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2019 (3) TMI 121 - AT - Money LaunderingOffence under PMLA - Provisional attachment - Held that - The party may or may not be able to succeed in their relief for quashing the final order, merely on sole ground by stating since the copy of reasons to believe is not served, therefore, the final order be quashed.The proceeding is main factor. In the present appeals, the appellants have requested the ED to supply the copy of reason to believe at least during the pendency of appeals, who refused to accede the request. Thus, the decision referred does not help the case of respondent. This Tribunal at this stage is not deciding the issue of validity of reasons to believe or whether recordal of reasons to believe prior to passing of provisional attachment order separately or along with the PAO or at the stage of issuance of notice under section 8(1). The said issue has already been argued in other appeals, the same would be considered and decided on merit. In the present, the only issue is with regard to supply of copies thereof. Validity of recording may or may not be challenged by the appellants after supplying copies of the same. Thus, it is wrong to allege on behalf of respondent ED that the said judgement rendered by the Hon‟ble Division Bench of the Delhi High Court in J. Sekar 2018 (1) TMI 535 - DELHI HIGH COURT cannot be relied upon or not applicable. Unless it is set-aside by the Supreme Court, the same remains effective. The same may not be binding upon the parties. Thus, the said judgement passed by the Division Bench in the case of J. Sekar (Supra) has a binding effect to this Tribunal. During the course of hearing, respondent has produced the photocopy of reason to believe to this Tribunal who also tried to explain that major part of reason to believe are incorporated in the provisional attachment order, therefore, there is no need to supply the copy of reasons to believe to the appellants. Level playing field - The parties in every case are entitled to apply the principles of equal opportunity to address their respective cases on merit before court regardless of any stringent law. A level playing field is concept of fairness where each party has an equal chance to succeed. Under this concept, one party cannot take advantage against other party (who is unheard)in the absence of reasons of allegations and to stop to prove its innocence. Unfairness can never be shown to any party not to know allegations raised against him by any agency/authority/tribunal, otherwise it would be called one sided action. Thus, each party should be given equal chance to succeed, even the party may be on weak wickets. Thus, as considered view that the appellants are entitled to know the allegations against them in the reason to believe and are entitled to challenge the same in accordance with law. Mere denial to supply copy shall be treated as injustice to the parties and curtail the fair defense and trial in the matter. In the present appeals, counsel for the respondent and IO have confirmed before this Tribunal that major part of the reasons to believe are incorporated in order of provisional attachment, then where is the difficulty. Thus, I direct that copy of the reasons to believe be supplied within one week to each of the appellants who shall be entitled to file the response, if any, three weeks thereafter.
Issues Involved:
1. Legality of the Provisional Attachment Order under Section 5(1) of PMLA. 2. Compliance with the "Reasons to Believe" requirement. 3. Adherence to Principles of Natural Justice. 4. Validity of reasons recorded for attachment. 5. Applicability of precedents and case law. 6. Provision of copies of reasons to believe to appellants. Detailed Analysis: Legality of the Provisional Attachment Order under Section 5(1) of PMLA: The judgment scrutinizes the legality of the Provisional Attachment Order issued under Section 5(1) of the PMLA. It emphasizes that the authority must have "reasons to believe" that any person is in possession of proceeds of crime and that such proceeds are likely to be concealed, transferred, or dealt with in a way that could frustrate the proceedings. The judgment asserts that non-compliance with these twin conditions renders the order without jurisdiction and unsustainable in law. Compliance with the "Reasons to Believe" Requirement: The judgment reiterates that the reasons to believe must be recorded in writing and must be based on material in the authority's possession. It states that the reasons should not be based on interdepartmental communications or superior authority's instructions. The tribunal emphasizes that the reasons must be cogent, coherent, and objectively based on material evidence. The failure to record reasons in writing as mandated by Section 5(1) PMLA nullifies the provisional attachment order. Adherence to Principles of Natural Justice: The judgment highlights that the principles of natural justice were violated by the Respondent No. 1 while passing the impugned order. It underscores that the notice issued under Section 8(1) must be precise and unambiguous to appraise the noticee of the determinative case they have to meet. The judgment criticizes the mechanical and non-judicious nature of the impugned order, which lacked cogent reasons for rejecting the submissions in writing. Validity of Reasons Recorded for Attachment: The tribunal stresses that the reasons to believe must be communicated to the affected parties, as held in the case of C.B. Gautam vs. Union of India. The judgment asserts that the reasons for the order must be incorporated in the order or served separately along with the order on the affected party. The tribunal cites various precedents to support this view, emphasizing that the failure to communicate reasons vitiates the entire proceedings. Applicability of Precedents and Case Law: The judgment discusses the applicability of various precedents, including the Supreme Court's ruling in P.P. Abdulla v. Competent Authority, which mandates that reasons recorded in writing must be produced before the court for scrutiny. The tribunal also refers to the Delhi High Court's judgment in J. Sekar v. Union of India, which held that reasons to believe must be made available to the noticee under Section 8(1) PMLA. Provision of Copies of Reasons to Believe to Appellants: The tribunal concludes that the appellants are entitled to know the allegations against them and are entitled to challenge the same in accordance with law. It directs the respondent to supply copies of the reasons to believe within one week to each of the appellants, who shall be entitled to file their response within three weeks thereafter. The tribunal emphasizes that denying the appellants access to the reasons would be unjust and curtail their fair defense and trial in the matter. Conclusion: The judgment underscores the necessity for strict compliance with the statutory requirements under Section 5(1) of PMLA, adherence to principles of natural justice, and the provision of reasons to believe to the affected parties. The tribunal directs the respondent to supply the reasons to believe to the appellants, ensuring a fair trial and defense. The judgment is a detailed exposition on the legal requirements for provisional attachment orders and the importance of transparency and fairness in quasi-judicial proceedings.
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