2021 (2) TMI 1033 - HC - Money Laundering

Maintainability of petition - availability of alternative remedy - Money Laundering - search and seizure proceedings - confiscation of properties - It is the case of the petitioners that upon drawing the panchnama, the Assistant Director issued a letter dated 22.7.2020, intimating the petitioners not to part with any of the noted bank accounts, properties and insurance policies named therein, without prior sanction and further not to withdraw, renew or deal with the same in any manner without prior permission of the respondent No.2 - HELD THAT - The judgment of the co-ordinate bench in the case of J JIGNESH KISHOREBHAI BHAJIAWALA VERSUS STATE OF GUJARAT AND ORS. 2017 (7) TMI 1377 - GUJARAT HIGH COURT clinches the issue. The said writ petition was dismissed by this court, inter alia, holding that the PML Act was enacted to prevent money laundering and to provide for the confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. It has been further held that in terms of Section 8 of the PML Act, the Adjudicating Authority independently considers the issue of such attachment and if it has reason to believe that the person is in possession of proceeds of crime, he shall issue show cause notice to such person. The accused is entitled to explain the sources of income, earning or assets, out of which or by means of which he has acquired the property, lead evidence and furnish any other information in his possession to justify the legitimate means of acquiring the properties in dispute. It is only after taking all the submissions of the accused and documents brought on record to establish the sources of his property so attached that the Adjudicating Authority takes a final decision on the same. In paragraph 22, it has been further observed that any person aggrieved by an order made by the Adjudicating Authority under Section 8 of PML Act can avail the remedy of appeal under Section 26 of PML Act to the Appellate Tribunal, whereby again the accused person is given ample opportunity of being heard, before any orders are passed. It is only when a person is aggrieved by the decision or order of the Appellate Tribunal that he may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him. The remedy of appeal under Section 42 of PML Act is in the nature of second appeal. Section 26 of the PML Act provides for remedy of appeal to the Appellate Tribunal to an aggrieved person. Any person aggrieved by an order made by the Adjudicating Authority under Section 8, can file an appeal under the aforesaid Section 26 to the Appellate Tribunal and the parties concerned will get an opportunity to put-forth his case. A further appeal is provided under Section 42 before the High Court within 60 days from the date of the communication of the decision or order of the Appellate Tribunal. Therefore, reading the provisions of Section 17 in juxtaposition with the provisions of Section 8 read with further provisions of Sections 26 and 42, an alternative efficacious remedy has been provided to the aggrieved person. The PML Act, therefore, is a Code unto itself. In view of the effective alternative efficacious remedy available to the persons aggrieved so also considering the object of enacting the PML Act and the principle enunciated by this court, this court would be loath to exercise its extra-ordinary power under Article 226 of the Constitution of India - Petition dismissed.

Summary

Issues Involved:
1. Jurisdiction of the proceedings under the Prevention of Money Laundering Act (PML Act).
2. Legality and validity of the seizure and freezing of assets.
3. Delay and laches in initiating proceedings.
4. Applicability of the PML Act to the petitioners.
5. Availability of alternative remedies.

Detailed Analysis:

1. Jurisdiction of the Proceedings under the PML Act:
The petitioners challenged the jurisdiction of the proceedings initiated under the PML Act by the Assistant Director of Enforcement, Department of Revenue. The petitioners argued that the proceedings were without authority of law and that the sale of goods and the payments received were not "proceeds of crime" to attract the provisions of the PML Act. The respondents countered that the PML Act is a comprehensive scheme for investigation, recording of statements, search and seizure, and prosecution. They emphasized that money laundering itself is an offense standalone under Section 3 of the PML Act, having a distinct character with wider implications.

2. Legality and Validity of the Seizure and Freezing of Assets:
The petitioners contended that the seizure of documents and freezing of assets, including savings accounts and investment documents, were illegal and without jurisdiction. They argued that the authorities had not reached a subjective satisfaction to retain the properties before initiating proceedings. The respondents maintained that the PML Act provides a mechanism for attachment and confiscation of tainted property and that the authorities had exercised their powers within the framework of the law. The court noted that the PML Act is a special law with an overriding effect and provides for search and seizure under Section 17, which includes recording reasons in writing and forwarding them to the Adjudicating Authority.

3. Delay and Laches in Initiating Proceedings:
The petitioners argued that the proceedings were time-barred as they were initiated 12 years after the alleged transactions took place in 2008-2009. They contended that even in the absence of a specific limitation period under the statute, proceedings should be initiated within five years from the date of the alleged illegalities. The respondents argued that the PML Act does not prescribe a specific limitation period for initiating proceedings and that the investigation was based on specific intelligence received in 2020. The court held that the PML Act provides for a comprehensive scheme for investigation and adjudication, and the delay in initiating proceedings did not vitiate the jurisdiction of the authorities.

4. Applicability of the PML Act to the Petitioners:
The petitioners contended that no scheduled offense had been committed by them or their family members and that the concealment of the identity of the product did not attract the provisions of the PML Act. They argued that the proceedings were initiated without proper authority of law. The respondents maintained that the petitioners were connected to the criminal activity relating to a scheduled offense and that the PML Act's provisions were applicable. The court noted that the PML Act's definition of "proceeds of crime" and "scheduled offense" was broad and that the petitioners' actions fell within the purview of the PML Act.

5. Availability of Alternative Remedies:
The respondents argued that the petitioners had an alternative remedy under Sections 26 and 42 of the PML Act, which provide for appeals to the Appellate Tribunal and the High Court. They contended that the petitioners should exhaust these remedies before approaching the court under Article 226 of the Constitution of India. The court agreed, stating that the PML Act is a code unto itself and provides an effective alternative remedy for aggrieved persons. The court emphasized that it would be loath to exercise its extraordinary power under Article 226 in light of the available statutory remedies.

Conclusion:
The court dismissed the petition, holding that the proceedings under the PML Act were within the jurisdiction of the authorities and that the petitioners had an alternative remedy available under the statute. The court emphasized the comprehensive nature of the PML Act and the importance of following the statutory scheme for investigation and adjudication. The petitioners' arguments regarding delay, jurisdiction, and applicability of the PML Act were rejected, and the court declined to interfere with the proceedings at the nascent stage.