2022 (11) TMI 52 - HC - Money Laundering

Attachment of property - expiry of period of limitation for filing appeal - whether for the purpose of taking possession of the property attached under Section 5 or frozen under sub-section 1-A of Section 17 of the Prevention of Money Laundering Act, 2002 (PMLA), the Director or any other officer authorized by him has to wait for the expiry of the period of limitation for filing appeal against the attachment order that has been confirmed in terms of sub-section (3) of Section 8 of the PMLA for taking its possession in terms of Section 8(4) of the PMLA? HELD THAT - There is no dispute to the legal position that the Supreme Court in Vijay Mandal Choudhary s case 2022 (7) TMI 1316 - SUPREME COURT has upheld the vires of the provisions contain in Section 8(4) of the PMLA. The said provision authorizes the Director or any other officer to take possession of the property regarding which provisional order of attachment has been confirmed. As per the Rule 5(2) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority),Rules, 2013 (hereinafter referred to as the Rules of 2013), once the attachment of immovable property has been confirmed by the Adjudicating Authority and it is found to be in possession of the owner, the authorized officer has to issue a notice of eviction of ten days so as to prevent the person from enjoying such property and if such person does not vacate the property within the stipulated time, he has to be evicted by taking possession thereof. The jurisdiction to proceed under Section 8(4) of the PMLA would come into play immediately upon passing of the order of attachment by the Adjudicating Authority. There is no scope to interpret the provisions contained in Section 8(4) and Section 26 of the PMLA and Rule 5(2) of the Rules of 2013 to hold that for taking action under Section 8(4) of the PMLA, the authorized officer has to await the expiry of period of limitation i.e., 45 days - the respondents were well within their powers to issue the impugned notice, which is in tune with the legal position as discernible from the provisions contained in Sections 8 and 26 of the PMLA read with Rule 5(2) of the Rules of 2013. There are no ground to interfere in the impugned judgments passed by the learned Writ Court. The same are well-reasoned and lucid and deserve to be upheld - appeal dismissed.

Summary

Issues:
1. Interpretation of provisions under the Prevention of Money Laundering Act, 2002 regarding possession of attached properties.
2. Validity of issuing eviction notices before the expiry of the period of limitation for filing an appeal against attachment orders.

Analysis:
1. The High Court of Jammu and Kashmir considered two Letters Patent Appeals against judgments related to the possession of properties attached under the Prevention of Money Laundering Act, 2002 (PMLA). The central issue was whether the Director or authorized officers had to wait for the appeal period's expiry before taking possession of the attached property. The learned Writ Court had ruled against this requirement, allowing the Director or authorized officers to take action before the appeal period's completion.

2. The case involved an investigation under the PMLA against individuals for offenses related to the Arms Act and corruption. Following the confirmation of a provisional attachment order, eviction notices were issued to vacate the attached properties. The appellants challenged these notices in separate writ petitions, which were dismissed by the Writ Court. The main contention was whether taking action under Section 8(4) of the PMLA before the appeal period was exceptional or a regular practice.

3. The appellants argued that immediate eviction before the appeal consideration would render the appeal right redundant. Referring to a Supreme Court case, they emphasized that possession should be an exception until a formal confiscation order is issued. However, the High Court noted that the PMLA allows authorized officers to take immediate possession upon attachment confirmation, emphasizing the term "forthwith" as granting immediate jurisdiction.

4. The High Court highlighted that the order of attachment confirmation is akin to a civil court decree, immediately executable without waiting for the appeal period. It emphasized that the legal provisions do not require the authorized officer to delay action until the appeal period lapses. The Court rejected the argument that exceptional circumstances were necessary for action under Section 8(4), stating that the appellate authority could determine this during appeal consideration.

5. Ultimately, the High Court upheld the Writ Court's judgments, dismissing the appeals as lacking merit. It emphasized that the legal position under the PMLA, along with Rule 5(2) of the Rules of 2013, supported the immediate action taken by the respondents. The Court noted that the remedy of appeal should be pursued rather than bypassed through writ jurisdiction, allowing the appellate authority to assess the exceptional nature of the case during appeal consideration.