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TMI Blog2015 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... as been made that the trust and retention accounts duly monitored by the lenders at the time of release. A further statement has been made that fixed deposits have been created only to augment interest. The need for releasing the amounts has also been reiterated from time to time. Unfortunately, these factors have not been taken into consideration by the respondents. The respondents have treated the power exercisable for investigation with the one available under Section 5 of the Act by an officer other than him. There is no explanation as to why the investigation has prolonged. There is no sufficient material to hold that the continuity of the orders impugned would be necessary for investigation. Admittedly, the power under Section 5 of the Act has not been invoked so far. Strangulating the petitioner would benefit none. When the exercise of power is for a specified purpose, it cannot be used otherwise. - Court is of the considered view that though the power is available to the respondents to pass the orders impugned, its continued exercise in the given case cannot be sustained in the eye of law. More over even under Section 5 of the Act, the provisional attachment can be in force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any others. 2.3. On 06.01.2015, the Power Finance Corporation sent a letter to the petitioner regarding approval of cost overrun, modification of terms and conditions of sanction and underwriting of cost overrun debt. On 19.01.2015, Punjab National Bank wrote a letter to the petitioner in respect of approval of Bank Guarantee of ₹ 422.00 crores. On 31.01.2015, Bank of Baroda wrote a letter for the renewal of credit facility. 2.4. The respondent issued summons to the petitioner on 19.02.2015 under Section 50 (2) and (3) of Prevention of Money-Laundering Act, 2002, requiring the petitioner to appear before the Assistant Director on 25.02.2015. 2.5. On 20.02.2015, letters have been sent by the respondents to the bankers of the petitioner. The following passage would be apposite. Further considering the sensitive nature of the case you are also advised not be transfer or liquidate or withdraw or otherwise deal with that the amount/stock/ security held in the above refered account(s) as on date, except with the prior permission of the authorities of this Directorate. This letter is challenged in W.P.No.7854 of 2015. 2.6. On receipt of the same, banks stopped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, without the prior concurrence of this Directorate. 2.10. On the earlier occasion, this Court framed the following issues. (i) Whether in terms of Section 49(1) of the Prevention of Money-Laundering Act, 2002, the respondent herein, namely, The Assistant Director, Directorate of Enforcement, Government of India, Chennai Zonal Office, is vested with power to issue the impugned proceedings? (ii) Whether the order, dated 24.09.2014 made in W.P.(Crl) No.120/12, with W.P.(C) No.463, 515/12 and 280/13, reported in 2014 (9) SCC 614 and Coal Block Allocation case are still pending and being monitored by the Hon'ble S.C.? (iii) Whether any similar orders have been passed in any other Enforcement Directorate by the Assistant Director and aggrieved over the same, any challenge is made (or) case is pending before other High Courts? 2.11. Thereafter, on 31.07.2015, further orders have been passed, which is reproduced hereunder: This Court also heard the submissions of the learned Additional Solicitor General of India, appearing for the Directorate and he would submit that orders are explicit and incapable of interpretation as projected by the petitioner. This Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act is to prevent the property from being alienated. Even in case of an attachment, a person interested would continue to enjoy the immovable property. There is no proceeds of the crime involved. The respondents have not looked into the relevant materials especially the various letters addressed by the petitioner. Accordingly, it is submitted that the proceedings will have to be quashed. 4. Submissions of the Respondents:- The learned Additional Solicitor General of India assisted by Mr.M.Dhandapani, the learned counsel for the respondents submitted that the respondents concerned are the competent authority to investigate. Such a power is available to the respondents under the Prevention of Money-Laundering Act. On a conjoint reading of Sections 2 (1)(y), 49 and 54 of the Prevention of Money-Laundering Act, 2002 (hereinafter referred to as the 'Act') it could be seen that the respondents are the authority appointed under Section 49 of the Act. In view of power conferred under Section 54 of the Act to assist for an enquiry, the orders impugned cannot be assailed on lack of jurisdiction. As the issues pertaining to coal allotment are pending consideration before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing for the petitioner cannot be accepted. The Division Bench has taken into consideration Sections 2(na) and 54 of the Act. The following paragraphs would be apposite. A balance has to be struck between the right to property of an individual and the measures which may be required to be inferred by necessary implication in an investigating agency for effective enforcement of the proceedings under the Act. Impugned letter dated 19.09.2014 must be read as a temporary measure during investigation undertaken for preservation of evidence in contemplation of initiation of proceedings under the Act and for its enforcement. Such letter is not an end itself. While on the other hand, failure to resort to such measure may render the substantive powers under the Act otiose, to permit the same to continue indefinitely would amount to supplanting them. In conclusion it is held as follows :- (a) Impugned letter dated 19.09.2014 issued by respondent no. 3 requesting respondent banks (reporting entities under the Act) to prohibit/freeze withdrawal of monies from the account of the appellant's group of Companies is to be read as an indispensable temporary measure for prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified or not? As clearly held by the Division Bench referred to supra, the exercise of power is only meant for the purpose of investigation. Thus, such an exercise is meant to be undertaken sparingly to the minimum extent for a temporary period. Such a power can neither be a substitute nor akin to the power available under Section 5 of the Act, which is substantive in nature. The Court must be conscious of fact that the power is used even before the activation of Section 5 of the Act. Thus, such a power is neither unlimited nor un-bridled. It is only a prelude to a proposed action and not a substitute. An incidental or ancillary action brought forth under the umbrage of investigation has to keep in mind the civil consequences that would arise. The process of investigation shall ensure that a party shall not be prejudiced. The investigation is only an enquiry into an offence. Thus,an investigation Officer may or may not conclude that an offence has been committed. While doing so, he has to avoid an element of arbitrariness especially when it partakes the character of an administrative action having civil consequences. As such an investigation is only a process of finding the truth, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise in the given case cannot be sustained in the eye of law. More over even under Section 5 of the Act, the provisional attachment can be in force only for a period of 180 days and not beyond. 6.5. On the question of applicability of Section 68 of the Act, it deals with invalidation of the notice on certain grounds. In the light of the discussion above, there is no difficulty in upholding the power of the respondents. However, the issue being one of the continued existence of orders meant to be used sparingly for a temporary period, the rigour of Section 68 of the Act would not apply to the case on hand. We should also bear in mind the fact that these orders have been passed unilaterally without even affording an opportunity to the petitioner neither indicating the reasons nor the application of mind. Therefore, the respondents ought to have done a complete review by taking into consideration of the entire materials. 7. CONCLUSION: Accordingly, the orders impugned are hereby set aside. The writ petitions are allowed. In view of the same, this Court is of the considered view that there is no necessity to consider the consequential prayers. However, this order will not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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