9911796707
TMI Blog2011 (4) TMI 1435X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of income, out of which or by means of which the provisionally attached movable properties were acquired. The petitioner instead of appearing before the first respondent has filed the present writ petition challenging the provisional attachment order as well as the case filed against him. HELD THAT:- In the present case, by attachment of property made by the second respondent, the petitioner is not bound to lose anything and he cannot be said to be prejudiced. On the other hand, by virtue of Section 5(3), every order of attachment made u/s 5(1) of the PMLA will lose its efficacy either after 150 days or after an order passed u/s 8(2) of the PMLA. Therefore, it is only the petitioner instead of approaching the first respondent Adjudicating Authority who had initiated proceedings u/s 8(1), had rushed to this court. Even if the attachment is made final, u/s 26, an appeal lies to the Appellate Tribunal. Therefore, the petitioner must submit his explanation to the Adjudicating Authority and convince it that the amount sought to be attached was not obtained due to any money laundering and that it was the legally earned income. Even if he fails before the first respondent, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as thereafter, the provisional attachment order was made vide GSR 441(E), dated 1.7.2005. The complaint under Section 5(5) of POMLA in O.C.No.70 of 2010 in Provisional Attachment Order No.6 of 2010, dated 05.10.2010 was filed on 1.11.2010 by the second respondent Deputy Director of Enforcement before the first respondent Adjudicating Authority at New Delhi. The first respondent on considering the complaint had issued a show cause notice under Section 8 of POMLA to the petitioner for his appearance before the first respondent calling him to show cause to his source of income, out of which or by means of which the provisionally attached movable properties were acquired. The petitioner instead of appearing before the first respondent has filed the present writ petition challenging the provisional attachment order as well as the case filed against him. 5.It was further stated that one Karthikeyan, the Managing Director of M/s.Ari Fabrics Ltd. having office at Coimbatore had entered into a Memorandum of Understanding dated 13.2.2008 with the petitioner that he should settle the amount of ₹ 6.5 Crores which was obtained by the said Karthikeyan as loan for the purpose of running ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s court. With reference to the company affairs, petitions are pending before the Company Law Board and certain company applications filed by him are also pending before this court. The petitioner had purchased the third respondent M/s.VMT Spinning Mills India Pvt. Ltd., by an agreement, dated 12.11.2007 and 08.12.2008. He was permitted to run the mill. Therefore, he had opened a Bank account with the fourth respondent. 8.It is further claimed that when a criminal case was filed by the Inspector of Police, District Crime Branch, Coimbatore, the accounts were verified in the Bank and the second respondent was satisfied about the transaction. It is on these premise, the petitioner had challenged the provisional attachment order issued under Section 5(1) of the POMLA. It is claimed that the authority should have reason to believe on the basis of materials that the attached subject property is the proceeds of a crime and the person charged had committed scheduled offences and that there are chances of concealment or transfer of proceeds. A mere repetition of the word reasons to believe cannot be a ground for passing the attachment order. The provisions of the second schedule to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act.] It was further stated that because of second proviso to Section 5, the attachment can be made even without forwarding a report under Section 173 Cr.P.C. 11.Therefore, the short question that arises for consideration in this writ petition is whether the impugned notice of provisional attachment under Section 5(!) and the impugned notice for adjudication under Section 8 suffer from any want of jurisdiction and liable for interference by this Court? 12.Mr.M.Dhandapani, learned Central Government Standing Counsel in support of his contentions had relied upon a judgment of the division bench of the Bombay High Court in First Appeal Nos.527 to 529 of 2010 in Radha Mohan Lakhotia Vs. The Deputy Director, PMLA, Directorate of Enforcement, Ministry of Finance, Department of Revenue, Mumbai, which arose under the provisions of POMLA. The Bombay High Court vide its judgment, dated 5.8.2010 had dealt with the scope of PO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitted a scheduled offence) will, therefore, be legitimate within the sweep of Section 5 of the Act of 2002. In our opinion, the thrust of Section 5 is to attach every property involved in money-laundering irrespective of whether it is in possession of the person charged of having committed a scheduled offence or any other person provided however it must be shown to be proceeds of crime and further, that proceeds of crime are likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under the Act. 12. Going by the definition of person occurring in Section 2(s) and on conjoint reading of section 2(u), which also refers to any person , coupled with the purpose and intent for which the enactment has been brought into force, accepting the argument of the appellants would result in a pedantic approach and limiting the plenitude of action of attachment and confiscation of proceeds of crimes only in the hands of the persons who have been charged of having committed a scheduled offence and none else. Whereas, the Act has come into being to prevent money laundering and to provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who has been charge of having committed a scheduled offence. If that was the intent of the legislature, there was no reason to insert clause (a). In that case, the Legislature would have simply provided for any person who has been charged of having committed a scheduled offence and in possession of any proceed of crime, such proceeds of crime can be attached and confiscated, subject to fulfillment of the specified conditions. 13.The Appellants however, have placed emphasis on the expression such person used in clause (b) of section 5(1) of the Act. According to them, the word such is prefix to the word person in clause (b). That is not superfluous, but is ascribable to the person referred to in clause (a). Which means that even clause (a) deals with person who has been charged of having committed a scheduled offence. It is not possible to countenance this submission. We are conscious of the fact that penal provisions should be strictly construed. At the same time, we cannot overlook the language of section 5 as applicable at the relevant time. In our opinion, clause (a) refers to any person whether he has been charged of having committed a scheduled offence or otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de or a complaint has been filed for taking cognizance of offence by the Special Court constituted under the NDPS Act. In so far as the person who is not named in the scheduled offence, there can be no question of filing of any report or complaint for taking cognizance. That stipulation has no application to the person who is not a person having been charged of a scheduled offence. The view that we propose to take is reinforced from the purport of section 3 and 4 of the Act of 2002. The same deal with the offence of money-laundering and punishment for money-laundering respectively. Both these provisions, even on strict construction, plainly indicate that the person to be proceeded for this offence need not necessarily be charged of having committed a scheduled offence. For, the expression used in whosoever . The offence of money-laundering under section 3 of the Act of 2002 is an independent offence. It is committed if any person directly or indirectly attempts to indulge or knowingly assists of knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property. Further, it would create a piquant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m a party) vide its judgment in S.Bagavathy Vs. State of Tamil Nadu, rep by its Secretary, Law Department, Chennai and another reported in 2007 (2) MLJ 526 dealt with the attachment of properties under the Tamil Nadu Protection of Interest of Depositors (in Financial Establishments) Act, 1997. While dealing with the exparte attachment, in paragraphs 27 and 28.1 to 28.4, the Full Bench had observed as follows: 27.The opportunity given to the financial establishments, the persons aggrieved or person interested as mentioned above is not minimal, but, should be viewed pragmatically as the same satisfies the principles of natural justice with utmost promptitude. The Act therefore provides very flexible hearing giving opportunity to the financial establishments and persons whose properties were attached and procedure provided in this regard is malleable and adaptable to the concept of principles of natural justice. The dispensation of pre-decision opportunity while passing ad interim order of attachment under Section 3 of the Act is inevitable, as the very object of the enactment is to control, rgulate and curb the activities of malicious transfer of funds by the financial establishm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for interim orders for attachment after which a post decisional hearing is provided for. In our opinion this is valid in view of the prevailing realities. 15.In the present case, by attachment of property made by the second respondent, the petitioner is not bound to lose anything and he cannot be said to be prejudiced. On the other hand, by virtue of Section 5(3), every order of attachment made under Section 5(1) of the POMLA will lose its efficacy either after 150 days or after an order passed under Section 8(2) of the POMLA. Therefore, it is only the petitioner instead of approaching the first respondent Adjudicating Authority who had initiated proceedings under Section 8(1), had rushed to this court. Even if the attachment is made final, under Section 26, an appeal lies to the Appellate Tribunal. Therefore, the petitioner must submit his explanation to the Adjudicating Authority and convince it that the amount sought to be attached was not obtained due to any money laundering and that it was the legally earned income. Even if he fails before the first respondent, there is time enough for challenging the same before the judicial appellate Tribunal constituted under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court was not at all justified in injuncting the appellant from taking action in furtherance of notice issued under Section 13(4) of the Act. In the result, the appeal is allowed and the impugned order is set aside. Since the respondent has not appeared to contest the appeal, the costs are made easy. Therefore, the writ petition filed by the petitioner must necessarily fail. 18.Before parting with the case, it is necessary to refer to the observations made by the Supreme Court in K.K.Baskaran's case (cited supra), where the Supreme Court emphasized the necessity to have laws to protect the people from money laundering and swindlers. In paragraph 41 of the said judgment, the Supreme Court had observed as follows: 41.The State being the custodian of the welfare of the citizens as parens patriae cannot be a silent spectator without finding a solution for this malady. The financial swindlers, who are nothing but cheats and charlatans having no social responsibility, but only a lust for easy money by making false promise of attractive returns for the gullible investors, had to be dealt with strongly. 19.In view of the above factual matrix and legal precedents, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
