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TMI Blog2017 (8) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... -PMLA-997/KOL/2015, MP-PMLA- 3137/KOL/2017 (Misc.), MP-PMLA-1886/KOL/2015 (Stay), FPAPMLA- 995/KOL/2015, MP-PMLA-3115/KOL/2017 (Misc.), MP-PMLA- 1898/KOL/2015 (Stay), FPA-PMLA-991/KOL/2015, MP-PMLA- 3136/KOL/2017 (Misc.), MP-PMLA-1891/KOL/2015 (Stay) & FPAPMLA- 999/KOL/2015, MP-PMLA-3113/KOL/2016 (Misc.), MP-PMLA- 1947/KOL/2015 (Stay) 1. The above named appellants has preferred these appeals under Section 26 of the Prevention of Money Laundering Act, 2002 against Order dated 15.06.2015 passed by the Adjudicating Authority in O.C. No. 409/2015 under the PML Act. Since all appeals and applications have arisen out of a common order dated 15.06.2015 of the Adjudicating Authority in a common O.C. No. 409/2015, the same are being disposed of by this common order. 2. The brief facts are that the Himanshu Kumar Lal, Joint Director, Enforcement Directorate, Govt. of India, CGO Complex, 3rd MSO Building, DF Block, 6th Floor, Salts Lake, Kolkata Zone Office has filed the original complaint against the above mentioned appellants and one M/s Eastern Institute for Integrated Learning in Management University, Sikkim (herein after referred to as EIILM) under section 5(5) of the PMLA, 2002. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court of Sikkim, the counsel appearing for the respondent in the said proceedings requested the Hon'ble High Court of Sikkim to clarify the interim orders dated 02.04.2015 with regard as other defendants (who are the appellants herein). The Hon'ble Court of Sikkim clarified that the order dated 02.04.2015 was to apply only to the writ petitioner there i.e. EIILM University (one of the defendants). 10. On the same day i.e. 05.06.2015, as stated in the e-mail sent by Assistant Director, Enforcement Directorate, he has been directed by the Adjudicating Authority to inform /intimate by email dated 06.06.2015 to the appellants in the complaint OC 409 of 2015 that the hearing of the complaint was scheduled and fixed on 8.6.2015. 11. In the said mail the defendants in OC 409 of 2015 including the Appellants were directed to appear for the hearing of the said complaint, failing which the complaint would be heard and decided in their absence. It is apparent that the mail was sent by the Respondent on 06.06.2015, which happened to be a Saturday, at 10:10 PM on the official e-mail of the Appellants University. 12. It is a matter of record that the counsel of some of the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above mentioned appeals which has been challenged, interalia, mainly on the following grounds:- (a) the provisional attachment order, show cause notice, complaint and impugned order dated 15.06.2015 passed by the Learned Adjudicating Authority is without jurisdiction and contrary to the provisions of the Act and the Rules and is bad in law as the constitution/Coram of the adjudicating authority comprising of a single Member which is to hear the Appellants is not competent to issue Show Cause notice and decide the complaint as it lacks jurisdiction and is in contravention of the provisions of the PML Act. (b) Section 6 (5)(b) of the PML Act provides that one Member from the field of law has been specifically provided in view of the fact that the functions conferred on the adjudicating authority are judicial in nature and are for the purpose of deciding lis between the parties, hence the presence of a member having legal background becomes a sine qua non and cannot be done away with. Moreover, the adjudicating authority while exercising its powers under the PML Act is called upon to decide questions which are intricate and complicated and pre-eminently of judicial complexion and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t money received by the sponsoring body of the Appellant from the legitimate sale of land and building cannot be termed as a 'proceeds of crime' in the hands of Appellant instead it is the assets in the hands of EIILM University procured from the alleged proceeds of crime which are to be treated as 'proceeds of crime' as defined under the Section 2(1)(u) of the Prevention of Money Laundering Act, 2002. Thus the impugned order being bad in law' ought to be set aside. 20. The said impugned order was also challenged on merits. Such details are mentioned in the grounds of appeal. 21. Notice in the appeal was issued on 12.08.2015. The appeal was pending before this Tribunal. 22. During the pendency of appeal, in the meanwhile on 22.09.2015, the final judgment was delivered by the Hon'ble High Court of Sikkim Gangtok in W.P. (Crl) No.-02/2015 which was filed by defendant no. 1 in OC i.e. EIIL in Management University, allowing the petition by passing the following directions:- Para 19 of the Judgment passed by the Hon'ble Court where the following directions were issued is re-produced here under:- "(i) The Respondent No.l shall take appropriate steps with the concerned authorities o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority to issue notice to the petitioner therein, it is prayed in the application that in view of the above said judgment passed by the Hon'ble High Court of Sikkim, the instant matter may kindly be remanded back to the Ld. Adjudicating Authority for fresh consideration by a coram consisting with a judicial member. 26. The prayer made in the application is strongly opposed on behalf of the respondent. In reply it is stated that the contention of the petitioner is not correct as the Prevention of Money Laundering Act, being a special act, there is no such provision of fulfillment of corum of the Adjudicating Authority while adjudicating a case in terms of section 8 of the Prevention of Money Laundering, 2002. 27. It is stated that one member officiating as Adjudicating Authority can function singly while adjudicating the case as per provision of the Prevention of Money Laundering Act, 2002. It is also stated in the reply that the Adjudicating Authority can function even in the case where there is no judicial member included in the Adjudicating Authority which is obviously a quasi Judicial Authority. 28. It is undisputed fact the impugned order has been passed by the Ld. Adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the impugned show cause notice was issued and the order under challenge passed in the absence of such a Member. Apart from what have been observed earlier, in a proceeding of the present kind, where orders were passed ex parte by the Adjudicating Authority in the absence of the Petitioner- University, it would have been essential for a Judicial Member to be part of the Bench considering the nature of the lis before it to ensure that the orders are passed in satisfaction of all the principles relevant and acceptable in law. Prima facie, therefore, I am of the view that the order does not appear to pass the muster of the law laid down in Tamil Nadu Generation and Distribution Corporation Limited (supra). 15. Having observed as above, I am, however, not inclined to quash the proceedings at this stage for the reasons that follow hereafter. 16. The Petitioner-University, apart from showing technical flaws in the constitution of the Bench, concededly has been unable to place anything before this Court to indicate that they have been prejudiced in any manner. It is also conceded that the Petitioner- University has not yet responded to the show cause notice. Under such circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relief claimed in the application on the ground of parity. 39. We are of the considered view that once the final judgment is passed, all the interim orders passed merged with final outcome of the Judgment as per settled law. The impugned order passed on 15th June, 2015, is liable to be set-aside as the Sikkim High Court, judgment has attained its finality. 40. We totally agree with the legal proposition referred in para 3, 7-12 of the Judgment delivered by the Sikkim High Court. The same are reproduced hereunder:- "3. At the time of arguments, Mr. Shakeel Ahmed, Learned Counsel for the Petitioner-University, re-emphasised the aforesaid proposition and urged that such was the intention of the Legislature can be clearly made out from Sub-Sections (2) and (3) of Section 6 of the PMLA. On this, he would refer to L. Chandra Kumar VS. Union of India and Others (1997) 3 SCC 261; Union of India VS. R. Gandhi, President, Madras Bar Association (2010) 11 SCC 1 and Tamil Nadu Generation and Distribution Corporation Limited VS. PPN Power Generating Company Private Limited : (2014) 11 SCC 53. 7. On a bare reading of Section 6 and Sub-Sections thereunder, I find substance in the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Clause (b) of Sub- Section (5) of Section 6, would depend upon the nature of the lis to be decided. This would be apparent from the very words used in Clause (b) of Sub-Section (5) of Section 6 whereby it provides that a "Bench" may be constituted "as the Chairperson of the Adjudicating Authority may deem fit". This provision, in my view, is quite distinct from Sub-Section (3) of Section 6 as it is quite obviously an omnibus provision prescribing the composition of the "Adjudicating Authority". 10. In Tamil Nadu Generation and Distribution Corporation Limited (supra) in which reliance was placed Upon Kihoto Hollohan VS. Zachillhu and Others I 1992 Supp (2) see 651, it has been held as under:- "59. In view of the aforesaid categorical statement of law, we would accept the submission of Mr Nariman that the tribunal such as the State Commission in deciding a lis, between the appellant and the respondent discharges judicial functions and exercises judicial power to the State. It exercises judicial functions of far-reaching effect. Therefore, in our opinion, Mr Nariman is correct in his submission that it must have essential trapping of the court. This can only be achieved by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e this purpose. To hold that the Tribunal should consist only of Judicial Members would attack the primary basis of the theory pursuant to which they have been constituted. Since the Selection Committee is now headed by a Judge of the Supreme Court, nominated by the Chief Justice of India, we have reason to believe that the Committee would take care to ensure that Administrative Members are chosen from amongst those who have some background to deal With such cases." 41. Even otherwise, we are surprised to note that on 5th June, 2015 when it was clarified by Hon'ble High Court, the hearing was fixed on 08.06.2015, Monday, despite the 6th June being Saturday. The notice was issued by E-mail. At the request of the appellant, the matter was adjourned to 11th June, 2015. On 11th June, 2015 the application was filed for re-call of order dated 8th June, 2015 and also to file the reply within one week, however no time was granted. The application was dismissed in limine and on the other hand the matter were reserved by the Adjudicating Authority. Left with no option, the appellants aggrieved by the said order dated 11th June, 2015 filed the writ petition before Hon'ble High Court of Karn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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