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TMI Blog2019 (3) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ti Singh, Pooja, Singh, Chitra Rentala, Santosh, Sachin, Mr. Aditya Wadhwa,, Debopriya, Songat Mishra, Advocates For the Respondent : Shri S.K. Sharma, Advocate JUDGEMENT FPA-PMLA-1988, 2047, 2048, 2059,2108, 2004 to 2008/MUM/2017 1. On 14.12.2016, the Income Tax Department conducted a raid/search of 15 Bank Lockers in the name of the Appellant (one of the appellant in appeal no. 1988/2017 out of this batch of appeals) at the Bank of Maharashtra, Parvati Branch, Pune. Pursuant to the said search the Income Tax Department seized an amount of Rs. 9,85,16,980/-. On the same day the Income Tax Department also raided /searched the factory premises of the Appellant and allegedly recovered an amount of Rs. 94,56,390/- from the factory premises. It may be noted that a sum of Rs. 7,97,95,500/- (39,893 x 2000 and 19 x 500 New GC Notes) was in new currency and the remaining amount of 1,87,21,480/- was in old currency. 2. On 16.12.2016 a case (FIR) bearing No. RC/PUNE/2016/A/0020 was registered by the CBI (ACB), Pune under Section Sections 420 r/w 120B Indian Penal Code, 1860 („IPC‟) and Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 („PC ACT‟ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent no.2 passed the provisional without following the mandate of Section 5(1), as such; the assumption of the jurisdiction to pass the attachment order is not sustainable. 4.2 The section 5(1) PMLA has two important components, i.e. firstly, satisfaction as envisaged in (a) and (b) and then, secondly, the action/power of the authority to pass the provisional attachment order. The authority cannot jump to the second component i.e. action/power of passing the provisional attachment order, without the compliance of the first component. Acquisition of the jurisdiction to pass the provisional attachment order would come only after recording the reasons in writing as mandated in section 5(1) PMLA. 4.3 The section 5(1) impose a stringent duty upon the Respondent No.2 that, before passing the provisional attachment order and depriving a person of his property, which is a constitutional right envisaged under Article 300-A of the Constitution of India, cogent and coherent reasons are required to be given and those reasons are to be recorded in writing and manifested which are not given in the present case. As such the provisional attachment order is without jurisdiction and not sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority passed the order. The notice is the first limb of this principle. It must be precise and unambiguous and should appraise the notice of the determinative case which he has to meet. In other words, the party should be put on notice of the case before any adverse order is passed against him. In the present case, the Respondent No.1 issued the notice u/s 8(1). 5. It is stated by all the appellants that the case of the Respondent No. 2 (ED) is false and not appealing to common sense as in some of the cases, the property in question was acquired in 2006-07 by the Appellant no. 1, from the proceed of the crime which was allegedly generated in 2010. Further, there is no immediate necessity of attachment since, the appellants never sold or disposed of the property after its acquisition in 2006-07 and even after the FIR was registered by the Crime Branch in 2015. This ex facie makes it clear that there was no immediate necessity to pass the provisional attachment order and the order was passed without application of mind. 6. All the appellants have denied the allegations raised by the respondent no. 1. In their respective stand, they have tried to explain the amount seized by the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riting shall not only be incorporated in the order but also shall be communicated to the affected parties. Therelevant extract from the judgement is as under: "Sec. 269UD(1), in express terminology, provides that the appropriate authority may make an order for the purchase of the property for reasons to be recorded in writing‟. Sec. 269UD(2) casts an obligation on the authority that it "shall cause a copy of its order under sub-s. (1) in respect of any immovable property to be served on the transferor". It is, therefore, inconceivable that the order which is required to be served by the appropriate authority under sub-s. (2) would be the one which does not contain the reasons for the passing of the order or is not accompanied by the reasons recorded in writing. It may be permissible to record reasons separately but the order would be an incomplete order unless either the reasons are incorporated therein or are served separately along with the order on the affected party. Reasons for the order must be communicated to the affected party." This decision has been followed in various judgments by various Courts, including the Hon'ble Supreme Court of India. 12. The submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars, and to show cause why all or any of such properties, as the case may be, should not be declared to be illegally acquired properties and forfeited to the Central Government under this Act. (2) Where a notice under subsection (1) to any specifies any property as being held on behalf of such person by any other person. a copy of the notice shall also be served upon such other person. 14. The Hon‟ble Supreme Court in the case of„P.P. Abdulla v. Competent Authority', (2007) 2 SCC 510, while considering an order of confiscation under the SMUGGLERS AND FOREIGN EXCHANGE MANIPULATORS (FORFEITURE OF PROPERTY) ACT, 1976 has held: "7. Learned counsel submitted that it has been expressly stated in Section 6(1) that the reason to believe of the competent authority must be recorded in writing. In the counter-affidavit it has also been stated in para 8 that the reasons in the notice under Section 6(1) were recorded in writing. In our opinion this is not sufficient. Whenever the statute requires reasons to be recorded in writing, then in our opinion it is incumbent on the respondents to produce the said reasons before the court so that the same can be scrutinised in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice. i. Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. j. Insistence on reason is a requirement for both judicial accountability and transparency. k. If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or `rubber-stamp reasons' is not to be equated with a valid decision making process. m. It cannot be doubted that transparency is the sine qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xus with the properties illegally acquired. 29. It is now a trite law that whenever a statute provides for `reason to believe', either the reasons should appear on the face of the notice or they must be available on the materials which had been placed before him. We have noticed hereinbefore that when the authority was called upon to disclose the reasons, it was stated that all the reasons were contained in the show cause notices themselves. They, however, in our opinion, do not contain any reason so as to satisfy the requirements of sub-section (1) of Section 68H of the Act. 18. The counsel for respondent - ED has referred the decision of Biswanath Bhattacharya versus Union of India & Others. The same is not applicableto the facts of the issue in hand as whether the party is entitled to receive the copy of reasons to believe or not. If yes, at what stge. The other allied issues are not involved at this stage of the appeals. All the appellants at this are requesting for copies thereof. 19. In the said case referred, the accused was under detention in 1976. His wife replied to the said notice without complaining of non-supply of reasoning. After his release the respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n mainly on the reason that the Adjudicating Authority along with the notice has sent the copy of complaint and copy of provisional attachment order who has yet to consider the material placed on record and after hearing of both parties, is to decide as to whether the provisional attachment is to be confirmed or not. Therefore, merely on the basis of averments that the notice u/s 8(1) does not contain the reason to believe, the prayer for quashing of proceedings cannot be allowed as it was pre-matured petition. However, in the present case,the plea is only to extent of supply of copy. The validity of recordal is not being decided at this stage. It is pertinent to mention that the judgement given by the Hon‟ble Supreme Court in the case of „P.P. Abdulla v. Competent Authority'(Supra) has not been referred or discussed. 21. This Tribunal is of the view that in the similar facts and circumstances as in the Bishwanath (Supra) or Brizo (Supra), the party may or may not be able to succeed in their relief for quashing the final order, merely on sole ground by stating since the copy of reasons to believe is not served, therefore, the final order be quashed.The proceeding is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. 75. There are two reasons to believe. One recorded by the officer passing the order under Section 5(1) PMLA and the other recorded by the AA under Section 8(1) PMLA. Both these reasons to believe should be made available to the person to whom notice is issued by the AA under Section 8(1) PMLA. The failure to disclose, right at the beginning, the aforementioned reasons to believe to the noticee under section 8(1) PMLA would not be a mere irregularity but an illegality. A violation thereof would vitiate the entire proceedings and cause the order of provisional attachment to be rendered illegal. 76. The Court disagrees with the learned counsel for the Union of India that there is no mandatory requirement, under section 8(1) PMLA, to communicate to the noticee the reason to believe. On a collective reading of Section 5(1) PMLA and Section 8(1) PMLA, such an interpretation is contraindicated and cannot satisfy the requirement of what the AA is supposed to do under Section 8(2) PMLA, viz. to consider the reply of the noticee, give them and the Director a hearing and „take into account‟ all relevant materials placed on record. 77. Although at the stage of issuance of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in a pending appeal before the Apex Court does not amount to "any declaration of law" but is only binding upon the parties to the said proceedings and at the same time, such interim order does not destroy the binding effect of the judgment of the High Court as a precedent because while granting the interim order, the Apex Court had no occasion to lay down any proposition of law inconsistent with the one declared by the High Court which is impugned." [Emphasis Supplied] 26. Thus, it is wrong to allege on behalf of respondent - ED that the said judgement rendered by the Hon‟ble Division Bench of the Delhi High Court cannot be relied upon or not applicable. Unless it is set-aside by the Supreme Court, the same remains effective. The same may not be binding upon the parties. Thus, the said judgement passed by the Division Bench in the case of J. Sekar (Supra) has a binding effect to this Tribunal. 27. During the course of hearing, the learned counsel appearing on behalf of respondent has produced the photocopy of reason to believe to this Tribunal who also tried to explain that major part of reason to believe are incorporated in the provisional attachment order, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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