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TMI Blog2019 (6) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... uspicion are two different situations. The law laid down earlier where the time limit was not provided may not be applicable because of change of situation by virtue of amendment which was carried on 19.4.2018, the specific period is prescribed in the Act for the purpose of investigation. Earlier, no specific timeline was set to complete the investigation and to file the prosecution complaint. The mandates now is changed whereby it is mandated that the attachment shall continue during investigation for a period not exceeding ninety days, as provided under section 8(3)(a) or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India. The second part of the provision is not applicable in the absence of such situation. Even this Tribunal is of the view that ninety days period is a less period and the said provision is rightly further amended where the period has been substituted by Act 7 of 2019-5-22 (i) to 365 days from 90 days, however, it is yet to be notified. Thus, unless it is notified, this Tribunal is duty bound to apply the provision as existed. In the light of above, the appeal is allowed. Both the accounts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Admittedly, neither the Appellant nor her husband were named as accused in the FIR. 5. On 31.08.2017, the Enforcement Directorate registered an ECIR baring no. 15/2017 qua the alleged commission of the offence u/s 3, 4 for the PMLA, 2002, allegedly based on the FIR bearing RC no. 08(A)/2017-AC III, dated 30.08.2017, registered by the CBI. Admittedly, neither the Appellant nor her husband were named as accused in the said ECIR. 6. On 25.10.2017, the CBI registered FIR being RC no. BD1/2017/E/0007 for the alleged commission of offences u/s 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988 and under Sections 120B r/w 420,467,468 and 471 IPC against M/s Sterling Biotech Limited. Sh. Chetan Sandeasara, Sh. Nitin Sandeasara, other directors of SBL and Sh. Anup Garg (Ex Director, Andhra Bank) for the alleged commission of offences of criminal conspiracy to cheat Andhra Bank and cause wrongful loss to it. Admittedly, neither the Appellant nor her husband were named as accused in the said FIR as per appellant. 7. On 27.10.2017, the Enforcement Directorate registered an ECIR bearing no. 17/2017 qua the alleged commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and safety, having been illegally detained by the Officials of the Enforcement Directorate. It is also stated that the appellant was not called to the office of the Enforcement Directorate even once to explain the details of the Bank Account Statements. 11. On 05.09.2018, the respondent passed the Freezing order, freezing the Bank Account and vide separate orders froze all other bank accounts, of the Appellant and her husband, despite of the fact that the appellant is not even an accused in any of the CBI Rs or the ECIRs of the Enforcement Directorate. 12. The learned counsel for the respondent does not dispute that no FIR or any criminal complaint filed by CBI is pending against the appellant. 13. It is also admitted by the learned counsel for the respondent that no complaint under section 8(3)(a) has been filed against Poonam Malik appellant within 90 days from the date of impugned order. It is stated by Mr. Rana that at the later stage, his client may find some evidence against herself and her husband. Therefore, it is immaterial if the prosecution complaint is not filed. 14. It is true that before amendment of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.] [(1A) Where it is not practicable to seize such record or property, the officer authorised under subsection (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned: Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of Section 8 or Section 58B or sub-Section (2A) of Section 60, it becomes practical to seize a frozen property, the officer authorised under sub-Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or court for taking cognizance of the scheduled offence, as the case may be.] (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority is about to search any person, he shall, if such person so requires, take such person within twenty-four hours to the nearest gazetted officer, superior in rank to him, or a Magistrate: Provided that the period of twenty-four hours shall exclude the time necessary for the journey undertaken to take such person to the nearest gazetted officer, superior in rank to him, or Magistrate's Court. (4) If the requisition under sub-section (3) is made, the authority shall not detain the person for more than twenty-four hours prior to taking him before the Gazetted Officer superior in rank to him, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of freezing of the property for purposes of adjudication under section 8, forward a copy of the order along with the material in his possession, referred to in sub-section (1), to the Adjudicating Authority, in a sealed cover, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) On the expiry of the period specified in sub-section (1), the property shall be returned to the person from whom such property was seized or whose property was ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such property beyond the said period. 18. Section 21 of PMLA reads as under:- 21. Retention of records. (1) Where any records have been seized, under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the Investigating Officer or any other officer authorised by the Director in this behalf has reason to believe that any of such records are required to be retained for any inquiry under this Act, such records may if seized, be retained or if frozen, may cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 18 for the purpose of continuation during investigation for a period not exceeding ninety days under this Act before the Competent Court, or under the corresponding law of any other countries as the case may be under Subsection (3) (a) of Section 8 may take necessary action within the time prescribed. In failure to do so under this Act, all the proceedings, seizures/frozen under Section 17 would be lapsed ipso facto. 22. Section 8 of the PMLA provides for procedure for adjudication by the Adjudicating Authority. The relevant extract of Section 8 of the PMLA is set out below:- 8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of Section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence under Section 3 or is in possession of proceeds of crime, he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of Section 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (7) of Section 8 or Section 58-B or sub-section (2-A) of section 60 by the Special Court. 23. The Hon‟ble High of Delhi in its Order dated 9th January, 2019 has rendered the detailed judgement in the case of Omar Ali Obaid etc. vs. ED ‟ has discussed the entire scheme of seizure made under Section- 102 of Cr. P.C. The relevant paras 58 to 74 are read as under:- 58. In terms of Section 73 of the PMLA, the Central Government is empowered to make rules for carrying out the provisions of the PMLA. In exercise of such powers, the Central Government has notified the Prevention of Money- Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005. Rule 4 of the said Rules also provides for the procedure related to freezing of any property found as a result of search of any building, place, vessel, vehicle or aircraft. 59. It is relevant to note that an order of provisional attachment or an order of seizure is not an end in itself and does not stand in isolation. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production of such property. 63. It is at once clear that scheme of seizure, including the checks and balances in exercise of such power, as contemplated under the Cr.P.C. is wholly inconsistent with the scheme of the provisions under the PMLA. 64. Powers of seizure of properties is a draconian power. Grant of such authoritarian and drastic powers, without commensurate checks and balances, would militate against the principle of rule of law engrafted in the constitution of India. A police officer does not possess unfettered rights to freeze any asset without the same being reported immediately to a Magistrate. The party aggrieved, thus, has immediate recourse in respect of the said action of freezing the property. As observed above, the scheme of provisional attachment or seizure of a property, as contemplated under the provisions of the PMLA is materially different. The PMLA has separate checks and balances to ensure that such powers are exercised in aid of the object of confiscating or vesting such proceeds of crime with the Government. The power to provisionally attach or seize or freeze a property can be exercised only (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f repugnancy between two enactments, namely, the Maharashtra Relief Undertakings (Special Provisions Act), 1958 and the Insolvency and Bankruptcy Code, 2016 in the perspective of the Constitution of India. The Supreme Court had referred to various decisions and culled out the principles with regard to repugnancy between two enactments. Although the decision was rendered in an altogether different context whether the provisions of the central legislation would override a state enactment the principles of inconsistency between two enactments as noticed by the Supreme Court would be equally applicable to determine whether the provisions of Section 102 Cr.P.C. are inconsistent with the provisions of the PMLA. In that case, the Supreme Court has referred to various decisions to set out the principles on the anvil of which the question whether two enactments are inconsistent are to be tested. In the aforesaid context, the Supreme Court had, inter alia, observed as under:- 51.7. Though there may be no direct conflict, a State law may be inoperative because the Parliamentary law is intended to be a complete, exhaustive or exclusive code. In such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of retention from the adjudicating authority within a period of thirty days from passing such order. However, this safeguard would also be rendered meaningless if the Enforcement Directorate ‟ s contention is to be accepted; the Directorate could as has been done in this case freeze the assets without recording reasons and without making any application or complaint to the Adjudicating Authority. This Court is unable to accept that even in cases where the Director of the Enforcement Directorate has reasons to believe that the property is proceeds of crime, he can provisionally attach the same only for a period of one hundred and eighty days, but in cases where he has mere suspicion that the property in question is proceeds of crime, he can without recording any reasons, without issuance of any notice and without any obligation to make a complaint/ application in this regard to the Adjudicating Authority, pass an order freezing the property for an indeterminate period. This interpretation would militate against the scheme of the PMLA as enacted by the Parliament. 71. With much respect to the view of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of India Act, 1934. The Supreme Court repelled the said contention and held that under Section 7(2) of the Act, the Central Board had the power to provide for service conditions of the bank staff by issuing administrative circulars as long as they did not impinge upon the Regulations made under Section 58 of the said Act. The power of an employer to fix service conditions cannot be equated to police powers. 74. In view of the above, the contention that officers of the Enforcement Directorate could issue orders of freezing under Section of Cr.P.C. is rejected and the communications issued by the Enforcement Directorate to BSE are, plainly, without authority of law. 24. Scheme of Section 8(3) of PMLA a) Section 8(3)(a) of PMLA, originally provided that confirmation of attachment by Adjudicating Authority would continue during the pendency of proceedings relating to scheduled offence before a court and becomes final after guilt of person is proved in the trial court in the said scheduled offence. Thus, finality of attachment even after confirmation by Adjudicating Authority was dependent upon the pendency of procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in his possession who has a reason to believe that property sought to be attached or seized is proceed of crime or related to the crime irrespective as to whether complaint under the schedule offence and prosecution complaint under PMLA is filed or not against the party who has in his possession of proceeds of crime. But, the situation where the investigation was being done on the basis of a mere suspicion against the party where the statute provides prescribed period of time and mandates the condition that it would continue during investigation for a period not exceeding ninety days. Having in possession of proceed of crime and period of investigation on the basis of suspicion are two different situations. 27. The law laid down earlier where the time limit was not provided may not be applicable because of change of situation by virtue of amendment which was carried on 19.4.2018, the specific period is prescribed in the Act for the purpose of investigation. Earlier, no specific timeline was set to complete the investigation and to file the prosecution complaint. The mandates now is changed whereby it is mandated that the attachment shall continue during investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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