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TMI Blog2019 (6) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 retention shall continue during investigation for a period not exceeding ninety days, as provided under section 8(3)(a) of the Act o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. General Manager, Regional Office, Union Bank of India, Samachar Marg, Opp. Stock Exchange, Mumbai, Shiva Shankara Rao, Astt. General Manager Branch Manager, Union Bank of India, Zaveri Bazar Branch, Mumbai, Sh. Rakesh Natrwarlal Patel, Prop. Of M/s Pihu Gold, Zaveri Bazar, Mumbai, Shri Deepak Chavda, Prop. Of M/s Satnam Jewels Mumbai., Sh. Amit Sampat, Director M/s Pushpak Bullions Pvt. Ltd., M/s Pushpak Billions Pvt. Ltd. unknown others invoking section 120-B read with section 420,465,468 of India Penal Code 1860 read with section 13(2) and 13(1) (d) of Prevention of Corruption Act, 1988 for act of criminal conspiracy, cheating, forgery for the purpose of cheating and abuse of official position criminal misconduct. 4. The offence under section 120(B) read with Section 420 of the Indian Penal Code 1860 is the scheduled offence under Paragraph-1 of part A of Prevention of Money Laundering Act, 2002. Accordingly, the Directorate of Enforcement Mumbai Zonal Office had recorded an ECIR dated 06.03.2017 under the PMLA against all the said persons. 5. During the course of investigation, it was found that the founder director of M/s Pushpak Bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. M/s Pushpak Realties Pvt. Ltd. which are owned and managed by him and his family member and relatives. 8. Further, the intelligence gathered during investigation revealed that Mr. Chandrakant Patel had hidden the incriminating documents pertaining to the sale of fold bullion as well as cash at room No. 9, Building No.19, 3rd Phopalwadi, Bhuleshwar Road, Bhuleshwar, Mumbai- 400002. 9. The said premise was searched on 13.10.2017 under section 17 of the PMLA, 2002 under the reasonable belief that the said premises is in possession of records relating to proceedings of case pertaining to money laundering under PMLA, 2002. 10. During the course of search of the premise, where it found that one Angadia/Courier firm by Name P. Vijaykumar Co. was functioning from the said premise. Further during the search India Currency amounting to ₹ 14,75,200/- was seized under reasonable belief that the said property is involved in money laundering. Mr. Jignesh Patel who is one of the partner of M/s P. Vijay Kumar Co. and was present during the search, could not give any satisfactory explanation regarding the source of the said Indian Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of impugned order. It is stated by counsel of respondent that at the later stage, his client may find some evidence. Therefore, it is immaterial if the prosecution complaint is not filed. 18. It is true that before amendment of the provision of Section 8(3)(a), the legal position was different. Since by virtue of amendment, the specific period of time is fixed, therefore, earlier orders passed before amendment have no application. 19. The relevant provisions are reproduced in order to understand the issued in hand: Section 17 of PMLA, 2002 reads as under: 17 Search and seizure. -(1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person - (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (1) may seize such property.] (2) The authority, who has been authorized under sub-section(1) shall, immediately after search and seizure [or upon issuance of a freezing order] 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 reason and material for such period, as may be prescribed. (3) Where an authority upon information obtained during survey under section 16, is satisfied that an evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence. Provided that no authorization referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourney 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 the Magistrate referred to in that sub-section: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of detention to the office of the Gazetted Officer, superior in rank to him, or the Magistrate's Court. (5) The Gazetted Officer or the Magistrate before whom any such person is brought shall, if he sees no reasonable ground for search, forthwith discharge such person but otherwise shall direct that search be made. (6) Before making the search under subsection (1) or sub-section (5) the authority shall call upon two or more persons to attend and witness the search, and the search shall be made in the presence of such persons. (7) The authority shall prepare a list of record or property seized in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such records were seized or frozen, as the case may be. (2) The person, from whom records seized or frozen, shall be entitled to obtain copies of records. (3) On the expiry of the period specified under sub-section (1), the records shall be returned to the person from whom such records were seized or whose records were ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such records beyond the said period. (4) The Adjudicating Authority, before authorising the retention or continuation of freezing of such records beyond the period specified in sub-section (1), shall satisfy himself that the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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, or, seized or frozen under Section 17 or Section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, 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. The said orders are passed in aid of the provisions to confiscate properties, which are found to be proceeds of crime. 60. The scheme of seizure made under Section 102 of the Cr.P.C. is materially different. Section 102 of Cr.P.C. is set out below:- 102. Power of police officer to seize certain property. (1) Any police officer, may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence. (2) Such police officer, if subordinate to the officer in charge of a police station, shall forthwith report the seizure to that officer. (3) Every police officer ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) if the specified officer has material in his possession, which provides him reason to believe that the property sought to be attached or seized is proceeds of crime or related to a crime; and (b) after recording the reasons in writing. 65. In the aforesaid view, the reliance placed on provisions of Section 65 of the PMLA is misplaced. By virtue of Section 65, the provisions of Cr.P.C. apply only insofar as they are not inconsistent with the provisions of the PMLA. There can be little doubt that scheme of seizure under Section 102, Cr.P.C. is inconsistent with the provisions relating to attachment and seizure of property under the PMLA. 66. What is sought to be canvassed on behalf of the Enforcement Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt 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 case, the State law is inconsistent and repugnant, even though obedience to both laws is possible, because so long as the State law is referable to the same subject-matter as the Parliamentary law to any extent, it must give way. One test of seeing whether the subjectmatter of the Parliamentary law is encroached upon is to find out whether the Parliamentary statute has adopted a plan or scheme which will be hindered and/or obstructed by giving effect to the State law. It can then be said that the State law trenches upon the Parliamentary statute. Negatively put, where Parliamentary legislation does not purport to be exhaustive or unqualified, but itself permits or recognises other laws restricting or qualifying the general provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ble Gujarat High Court, this Court is unable to agree with the view as expressed in Paresha G. Shah v. State of Gujarat and Ors. (supra). An order of freezing under Section 102 of Cr.P.C. cannot be considered to be in aid of order of provisional attachment passed under Section 5(1) of the PMLA or an order of seizure and/or freezing of property under Section 17(1A) of the PMLA. Both the orders under Section 5(1) and under Section 17 of the PMLA are orders of interim nature and are operative for a limited period till pending adjudication under Section 8 of the Act and further confiscation of the property. Orders of freezing of property passed under section 17(1A) of the PMLA or provisional attachment are by their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 proceedings relating to scheduled offence and achieving finality of judgement in such case and not otherwise. Subsequently, there was an amendment incorporated in the said provision. The same was applicable w.e.f. 15.2.2013. b) With effect from 19.04.2018, an amendment was brought in Section 8(3)(a) that attachment would continue during investigations for a period not exceeding 90 days or pendency of proceedings relating to any offence under PMLA before a court. c) It is evident from the said provision that investigation has to be completed within a period of 90 days as otherwise there will be no attachment. d) The latest amendment in PMLA has fixed the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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