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TMI Blog2020 (10) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... he trial is pending before the Special Court - Once the Tribunal concluded that the attachment orders were liable to be set aside, it could not have avoided setting aside the same, by merely observing that there are allegations by the CBI against Kamats and Alemaos who are facing trial and therefore, in the name of striking balance, confirmed the attachment of the FDRs or imposed conditions for raising the attachment on the immovable properties. The directions issued by the Tribunal in its impugned order are this, quite contrary to its reasoning. The directions, therefore, are quite unsustainable in such circumstances. On a plain reading of the provisions of Section 5(1) of the PMLA, it is apparent that the two predicates in clauses (a) and (b) have to be construed conjunctively and not disjunctively as suggested by Mr. Vaze, learned counsel for the ED. This means that the director or the authorized officer before he proceeds to make an order under Section 5(1) of the PMLA, must have reason to believe, on the basis of material in his possession, not only any person is in possession of any proceeds of crime but further, such proceeds of crime are likely to be concealed, transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rime will be dealt with in a manner which may result in frustrating any proceedings relating to the confiscation of such proceeds of crime, constitutes no compliance whatsoever with the predicates of clause (b) of Section 5(1) of the PMLA. The statement made on behalf of the Appellants-Kamats that they will not sell, transfer, alienate, encumber or liquidate or encash the attached properties/FDRs and order until the conclusion of PMLA Case No.1/2018 pending before the Special Court at Mapusa and for one month thereafter, is hereby accepted. The Appellants-Kamats will have to abide by this statement - Application disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,29,748/- Total 1,19,90,063/- ALEMAOS Sr. No. Description Value 1 Flat no.101, Ground Floor, Building no.1 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 11.50 lakhs. 2 Flat no.102, Ground Floor, Building no.1 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 11.50 lakhs. 3 Flat no.308, 3rd Floor, Building no.3 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 9 lakhs. 4 Flat no.507, 3rd Floor, Building no.5 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 9 lakhs 5 Flat no. 508, 3rd Floor, Building no.5 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 9 lakhs. 6 Flat no.502, Ground Floor, Building no.5 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 11.50 lakhs. 7 Flat no. 201, Ground Floor, Building no.2 at 'Coconut Grove Residence' situated at Fatrade of Varca Village, Salcete, Goa. 11.50 lakhs 8 Flat no. 607, 3rd Floor, Building no.6 at 'Coconut Grove Residence' situated at Fatrade of Varca Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe in this predicate but the further reason for such belief is required to be recorded in writing. 13. Mr. Arun Bras De Sa adopted the submissions made by Mr. Rao in these appeals. 14. Mr. Vaze, learned counsel for the ED while refuting the contentions of Mr. Rao and Mr. De Sa submitted that the entire reasoning of the Tribunal was flawed and the Tribunal, in the present case ought not to have raised the attachment of the immovable properties, even conditionally. 15. Mr. Vaze submits that the object and emphasis of Section 5(1) of the PMLA were to attach the proceeds of crime or properties equivalent to the value of proceeds of crime so that there can be confiscation, should the accused person be ultimately convicted for the offence of money laundering. He, therefore, submits that once a person is found to be in possession of proceeds of crime, a provisional attachment order can be validly made under Section 5(1) of PMLA, since, likelihood of such person dealing with such proceeds of crime in order to frustrate the proceedings for confiscation is implicit. 16. Mr. Vaze submits that if the object and emphasis of Section 5(1) of the PMLA are kept in mind then, two predic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 8 of the PMLA. 23. The rival contentions now fall for our determination. 24. The Tribunal in the present case, in its impugned order dated 26.07.2019, agreed with most of the contentions raised on behalf of Kamats and Alemaos and even concluded in para 78, that the properties attached in the matter are liable to be released 'in the light of the reasons stated in earlier paras'. However, instead of setting aside the attachment, the Tribunal issued a host of directions in para 79, perhaps not even contemplated under the PMLA, by simply observing that there is a need to strike a balance in these matters since the trial is pending before the Special Court. 25. The aforesaid is evident from paras 78 and 79 of the impugned order which read as follows:- "78. Therefore, the properties attached in the matter are liable to be released in the light of reasons stated in earlier paras. However, it is also a matter of fact that there are allegations by the CBI against the appellants, who are facing trial in the. complaint of schedule offence and the complaint under PML Act, thus, till the final order is passed, the alleged proceed of crime is to be secured by striking the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 5(1) of the PMLA. He submits that the object of Section 5(1) of the PMLA is to attach properties constituting the proceeds of crime so that such properties are available for confiscation, should the accused persons be convicted for offences under the PMLA. He submits that the provisions of Section 2(u) and 5(1) of the PMLA are therefore required to be construed in the light of this object. 28. Mr. Vaze submits that there is no reason to construe the expression "value of the property" in Section 2(u) of the PMLA narrowly as has been done by the Tribunal. He submits that this expression includes even untainted properties of equivalent value where it is established that the actual properties constituting the proceeds of crime have been converted, effectively concealed, or frittered away. He submits that the construction of the Tribunal will permit astute money launderers from escaping the clutches of the law and thereby, frustrating the object of PMLA. He submits that this is precisely the view taken by the Delhi High Court in K. Rethinam v. Union of India & Ors 2018 SCC Online Del 6523 and Directorate of Enforcement v. Axis Bank 2019 SCC Online Del 7854. He submits tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeds of crime; and (b) such 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 Chapter III, he may, by order in writing, provisionally attach such property for a period as prescribed and in such manner as may be prescribed. There are certain provisos to Section 5(1), with which, we are not concerned in these matters, particularly because no serious issue was raised about the non-compliance thereof. 32. On a plain reading of the provisions of Section 5(1) of the PMLA it is apparent that the director or the authorized officer has powers to provisionally attach properties involved in money laundering, however, such power is hedged by the crucial circumstance that the director or the authorized officer must have reason to believe that the two predicates referred to in clauses (a) and (b) as aforesaid exist or are fulfilled. Further, it is not sufficient, that the director or the authorized officer merely entertains such reason to believe in his mind but further, the reasons for such belief are required to be recorded in writing. At least on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to ascribe to it the meaning which is not consistent with the context of Section 3. It is a matter of common knowledge that the word `or' is at times used to join terms when either one or the other or both are indicated. Therefore, if the context mandates, it is no good reason to restrict the meaning of the word "or". The word "or" as used in Section 3 would mean that the Government has the power to do either or both things. 36. In Tek Chand Bhatia (supra), the Hon'ble Apex Court referred to the Stroud's Judicial Dictionary, 3rd Edn., vol. 1, in which it is stated : "And" has generally a cumulative sense, requiring the fulfillment of all the conditions that it joins together, and herein it is the antithesis of "or". Sometimes, however, even in such a connection, it is, by force of a context, read as "or"." While dealing with the topic 'OR is read as AND, and vice versa', Stroud says in Vol.3, at page 2009: "You will find it said in some cases that 'or' means 'and'; but; or; never does mean 'and'." 37. In Tek Chand Bhatia (supra), the Hon'ble Apex Court referred to Maxwell on Interpretation of Statutes, 11th Edn., pp. 229-30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted in Sahaney Steel & Press Works Ltd. Hyderabad v. Commissioner of Income Tax Andhra Pradesh (1997) 7 SCC 764. 41. In the context of Mr. Vaze's contention based upon the object of Section 5(1) of the PMLA or the intention of the Legislature in enacting Section 5(1) of the PMLA, it is to be remembered that in all ordinary cases and primarily, the language employed is the determinative factor of legislative intention. The first and primary rule of construction is that the intention of the Legislature must be found in the words used by the Legislature itself. This is what is held by the Hon'ble Supreme Court in New Piece Goods Bazar Co. Ltd. v. CIT AIR 1950 SC 165., Bombay and Kannailal Sur v. Paramnidhi Sadu Khan AIR 1957 SC 907. 42. In Brophy v. AG of Manitoba (1895) AC 202, the Privy Council held that the question is not what may be supposed to have been intended by the Legislature but what has been said. Justice Holmes went to the extent of observing: "I only want to know what the words mean" (REID MACDONALD AND FORDHAM, 'Cases and other Materials on Legislation' by, 2nd Edition, p.1005.) Lord Broughan has more emphatically stated the importance of the text ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the proceeds of crime are likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating to the confiscation of such proceeds of crime. Similarly, in Kavitha Pillai (supra), the Division Bench Kerala High Court, speaking through Justice Dama Seshadri Naidu (as His Lordship then was) held that though the belief of the director or the authorized officer for ordering provisional attachment may be subject to, the same, should be verifiable and hence recorded. The officer's effort to provisionally attach the proceeds of crime has strings attached to it: he should ensure that he has (a) recorded the grounds of his belief; (b) sent a report to the magistrate under Section 173 of the Code of Criminal Procedure, 1973; or (c) filed a complaint before the magistrate or court for taking cognizance of the scheduled offence. 45. Kavitha Pillai (supra) proceeds to hold that "reason to believe" stands on a firmer footing than the reason "to suspect." Belief is a matter of faith or opinion-even in the secular sense. But "reason" to believe needs more than a nagging suspicion or personal conviction. At the same time, it is less emphatic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds under Chapter III of the PMLA. The mere incantation that the officer had reason to believe that such proceeds of crime will be dealt with in a manner which may result in frustrating any proceedings relating to the confiscation of such proceeds of crime, constitutes no compliance whatsoever with the predicates of clause (b) of Section 5(1) of the PMLA. 49. Although, we are not going into the issue as to whether the properties/FDRs which were ordered to be attached by order dated 30.03.2017 were indeed proceeds of crime, but assuming that the same were so, at the highest, it can be said that the Joint Director had recorded reason for his belief that Kamats and Alemaos were in possession of the proceeds of crime. This much could be said to be discernible from what is set out in paragraphs 2 to 33 of the order dated 30.03.2017. However, there is absolutely nothing in all these paragraphs on the aspect of any likelihood on the part of Kamats and Alemaos to conceal, transfer or deal with in any manner such proceeds of crime which may result in frustrating any confiscation proceedings under the PMLA. The Tribunal was certainly right in holding that there was no compliance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esumption of innocence. The ED, in the peculiar facts of the present case, should have accepted the statements made by Kamats and Alemaos rather than to seek to dispossess them from their immovable properties even before the conclusion of the criminal proceedings pending against them. 54. Further, at the request of the learned counsel for the parties, by taking into consideration the order made by the Hon'ble Supreme Court in the case of Ashwini Kumar Upadhyay Vs Union of India and others Writ Petition (Civil) No. 699/2016, we direct the Special Court taking up the case No. PMLA No.1/2018 to dispose of the same as expeditiously as possible and in any case within one year from the date of which the parties produce the authenticated copy of this order before it. 55. Accordingly, we dispose of these appeals by making the following order: (a) AUPML No.1/2019 is hereby allowed and the impugned order is set aside. However, the statement made on behalf of the Appellants-Kamats that they will not sell, transfer, alienate, encumber or liquidate or encash the attached properties/FDRs referred to in para 5 of this judgment and order until the conclusion of PMLA Case No.1/2018 pending ..... X X X X Extracts X X X X X X X X Extracts X X X X
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