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TMI Blog2020 (12) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in SHASHIKANT SINGH VERSUS TARKESHWAR SINGH ANR. [ 2002 (4) TMI 958 - SUPREME COURT ] has held that it is the duty of courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed. A conspectus reading of sub-sections (3), (4), (5), (6) of Section 8 along with Sections 20 and 21 of the PML Act and Rule 5 of Possession Rules 2013, it would clearly emerge that the stages of confirmation of an order of provisional attachment, retention of the property so attached and the seizure of the attached property and its possession being taken are all intermediatory stages prior to confiscation. Thus, where the property is provisionally attached or record is seized from the ownership, control or possession, of a person accused of an offence under Section 3 or not so accused, the attachment, retention and the eventual authority to order confiscation of the property would be dependent and contingent upon proof of guilt and finality of an order of conviction of a person of the offence of money laundering under Section 3 or on conclusion arrived at by the Special court that property so attached, retaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering. The provisions of the PML Act have over-riding effect over provisions in other statutes or in other words, the provisions of PML Act prevail over anything inconsistent contained in any other law. It is trite law that when two Acts are Special Acts, in such an event it is the later act which will prevail. This Court is of the considered view that existence of a predicate offence for initiation of proceedings under the PML Act is not a condition precedent or in other words, the offence under Section 3 of the PML Act is a stand alone offence. Hence, the presence of a schedule offence as prescribed under the PML Act would not be condition precedent for proceeding against such person under the PML Act - reading of second proviso to clause (b) would clearly indicate that it excludes clause (b) of Section 5(1). In other words, the legislative intent to exclude clause (b) of Section 5(1) in the circumstances provided under the second proviso, is clear and unambiguous. The proper and rational meaning to be attached to clause (a) in sub-section (3) of Section 8 is, that once the provisional attachment order passed under Section 5, is confirmed by the adjudicating authority unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 15918/2013, 39889/2014, 17894, 24444/2015, 19313, 23176, 33740, 42157, 57756, 62102/2016, 4215, 5269, 6159, 6173, 8261, 13160, 14158, 18557, 36309, 36310, 41176, 46318, 48031/2017, 24480, 27705, 27744, 28027,35991/2018 - - - Dated:- 11-12-2020 - THE HON BLE MR. JUSTICE ARAVIND KUMAR For the Appellant : Manmohan P.N., R. Swaroop Anand, Kiran S. Javali, K. Chandrashekara, Sanket M. Yenagi, Nagendra Naik R., Sachin B.S., K.P. Thrimurthy, Vinaya Keerthy M., Vijaya Kumar, Aniyan Joseph, Advocates, Uday Holla, Sr. Counsel for Nandish Patel, Aravind Kamath, Manu Kulkarni, Ashwin Kurian, Brijesh Patil and N. Nagendra Naik, Advocates for Muniyappa, Advocate For the Respondent : K.M. Nataraj, M.B. Nargund, ASGIs, P. Karunakar, S. Madhukar Deshpande, H. Jayakara Shetty, CGCs, N. Sukumar Jain, Jeevan Neeralgi, Prasanna Kumar, Aniyan Joseph, Jai M. Patil, P. Udhayashankar Rai, Reshma Thammaiah, P.N. Manmohan, Advocates for Law Links Advocates, Sheyas Jayasimha, Advocate for Aarna Law Advocates and Abhishek Bagad, Advocate for M.D. Jidesh Kumar, Advocate ORDER Aravind Kumar, J. 1. These batch of writ petitions have been filed questioning the provisional order of att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 W.P.No.41176/2017 V. Challenging initiation of proceedings under Section 3 of PMLA on the ground Section 13(1)(e) and 13(2) of PC Act was subsequently included in the schedule of offences under PMLA: Sl.No. Case No. 1 W.P.Nos.13160-66/2017 VI. Challenging the consequential order/possession notice: Sl.No. Case No. 1 W.P.No.39889/2014 2 W.P.No.27744/2018 3 W.P.No.24444/2015 4 W.P.No.35991/2018 VII. CONSTITUTIONAL VALIDITY 1 W.P.Nos. 15917/2013 15974/2013 2 W.P.Nos. 15918/2013 15961/2013 VIII. Proceedings initiated under PMLA and remand application filed before the Special Judge of PMLA Court is sought for being quashed: Sl.No. Case No. 1 W.P.No.18557/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be dismissed. 4. In W.P. Nos. 38642/2016, 15917/2013 15974/2013, 15918/2013 15961/2013, 23176-77/2016, 33740/2016, 24480/2018, 41176/2017 and 24444/2015, the contesting respondents have filed their statement of objections traversing the writ petition averments wherein it is contended that writ petitioners have alternate remedy of filing an appeal when there is a final order passed under Section 26 of PML Act and where the provisional order is passed, it requires to be confirmed under Section 8(3), as otherwise, such provisional attachment would get spent itself. Hence, without there being a challenge to the confirmatory order by filing an appeal, the present writ petitions where the order confirming the provisional attachment has been passed is not require to be entertained. 5. It is contended that the impugned notices issued under Section 8 is in consonance with Section 8 of PML Act. It is also contended that de hors the report under Section 173 Cr.P.C., the authorities under PML Act are empowered to conduct independent investigation and as such, the final report of the police cannot by itself form the basis for the respondent-authorities to exercise the power. It is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould prevail, they have sought to repel the contentions raised. The entertainment of reasonable belief is sufficient for provisional order of attachment to be passed. It is further contended that person referred to in Section 5 is not restricted to a person accused of a crime. 7. It is further contended that expression any property occurring in sub-section (1) of Section 5 encompasses not only the property of a person who is accused of a schedule offence but any other person who involves himself in money laundering and such person can also be roped in for the purposes of investigation and attachment of his property under Section 5 of the PML Act. Hence, the person who is not charged of a predicate offence would also come within the sweep of PML Act. 8. Insofar as the absence of full quorum consisting of Chairman and two members to constitute an Adjudicating Authority raised by the petitioners as a ground to assail the impugned order as one without jurisdiction is rebutted by contending as Sections 6(13), 6(14) 6(15) would clearly indicate that in the event of vacancy in the office of Chairperson due to death, resignation or otherwise or if the Chairperson of the adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that petitioners have invested the amount in purchasing the property as indicated in the impugned order as though it is from proceeds of the crime. He would submit that Section 5 of the PML Act provides an explanation which enables the authority to attach the property if any person is in possession of proceeds of crime or a person being charged of having committed a scheduled offence and if such person is likely to transfer or deal with the said property in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of the crime and when petitioners are neither accused nor having been charged for any of the schedule offence and there being no prima-facie material against petitioners, impugned order could not have been passed. He would contend that provisional order cannot be given retrospective effect and in the instant case, the alleged offence has taken place in the year 2013 and as on the said date, the offence alleged did not find a place in the Schedule to the PML Act and as such, impugned order is liable to be set aside. He would draw the attention of the court to contend that accused Ameen Basha was absconding and based on his call d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be made applicable or in other words, petitioners cannot be proceeded for an offence which was not in existence and thereby the action of the respondents would be hit by Article 20 of the Constitution of India. He would also contend that alternate remedy of appeal which has been canvassed by the respondents to stave off the claim of the petitioners is liable to be rejected as the issue raised in the writ petitions is one of jurisdiction and as such, he prays for allowing the writ petition by quashing the impugned orders. He has relied upon the following judgments in support of his contentions: i) LAWS (APH)-2014-12-183: TECH MAHINDRA LIMITED vs. JOINT DIRECTOR, DIRECTORATE OF ENFORCEMENT. ii) SLP (CRIMINAL) DAIRY NO. 34143/2017: JOINT DIRECTOR, DIRECTORATE OF ENFORCEMENT AND OTHERS vs. TECH MAHINDRA LTD. AND ANOTHER. iii) ARUN KUMAR MISHRA vs. DIRECTORATE OF ENFORCEMENT. iv) LAWS (DLH) 2015 4 47: AJANTA MERCHANTS PVT. LTD. vs. DIRECTORATE OF ENFORCEMENT. v) (2013) 2 SCC 212: SUKHDEV SINGH vs. STATE OF HARYANA. vi) (2014) 3 SCC 151: VARINDER SINGH vs. STATE OF PUNJAB AND ANOTHER. vii) (2008) 14 SCC 186: ASLAM MOHAMMAD MERCHANT vs. COMPETENT AUTHORITY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. He would fairly submit that prosecution has challenged the said order of quashing before Hon'ble Supreme Court and same is pending. A provisional order of attachment came to be passed as against petitioner on 25.09.2012 under section 5(1) of PML Act and as on the said date, 2013 amendment had not come into force. Under section 5(1) of PML Act, the basis for initiation of proceedings is that a person should have been charged of a schedule offence and having realized certain amount as proceeds of crime and should have attempted to project said money as untainted money. He would submit that as on that date of complaint having been filed, petitioner was not an accused for the predicate offence and no charges had been made against him. When petitioner was not charged for the scheduled offence and criteria prescribed under section 5(1) of the Act being absent, question of the authority being satisfied or having reasons to believe that property had been purchased from the proceeds of crime, is erroneous. 12.1. He would also submit that mere filing of final report under Section 173 of Cr.P.C. would not tantamount to charging the petitioner of a predicate offence. He would contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said provision pre and post amendment, to contend that that prior to 2013 amendment, the endeavour of PML Act was to completely co-relate the proceedings under PML Act to a schedule offence. He would contend that requirement under Section 5(1) was that a person should be charged for the schedule offence. Section 3 would indicate that a person should have knowingly received the proceeds of the crime and this read along with Section 8(3) would confer the provisional attachment during the subsistence of the proceedings before the jurisdictional court for the schedule offence. He would contend that adjudicating authority decides under sub-section (2) that any property is involved in money laundering, would confirm the attachment of property made under sub-section (1) of Section 5 as per the procedure contemplated under Section 8(3) of PML Act. He would draw the attention of the court to post and pre amendment of sub-section (3) of Section 8 to contend that it is Sine qua non that there should exist a proceeding under the Act relating to an offence under the Act, more particularly a complaint under Section 45 of the Act should exist for an offence under Section 3 which is punishable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld get extinguished. He would also contend that in case of petitioner, confirmation has not happened in terms of Section 8(3). Hence, by operation of law, provisional attachment order dated 25.09.2012 passed against petitioner stood extinguished. 12.5. He would submit that confirmation of attachment order should be read in terms of Section 8(3) and on account of the procedural defect under Section 8(3), the provisional attachment stood automatically vacated or in other words, it has not continued by operation of law. He would submit that requirement of Section 8(3) is, there should be an offence necessarily in existence under the Act. He would submit that if the authorities had invoked 2009 amendment against petitioner, there would have been absolutely no hurdle, as the provision then existing would specifically discloses that existence of scheduled offence would suffice for confirmation. However, respondent- authorities have specifically invoked the provisions as found in Amendment Act 2 of 2013 and on account of attachment having not continued in terms of Section 8(3), by operation of law, Section 5(3) would surface and the provisional order of attachment passed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is only the Director or any other officer not below the rank of Deputy Director authorized by him for the purpose of Section 17(1A) has the authority to exercise the power on the basis of the information in his possession and has reason to believe. He would contend that notice is issued by the Assistant Director who has no jurisdiction and as such, the impugned communication is illegal, void and without jurisdiction and therefore, liable to be quashed. 13.3. He would submit that within 30 days from the seizure or freezing, respondent No. 1 has to take steps to make an application in terms of Section 17(4) of PML Act for retention or continuation of the order of freezing and such measures having not been taken, the proceedings are liable to be quashed. 13.4. He would further contend before exercising the power of freezing or seizure, it is mandatory requirement of respondent No. 1 to provide its reasons to believe in writing and same is the mandate under Section 17(1) of the PML Act. Hence, he has prayed for allowing the writ petitions. He has relied upon the following judgments in support of his contentions: i) (2008)14 SCC 186-ASLAM MOHAMMAD MERCHANT vs. COMPETEN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that it will have to be examined on case to case basis, the entry in the schedules existing as on those dates and which relates to the final report under Section 173 of Cr.P.C. (c) He would draw the attention of the court to Section 5 to contend that initially order of attachment was for a period of 90 days which was increased to 150 days and then to 180 days. Secondly, by amending Act 2 of 2013 with effect from 15.02.2013, Sub-Section (1) of Section 5, the expression the Director came to be inserted, which expression was not found earlier. He would contend that by amending Act 22 of 2009, the proviso came to be amended. He would draw the attention of the court to Sections 8 5 pre amendment of 2013, to contend that prior to 15.02.2013, the proceedings were with the adjudicating authority both for consideration of provisional attachment order and confiscation of the property thereafter. However, post 15.02.2013, it is only the provisional attachment order that is going to be passed by the adjudicating authority and confiscation of the same would lie to the Special court. Thus, area of consideration of confiscation is totally changed post 15.02.2013. Hence, he would contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich provided for confiscation only after the prosecution is over in the schedule offence is no longer available under the Act and such person is now compulsorily required to face trial. These proceedings are not just proceedings for confiscation, it is proceedings only as prelude to the prosecution. These aspects of the matters are to be adjudicated by this court as they are not admittedly within the jurisdiction of the adjudicating authority or appellate authority and thereby such person is made to face trial which was not in existence prior to 15.02.2016 or 01.06.2009. The scenario has changed from 1.7.2005, 6.3.2009, 15.3.2013 29.3.2018. If that is the position and petitioners are before this court in the year 2018, then, this court will have to look at the law existing as on 29.03.2018 and the next question would be as to what position of law as on that date will have to be applied, has to be gone into. Thus, it would mean, all these contentions will have to be urged before the Special court constituted under Section 43 and not before the adjudicating authority or the appellate authority on the ground of they are doing only confirming the order of attachment. (f) He would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , learned Senior counsel appearing for petitioner in W.P. No. 5269/2017 would contend that the property purchased by the petitioner is under sale deed dated 19.10.2000 and the consideration has been paid by the petitioner from her lawful funds and lawfully borrowed money. He would submit that petitioner has constructed a house and has been residing there along with his family members and prima facie, it would establish that schedule property was acquired by the petitioner by lawful means. He would also contend that certain transactions that took place during September to October, 2010 has been co-related to the proceeds of crime under the impugned order dated 03.01.2017 (Annexure-B) and well before September, 2010 the loan borrowed by the petitioner had also been settled with the Bankers, secured creditor and there being no relationship between the acquisition of the schedule property and the proceeds of crime, the provisional attachment order dated 03.01.2017 (Annexure-B) is liable to be set aside. He would further contend that the respondents have erroneously concluded that proceeds of crime were utilized to clear the debts against the schedule property i.e., repayment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustody of Records and the Period of Retention) Rules, 2005. Hence, he has prayed for allowing the writ petition by quashing the impugned order. 18. Sri Vijayakumar Bajantri, learned counsel appearing for petitioner in W.P. No. 13160-66/2017 would contend that petitioner who was tried for the offence punishable under Section 13(1)(e) and 13(2) of PC Act has been acquitted on 23.02.2017 and as such, there being no predicate offence, proceedings initiated against the petitioner under PML Act is liable to be quashed. He would also contend that FIR against the petitioner for the offence punishable under Section 13(1)(e) and 13(2) of PC Act was registered on 30.06.2010 and provisional order of attachment was passed on 20.10.2016 and prior to the attachment, the proceedings under PML Act has been initiated under Section 3 by issuance of notice dated 15.09.2010 (Annexure-F) on which date, Section 13 of PC Act did not find a place in the schedule to PML Act and it was included by Act 2 of 2013 with effect from 15.02.2013 and there being no criminal case in existence as on the date the proceedings under PML Act was initiated, the amended provision could not have been made applicable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner is no way concerned with the transactions of Sri. Dyana Antony Paul and others and petitioner has been wrongly arrayed as a party to the proceedings. Hence, he has prayed for quashing of the provisional order of attachment. He would also reiterate the contentions raised by the learned Advocates who have hitherto argued. 21. Sri Sanketh Yenagi, learned Advocate appearing for petitioner in W.P. No. 14158/2017 has prayed for quashing of the provisional order of attachment including the complaint lodged in O.C. No. 683/2017 (Annexure-B) and the consequential notice dated 14.02.2017, contending inter alia that the property/assets which are sought to be attached were acquired prior to 01.06.2009 namely, it was acquired on 19.07.2004 and the offences alleged are on the basis of investigation by CBI which was committed prior to 2009 namely, prior to the insertion of provisions of PC Act to the schedule of PML Act. Hence, he has sought for quashing of the provisional order of attachment, complaint and consequential notice. 22. Sri Vinaya Keerthi, learned Advocate appearing for petitioner in W.P. No. 62182/2016 has sought for quashing of the order dated 22.07.2016 (Annexur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the crime. He would submit that when a person projects the property secured by illegal means as untainted property, same would be brought under the net of PML Act, as it amounts to money laundering. Hence, he contends that the offence indicated under Section 3 is a standalone offence and it has nothing to do with the scheduled offence committed. Hence, the argument of the petitioners that condition precedent to bring money laundering within Section 3, there must be scheduled offence, is erroneous. He would submit that Section 498A of IPC is not a scheduled offence under PML Act. By assuming that he has acquired some property and even he projects it as untainted property, he is not guilty of money laundering, but in respect of scheduled offence, when he projects it as untainted property, he is guilty of offence punishable under PML Act. Therefore, offence under PMLA is stand alone offence and as such person will be tried independently by the court, he may be guilty or he may not be guilty, it is irrelevant. 24.1. He would submit that a person might have acquired vast properties in the name of third parties and there may be couple of people involved in activities and said pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe; (ii) has material on the basis of which he has reason to believe; and, (iii) such material should be in his possession. Then, in such an event he may by order in writing provisionally attach such property for a period not exceeding 180 days from the date of order. He would submit that Section 5 and Section 8(a) cannot be read in isolation as sought to be made out by the counsel for the petitioners. He would submit that a provision in a statute must be read word to word and sentence to sentence and not in isolation. 24.4. He would also submit that by Act 2 of 2013 it clarifies that the adjudicating authority while confirming the order of attachment made under sub-section (1) of Section 5 or retention of property or records seized or frozen under Section 17 of 18, such order would continue during the pendency of the proceedings relating to any offence under the PML Act or under the corresponding law of any other country before the competent court of criminal jurisdiction outside India, as the case may be vide clause (a) of sub-section (3) of Section 8. Thus, by clarification in 2013 amendment it only clarifies the position as to what period the confirmation order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, he would contend that a delegated amendment partakes the character of a statutory provision. Section 5(4) also makes it very clear that at the initial stage only attachment is permitted and the authority has not been allowed to take possession and such person is allowed to enjoy the property and only when provisional order of attachment is confirmed, possession can be taken by depriving enjoyment of the property, in the manner prescribed namely, as per 2013 Rules. Hence, it is contended that KAMARUNNISA's case relied upon by the petitioners has no application at all to the present scenario by virtue of amendment of the Act and also having regard to the Rules made thereunder. Even otherwise, he would contend that observation made in KAMARUNNISA's case is referable to that particular judgment only and has no universal application. He would further submit that his argument on this proposition is fortified by referring to Section 2(t). He would draw the attention of the court to proviso to Section 8(4), Section 8(5) and 8(6) of the PML Act to contend that attachment and confirmation would depend upon conclusion of a trial under the PML Act and not depending upon the trial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the appellate tribunal and thereby, two (2) layers are provided under the PML Act to an aggrieved person. He would also submit that PML Act is a complete code for redressal of the grievance with two (2) layered mechanism. 24.8. He would contend that in respect of the offences punishable under Sections 3 4 of PML Act, special courts are constituted under Chapter VII whereunder we get a clue with regard to offences which had taken place even before commencement of the Act. He would draw the attention of the court to Section 44 of PML Act to contend that such special courts would not only conduct trial of the offence punishable under Section 4 but also try an offence other than offence referred to in sub-section (1) of Section 43 which means that the offence under the PML Act as well as offence under any other enactment to which such persons may be charged. He would submit that Section 48 prescribes the authorities under the PML Act and sub-section (2) of Section 49 empowers the Central Government to authorize the Director or an Additional Director or a Joint Director or a Deputy Director or an Assistant Director appointed under sub-section (1) to appoint other au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epend upon the result of Chapter III i.e., with regard to attachment that comes into play. Ultimately, attachment under Section 5 and 8 depends upon trial of the offence under the PML Act. 24.12. He would draw the attention of the court to Section 8(5) and 8(6) to contend that conviction is not required and if a finding has been recorded by the court that there is offence of money laundering, it would suffice. He would also submit that once a complaint is filed, it is for the special court to take cognizance of the offence under Section 3 and proceed with the matter as prescribed under Section 44 of the PML Act. Where the complaint is filed for the offence under Section 3, what is targeted is only the projection and whether such person who is accused of money laundering, had amassed wealth or not would not be the criteria at all and this distinction has to be borne in mind. 24.13. He would submit that in some of the matters, the order of attachment or its confirmation thereof has not been challenged and only the statutory notice issued under sub-section (4) of Section 8 is challenged. 24.14. He would also submit that constitutional validity of Section 8 which has been chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not take away the effect of authority to pass the order of attachment. He would submit that provisions in Section 55 to 61 of PML Act is not to weaken other provisions of the PML Act. He would submit that with regard to retrospectivity Sri Manmohan has relied upon the judgment in the case TECH MAHINDRA in support of his contention and the prayer in the said proceedings was for quashing criminal case and the appeal filed before the Division Bench as dismissed as not maintainable and the Hon'ble Apex Court has observed that on facts the impugned order did not call for interference. He would submit that the two judgments rendered by the Delhi High Court in the matter of AJANTA MERCHANTS AND ARUN KUMAR MISHRA by relying upon TECH MAHINDRA's case has been challenged and stayed. He would contend that TECH MAHINDRA's case came to be examined in the context of criminality i.e., Section 3 criminal proceedings vis- -vis knowledge of the person who commits offence, on merits by examining the facts and arriving at a conclusion that the petitioner had no knowledge. 24.18. He would also rebut the contentions raised by Sri Uday Holla with regard to the authority of the Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, if the Special court finds that the offence of money laundering has been committed, it can order such property involved in the money laundering or which has been used for the commission of money laundering to stand confiscated to the Central Government. He would further contend that under Section 8(3), first it is confirmation of attachment and then, continue the investigation for a period not exceeding 90 days and thereafter file a complaint before the Special court which is the purport of 2018 amendment. 24.20. He would also submit that proceedings relating to provisional attachment and its adjudication for confirmation is not an appeal proceedings, but original proceedings and as such, the petitioners cannot be heard to contend that under Article 226 or 227 of the Constitution of India, this court is required to examine the said proceedings in threadbare. He would submit that confiscation would arise only after conclusion of trial and in none of the cases which are before this court the said issue has not arisen and as such, the principles as applicable to confiscation including the provisions thereof would have absolutely no bearing on these proceedings. 24.21. He wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OME TAX vs. HINDUSTAN BULK CARRIERS. xvi) (2002) 5 SCC 738: SHASHIKANT SINGH vs. TARKESHWAR SINGH AND ANOTHER. xvii) (2013) 7 SCC 653: LILY THOMAS vs. UNION OF INDIA AND OTHERS. xviii) CRL. M.P. NO. 18478/2015 DECIDED ON 23.11.2015: DIRECTORATE OF ENFORCEMENT vs. M/S. AJANTA MERCHANTS PVT. LTD. xix) W.P. (CR.) NO. 325/2010 DECIDED ON 06.08.2010: HARI NARAYAN RAI vs. UNION OF INDIA AND ANOTHER. xx) CR. M.P. NO. 2686/2013 DECIDED ON 06.03.2014: NARANDRA MOHAN SINGH AND ANOTHER vs. DIRECTORATE OF ENFORCEMENT, RANCHI AND ANOTHER. xxi) SPECIAL CIVIL APPLICATION NO. 4171/2012, DECIDED ON 31.07.2013: ALIVE E HOSPITALITY AND FOOD PRIVATE LIMITED vs. UNION OF INIDA AND OTHERS. xxii) FIRST APPEAL NO. 967/2010 A/W FIRST APPEAL NO. 968/2010 DECIDED ON 29.09.2011: OM PRAKASH DAULAT RAM NOGAJA vs. SHRI ATUL VERMA AND ANOTHER. xxiii) FIRST APPEAL NO. 527/2010 A/W FIRST APPEAL NO. 529/2010 DECIDED ON 05.08.2010: RADHA MOHAN LAKHOTIA AND ANOTHER vs. THE DEPUTY DIRECTOR AND ANOTHER. xxiv) CRL. O.P. NO. 2240/2011 DECIDED ON 13.07.2012: M. SARASWATHY AND ANOTHER vs. THE REGISTRAR AND ANOTHER. xxv) W.P. (C) NO. 15378/2016 DECIDED ON 19.11.2016: A.K. SAMSUDDIN vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 020 DECIDED ON 17.02.2020-TRIAD TRADING SERVICES P. LTD. vs. UNION OF INDIA ANOTHER REPLY ARGUMENTS: 27. Sri. Nagendra Naik, learned Advocate would submit that provisions of PMLA is borrowed from Cr.P.C. He would submit that Section 46 of PMLA is corresponding to Section 105A(c). He would draw the attention of the court to Section 105C and 105E which is traceable to Section 5 of PML Act. Hence, he would contend that the intention of the legislature was to make the offence under PML Act as a criminal offence and not as a civil offence. He would submit that the proceedings would commence with a charge that a person has committed an offence under Section 3 resulting in provisional attachment, its confirmation, adjudication and thereafter prosecution. He would contend that under first proviso of Section 5(1) a report has to be forwarded to a Magistrate under Section 173 of Cr.P.C. or a complaint has to be filed by a person authorized to investigate the offence mentioned in that schedule, before a Magistrate or court for taking cognizance of the scheduled offence and this being the intention of the legislature, the incorporation of second proviso by 2015 amendment it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted to the respondents and they can continue their investigation for a period not exceeding 90 days or proceedings under the Act. He would contend that authorities under the Act have to complete their investigation within 90 days from the date of confirmation and initiate proceedings under this Act failing which by virtue of Section 5(3), order of confirmation would lapse by operation of law. He would submit that in W.P. Nos. 15917/2013 15974/2013 and 15918/2013 15961/2013, petitioners have been issued with a notice under Section 8(4) upon confirmation order that has been passed against them. Petitioners were heard by the adjudicating authority prior to 2013 amendment coming into force but an order has been passed by the adjudicating authority in terms of 2013 amendment without giving an opportunity of hearing and they have specifically invoked language of the amended Section 8(3)(a) under the order of confirmation passed on 22.02.2013 and subsequent to which impugned possession notice under Section 8(4) has been issued. He would submit that only if the requirement of Section 8(3) is met, question of issuing notice under Section 8(4) would arise. He would submit that twin re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings under Section 45 of PML Act. He would submit that initiation of proceedings has been challenged before this court in W.P. No. 14549/2016 by invoking Article 226 of Constitution of India read with Section 482 Cr.P.C. In the appeal filed against the order of confirmation of attachment, the Appellate tribunal has adjourned the same and is awaiting orders in W.P. 14549/2016. Hence, he prays for allowing the writ petitions. 29. Sri P.N. Manmohan, learned Advocate appearing for petitioners would rely upon the RAMA RAJU's case to contend as to whether the provisions of PML Act is penal in nature has not been considered and the petitioner not being connected with any offence, merely based on message found in her mobile phone, she sought to be prosecuted and according to the authorities, the offence has been committed in India and money has come from abroad and for this, there should be compliance of Section 2(ra). He would submit that even according to the authorities, the money has come from abroad and as such, the petitioners cannot be brought within the purview of PML Act. He would contend that either offence should have committed in India and amount should be transferred ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orical background resulting in birth of PML Act, 2002. HISTORICAL BACKGROUND LEADING TO ENACTMENT OF PML ACT, 2002: 32. Since Money Laundering was an international phenomenon, having felt Trans National Co-operation is of critical importance in the fight against this menace, a number of initiatives were taken to deal with the problem at the international level. The major international agreements addressing money laundering include the United Nations Convention against illicit trafficking in drugs and psychotropic substances, which is popularly known as Vienna Convention and the Council of Europe Convention on Laundering, search, seizure and confiscation of the proceeds of crime. The role of financial institutions in preventing and detecting money laundering has also been the subject of pronouncements by the Basle Committee on Banking Regulation Supervisory Practices, the European Union and the International Organization of Securities Commissions. 33. The Vienna Convention was the first major initiative in the prevention of Money laundering held in December, 1988, which laid down the ground work for efforts to combat money laundering by obliging the member States to cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onvention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988; (iv) International Convention for Suppression of the Financing of Terrorism 1999; (v) United Nations Convention against Organised Transnational Crimes 2000 and (vi) United Nations Convention against Corruption 2003. 37. India being a party at the United Nations Convention, felt there being urgent need for the enactment or a comprehensive legislation inter alia for preventing money laundering and connected activities as it posed a serious threat not only to the financial system of the country but also a threat to integrity and sovereignty and as such, for preventing money laundering and connected activities, confiscation of proceeds of crime, setting up of agencies and mechanisms for co-ordinating, measures for combating money laundering etc., and keeping in view the Basel Statement of Principles, enunciated in 1989 as well as the recommendations of FATF at G-7 1989 Summit, the Prevention of Money Laundering Bill, 1988 was introduced in the Lok Sabha on 04.08.1988. After being referred to the Standing Committee on Finance and on receipt of the said report, which came to be accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 39. Keeping the aforesaid object in mind, which the Parliament has envisaged to achieve by the aforesaid enactment, I proceed to adjudicate the points formulated hereinabove. RE. POINT NO. (i) (iv): 40. In W.P. Nos. 15917/2013 15974/2013 and W.P. Nos. 15918/2013 15961/2013, petitioners have sought for declaring sub-section (4) of Section 8 of PML Act as unconstitutional and in W.P. Nos. 39889/2014, 27744/2018, 24444/2015 and 35991/2018 petitioners have sought for quashing of possession notices issued by authorities to take physical possession of properties which have been attached. Discussion on these two (2) points would overlap and as such, they are taken together for adjudication. 41. Before embarking upon adjudication on merits, the parameters and principles governing the issue of a construction of a statute and the adjudicating mechanism to be adopted when constitutionality of an enactment or its provisions is under challenge, requires to be addressed in the background of judicial pronouncements. 42. A construction which reduces the statute to a futility has to be avoided. The principle expressed in the maxim ut res magis valeat quam pereat i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be done, it may be either an absolute enactment or a directory enactment. The difference being that an absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially. No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience it is the duty of courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be construed (Craies on Statute Law, 7th Edn., pp. 260-62) 12. On facts, the court could not have intended while concluding the trial against Chandra Shekhar Singh, to nullify its earlier order directing issue of warrants against Respondent 1. The construction to be placed on a provision like this has to commend to justice and reason. It has to be a reasonable construction to promote the ends of justice. The words could be tried together with the accused in Section 319(1) cannot be said to be capable of only one construction. If it was so, approach to be adopted would be different since the intention of Parliament is to be res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the property without due process of law would be in violation of Article 300A of the Constitution of India, petitioners have prayed for said provision being struck down. Section 8 of PML Act and corresponding amendments effected thereto reads as under: Act of 15 of 2003 Act of 22 of 2009 Act of 2 of 2013 Act of 13 of 2018 Section 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, 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 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seized property or record becomes final under clause (b) Sub-section (3), the Adjudicating Authority shall, after giving an opportunity of being heard to the person concerned, make an order confiscating such property. Section 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, it 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 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 proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard to the person concerned, make an order confiscating such property. Section 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, it 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: PROVI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money- laundering after having regard to the material before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention or freezing of the seized or frozen property or record shall-- (a) continue during investigation for a period not exceeding ninety days or the pendency of the proceedings relating to any offence under this Act before a court or under a corresponding Law of any other country before the competent court of criminal jurisdiction outside India, as the case may be; and (b) become final after an order confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the Special Court. (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached Under section 5 or frozen under sub-section (1A) of section 17, in such manner as may be prescribed: PROVIDED that if it is not practicable to take possession of a property frozen under sub-section (1A) of section 17, the order of confiscation shall have the same effect as if the property had been taken possession of. (5) Where on conclusion of a trial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed forthwith. By Act, 2 of 2013 after the words shall forthwith take the , the words possession of the attached property under Section 5 or frozen under sub-section (1-A) of Section 17, in such manner as may be prescribed came to be substituted. The proviso thereto also came to be added which would indicate that if it is not possible to take possession of a property frozen under sub-section (1-A) of Section 17, the order of confiscation shall have the same effect as if the possession of the property had been taken. 50. A plain reading of sub-section (5) of Section 8 of PML Act would indicate that on conclusion of a trial of an offence under the Act, if the Special Court finds that offence of money laundering has been committed, it can order that such property involved in the money laundering or which has been used for commission of an offence of money laundering to stand confiscated to the Central Government. Thus, it would emerge from these provisions that even if the Special court finds that offence under the Act has not been committed and yet, if such property has been used for commission of the offence of money laundering, even in such circumstances, the Special court ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such property to the person so entitled to receive it. 54. Section 8 as amended by the Amendment Act 2 of 2013 cannot be said to be arbitrary or violative of fundamental right of a person, even if the proceedings are continued for trial of scheduled offence resulting in acquittal and the alleged proceeds of crime pertained to that scheduled crime. It is to be further noticed that mandate of sub-section (4) of Section 8 to the authorities is to take possession of the property forthwith which is attached under Section 5 or frozen under sub-section (1-A) of Section 17 on the provisional order of attachment made under sub-section (1) of Section 5 has been confirmed under sub-section (3). The authorities have no discretion at all and they are bound to take possession and the expression possession referred to in sub-section (4) refers to physical possession. The judgment of the KAMARUNNISA's case relied upon by petitioners was rendered on 11.07.2012 i.e., pre 2013 amendment i.e., prior to Act 2 of 2013 coming into force. The amendment which was brought to sub-section (4) of Section 8 namely, the expression possession of the property attached under Section 5 or frozen under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property which has been provisionally attached and same having been confirmed and arrived at a conclusion that such property was not involved in money laundering is to be released or retained. 57. A conspectus reading of sub-sections (3), (4), (5), (6) of Section 8 along with Sections 20 and 21 of the PML Act and Rule 5 of Possession Rules 2013, it would clearly emerge that the stages of confirmation of an order of provisional attachment, retention of the property so attached and the seizure of the attached property and its possession being taken are all intermediatory stages prior to confiscation. Thus, where the property is provisionally attached or record is seized from the ownership, control or possession, of a person accused of an offence under Section 3 or not so accused, the attachment, retention and the eventual authority to order confiscation of the property would be dependent and contingent upon proof of guilt and finality of an order of conviction of a person of the offence of money laundering under Section 3 or on conclusion arrived at by the Special court that property so attached, retained and possession taken thereof was the property which had been used for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds of crime are attached and offenders who participate and assist in the commission of crime do not enjoy the benefits of the property which is relatable to the crime. The PML Act envisages attachment of all properties involved in the offence of money laundering and the proceeds of such crime would also come within the sweep of the PML Act. 60. The issue which would fall for consideration by this court would be, whether eviction of the occupant of a property or in other words, taking possession of the property which is provisionally attached and thereafter confirmed, would be violative of Article 14 of Constitution of India or does it amount to depriving a person of his property rights guaranteed under Article 300A of the Constitution of India. 61. The Hon'ble Apex Court in YOGENDRA KUMAR JAISWAL vs. STATE OF BIHAR reported in (2016) 3 SCC 183 has held: 151. We are absolutely conscious that the said judgment was delivered in a different context. What is prohibited under Article 20(1) is imposition of greater punishment that might have been imposed and prohibition of a conviction of any person for violation of law at the time of commission of the act. We repeat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific legal authority. If the State sought to acquire the property of an individual it could do only by making a law, and on payment of amount by way of compensation for such expropriation. Thus, in effect it would clearly indicate that no person can be deprived of his property, save by authority of law. In other words, if the property belonging to a person is taken away by the State by exercising its executive power without legal right to do so, then only Article 300A would be attracted or such person can complain of violation of Article 300A of the Constitution of India and not otherwise. 63. Under Section 8(5) of the PML Act the Special Court is empowered to confiscate such property after arriving at a conclusion that the offence of money laundering has been committed or such property has been used for commission of the offence of money laundering. In that view of the matter, it cannot be gainsaid by any of the petitioners that property which has been provisionally attached and said provisional order of attachment having been confirmed, the possession of such property cannot be taken under Section 8(4) of the PML Act or frozen under sub-section (1A) of Section 17. It is only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(u), 2(y), 2(wa), 3, 4, 5 together with corresponding amendments brought about have been tabulated herein below. Act, 2002 Section 2 read as: Amendment by Act 20 of 2005, Section 2 read as: Amendment by Act 21 of 2009, Section 2 read as: Amendment by Act 2 of 2013, Section 2 read as: Finance Act, 2016 (28 of 2016), Section 2 read as: Latest Amendment Finance Act, 2018 (Act 13 of 2018) Section 2 read as: Was not present (na) investigation includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence. (na) investigation includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence. (na) investigation includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any manner) the proceeds of such conduct or part thereof to India; or (ii) any offence specified in Part A, Part B or Part C of the Schedule which has been committed in India and the proceeds of crime or part thereof have been transferred to a place outside India or any attempt has been made to transfer the proceeds of crime, or part thereof from India to a place outside India. Explanation: Nothing contained in this clause shall adversely affect any investigation, enquiry, trial or proceeding before any authority in respect of the offences specified in Part A or Part B of the Schedule to the Act before the commencement of the Prevention of Money-Laundering (Amendment) Act, 2009 (ra) offence of cross border implications means- (i) any conduct by a person at a place outside India which constitutes an offence at that place and which would have constituted an offence specified in Part A, Part B or Part C of the Schedule, had it been committed in India and if such person (transfers in any manner) the proceeds of such conduct or part thereof to India; or (ii) any offence specified in Part A, Part B or Part C of the Schedule which has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheduled offence or the value of any such property. (u) proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country. (u) proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. (y) schedule offence means- (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the schedule if the total value involved in such offences is thirty lakh rupees or more; (y) schedule offence means- (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the schedule if the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior to 01.06.2009 cannot be brought under the sweep of the PML Act or it cannot be made applicable retrospectively. It has been further contended that for invoking the provisions of PML Act, a person must have committed a schedule offence; there must be proceeds of crime; either accused or a third party must be in possession of such proceeds of crime; must be projecting that money or property as untainted; and there must be reasonable belief or apprehension in the mind of the authority that such property will be concealed, transferred or dealt with, resulting in frustrating the confiscation proceedings and only when these ingredients are present, the proceedings under the PML Act can continue and not otherwise. 68. The PML Act is a special enactment having been enacted to deal with ever increasing menace of money laundering. The provisions of the PML Act have over-riding effect over provisions in other statutes or in other words, the provisions of PML Act prevail over anything inconsistent contained in any other law. It is trite law that when two Acts are Special Acts, in such an event it is the later act which will prevail. Hon'ble Apex Court in SOLIDAIRE INDIA LIMITED vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case and absence of any ingredients to bring the alleged transaction about subject property within the definition of 'criminal proceeds', property' and 'value of the property', etc. a complete answer is given by a Division Bench of the Andhra Pradesh High Court in the case of B. Rama Raju. 11. In view of the above, I am in complete agreement with the conclusions drawn by the Division Bench of Andhra Pradesh High Court in the case of B. Rama Raju [supra] whereby the contention that the definition of proceeds of crime [Section 2(1)(u)] is too broad and is therefore arbitrary and invalid since it subjects even property acquired, derived or in the possession of a person not accused, connected or associated in any manner with a crime and thus places innocent persons in jeopardy, does not merit acceptance. 72. Section 2(p) defines money laundering and it has the same meaning as assigned to it in Section 3. A plain reading of Section 3 of PML Act would indicate that whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge that the property is a result of criminal activity. If any property, which includes value of the property, is proceeds of crime then any transfer in terms of Section 2(za) requires examination to verify as to whether it is by way of a money-laundering operation involving the process of placement, layering or integration. Such property could be subjected to attachment and confiscation. The Section, however, does not presuppose knowledge of the proceeds being of criminal activity. Properties apart from the proceeds of crime are not liable to attachment, neither is it included in the ambit of the Act. All that the Section is concerned with is the proceeds of crime and does not extend to property not so involved. 75. A plain reading of the definition of money laundering as indicated in Section 2(p) would indicate, it has not undergone any change and it has the same meaning as assigned to it under Section 3. Whereas, Section 2(y) which defines schedule offence has undergone amendment namely, sub-clause (ii) was substituted by Act No. 21 of 2009. For the words thirty lakh rupees or more was substituted by the words one crore rupees or more . 76. The expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n offence long back and the proceeds of it is being placed, layered or sought to be integrated to the main stream of economy, then also, he is said to have committed the offence of money laundering. Incorporation of certain offences in the Schedule is to bring it within the net of PML Act namely, proceeds of that crime within the provisions of the Act. For constituting an offence under Section 3 of PML Act, it is the connection of transaction to proceeds of crime which is sufficient and not the crime. 79. The main object of PML Act is to ascertain the proceeds of crime which involved in money laundering and attachment, confirmation and confiscation of the proceeds of crime in the form of properties and also to punish the offenders of money laundering. The date of acquisition of properties is immaterial but the date of projecting the proceeds of crime as untainted properties would only have to be ascertained by conducting investigation. 80. What is targeted by Section 3 is 'laundering of money' and therefore, the date of 'laundering' would be relevant. The expression 'laundering' as found in Section 3 comprises of involvement in any process or activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceeded under PML Act. In other words, proceedings can be against persons who are accused of a scheduled offence or against persons who are accused of having committed an offence of money laundering and also persons who are found to be in possession of the proceeds of crime . It is not necessary that a person has to be prosecuted under the PML Act only in the event of such person having committed schedule offence. The prosecution can be independently initiated only for the offence of money laundering as defined under Section 3 read with section 2(p) which provides that money laundering having the meaning assigned to it under Section 3 of the Act. 23. In other words, the proceedings under PML Act are independent, separate, distinct and different from the proceedings initiated for scheduled offences by other law enforcement agencies. PML Act is a stand alone enactment which differentiates the Schedule offence and the money laundering offence separately. To put it differently, if the investigation for the predicate offence is conducted by the authorities so empowered under the enactments and if for various reasons such proceedings were to be closed or dropped, then, proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1) would indicate that no such order of attachment can be made unless, in relation to the schedule offence, a report of which has been forwarded to a Magistrate under Section 173 of Code of Criminal Procedure or a complaint has been filed by a person authorized to investigate the offence mentioned in that schedule as indicated thereunder. However, second proviso to Section 5(1) would indicate that notwithstanding anything contained in first proviso, any property of any person may be attached under Section 5 if the authorities specified in sub-section (1) has reason to believe that such property involved in money laundering if not attached immediately is likely to frustrate the proceedings under the PML Act. Section 5 mandates that the officers specified thereunder should forward a copy of the order of provisional attachment immediately along with the material in his possession to the adjudicating authority in a sealed envelope in the manner prescribed and the adjudicating authority is required to keep such order and material for such period as may be prescribed. Sub-section (3) of Section 5 would indicate that order of attachment made under sub-section (1) shall cease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d proviso, is clear and unambiguous. To put it differently, if other conditions set out in Section 5 of the PML Act are satisfied, any property of any person could be proceeded against for attachment, adjudication and confiscation. In fact, the definition of the expression person under Section 2(s) is not restrictive definition limited to a person charged of having committed a schedule offence only and it includes any other person also. 85. The adjudicating authority on being satisfied and having reason to believe that any person has committed an offence under Section 3 or in possession of proceeds of crime, would serve a notice under Section 8(1) of not less than 30 days on such person by 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. The adjudicating authority would thereafter pass an order by recording a finding whether all or any of the properties referred to in the notice under sub-section (1) or involved in money laundering. Thereafter the adjudicating authority would confirm or annul the provisional order of attachment. 86. Thus, on a conspectus reading of Section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 8(3) to 8(6) being applied. 88. By amending Act 2 of 2013, Section 2(1)(ia) was inserted and the expression scheduled offence before a court and found in clause (a) of sub-section (3) of Section 8 was substituted by the expression any offence under this act before a court or under the corresponding law of any other country before the competent court of criminal jurisdiction outside India, as the case may be; . The said amendment came into force from 15.02.2013. 89. As could be seen from clause (2)(1)(ia) the expression corresponding law has been defined indicating the offences alleged to have been committed in any foreign country, should be corresponding to the scheduled offence under the PML Act. A plain reading of this provision would indicate that the parliament has only envisaged or has thought fit in its wisdom to rely on the scheduled offences of the PMLA for holding person guilty in foreign jurisdictions and not leave out the persons, who have committed the scheduled offences in India, by considering them as not guilty, when both have indulged in money laundering activity. On an harmonious reading of both provisions would imply that any offence under thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the scheduled offence itself is found not to have been committed or the attached property is not involved in money-laundering and vest the same with the Special Court. 93. In the light of the aforestated analysis, this court is of the considered view that contention of the petitioners with regard to applicability of unamended Section 8(3) (a) would not hold water and it is liable to be rejected and accordingly it stands rejected. 94. The Division Bench of Andhra Pradesh High Court in the matter of B. RAMA RAJU vs. UNION OF INDIA reported in (2011) 3 ALD 443 (DB) having examined as to whether the provision of Sections 5 and 8 of PML Act is in violation of Articles 14, 21 300A of the Constitution of India, has held in the negative. It came to be held: 25. In our considered view the petitioners' contention proceeds on a misconception of the relevant provisions of the Act. Against transactions constituting money-laundering, the provisions of the Act contemplate two sets of proceedings; (a) prosecution for the offence of money-laundering defined in Section 3 with the punishment provided in Section 4; and (b) attachment, adjudication and confiscation in the seque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttachment and confiscation, on a satisfaction by the appropriate and competent authority that such property constitutes proceeds of crime. 28. In our considered view, the provisions of the Act which clearly and unambiguously enable initiation of proceedings for attachment and eventual confiscation of property in possession of a person not accused of having committed an offence under Section 3 as well, do not violate the provisions of the Constitution including Articles 14, 21 and 300-A and are operative proprio vigore. 95. The offence of money laundering under Section 3 of the PML Act is an offence independent of predicate offence and to launch prosecution under Section 3 of the PML Act, it is not necessary that a predicate offence should also have been committed. In fact, Section 3 criminalizes the possession or the conversion of the proceeds of crime, which includes projecting or claiming the proceeds of crime as untainted property. The element of mens-re a is inherent in the section as against the provision of Section 2(u), thereby preventing prosecution of any innocent person. 96. The expression proceeds of crime as defined under Section 2(u) would not merely inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons indulging in illegal activities screen the properties acquired from such illegal activity in the names of their relatives and associates. Sometimes they transfer such properties to them, may be, with an intent to transfer the ownership and title. In fact, it is immaterial how such relative or associate holds the properties of convict/detenu-whether as a benami or as a mere name-lender or as a bona fide transferee for value or in any other manner. He cannot claim those properties and must surrender them to the State under the Act. Since he is a relative or associate, as defined by the Act, he cannot put forward any defence once it is proved that property was acquired by the detenu whether in his own name or in the name of his relatives and associates. In fact, the aforesaid judgment has been referred to in RAMA RAJU's case referred to supra and concluded as under: 46. The object of the Act is to prevent money-laundering and connected activities and confiscation of proceeds of crime and preventing legitimizing of the money earned through illegal and criminal activities by investments in movable and immovable properties often involving layering of the money gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule of it requirement is obeyed or complied with. On every occurs and reoccurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act of omission which continues and therefore, constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when an act or omission if committed once and for all. 103. Having regard to the aforesaid authoritative pronouncement of the Hon'ble Supreme Court, when the scheme of PML Act is seen that money laundering is a continuing offence and as such question of it being made retrospective effect does not arise. 104. The process of money laundering i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), wherein the expression any person is referred that proceeds of crime may be or can be in possession of any person , be it a person charged of having committed a scheduled offence or otherwise . It has been further held: 11. The question is whether section 5 can be invoked against a person who is not named as an accused in the commission of a scheduled offence? Sub-section (1) of Section 5 will have to be read as a whole conjointly with the other provisions of the Act already referred to hitherto, including section 8 thereof. Section 5 authorises the Director or any other officer not below the rank of Deputy Director authorised by Director for the purposes of the said section to resort to action of attachment of property if he has reason to believe and the reason of such belief has been recorded in writing arrived at on the basis of material in his possession. That action is intended to freeze the proceeds of crime, which property, is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence or value of any such property until the criminal action for the scheduled offence is taken to its logical end against the accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide for confiscation of property derived from or involved in, money laundering and for matters connected therewith or incidental thereto. It is the outcome of the Political Declaration and Global Programme of Action, as annexed to the resolution S-17/2 adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990. It has come into being also on account of the Political Declaration adopted by the Special Session of the United Nations General Assembly held on 8th to 10th June, 1998 which called upon the Members States to adopt national money-laundering legislation and programme. The term money-laundering has the same meaning assigned to it in Section 3 of the Act of 2002. It essentially refers to the tainted property which is derived from criminal activity relating to a scheduled offence. Such tainted property may travel at different levels or by way of circular transactions for being eventually projected as untainted property in the hands of or possession of person other than the person charged of having committed a scheduled offence. That involves direct or indirect involvement of person or persons other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of any procedural irregularity for the reasons indicated herein above. Hence, this court holds that point Nos. (ii) and (iii) are to be answered against the petitioners and they are accordingly answered. RE: POINT NO. (v): 108. It is contended by the respondents that on provisional orders of attachment being passed, show cause notices have been issued and even without filing objections to the said show cause notices by explaining as to why the provisional order of attachment should not be confirmed, petitioners have invoked the extraordinary jurisdiction of this court by challenging either the provisional orders of attachment or consequential show cause notice issued and as such the writ petitions are not maintainable. It is also contended that where the provisional orders have been confirmed by the adjudicating authority, the aggrieved person has a right of appeal to the appellate tribunal and in case of the order passed by the tribunal dismissing the appeal, the aggrieved party can yet again file one more appeal to this court and without exhausting the said alternate remedies available under the PML Act the petitioners have approached this court by filing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les of natural justice or where the order or proceedings is wholly without jurisdiction or the vires of an Act is under challenge. It has been further held: 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in atleast three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. 112. A plain reading of Section 5, 8, 26 and 42 of PML A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of communication of the decision. Thus, sufficient safeguards protecting the interests of the aggrieved persons including granting of opportunity to file reply to the provisional order of attachment is found in the provisions aforestated and as such this court is of the considered view that these provisions would provide ample opportunity to the aggrieved person to challenge the order passed by the authorities and as such it cannot be gainsaid, there would be violation of principles of natural justice or on that ground the writ petition would be maintainable. 113. In the writ petitions filed at Sl. No. I, II, III, IV, VI, VIII and IX, the challenge is not only to the provisional order of attachment but also to the confirmation order of attachment, notice issued seeking information from the Banks and financial institutions, consequential notices issued to comply with the confirmation order of attachment, consequential notice for handing over possession of the properties issued, summons issued under Section 50(3) and the remand application filed before the Special Judge of PMLA Court and as such on the short ground of the petitioners having not availed the remedy provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a designated business or profession, as indicted thereunder. He would also contend that under Section 17 it is only the Director or Deputy Director who can order for such seizure and the impugned communication which is issued by the Assistant Director is without jurisdiction. He would also contend that Assistant Director has no power to freeze the account except under Section 17(1A) of the PML Act. In substance he would contend that; (i) officer who has issued the impugned communication has no jurisdiction; (ii) AMFI is not a reporting entity nor does it fall within the ambit of Section 54; and, (iii) the officer issuing the impugned communication must have reason to believe that money laundering exits, which is not forthcoming from the impugned communication. He would further contend that petitioners in W.P. Nos. 6159/2017, 6173/2017 and 8261/2017 have ceased to be the Directors and employee of the company and their life savings in mutual funds have been frozen and under the guise of investigation which exercise cannot be undertaken. Hence, he has prayed for allowing the writ petitions. 116. At the outset it requires to be noticed that petitioner in W.P. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have committed an offence under PML Act. 119. Investigation as defined under Section 2(na) is an inclusive definition. Chapter III, IV and V of PML Act provide for exercise of powers by the investigation agencies. Sections 16 to 18, Section 20 and 21 of the PML Act provide such authorities the powers to survey, seizure and retention or proceeds of crime or any record or property relating thereto upon recording reasonable belief as postulated under the said provisions. Section 12 and 12A of the PML Act casts duty upon the reporting entities namely, banks and financial institutions to maintain records of transactions, identities of persons, entering into such transactions and report the same to the authorities under the PML Act. Section 19 of the PML Act provides for power to arrest. Sections 5, 8 and 9 of the PML Act provide for attachment of proceeds of crime or records/properties related thereto upon recording reasonable belief thereto and eventual confiscation of such attached/retained properties. Section 54 of the PML Act provides for duty of certain officers and others to assist the authorities for enforcement of the PML Act. Officers of reporting entities i.e., ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigated for the offence under the PML Act. Thus, when this process of investigation has commenced namely, the authorities are attempting to trace, identify and verify the source of such monies invested or deposited from such accounts, if permitted to be withdrawn, the investigation would lose its purpose and it may become an exercise in futility. It is to prevent such contingencies, the investigating agency must be necessarily held to possess the incidental power to request a reporting entity namely, banking company, financial institution, intermediary or a person carrying on a designated business such information as may be necessary. Thus, the expression investigation as found in the PML Act will have to be necessarily held as an inclusive definition and it would take within its sweep all such incidental and consequential powers, which would be necessary to achieve the ultimate end i.e., collection of evidence and consequently, achieving the object of the Act. 121. In fact, the issue relating to the Assistant Director having issued the impugned communication being without power does not arise, inasmuch as, the notice in question has been issued by the Assistant Director and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has ended or the account has been closed, whichever is later. Section 12A empowers the Director to call from reporting entity any of the records referred to in sub-section (1) of Section 12 and additional information as he considers necessary. 125. Under Section 54 of the Act officers specified in clauses (a) to (j) are empowered and required to assist the authorities under PML Act. This Section neither prohibits nor prevents the power of the investigating authority to call for information or records from a banking company, financial institution, intermediary or a person carrying on a business or profession. The acts which are necessary and incidental for exercise of a statutory power are to be inferred by necessary implication, as otherwise, such statutory power would be of no use. The second respondent being an financial institution and also falling within the expression of intermediary would definitely fall within the parameters of reporting entity as defined under Section 2(wa) of the PML Act and as such the contention raised by the learned Senior Counsel appearing for the petitioner cannot be accepted and it is liable to be rejected and accordingly, it stands rejected. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not arise. 130. The language as found in Section 8(1) when read along with Section 8(3), would clearly disclose that the adjudicating authority would adjudicate the claim relating to the property attached under sub-section (1) of Section 5 or seized or frozen under Section 17 or Section 18. Expression such property refers to the property which has been attached under Section 5(1) of the Act. Until and unless the property has been attached under Section 5(1), question of confirming the attachment of the property made under sub-section (1) of Section 5 would not arise. In other words, for confirming the attachment, the property requires to be attached under Section 5(1) as otherwise, the adjudicating authority under Section 8 would not get jurisdiction to adjudicate such attachment. 131. In the instant case, as noticed hereinabove, it would clearly disclose what was sought to be attached under Provisional Order of Attachment dated 30.06.2016 (Annexure-V) was the movable property namely a sum of ₹ 1,21,50,000/- paid by the writ petitioner to M/s. Prime Housing Development Company, Mangalore and not flats bearing Nos. 114, G09 313 at Divya Deepa Residency, Shiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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