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TMI Blog2024 (2) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... w the seizure to continue endlessly even though the same does not culminate into any proceedings relating to any offence under the Act before a court within the period of 365 days as prescribed by that very provision. Explanation (ii) to Section 44 of the Act states that the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence for which complaint has already been filed, whether named in the original complaint or not. From the said provision also, it is apparent that the investigation may lead to filing of a subsequent complaint to bring on record further evidence in form of seized documents and records, either against the accused named in the original complaint or subsequent thereto - it is held that the period of 365 from the passing of the order dated 10.02.2021 by the Adjudicating Authority having been passed, the documents/digital device/property seized from the petitioner in the search and seizure conducted on 19th and 20th August, 2020 from the premises of the petitioner are liable to be ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was submitted by M/s JSW Steel Limited. The said plan was approved by the learned NCLT vide order dated 05.09.2019. 5. The petitioner claims that in the course of his functioning as the IRP and as the RP of BPSL, the petitioner unearthed fraud committed by the ex-promoters and directors of BPSL, for which he even filed a criminal complaint dated 07.02.2020 with the SHO, Thelkoloi Police Station, District- Sambalpur, Odisha, under Sections 419,420,465,467,468,469,471 read with Section 120-B of the Indian Penal Code, 1860 (in short, IPC ). The petitioner also filed an application under Section 66 of the Insolvency and Bankruptcy Code, 2015 (in short, IBC ) for the fraudulent and wrongful trading, before the learned NCLT. 6. It is alleged that the Central Bureau of Investigation, New Delhi (in short, CBI ) registered an FIR/RC No. RCBDl/2019/E/0002 dated 05.04.2019 against BPSL, its Directors, and the other Key Managerial Persons, on allegations of offences committed under Sections 120-B read with Sections 420, 468, 471 477A of the IPC, and Section 13(2) r/w 13(1) (d) of the Prevention of Corruption Act, 1988. The petitioner was neither named as an accused in the FIR nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2021 passed under Section 8(3) of the Act, confirmed the retention of the items, documents, records, and jewellery seized by the respondent during the search and seizure. 13. The petitioner claims that as no complaint against the petitioner was thereafter filed for a period of more than 365 days, the petitioner, vide an application dated 11.04.2023, sought the return of the seized documents and properties. As the respondent did not return the said properties nor gave any reply to the request of the petitioner, the petitioner has filed the present petition claiming the aforementioned reliefs. Submissions of the learned counsel for the Petitioner 14. The learned counsel for the petitioner submits that though more than three years have passed since the seizure of petitioner s property, and though no prosecution with respect to the petitioner or the said property has been initiated by the respondent, yet the seized items continue to be retained by the respondent. The petitioner, in fact, continues to be a witness for the respondent. He submits that in terms of Section 8(3)(a) of the Act, retention of the property so seized can be continued only for a period not exceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigation against BPSL by the Director General of GST Intelligence, Bhubaneswar (hereinafter referred to as DGGI ) involving fraudulent and clandestine removal of finished goods by the previous as well as the current management of BPSL, the respondents collected incriminating evidence in the shape of statements recorded by DGGI. It was found that BPSL had engaged in clandestine clearance of the finished goods from its Odisha Plant to its plants at Kolkata and Chandigarh. A total of 58 of such consignments had been cleared in a clandestine manner. The total value of these consignments was Rs. 705.39 Crore, out of which, three such consignments, valuing Rs. 40.42 crores, were cleared after 26.07.2017. It was further gathered that the data has been deleted from the servers of BPSL, Odisha. It was further noted that one Sh. H.C. Verma, before the start of the resolution process on 26.07.2017, and the petitioner thereafter, were the two main persons responsible for the clandestine removal of the goods leading to the siphoning of funds from BPSL. Based on the above facts, searches were conducted under Section 17(1) of the Act, which resulted in the recovery of various incriminating docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Ravi Ors. 2021 SCC OnLine Del 5540. 19. He submits that apart from the above Criminal Complaint, there are other proceedings that are also pending, which shall also fall within the scope and ambit of Section 8(3)(a) of the Act. They are as follows: (a) W.P. (Crl.) 1342/2020 filed by the petitioner seeking quashing of summons dated 19.08.2020 and 22.08.2020 issued under the Act; (b) W.P.(C) 11256/2022 filed against the Provisional Attachment Order No. 10/2021 passed against the petitioner; (c) W.P. (Crl.) 233/2021 filed by the petitioner seeking setting aside of the search and seizure action and direction seeking supply of the relied upon documents; and (d) W.P. (Crl.) 96/2022 filed by one R.P. Goyal wherein this Court, by its order dated 10.02.2022, stayed the trial of the CC No. 01/2020. 20. He submits that in light of the clear language of Section 8(3)(a), all kind of proceedings, including the above, shall lead to an extension of seizure. Placing reliance on the judgment of the Supreme Court in Babita Lila v. Union of India, (2016) 9 SCC 647, he submits that no presumption of casus omissus exists and the Court should not read anythin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words have to be read in a narrow manner so as to mean only the complaint which arrays the person from whom the documents or the property has been seized as an accused or mentions such documents or property as relied upon in such complaint, the learned counsel for the respondents submits that there is no reason to give a restricted meaning to these words and any proceedings relating to any offence under this Act shall be sufficient to extend the period by which the property seized or frozen can be retained. 26. For appreciating the above submissions, a few provisions of the Act may be important to be considered. 27. Section 3 of the Act defines the offence of money laundering. Section 5 of the Act provides for attachments of the property involved in money laundering. Sub-Section 1 of Section 5 of the Act is relevant and is reproduced hereinunder:- 5. Attachment of property involved in money-laundering. (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be made unless inter alia, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 173 of the CrPC, or a complaint has been filed by a person authorized to investigate the offence mentioned in the schedule before a Magistrate or a Court for taking cognizance of the scheduled offence. Therefore, for ordering a provisional attachment of the property, proceedings in the form of a report under Section 173 of the CrPC or a complaint for taking cognizance of a scheduled offence is a pre- requisite. The second proviso to Section 5(1) of the Act states that the above pre-requisite can be not insisted upon if the authority has reason to believe that if such property is not attached immediately under the Act, the non attachment of the property is likely to frustrate any proceedings under this Act . 29. On the provisional attachment of the property, in terms of Section 5(5) of the Act, a complaint stating the facts of such attachment has to be filed before the Adjudicating Authority under the Act. 30. Section 17 of the Act empowers the competent officer to carry out a search and to inter alia seize any record or property found as a result o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided that if, at any time before its confiscation under sub-section (5) or sub- section (7) of section 8 or section 58B or sub- section (2A) of section 60, it becomes practical to seize a frozen property, the officer authorised under sub-section (1) may seize such property. (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure [or upon issuance of a freezing order, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section. (4) The authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aundering and the property is required for the purposes of adjudication under section 8. (5) After passing the order of confiscation under sub-section (5) or sub- section (7) of section 8, Special Court, shall direct the release of all property other than the property involved in money-laundering to the person from whom such property was seized or the persons entitled to receive it. (6) Where an order releasing the property has been made by the Special Court under sub-section (6) of section 8 or by the Adjudicating Authority under section 58B or sub-section (2A) of section 60, the Director or any officer authorised by him in this behalf may withhold the release of any such property for a period of ninety days from the date of [receipt of] such order, if he is of the opinion that such property is relevant for the appeal proceedings under this Act. 21. Retention of records. ( 1) Where any records have been seized, under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the Investigating Officer or any other officer authorised by the Director in this behalf has reason to believe that any of such records are required to be retained for any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 it.] (8) Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering: Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from whom such property was seized or recovered. The provisions of the Act have to be reasonably read and in a harmonious manner with other provisions. It is also to be remembered that the power of attachment, seizure, and freezing of the properties and records, is a draconian provision that has to be strictly construed. Reference in this regard is placed on Radha Krishnan Industries v. State of Himachal Pradesh Ors., (2021) 6 SCC 771. 36. In the present case, the order dated 10.02.2021 passed by the Adjudicating Authority allows further retention of the documents and properties seized from the petitioner, by observing as under:- On perusal to facts of the case as brought out in the complaint, subsequent proceedings before the adjudicating Authority, and the discussions in the preceding paras, I find that the provisions of Section 17, 8(1), 20, 21 have been complied with. 1. What is required to be seen at this juncture is the interest of the investigation, where prima facie allegations exist regarding commission of the offence of money laundering. The background stated in the OA sufficiently indicates that the scheduled offences are committed and the proceeds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court as per schedule for pronouncement vide cause list dated 09.02.2021. (Emphasis supplied) 37. From the above, it would be apparent that the retention of the documents and properties has been allowed for the purposes of investigation/adjudication. The same would, therefore, extend for a period of 365 days in terms of Section 8(3)(a) of the Act unless a proceeding relating to the offence under the Act has been filed prior thereto. As noted hereinabove, the proceeding relating to any offence under this Act has to mean proceeding filed before the Special Court in relation to the property or the record so attached, seized or frozen. 38. It is not disputed by the respondents that the Complaint, being CC no. 01/2020, which is pending before the Court of the learned Special Judge, Rouse Avenue Court, does not name the petitioner herein as an accused. In fact, it names the petitioner as one of the witness. It also does not make a mention of the documents or the property seized from the petitioner. The Cognizance on the said complaint was taken by the learned Special Judge vide order dated 17.01.2020, that is, prior to the seizure of the documents and the property from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period not exceeding 90 days. The aforesaid period of 90 days has been increased to 365 days w.e.f 01.08.2019 vide amendment Act 7 of 2019. The concept of 90 days period during investigation was Introduced w.e.f. 19.04.2018. In the case in hand, the Adjudicating Authority vide order dated 28.05.2018 (Annexure A-3) confirmed provisional attachment wherein it was ordered that attachment shall continue during investigation for a period not exceeding 90 days. 28. The Respondent has pleaded that amendment prescribing 90 days period during investigation came into force w.e.f. 19.04.2018 and complaint under Section 44 45 of PMLA was filed on 22.12.2017 before Special Court, thus Appellants are not entitled to benefit of amendment made w.e.f 19.04.2018. In the adjudication order, it was ordered that attachment shall continue during investigation for a period not exceeding 90 days. It was Appellants who challenged said order before Tribunal, thus Respondent cannot take any plea contrary to order of Adjudicating Authority, thus contention of Respondent that Appellant is not entitled to amended provision is misconceived and accordingly rejected. 29. The Respondent in its reply bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of 365 from the passing of the order dated 10.02.2021 by the Adjudicating Authority having been passed, the documents/digital device/property seized from the petitioner in the search and seizure conducted on 19th and 20th August, 2020 from the premises of the petitioner are liable to be returned. 44. The other proceedings that are pending and on which the learned counsel for the respondent has placed reliance, that is, W.P. (Crl.) 1342/2020, W.P. (C) 11256/2022, W.P. (Crl.) 233/2021, and/or W.P. (Crl.) 96/2022, also do not fall within the ambit and scope of the expression pendency of the proceedings relating to any offence under this Act before a Court in Section 8(3)(a) of the Act. 45. As far as the petition filed by the petitioner challenging the Summons dated 19.08.2020 and 22.08.2020 issued under the Act, that is , W.P.(Crl) 1342/2020, titled as Mahender Kumar Khandelwal v. Union of India Ors., the same cannot come to the aid of the respondent to extend the period for retention of the seized documents and the property. As noted hereinabove, the expression pendency of the proceedings relating to any offence under this Act before a Court relates to a com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purposes of extending the seizure under the order dated 10.02.2021 passed by the Adjudicating Authority, the pendency of the above writ petition can come to no avail to the respondent inasmuch as the said writ petition is not a proceedings pending in relation to the offence under the Act but in challenge to an order passed under the Act. The reasons given hereinabove also to this Writ Petition. 50. The reliance of the learned counsel for the respondent on the Explanation attached to Section 8(3) of the Act, also cannot be accepted. Though arrest of a suspect/accused may be an important part of the investigation, however, the order dated 28.08.2020 passed by this court in W.P. (Crl.) 1342/2020, merely restrains the respondents from taking any coercive action against the petitioner. Explanation to Section 8(3) of the Act becomes applicable only where the investigation is stayed by any Court . The order dated 28.08.2020 passed in W.P.(Crl.) 1342/2020 cannot be said to be an order staying the investigation. The Explanation to Section 8(3) of the Act is, therefore, not attracted to the facts of the present case and cannot extend the period of retention of the seized documents an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in Article 300-A confined not to land alone, it includes intangibles like copyrights and other intellectual property and embraces every possible interest recognised by law. 169. This Court in State of W.B. v. Vishnunarayan and Associates (P) Ltd., while examining the provisions of the West Bengal Great Eastern Hotel (Acquisition of Undertaking) Act, 1980, held in the context of Article 300-A that the State or executive officers cannot interfere with the right of others unless they can point out the specific provisions of law which authorises their rights. (emphasis supplied) (c) In T. Vijayalakshmi v. Town Planning Member, (2006) 8 SCC 502, the Court observed: 13. Town Planning legislations are regulatory in nature. The right to property of a person would include a right to construct a building. Such a right, however, can be restricted by reason of a legislation. In terms of the provisions of the Karnataka Town and Country Planning Act, a comprehensive development plan was prepared. It indisputably is still in force. Whether the amendments to the said comprehensive development plan as proposed by the Authority would ultimately be accepted by the State o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 21 and 300-A is meant to prevent deprivation of rights. Insofar as Article 21 is concerned, it is a fundamental right whereas in Article 300-A it is a constitutional right which has been given a status of a basic human right. xxxxx (k) In Shrirampur Municipal Council v. Satyabhamabai Bhimaji Dawkher, (2013) 5 SCC 627 it was held: 43. This is the reason why time-limit of ten years has been prescribed in Section 31(5) and also under Sections 126 and 127 of the 1966 Act for the acquisition of land, with a stipulation that if the land is not acquired within six months of the service of notice under Section 127 or steps are not commenced for acquisition, reservation of the land will be deemed to have lapsed. Shri Naphade's interpretation of the scheme of Sections 126 and 127, if accepted, will lead to absurd results and the landowners will be deprived of their right to use the property for an indefinite period without being paid compensation. That would tantamount to depriving the citizens of their property without the sanction of law and would result in violation of Article 300-A of the Constitution. (emphasis supplied) 52. Therefore, the natural ..... X X X X Extracts X X X X X X X X Extracts X X X X
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