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TMI Blog2024 (6) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 2002. Admittedly, the petitioners, as per their claim, fall in the category of claimants and are, thus, well within their right to approach the Special Court under the Prevention of Money-Laundering Act at Jaipur, which has taken cognizance of the prosecution complaint filed by the Enforcement Directorate on 31-03-2021. It is thus abundantly clear that the remedy of the petitioners lies before the Special Court under the Prevention of Money-laundering Act, at Jaipur which has taken cognizance of the case and is seized of the matter. This remedy is available to the petitioners under Section 8 (8) of the Act read with Rule 3-A of the Rules of 2016. The petitioners have deliberately skipped the aforesaid statutory remedy which is equally efficacious and could be availed before the Special Court under Prevention of Money-Laundering Act and have rushed to this Court invoking extraordinary jurisdiction of this Court. The petitioners do not dispute the order of provisional attachment on merits nor have they any locus standi to challenge the provisional attachment of the property to the extent it represents the proceeds of crime. The short grievance of the petitioners is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eements were also executed between the petitioners and respondents Nos. 4, 5 and 6. While the petitioners were waiting for the project to be completed so that they could enter their residential units, the Responded No.4, abruptly stopped the construction in the year 2018. The respondent No.4 had been putting forth one excuse or the other for not completing the construction and in the meanwhile the petitioners came to know that respondent company was being investigated for serious frauds investigated under Section 212 of the Companies Act. The investigation led to filing of a complaint under Section 439(2) read with Sections 436(a)(d)(2) and 421(1) of the Companies Act and Section 50 of the Limited Liability Partnership Act read with Section 193 of the Code of Criminal Procedure before the Court of Learned District and Session Judge-cum-Special Judge (Companies Act), Gurgaon, Haryana. The respondent Company got involved in the criminal litigation and as a result, the construction of the project remained as it was. The home buyers, including some of the petitioners herein, approached this Court by way of WPC 1185/2020 seeking inter alia direction to the official respondents therein t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation against the founder Director of Adarsh Credit Cooperative Society Ltd ["ACCSL"] and other related persons/firms/entities. The investigation was commenced under the Act of 2002 on the basis of an FIR registered by Special Operation Group, Jaipur, under Sections 120-B, 420, 460, 471 of the IPC on the allegation of cheating the investors/members of ACCSL and diverting the money deposited by various investors in other schemes of the Society. On the basis of the investigation conducted by the respondent No.3, it was concluded that that respondent No.4 had diverted the proceeds of crime raised through public deposits to the affiliate Cooperative Societies of the ACCSL and invested in moveable and immoveable properties. It is in this background, the respondent No.3 in terms of the provisional attachment order dated 25-03-2022 attached, amongst others, the immoveable property qua the project representing value of entire project land equivalent to proceeds of crime i.e. Rs. 10,02,82,884/- and entire inventory on Block B, F and Unit No. G3, G4, G5 and G6 of Block A, representing value of proceeds of crime i.e. Rs. 10,25,70,396.01. The provisional attachment order passed by respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 24/2018 with the Special Operations Group (SOG), Rajasthan Police, Jaipur against Mukesh Modi the founder director of Adarsh Credit Cooperative Society Ltd and Rahul Modi, its Managing Director. The SOG Jaipur has, after completing the investigation filed he preliminary charge sheet before the competent Court of law, perusal whereof reveals that the accused persons had committed various offences under IPC and other penal legislations, out of which Sections 120-B, 420, 467 and 471 of IPC are covered under Paragraph 1 of Part A of the Schedule of offences under the Act of 2002. The charge sheet further revels that the funds of ACCSL, which were collected from public deposits by assuring the public of high returns under various schemes, were later diverted and used by the accused persons for their personal gain and corresponding loss to the ACCSL and a major part of the project in question was raised by these proceeds of crime. 9. Apart from justifying the impugned order, respondents Nos. 1 to 3 have also raised following preliminary objections:- (i) That the ECIR has been registered in Jaipur and the order of provisional attachment was passed by respondent No.3 at Jaipur and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s being raised with the proper building permission granted by the Municipal Corporation. It was only after arriving at the satisfaction that the project was being raised in accordance with law, they invested their money for owning one residential unit each on the completion of the project. They have given the details of the payments made by them from time to time to the private respondents. They could not get the sale deeds executed because of the intervening circumstances i.e. registration of an FIR for Scheduled offences by the SOG, Jaipur against the founder Director and the Managing Director and other people connected with ACCSL, which led to the discovery of proceeds of crime having been diverted by the accused persons in various projects, including the project in question. The ED also swung in action and recorded formal ECIR on 22-03-2019 at Zonal Office of ED at Jaipur under the provisions of the Act. During investigation, the trail of the proceeds of crime was traced to the project "Palm Springs" raised at Humhama, Budgam Srinagar. This led to the provisional attachment of the property equivalent to the proceeds of crime invested in the project. It is true that while effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 subsection (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under subsection (1) of section 5 or retention of property or 3 [record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property] or record shall-- (a) continue during 1 [investigation for a period not exceeding 2 [three hundred and sixty-five days] or] the pendency of the proceedings relating to any 3 [offence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 loss despite having taken all reasonable precautions and is not involved in the offence of money laundering: Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed." 14. From perusal of Section 8, it is evident that the Director or any other officer not below the rank of Deputy Director authorized by the Director Enforcement, is authorized to pass an order in writing, provisionally attaching the property raised by any person by the proceeds of crime. The attachment of such property shall no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found a sum of Rs. 20,28,53,280.01 invested in the project "Palm Springs" as proceeds of crime. The total investment made in the project is found to be Rs. 41,48,39,786/-, out of which a sum of Rs. 31,22,69,380/- is found to have been raised by the ABL Tech Infrastructure Ltd. against this project. The ED has thus found a total inflow of proceeds of crime to this project as Rs. 10,25,70,396.01. In addition to the entire land under the project valuing Rs. 10,02,82,884/-. The property equivalent to this amount was, therefore, attachable under Section 5 of the Act of 2002. 18. Be that as it may, the order of provisional attachment passed by respondent No.3 fell for adjudication before the Adjudicating Authority for confirmation. The Adjudicating Authority, after hearing both sides, has passed the impugned order confirming the provisional attachment order passed by the respondent No.3. 19. As is seen from sub-section (1) of Section 8, if the Adjudicating Authority receives a complaint under Section 5(5) of the Act, and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dded to this Section by Act No. 13 of 2018 with effect from 19-04-2018 provides similar remedy to the claimant during trial of the case also. It is here we are required to make a reference to the Prevention of Money-Laundering (Restoration of Property) Rules, 2016 framed by the Central Government in the exercise of powers conferred by sub-section (1) and Clause (x) of sub-section (2) of Section 73 read with sub-section (8) of Section 8 of the Act of 2002. The expression "claimant" is defined under clause (b) and reads as under:- " (b) "claimant" means a person who has acted in good faith and has suffered a quantifiable loss as a result of the offence of Money-laundering despite having taken all reasonable precautions, and is not involved in the offence of money-laundering." 21. It is thus beyond the pale of any dispute that a person, who has acted in good faith and has suffered a quantifiable loss as a result of the offence of money-laundering, despite having taken all reasonable precautions and is otherwise not involved in money-laundering, would be a claimant entitled to invoke the second proviso to sub-section (8) of Section 8 of the Act of 2002. 22. Admittedly, the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners lies before the Special Court under the Prevention of Money-laundering Act, at Jaipur which has taken cognizance of the case and is seized of the matter. This remedy is available to the petitioners under Section 8 (8) of the Act read with Rule 3-A of the Rules of 2016. The petitioners have deliberately skipped the aforesaid statutory remedy which is equally efficacious and could be availed before the Special Court under Prevention of Money-Laundering Act and have rushed to this Court invoking extraordinary jurisdiction of this Court. That apart, the petitioners, who have substantial interest in the property attached by the respondent No.3 and confirmed by the Adjudicating Authority, have a remedy of approaching the Appellate Tribunal by way of an appeal. Section 26 of the Act of 2002, which provides remedy of appeal, reads thus: "26. Appeal to Appellate Tribunal.--(1) Save as otherwise provided in sub-section (3), the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act, may prefer an appeal to the Appellate Tribunal. (2) Any reporting entity aggrieved by any order of the Director made under sub-section (2) of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents to canvass his point that petition under Article 226 of the Constitution of India is maintainable notwithstanding the availability of equally efficacious alternate remedies. 28. I do not wish to venture into elaborate discussion on the issue of maintainability of the writ petition despite the availability of alternate remedy, as the law on the point is well settled. In Whirlpool Corporation v. Registrar of Trade Marks Mumbai and others, (1998) 8 SCC 1, Hon"ble the Supreme Court has authoritatively laid down that writ petition under Article 226 would be maintainable even in the face of availability of equal alternate remedy available to the petitioner where the writ petition is filed for enforcement of fundamental rights; where there has been violation of principles of natural justice; where the order or the proceedings are wholly without jurisdiction; or when the vires of an Act of legislation is challenged. 29. At this stage it is apt to refer to the observations made in para 15 by Hon"ble the Supreme Court in Commissioner of Income Tax and ors v. Chhabil Dass Agarwal, (2014) 1 SCC 603, which read thus:- "Thus, while it can be said that this Court has recognized some except ..... X X X X Extracts X X X X X X X X Extracts X X X X
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