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TMI Blog2024 (7) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... t excluded the period for the purpose of limitation and even termination of proceedings till 28.02.2022 in the Suo Motu Writ Petition No. 3/2020 decided on 10.01.2022. The period otherwise started from 15.03.2020. In view of the above, the period till 28.02.2022 cannot be counted for termination of the proceedings. The period has to be excluded from 15.03.2020 till 28.02.2022. Delhi High Court in the case of Vikas WSP Ltd [ 2021 (1) TMI 1161 - DELHI HIGH COURT ] set aside the order of the Adjudicating Authority passed after 180 days on the ground that the Apex Court has excluded the period for the purpose of limitation for taking remedies in the courts by the litigants and not for the extension of the period for termination of proceedings. The period from 15.03.2020 to 28.02.2022 is excluded for computation of 180 days as per the judgment of the Apex Court in Suo Motu Writ Petition [ 2022 (1) TMI 385 - SC ORDER ] - the issue is decided against the appellant and in favour of the respondent. Constitution of the Adjudicating Authority - HELD THAT:- The Calcutta High Court in the case of R.P. Infosystems Ltd. Vs. Adjudicating Authority [ 2023 (8) TMI 1051 - CALCUTTA HIGH COURT ] held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Adjudicating Authority deserves to be set aside having passed beyond a period of more than 180 days given under Section 20(3) of the Act of 2002. 4. The further issue raised by the appellant is in reference to the constitution of the Adjudicating Authority. The learned counsel for the appellant submitted that as per the Rules framed under the Act of 2002, the Adjudicating Authority should consist of three Members and out of which one should be from the field of law. The impugned order has been passed by a Member not connected with the field of law and, therefore, the constitution of the Adjudicating Authority was contrary to the provisions of The Prevention of Money Laundering (Appointment and Conditions of Service of Chairperson and Members of Adjudicating Authorities) Rules, 2007 (in short 'Rules of 2007'). The impugned order has been passed by an authority not constituted as per the Act of 2002 and the Rules of 2007. Thus, on the strength of the aforesaid ground also, the impugned order deserves to be set aside. 5. The counsel for the appellant did not raise any other issue during the course of oral arguments despite an opportunity, and accordingly contest to the arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the field of Finance and Accountancy would also be eligible subject to certain conditions. 10. A reference of Section 6 of the Act of 2002 has also been given to show provision for composition of the Adjudicating Authority and its power. The Adjudicating Authority can consist of Chairman and two Members but in case of vacancy, the powers have not been taken away from Single Member to adjudicate the matter. The reference of Section 6 was given to indicate that in case of difference of opinion between a Bench of two Members, the matter can be sent to third Member thus composition of the Tribunal does not require that Bench should consist of three Members. The Single Member can also hold the post and thereby the issue raised by the appellant is of no substance and, therefore, the prayer was made to dismiss the appeal. 10. We have considered the rival submissions of the parties and perused the record. 11. The first issue raised by the appellant is in reference to Section 20 of the Act of 2002 which provides the period for which the property can be retained. According to the appellant, the impugned order was passed by the Adjudicating Authority beyond a period of 180 days. To exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer authorised by him in this behalf may withhold the release of any such property for a period of ninety days from the date of 5[receipt of] such order, if he is of the opinion that such property is relevant for the appeal proceedings under this Act". 12. Section 20(1) provides that if property is seized or frozen, it may continue to remain frozen or seized for a period not exceeding 180 days from the date the property was seized or frozen. In the instant case, the impugned order was passed on 22.08.2022 while the freezing of the amount of FD and bank account was on 05.11.2021. Thus, the impugned order was passed by the Adjudicating Authority beyond the period of 180 days. The fact, however, remains that due to Covid-19, the Apex Court excluded the period for the purpose of limitation and even termination of proceedings till 28.02.2022 in the Suo Motu Writ Petition No. 3/2020 decided on 10.01.2022. The period otherwise started from 15.03.2020. In view of the above, the period till 28.02.2022 cannot be counted for termination of the proceedings. The period has to be excluded from 15.03.2020 till 28.02.2022. We may quote the relevant paras of the judgment of Supreme Court in the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of proceedings. The reference of Section 29A of the Arbitration and Conciliations Act, 1996 was given to avoid the consequence of delay in passing the award within the period given under Section 29A of the Act of 1996. A direction was made to exclude the period between 15.03.2020 till 28.02.2022 for termination of proceedings. 14. The learned counsel for the appellant has relied on the judgment of Delhi High Court in the case of Vikas WSP Ltd. and Ors. Vs. Directorate of Enforcement &Anr. reported in 2020 SCC Online Del1732 though it is with the admission that the effect and operation of the judgment has been stayed by the Division Bench and the matter is still pending. The reference of the judgment of Calcutta High Court was also given wherein similar view has been taken. 15. We have carefully gone through the judgment of Delhi High Court in the case of Vikas WSP Ltd. (supra) and the judgment of Calcutta High Court. Delhi High Court set aside the order of the Adjudicating Authority passed after 180 days on the ground that the Apex Court has excluded the period for the purpose of limitation for taking remedies in the courts by the litigants and not for the extension of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Covid-19 pandemic situation and extended the period of limitation from 15.03.2020 for the purpose of filing petitions/applications/suits/ appeals/all other proceedings under any general or special law before any Court or Tribunal. The object of such extension was in recognition of the difficulties that might be faced by lawyers/litigants to file their applications physically. The relevant paragraphs of In re: Limitation (supra) are extracted below: 1. This Court has taken suomotu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under special laws (both Central and/or State). 2. To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective courts/tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the court or tribunal can condone delay) and termination of proceedings. vi) For instance, Section 29A of the Arbitration & Conciliation Act, 1996 provides a time limit of 12 months within which an award has to be passed. By virtue of In re: Limitation, 2022 (supra), the period from 15.03.2020 to 28.02.2022 shall be excluded to compute the period of 12 months under Section 29A of the Arbitration & Conciliation Act, 1996. Similarly, Section 12A(3) of the Commercial Courts Act, 2015 provides an outer time period of three months within which pre-institution mediation shall be completed. However, by virtue of In re: Limitation, 2022 (supra), the period from 15.03.2020 to 28.02.2022 shall be excluded to compute the period of 3 months. Therefore, In re: Limitation, 2022 (supra) states that wherever a statute prescribes a maximum period within which proceedings have to be completed, the period from 15.03.2020 to 28.02.2022 shall be excluded to compute such maximum period. vii) To decide the applicability of In re: Limitation (supra) in computation of 180 days for confirming the provisional attachment of property, it is apposite to discuss the nature of time frame prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immediately after attachment under sub-section (1), forward a copy of the order, along with the 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 order and material for such period as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made undersub-section (3) of Section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation. --For the purposes of this sub-section, "person interested", in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the Suo Motu writ petition sought to protect the starting-point, which was at the risk of being defeated by reason of the pandemic. 19. In other words, what was being protected by the orders of the Supreme Court was the right to remedy, not the right to take away a remedy under a given statute. The respondents before this Court seek to do the latter. The only step taken by the ED is the order of the provisional attachment dated 30th September, 2021. No other steps were taken by the ED before the petitioners reply on 3rd January, 2022 or before the expiry of 180 days period on 31st March, 2022. By its inaction and failure to act in terms of Section 5(1)(b) or the other conditions of the said section, the ED has made itself vulnerable to Section 5(3) of the PMLA. The petitioner in turn has been given the breather of exhaustion of the 180 days window from 1st April, 2022 and the ED cannot now revive the proceedings after more than 80 days have passed from the end point of the 180 days period. 21. In Gobindo Das, the Appeal Court disagreed with the view of the Adjudicating Authority being a "non-litigant". The Division Bench was also disturbed by the fact that the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet within the prescribed time. The decision in S. Kasi (supra) cannot be extended to PMLA proceedings dealing with confirmation of provisional attachment order within 180 days. xix) It is true that provisional attachment of property has an effect of potentially depriving a person of his property. However, right to personal liberty and right to property stand on a different footing and cannot be equated. This is evident from the fact that the urgency in concluding proceedings dealing with a person in jail is much higher than a person whose property is provisionally attached. Further, under Section 5(4) of the PMLA, the person whose property is provisionally attached can still enjoy such property till the same is confiscated. Even in cases of confirmation of provisional attachment, a person can still enjoy such property till the same is confiscated. xx) In Vijay MadanlalChoudhary (supra), the Apex Court held that provisionally attached properties which are confirmed can still be enjoyed by a party till a confiscation order is passed. xxi) Therefore, provisions prescribing timelines and which deal with police investigation upon which a person's liberty is dependent has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present purpose.] **** 32.2. In fact, in S. Kasi case [S. Kasi v. State, (2021) 12 SCC 1 : 2020 SCC OnLine SC 529] , this Court also noticed that a coordinate Bench of the same High Court had already held [Settu v. State, 2020 SCC OnLine Mad 1026] that the said order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] did not cover the offences for which Section 167CrPC was applicable but, in the order [S. Kasi v. State, 2020 SCC OnLine Mad 1244] impugned, the other learned Single Judge of the same High Court took a view contrary to the earlier decision of the coordinate Bench; and that was found to be entirely impermissible. In any case, the said decision, concerning the matter of personal liberty referable to Article 21 of the Constitution of India and then, relating to the proceedings to be undertaken by an investigating officer, cannot be applied to the present case relating to the matter of filing written statement by the defendant in a civil suit. xxiii) Further, a Division Bench of Madras High Court in S. Prasanna v. The Deputy Director, Directorate of Enforcement, Government of India47 held that the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal complaint within 30 days under Section 5 of the PMLA, prejudice cannot be caused to it by not excluding the period from 15.03.2020 to 28.02.2022. One litigant's interests cannot be protected at the cost of another. This Court would further like to stress that the provisionally attached properties can still be enjoyed under Section 5(4) of the PMLA. xxvi) The reasoning in Hiren Panchal (supra) that what was protected under In re: Limitation (supra) was institution of proceedings and not proceedings which were already initiated cannot be accepted in light of the decision in Prakash Corporates (supra) which held that In re: Limitation (supra) cannot be narrowly applied. xxvii) Lastly, the decisions in S. Kasi (supra),Vikas WSP Ltd. (supra), Gobindo Das (supra) and Hiren Panchal (supra) cannot be applied for the simple reason that In re: Limitation (supra) was further clarified in In re: Limitation 2022 (supra) wherein the Court at Para 5.4 (extracted supra) held that where time period is prescribed for termination of proceedings, the period from 15.03.2020 to 28.02.2022 shall be excluded. In the present case, Section 5(3) of the PMLA states that provisional attachment of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Kasi v. StateCriminal Appeal No. 452 of 2020 decided on 19.06.2020. The relevant paras of the judgment (supra)are quoted hereunder: "10.3. With reference to the decision of this Court in the case of S. Kasi v. State Criminal Appeal No. 452 of 2020 decided on 19.06.2020, it has been argued on behalf of the Respondent that a 3-Judge Bench of this Court has specifically ruled that the said order dated 23.03.2020 in SMWP No. 3 of 2020 is not applicable to all the applications; and benefit of the order of extension of limitation cannot be taken by police while filing chargesheet Under Section 167(2) of the Code of Criminal Procedure, 19736. Further, with reference to the decision in the case of Sagufa Ahmed (supra), it has been argued that what was extended in SMWP No. 3 of 2020 was only the period of limitation and not the period upto which delay could be condoned in exercise of discretion conferred by the statute. The learned Counsel would also submit with reference to the decision of this Court in SCG Contracts (supra) that where a Defendant fails to file the written statement within permissible time, it is beyond the Court's power to condone the delay. 11. In his rejoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter, observed and directed as under: Supreme Court Advocate on Record Association (SCAORA) has now through this Interlocutory Application highlighted the daily surge in COVID cases in Delhi and how difficult it has become for the Advocates-on-Record and the litigants to institute cases in Supreme Court and other courts in Delhi. Consequently, restoration of the order dated 23rd March, 2020 has been prayed for. We have heard Mr. Shivaji M. Jadhav, President SCAORA in support of the prayer made in this application. Learned Attorney General and Learned Solicitor General have also given their valuable suggestions. We also take judicial notice of the fact that the steep rise in COVID-19 Virus cases is not limited to Delhi alone but it has engulfed the entire nation. The extraordinary situation caused by the sudden and second outburst of COVID-19 Virus, thus, requires extraordinary measures to minimize the hardship of litigant-public in all the states. We, therefore, restore the order dated 23rd March, 2020 and in continuation of the order dated 8th March, 2021 direct that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period from 15.03.2020 till 02.10.2021 shall stand excluded. 19.6. We are not elaborating on other directions issued by this Court but, when read as a whole, it is but clear that the anxiety of this Court had been to obviate the hardships likely to be suffered by the litigants during the onslaughts of this pandemic. Hence, the legal effect and coverage of the orders passed by this Court in SMWP No. 3 of 2020 cannot be unnecessarily narrowed and rather, having regard to their purpose and object, full effect is required to be given to such orders and directions". 19. The Apex Court has distinguished its earlier judgment in reference to Article 21 of the Constitution and did not find applicable to the proceedings in hand, which are civil in nature, thus we cannot record our finding in favour of the appellant. 20. The Adjudicating Authority, however, is given powers under sub-section (4) of Section 20 to record its findings that property is prima facieinvolved in money laundering and thereby to continue the proceedings beyond the period specified under sub-section (1) of Section 20. However, it is true that order for it has to be passed within 180 days. We have excluded the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y further make a reference of Section 6 of the Act of 2002 which is quoted thus: "6. Adjudicating Authorities, composition, powers, etc.-- (1) The Central Government shall, by notification, appoint [an Adjudicating Authority] to exercise jurisdiction, powers and authority conferred by or under this Act. (2) An Adjudicating Authority shall consist of a Chairperson and two other Members: Provided that one Member each shall be a person having experience in the field of law, administration, finance or accountancy. (3) A person shall, however, not be qualified for appointment as Member of an Adjudicating Authority, -- (a) in the field of law, unless he-- (i) is qualified for appointment as District Judge; or (ii) has been a member of the Indian Legal Service and has held a post in Grade I of that service; (b) in the field of finance, accountancy or administration unless he possesses such qualifications, as may be prescribed. (4) The Central Government shall appoint a Member to be the Chairperson of the Adjudicating Authority. (5) Subject to the provisions of this Act, -- (a) the jurisdiction of the Adjudicating Authority may be exercised by Benches thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccessor enters upon his office or until the expiry of his term of office, whichever is the earliest. (12) The Chairperson or any other Member shall not be removed from his office except by an order made by the Central Government after giving necessary opportunity of hearing. (13) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson of the Adjudicating Authority until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office. (14) When the Chairperson of the Adjudicating Authority is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Member shall discharge the functions of the Chairperson of the Adjudicating Authority until the date on which the Chairperson of the Adjudicating Authority resumes his duties. (15) The Adjudicating Authority shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... member of an Indian Legal Service. The other qualification is possession of a qualification in the field of finance, accountancy or administration as may be prescribed. It is, therefore, not the case that all the members of the AA should be judicial members. 80. It is seen that under Section 5 PMLA, the jurisdiction of the AA "may be exercised by the Benches thereof". Under Section 6(5)(b) PMLA, a Bench may be constituted by the Chairperson of the AA "with one or two members" as the Chairperson may deem fit. Therefore, it is possible to have single-member benches. The word "bench' therefore does not connote plurality. There could, even under Section 6(5)(b) PMLA, be a "single member bench'. When Section 6(6) PMLA states that a Chairperson can transfer a member from one bench to another bench, it has to be understood in the above context of there also being single- member benches. 81. The Court is unable to agree with the submission that since the Adjudicating Authority (Procedure) Regulations 2013 requires every order-sheet to have the signatures of the Chairperson and members constituting the bench, it necessarily means that every matter has to be heard b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 12243/2022) and the relevant para is quoted hereunder: "5. Although the Court is aware that the aforesaid decision has been placed in abeyance in an appeal preferred by the Directorate, albeit preferred with respect to certain unrelated aspects of that decision, it also bears in mind the salutary principle that while a stay of a judgment may defer its enforcement inter partes, it does not efface the dictum thereof. In any case, it would be improper for this Court to either consider or tread down a path different from what was laid down in J. Sekar merely on the ground that a stay has been granted on the appeal of the Directorate." The Madras High Court in the case of G. Gopalakrishnan v. Deputy Director, Directorate of Enforcement(WP (MD) 1454/2018 with connected matters) decided on 03.01.2019 has also held that it is not mandatory that there should be a composition of three members of the Adjudicating Authority. The relevant paras of the judgment are quoted hereunder: "79. But looking at the entire scheme of PMLA, Section 6 and as referred to by the learned Senior Counsel, this Court can infer that it is possible to have less than three Member to act as Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that less than three Member Adjudicating Authority is permissible under PMLA. The Delhi High Court held that there can be a single Member of Adjudicating Authority and appellate Tribunal under PMLA and such single Member Bench need not mandatorily have judicial members and can be administrative members as well. This case was relied upon by the learned Addl.Solicitor General for the purpose of contending that the issue of coram non-judice is not a valid argument in the teeth of various provisions which explicitly provide for formation of single Member Bench. This Court is in agreement with the submission made by the learned Addl.Solicitor General that it is not mandatory to have three Member Bench all the time for all adjudication purposes. It is up to the Chairperson of the Adjudicating Authority to form Bench containing one or two Members as it deems fit in order to adjudicate the cases which are placed for consideration before the Authority." 27. The Calcutta High Court in the case of R.P. Infosystems Ltd. Vs. Adjudicating Authority reported in MANU/WB/2399/2023 held that even a single member bench of the adjudicating authority is competent to adjudicate any matter under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 6 that a bench may be constituted by the Chairperson of the adjudicating authority with one or two members as the Chairperson of the adjudicating authority may deem fit. Therefore, it would be incorrect interpretation on the part of the appellant state that the adjudicating authority namely the Chairperson who has presently taken up the case for adjudication has no jurisdiction to do so. A plain reading of the provision makes it clear that the Central Government is empowered to appoint an adjudicating authority by issue of notification in the Gazette to exercise the jurisdiction, powers and authority conferred by or under the Act and in accordance with the said provision the Central Government has issued a notification on 01.07.2005 and have appointed the adjudicating authority to exercise jurisdiction, powers and authority conferred by or under the Act. Thus, for all purposes an adjudicating authority has been put in place and the manner in which the business of the adjudicating authority has to be carried out is stipulated in Sub Section (5) of Section 6 and in terms of Clause (b) of Sub Section (5) of Section 6, a single member bench of the adjudicating authority is competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnical members cannot function without a Chairperson is unsustainable. In the absence of any provision in PMLA that function under Section 8 of PMLA conferred on the Adjudicating Authority have to be performed by Adjudicating Authority having a member of experience in the field of law only, no such inference can be drawn. For yet another reason, it is required to be held so. 22. It is well settled rule of statutory interpretation that the courts should strongly lean against any construction which reduces the statutory provision to a futility (see Tinsukhia Electric Supply Company Limited vs. State of Assam MANU/SC/0027/1990 : 1989:INSC:128 : (1989) 3 SCC 709). In MukundDewangan vs. Oriental Insurance Company Limited MANU/SC/0797/2017 : 2017:INSC:576 : (2017) 14 SCC 663, it has been held that every word and expression which the legislature uses has to be given its proper and effective meaning as the legislature does not use an expression without purpose and meaning. Therefore, the principle that the statute must be read as a whole is equally applicable to different parts of the same section. Section 6(2) of PMLA provides that an Adjudicating Authority shall consist of a Chairpe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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