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TMI Blog2024 (7) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules of 2013. Even the petitioner, neither through the contents of the petition nor during the course of arguments, has been able to point out any infirmity in the above-mentioned process followed by the respondent. Further, the validity of the relevant rule(s) of Rules of 2013, as referred hereinabove, has also not been assailed before this Court by the petitioner herein. Whether Vehicles are subject to natural decay? - HELD THAT:- The depreciation of vehicles is a well-recognized phenomenon in the automobile industry. From the moment a car is driven out of the showroom, its value begins to decrease. This depreciation accelerates with each passing year, and the resale value drops substantially. After some years, most vehicles lose a significant part of their original value, making them less economically viable to maintain or sell. By converting the sale proceeds of a movable property subject to natural decay, such as a vehicle, into an interest-bearing fixed deposit, the Rule ensures that the value of seized properties is preserved and potentially increased, thereby ensuring equal justice to either of the party, regardless of the trial s duration. In this manner, both the right o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hestrating a criminal conspiracy. The conspirators, pretending to be high-ranking government officials, had extorted approximately Rs. 200 crores from a complainant, Mrs. Aditi Singh. The ordeal began when Mrs. Singh had received a call from a man, claiming to be the Law Secretary of India, who had offered to assist her in her legal battles including obtaining bail for her husband. He had directed her to communicate with his junior officer, Abhinav, via Telegram. Abhinav had convinced her that she was under surveillance and had pressured her to contribute Rs. 20 crores to a party fund, which she had managed to arrange through various means. Later, the man had demanded an additional Rs. 130 crores, and had extended threats to her. Succumbing to the pressure, Mrs. Singh had ended up paying around Rs. 200 crores. Investigations later revealed that the petitioner s husband Mr. Sukash Channdersekhar, an inmate of Tihar Jail, had orchestrated the entire scam, and by using spoof calls, he had impersonated senior government officials and, along with his accomplices, he had defrauded and extorted a significant sum from Mrs. Aditi Singh. 4. On the basis of these allegations, an FIR bearing n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premises of M/s Lanson Toyota. It was also revealed that one associate of Mr. Sukash Chandrasekhar i.e. Mr. Arun Muthu had also purchased some high-end cars, which had been funded by Mr. Sukash. Therefore, a search had also been conducted at the residence of Mr. Arun Muthu, which led to seizure of four vehicles. It was also revealed that some vehicles of Mr. Sukash Chandrasekhar/Mrs. Leena Paulose were kept at the business premises of one Mr. Karthik, located in Chennai. Pursuant to search conducted at this premises, four more cars were recovered and seized by the Directorate of Enforcement. 8. The investigation further revealed that Mr. Sukash had purchased these cars either in the name of some firms of his wife or third parties, and had made cash payments through his associates Mr. B. Mohanraj, Mr. Arun Muthu, etc. and further had legitimized the transactions with rent agreements. Significant commissions were paid to associates and third parties involved. These twenty-six (26) vehicles were found to be acquired using proceeds from criminal activities and were retained for further investigation and potential confiscation under PMLA. 9. In October 2021, Mr. Sukash Channdersekha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to ED for disposal in accordance with law and the Rules of 2013. Application is accordingly disposed off. 13. Thereafter, an application was moved by the State praying that the Directorate of Enforcement be directed to not dispose of the said vehicles without prior intimation to the Delhi Police/ Economic Offences Wing. The petitioner herein i.e. Mrs. Leena Paulose had also filed her objections to the prayer of Directorate of Enforcement, for sale of vehicles in question. 14. After considering the submissions made on behalf of all the parties, the learned Additional Sessions Judge vide order dated 14.02.2023 held that the Directorate of Enforcement was at liberty to proceed ahead to dispose off the 26 vehicles as per Rule 4 of Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicatory Authority), Rules 2013. It was further directed that the Directorate of Enforcement would file the report regarding disposal of those vehicles and further that the representative of Delhi Police/ Economic Offences Wing can also participate in the process of auction of those vehicles. The relevant portion of order dated 14.02.2023 is extracted he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 vehicles in its ED matter as well as in the present matter. Representative of EOW can also participate in the process of auction of those vehicles so that they can also record the proceedings for the purpose of record of this case. With these directions application of State disposed off. 15. The above-mentioned orders dated 20.12.2022 and 14.02.2023, and the action of respondent i.e. Directorate of Enforcement of selling the 26 vehicles seized in the present case, has been challenged by the petitioner by way of present petition. SUBMISSIONS BEFORE THIS COURT Submissions on behalf of Petitioner 16. Learned counsel, appearing on behalf of petitioner Mrs. Leena Paulose, argues that the petitioner is suffering from depression with memory loss, after prolonged isolated life in jail for more than 16 months; however, she is able to remember that two cars i.e. Rolls Royce Ghost with registration no. DC12CA8000 and Brabus with registration no. HP12L0850, were purchased in the year 2018 i.e. much prior to the date of the alleged offence and by any stretch of imagination, these cars cannot come under the ambit and scope of proceeds of crime. It is submitted that the petitioner also remembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswering the queries of the Directorate of Enforcement. It is stated that the petitioner has been implicated in the present case only for the reason of being wife of accused no. 1 i.e. Mr. Sukash Chandrasekhar and that she was having an independent business in the name of M/s Super Car Artistry for buying and selling cars. It is also argued that most of the cars are taken on legally valid Loan Agreements and the petitioner was paying the EMI for the same without fail. 20. It is also argued that any action of the respondent, of selling the cars, will go to the root of the Articles 14, 19 and 21 of the Constitution of India as the chances of a dignified life to the petitioner will be denied to her and ignoring the fact that 26 cars are essential for her business activities. It is also argued that out of 26 cars, she is emotionally connected with some of the cars and once sold, no amount of money can get it back. It is also stated that just because she is the wife of the main accused, the same should not mean the end of dignified life for her. It is stated that most unfortunately, the entire pleadings of the respondent about the present petitioner is about her being the wife of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled on behalf of the present petitioner objecting to sale/disposal of 26 vehicles. The Directorate of Enforcement in its reply had submitted that the amount received from the disposal of the vehicles will be kept available for transfer to the actual claimant. It is argued that after having considered the submissions on behalf of all the parties, learned Additional Sessions Judge in continuation of its earlier order dated 20.12.2022, directed vide order dated 14.02.2023 that the Directorate of Enforcement was at liberty to proceed ahead to dispose of the 26 vehicles as per Rule 4 of Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicatory Authority), Rules 2013. It was also ordered that the representative of EOW can participate in the process of auction of those vehicles so that they can also record the proceedings for the purpose of records this case. 26. Therefore, it is prayed that the present petition be dismissed since the proceedings carried out by the Directorate of Enforcement are as per law. Submissions on behalf of State 27. Learned ASC, appearing on behalf of the State, argues that as per the provisions of MCOCA, every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of any records relating to money laundering, or (iv) is in possession of any property related to crime, then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks of identification on such record or property, if required or make or cause to be made extracts or copies therefrom; (e) make a note or an inventory of such record or property; (f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act: *** (4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty days from such seizure or freezing, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undering, 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 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 investigation for a period not exceeding three hundred and sixty-five days or the pendency of the proceedings relating to any 3 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; and (b) become final after an order of 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; Explanation . For the purposes of computing the period of three hundred and sixty-five days under clause (a), the period during which the investigation is stayed by any court under any law for the time being in force shall be excluded. (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... send a report to the Special Court or Adjudicating Authority, as the case may be, for information and appropriate action: Provided further that where the movable property is a mode of conveyance of any description, the authorised officer, after obtaining its valuation report from the Motor Licensing Authority or any other authority, as the case may be, may accept and retain the fixed deposit receipt of a nationalised bank equivalent to the value of the movable property as security in the name of Director of Enforcement and send a report to the Special Court or Adjudicating Authority, as the case may be, for information and appropriate action. (3) Where the attached property confirmed by the Adjudicating Authority consists of cash, government or other securities or bullion or jewellery or other valuables, the authorized officer shall cause to deposit it in a locker in the name of the Director of Enforcement or in the form of fixed deposit receipt, as the case may be, in State Bank of India or its subsidiaries or in any nationalised bank and retain the receipt thereof. (4) Where the attached property confirmed by the Adjudicating Authority is in the form of shares, debentures, units ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case may be, and deposit the sale proceeds in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit and retain the receipt thereof. Whether the proceedings carried out in this case by the Directorate of Enforcement are as per law? 35. Having gone through the records of the case, this Court is of the opinion that in the present case, in order to collect the records relating to the money laundering and to trace proceeds of crime involved in money laundering, the Directorate of Enforcement had carried out search under Section 17 of PMLA at several locations and premises. In this process, a total of 26 luxury and high-end cars were found and seized by the respondent, which were prima facie found to have been purchased out of the proceeds of crime generated out of the criminal activities of Mr. Sukash Channdersekhar. 36. In compliance of Section 17 (4) of PMLA, the Directorate of Enforcement had filed five original applications bearing numbers OA Nos. 555, 558, 559, 565 and 572 of 2021. The common prayers in all these applications were as follows: I. In the facts and circumstances stated above, it is prayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to natural decay? 41. Rule 4 of Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicatory Authority), Rules 2013 provides the manner of taking possession of movable properties is concerned, which clearly outlines as follows: (i) Where the property in question is a movable property, the authorized officer shall take physical possession of such property and deposit it in a warehouse or a storage place [Rule 4(1)]. (ii) Where the property in question is liable to speedy and natural decay or the expense of maintenance is likely to exceed its value, such property shall be sold of with the leave of the concerned Special Court or Adjudicating Authority, and the sale proceeds shall be deposited in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit and the receipt of the same shall be retained [Rule 4 (2)]. 42. The applicability of Rule 4 (2) has not been disputed by the petitioner Mrs. Leena Paulose. It is the specific case of respondent that the 26 cars in question, which are expensive and luxury cars, are those movable properties which are subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposal shall similarly be ensured to effectively implement the mandate of the Supreme Court in Sunderbhai Ambalal Desai v. State of Gujarat (supra 1) that articles are not to be kept for a period of more than one month. As regards valuable articles and currency notes, mandate of the Supreme Court as prescribed in above mentioned judgments should be strictly ensured. (Emphasis supplied) 46. Therefore, the relevant rules of PMLA which allow the sale of seized vehicles and depositing the proceeds of the same into a fixed deposit addresses the above-mentioned issues. For the accused, if the trial concludes in his favor after several years, he would receive the monetary value rather than a decayed, non-operational, rusted vehicle, almost reduced to junk. This ensures the accused does not suffer any financial loss due to the prolonged judicial process. For the investigating agency, this approach ensures that the value of the seized properties will be available to the investigating agency if the trial concludes in their favour. 47. Therefore, by converting the sale proceeds of a movable property subject to natural decay, such as a vehicle, into an interest-bearing fixed deposit, the Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceive the amount generated from selling the movable property i.e. cars in the present case, which the Directorate of Enforcement is obliged to keep deposited in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit. Conclusion 52. This Court has also considered the arguments presented on behalf of Mrs. Leena Paulose, who claims to be a model, actor, dentist, and successful businesswoman. She has also claimed her involvement in various business activities, including M/s Super Car Artistry. However, her statements contain contradictions and inconsistencies, which this Court will address in the following paragraphs. 53. On the one hand, Mrs. Leena Paulose states that she is a model, actor, dentist and an independent successful business woman, having various business activities including M/s Super Car Artistry, and that she has been implicated in the present case solely because she is the wife of the main accused in this case. However, on the other hand, she states in her application dated 31.08.2022 filed before the learned Trial Court, that as a dutiful wife, she had complied with the suggestions/demands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness M/s Super Car Artistry. Likewise, she further states that she is emotionally connected with some of these cars and once sold, no amount of money can get it back. However, at the same time, it is important to note that at-least 8 cars were not even recovered from the residential or business premises of the petitioner Mrs. Leena Paulose, but from the premises of Mr. Arun Muthu and Mr. Karthik. Strangely, the petitioner does not even remember the make and registration number of the cars in question, nor does she know where the registration papers and other relevant documents of the cars in question were, which belie her contentions. The argument regarding emotional connection with some of the cars in question is also not palatable since neither the restriction of such cars nor the reason for the emotional connect was provided in the pleadings or during arguments. Even otherwise, when one does not even have the knowledge about majority of the cars or other details, where will be the question of emotional attachment with any of them. 57. A reasonable human being, who is able to purchase 26 luxurious cars, would have not only the documents and the details qua her own income, but all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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