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TMI Blog2023 (8) TMI 1489X X X X Extracts X X X X X X X X Extracts X X X X ..... rity; (iii) Pending admission, hearing and final disposal of the present Special Civil. Application, stay the effect, operation and implementation of the Impugned Order Notice qua the Subject Land and the Petitioner, and all actions consequential to the Impugned Order, including the Complaint and Show Cause Notice, qua the Subject Land and the Petitioner; (iv) Grant ex-parte ad-interim relief in terms of prayer (iii) above; and (v) Pass any other orders that this Hon'ble Court deems fit in the interest of justice. 2. Brief facts leading to the adjudication of the present writ-application read thus :- 2.1 The writ-applicant herein, AM Mining India Private Limited ("AMMIPL") is a private company incorporated on 31.10.2019 under the provisions of Companies Act, 2013. The writ-applicant herein is a part of the Arcelor Mittal Nippon Steel Group, which has caused successful resolution of stressed assets, including the successful resolution and revival of the erstwhile Essar Steel India Limited. 2.2 The Respondent No. 2 is ABG Shipyard Limited, a company incorporated on 15 March 1985 under the provisions of Companies Act, 1956 ("ABG Shipyard") which is under liquidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- Particulars Time Period Amount .... .... .... Tranche 1 At the end of 7 months of being declared as successful bidder (i.e. August 25, 2022) INR 18,95,00,000,.00 (Rupees Eighteen Crores Ninety-Five Lakhs Only) Tranche 2 At the end of 8 months of being declared as successful bidder (i.e. September 25, 2022) INR 18,95,00,000,.00 (Rupees Eighteen Crores Ninety-Five Lakhs Only) Tranche 3 At the end of 9 months of being declared as successful bidder (i.e. October 25, 2022) INR 83,38,00,000.00 (Rupees Eighty Three Crores Thirty Eight Lakhs Only) 2.9 Accordingly, under UTR: HSBCR22022082517255864, the writ-applicant herein on 25.08.2022 remitted an amount of INR 18,95,00,000.00 (Rupees Eighteen Crores, Ninety-Five Lakhs only). 2.10 The writ-applicant herein was ready and willing to remit the balance amounts, in terms of the aforesaid payment schedule set out in the Agreement to Sell. The writ-applicant herein had, and continues to have, necessary wherewithal to make the balance payments. 2.11 Subsequent to the aforesaid proceedings undertaken before the NCLT wherein the writ-applicant herein was declared as the highest bidder as referred above and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble NCLT initiated the liquidation proceedings on 25.4.2019. Pursuant to the order, Mr. Sundaresh Bhat was appointed as the liquidator. In furtherance of the advertisement for sale of assets of ABGSL issued by the Liquidator under the liquidation process, the petitioner submitted its bid for the subject land. Upon being adjudged as the successful bidder and making necessary payments, an agreement to sell was drawn on 21.3.2022. On 21.9.2022, by way of the impugned order, the subject land was provisionally attached under the PMLA, thereby enjoining the parties from completion of the sale process and causing handing over of the subject land to the petitioner, which came to be confirmed by the impugned order passed by the adjudicating authority dated 14.3.2023. 2.1 Mr. Sanjanwala, learned Senior Counsel vehemently submitted that the petitioner herein is a successful bidder, pursuant to the permission granted by the NCLT to the liquidator to sell the assets of ABG Shipyard by way of private sale by order dated 2.12.2020. The petitioner on 25.01.2022, submitted a bid for an amount of INR 189,50,00,000/- for the purchase of the Subject Land ("Sale Consideration") and was adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. 5. In view of the above, Issue Rule, returnable on 5.7.2023. Mr. Devang Vyas, learned ASG waives service of notice of Rule for and on behalf of respondent No. 1. Mr. Monaal Davawala, learned advocate waives service of notice of rule for respondent Nos. 2 and 3." 5. Heard Mr. R. S. Sanjanwala, the learned Senior Counsel assisted by Mr. Raheel Patel, the learned advocate appearing for Gandhi Law Associates, the learned advocate appearing for the writ-applicant, Mr. Kshitij Amin, the learned advocate appearing for the respondent No. 1 and Mr. S.N. Soparkar, the learned Senior Counsel assisted by Mr. Monaal Davawala, the learned advocate appearing for the respondent No. 2 and 3. Submissions on behalf of the writ-applicant herein :- 6 Mr. R. S. Sanjanwala, the learned Senior Counsel vehemently submitted that the final order dated 14.3.2023 passed by the respondent No. 1 is in teeth of Section 33(5) of the IBC. (a) Placing reliance on the aforesaid submission Mr. Sanjanwala, the learned Senior Counsel submitted that the order impugned is in clear breach of provisions of Section 33(5) of the Indian IBC, the respondent No. 1 having initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MLA, since (i) Section 238 of the IBC provides that the provisions of IBC will override anything inconsistent with any other law in force and (iii) PMLA, despite containing a similar overriding provision under Section 71, is subservient to the provisions of IBC, since IBC was enacted after PMLA. It was submitted that when there is two enactments of non-obstante clauses (like the present one), the enactment which is subsequent in time overrides the other. Reliance was placed on the decision in the case of Bank of India vs. Ketan Parekh and Ors., reported in (2008) 8 SCC 148 to substantiate the aforesaid contention. (f) Mr. Sanjanwala, the learned Senior Counsel submitted that the writ-applicant herein is bonafide purchaser of the subject land and has no involvement into unlawful activities allegedly carried out by the ABG Shipyard. The writ-applicant herein is a successful bidder and pursuant to the liquidation process undertaken by the respondent No. 3 after the orders came to be passed by the Hon'ble NCLT, the writ-applicant herein having found, not to be "a related party" to ABG Shipyard in terms of Section 29A of the IBC. It was submitted that in view thereof, the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the Special Civil Application No. 19387 of 2022 dated 17.2.2023 in case of Welspun Steel Resources Pvt. Ltd., vs. Union of India, which set aside the provisional attachment of similarly placed assets, holding that the same could not have been attached in the first place under the PAO, not being the proceeds of crime. Despite the same having been brought to the notice of the adjudicating authority, no reference is made by the adjudicating authority while passing the final order dated 14.3.2023. (j) It was submitted that the adjudicating authority was bound by the order passed in the Special Civil Application No. 19387 of 2022 dated 17.2.2023 as referred above and in view thereof also the present petition is required to be allowed considering the fact that in an identical fact and situation with respect to Welspun Steel Resources Pvt. Ltd., by exercising extraordinary jurisdiction the respondent authority has quashed the order of provisional attachment. (k) Placing reliance on the aforesaid submissions, it was submitted that the order impugned is required to be quashed and set aside on the aforesaid ground alone. (l) Mr. Sanjanwala, the learned Senior Counsel su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal until the sale deed is executed between the parties. It was submitted that in the facts of the present case at the stage of agreement to sell in view thereof this Court may not interfere with the order impugned passed by the respondent authority. 7.3 Mr. Amin, the learned advocate submitted that the orders impugned passed by the respondent authorities are in due compliance of the Act and the reasons are recorded in accordance with the provisions of law. 7.4 It was submitted that on the complaint being lodged before the enforcement authority, investigation was carried out, forensic audit was also carried out and it was found that there was divergence in the fund and for the same, attachment was held to be necessary. 8. Heard Mr. S. N. Soparkar, the learned Senior Counsel appearing for the respondent No. 2 Official Liquidator. Mr. Soparkar, the learned Senior Counsel supported the submissions made by the learned advocate appearing for the writ-applicant herein. Mr. Soparkar, the learned Senior Counsel submitted that the orders impugned are in violation of the provisions of Section 33(5) of the IBC. Mr. Soparkar, the learned Senior Counsel also submitted that the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2 of the Companies Act, 2013 (18 of 2013), or was in any manner in charge of, or responsible to the corporate debtor for the conduct of its business or associated with the corporate debtor in any manner and who was directly or indirectly involved in the commission of such offence as per the report submitted or complaint filed by the investigating authority, shall continue to be liable to be prosecuted and punished for such an offence committed by the corporate debtor notwithstanding that the corporate debtor's liability has ceased under this sub-section. (2) No action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution of the corporate debtor, where such property is covered under a resolution plan by the Adjudicating Authority under section 31, which results in the change control of the corporate debtor to a person, or sale of liquidation assets under the of Chapter III of Part II of this Code to a person, who was not- (i) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (ii) a person with regard to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), on the basis of material in his possession, that - (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in clause (b), any property of any person may be attached under this section if the Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 (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 oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded, 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 offences of money-laundering after having regard to the material before it." 11. At this stage, it is also apposite to refer to the position of law as held in the case of Rajiv Chakraborty Resolution Professional of EIEL v. Directorate of Enforcement, reported in 2022 SCC OnLine Del 3703, paragraphs 8, 12, 20, 104, 107, 114 and 115. "8. Having noticed the essential facts, which would be relevant for the purposes of disposal of the instant writ petition and before proceeding to consider the arguments addressed on merits, the Court deems it appropriate to deal with the preliminary objections which were raised by Mr. Hossain. Mr. Hossain had firstly referred to the petitioner having filed I.A. No. 2576/2019 before the NCLT and submitted that an identical prayer for the lifting of the attachment orders made by the ED had been moved before the said Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture Not Verified Digitally Signed By:NEHA Signing Date:11.11.2022 15:55:22 Neutral Citation Number: 2022/DHC/004739 conflicting views which had been expressed in Varrsana Ispat Limited vs. Deputy Director of Enforcement14 as well as Andhra Bank vs. Sterling Biotech Limited15, Rotomac Global Private Limited vs. Deputy Director, Directorate of Enforcement16 on the one hand and Manoj Kumar Agarwal on the other and contended that in light of the flux in the legal position, it would but be appropriate for this Court to effectively rule upon the questions which arise. The attention of the Court was also drawn to the judgement rendered by a larger bench of the National Company Law Appellate Tribunal17 in Kiran Shah v. Enforcement Directorate18 which had taken a view diametrically opposed to what was held in Manoj Kumar Agarwal. In view of the aforesaid, it was urged that the Court should render an authoritative pronouncement on the questions which arise for determination. 20. Appearing for the respondents, Mr. Zoheb Hossain, learned counsel appearing for the ED argued that "proceeds of crime" as defined under Section 2(1)(u) of PMLA is not an operational debt as per the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill the investigation is completed. The authority for "provisional" attachment of suspect assets is to ensure that the same remain within the reach of the law. xxx xxx xxx 141. This court finds it difficult to accept the proposition that the jurisdiction conferred on the State by PMLA to confiscate the "proceeds of crime" concerns a property the value whereof is "debt" 2019 SCC OnLine Del 7854 Signature Not Verified Digitally Signed By:NEHA Signing Date:11.11.2022 15:55:22 Neutral Citation Number: 2022/DHC/004739 due or payable to the Government (Central or State) or local authority. The Government, when it exercises its power under PMLA to seek attachment leading to confiscation of proceeds of crime, does not stand as a creditor, the person alleged to be complicit in the offence of money-laundering similarly not acquiring the status of a debtor. The State is not claiming the prerogative to deprive such offender of ill-gotten assets so as to be perceived to be sharing the loot, not the least so as to levy tax thereupon such as to give it a colour of legitimacy or lawful earning, the idea being to take away what has been illegitimately secured by prescribed criminal activity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lgated later in point of time. 114. On a consideration of the aforesaid, the Court comes to the conclusion that Section 32A would constitute the pivot by virtue of being the later act and thus govern the extent to which the non obstante clause enshrined in the IBC would operate and exclude the operation of the PMLA. As has been observed hereinabove, while both IBC and the PMLA are special statutes in the generic sense, they both seek to subserve independent and separate legislative objectives. The subject matter and focus of the two legislations is clearly distinct. When faced with a situation where both the special legislations incorporate non obstante clauses, it becomes the duty of the Court to discern the true intent and scope of the two legislations. Even though the IBC and Section 238 thereof constitute the later enactment when viewed against the PMLA which came to be enforced in 2005, the Court is of the considered opinion that the extent to which the latter was intended to capitulate to the IBC is an issue which must be answered on the basis of Section 32A. The introduction of that provision in 2020 represents the last expression of intent of the Legislature and thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iquidation. Assets of the company 'corporate debtor' were offered for sale pursuant to an auction held under the directions of the Apex Court. The petitioners were successful bidders and had after depositing the entire sale consideration received sale certificates. Certainly can it not be said that the assets which are 'specified assets' which the petitioners have acquired are those assets which are acquired as a result of criminal activity and therefore can be said to be 'proceeds of crime'. In the decision in the case of Manish Kumar (supra), the Apex Court while considering the constitutionality of Section 32(A) of IBC held as under: "320. Coming to sub-Section (2) of Section 32A, it declares a bar against taking any action against property of the corporate debtor. This bar also contemplates the connection between the offence committed by the corporate debtor before the commencement of the CIRP and the property of the corporate debtor. This bar is conditional to the property being covered under the Resolution Plan. The further requirement is that a Resolution Plan must be approved by the Adjudicating Authority and, finally, the approved plan, must result in a change in contro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty of the corporate debtor is protected from any legal action again subject to the safeguards, which we have indicated. 323.3 The bar against action against the property, is available, not only to the corporate debtor but also to any person who acquires property of the corporate debtor under the CIRP or the liquidation process. The bar against action against the property of the corporate debtor is also available in the case of a person subject to the same limitation as prescribed in sub-Section (1) and also in sub- Section (2), if he has purchased the property of the corporate debtor in the proceedings for the liquidation of the corporate debtor. 324. The last segment of Section 32A makes it obligatory on the part of the corporate debtor or any person, to whom immunity is provided under Section 32A, to provide all assistance to the Investigating Officer qua any offence committed prior to the commencement of the CIRP. 325. The contentions of the petitioners appear to be that this provision is constitutionally anathema as it confers an undeserved immunity for the property which would be acquired with the proceeds of a crime. The provisions of the Prevention of Money-Lau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er into the hands of the Resolution Professional subject undoubtedly to the control by the Committee of Creditors. As far as protection afforded to the property is concerned there is clearly a rationale behind it. Having regard to the object of the statute we hardly see any manifest arbitrariness in the provision." 6.4 Therefore, what is clear is that it is only such property which is derived or obtained directly or indirectly as a result of a criminal activity can be regarded as proceeds of crime. In the facts of the case, obviously apparent it is that the only allegation and the gist that had been discussed is that the corporate debtor used the credit raised from the bank for purposes other than intended purposes to carry out circular transactions with various group companies and making overseas investments. There is no explanation as to how the properties standing in the name of corporate debtor and which form part of the assets sold to the petitioners are proceeds of crime especially since these assets are neither overseas assets or that of the group companies. 7. Sine qua non to arrive at a determination that the assets are proceeds of crime, the foremost requirement is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid reasons therefore, the petition is allowed. The order dated 21.09.2022 insofar as it attaches the specified assets of the petitioners as shown in para 12 of the impugned order in the schedule of properties at Sr. Nos. 13, 14, 15, 17, 18, 19 and 20 shall be treated as assets not falling within the purview of and having acquired from 'proceeds of crime'. The order holding so is without jurisdiction and the assets are directed to be released from such attachment. Order accordingly. Rule is made absolute. No costs. " Analysis :- 13. The following emerge for the consideration of the present dispute in question; Whether the respondent authority under the PMLA Act, 2002 would retain jurisdiction or authority to proceed against the properties of a corporate debtor once liquidation measures have been approved in accordance with the provisions of IBC Act, 2016 ? 14(A) Pursuant to an application filed by the ICICI Bank Ltd., Corporate Insolvency Resolution Process (CIRP) was initiated against the ABG Shipyard by the Hon'ble NCLT on 1.8.2017 CP(IB) No. 53/NCLT/AHM/2017. Since there was no resolution of ABG Shipyard to take place in terms of the IBC, vide the Liquidatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ-applicant herein had already remitted INR 68,22,00,000 (Rupees Sixty-Eight Crores and Twenty-Two Lakhs only) towards acquisition of the Subject Land. (E) Towards the balance of the Sale Consideration, the Agreement to Sell, provided the following payment schedule :- Particulars Time Period Amount .... .... .... Tranche 1 At the end of 7 months of being declared as successful bidder (i.e. August 25, 2022) INR 18,95,00,000,.00 (Rupees Eighteen Crores Ninety-Five Lakhs Only) Tranche 2 At the end of 8 months of being declared as successful bidder (i.e. September 25, 2022) INR 18,95,00,000,.00 (Rupees Eighteen Crores Ninety-Five Lakhs Only) Tranche 3 At the end of 9 months of being declared as successful bidder (i.e. October 25, 2022) INR 83,38,00,000.00 (Rupees Eighty Three Crores Thirty Eight Lakhs Only) (F) Accordingly, under UTR: HSBCR22022082517255864, the writ-applicant herein on 25.08.2022 remitted an amount of INR 18,95,00,000.00 (Rupees Eighteen Crores Ninety-Five Lakhs only). The bank statement to the said effect is duly produced at Annexure P-13. (G) The writ-applicant herein was ready and willing to remit the balance amounts, in term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interferes with the consummation of the sale process which is part of liquidation of ABG Shipyard. The aforesaid interjection by the respondent No. 1, in the opinion of this Court, is in teeth of the provisions of Sections 32A, 33(5) and 238 of the IBC. 18. In the facts of the present case, by an order dated 17.2.2023 passed in the Special Civil Application No. 19387 of 2022 the order of provisional attachment dated 21.9.2022 passed under Section 5(1) PMLA Act, 2002, wherein the writapplicant in the said petition i.e. Welspun Steel Resources Pvt. Ltd., was identically placed at Serial No. 3 as that of the present writ-applicant herein in the said schedule, wherein the writ-applicant herein figures at Serial No. 12 in the schedule of property duly produced at page-214 para-12 wherein the order of provisional attachment dated 21.9.2022 passed under Section 5(1) of the PMLA Act, 2002 has been quashed and set aside by the said judgment. 18.1 While quashing the order of provisional attachment under Section 5(1) of the PMLA Act by order dated 17.2.2023 passed in the Special Civil Application No. 19387 of 2022 it was held that the "reason to believe" has been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent to the final argument filed by the Defendants and the Complainant have been gone through. I have considered all the relevant materials placed on record before me. Considering the material in O.C ., the written replies and rejoinders, I find that the immovable/movable properties provisionally attached by PAO No. 08/2022 dated 21.09.2022 i.e ., movable/immovable properties mentioned on page no. 185 to 190 of PAO and at page no. 09 to 15 of OC of the instant order, mentioned in the name of Defendants are proceeds of crime in terms of section 2(1)(u) of the PMLA, 2002, and therefore, involved in money laundering. Further, there is failure on part of the Defendants to discharge the burden as required to be discharged under the provisions of section 8 of PMLA and in view of the presumption under section 24 of PMLA as herein above referred, which is not rebutted. a. I, therefore, hereby confirm the attachment of the property made under sub-section (1) of Section 5 of PMLA. I, therefore, order that the said Attachment shall continue during pendency of the proceedings relating to any offence under the prevention of Money-Laundering Act, 2002 before the Special Court; and bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The impugned order is passed by the adjudicating authority without considering the submissions advanced by the petitioner herein and has proceeded to conclude that the properties attached are proceeds of crime and, therefore, involved in money laundering. 19.2 It is apposite to refer to the ratio as laid down in the case of Assistant Commissioner, Commercial Tax Department, Works Contract And Leasing, Kota Versus Shukla And Brothers, reported in (2010) 4 SCC 785, paragraphs 13 to 19 "13. The principle of natural justice has twin ingredients; firstly, the person who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing and secondly, the orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself. Such rule being applicable to the administrative authorities certainly requires that the judgment of the Court should meet with this requirement with higher degree of satisfaction. The order of an administrative authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons. . . ." 15. In Gurdial Singh Fijji V/s. State of Punjab [(1979) 2 SCC 368], while dealing with the matter of selection of candidates who could be under review, if not found suitable otherwise, the Court explained the reasons being a link between the materials on which certain conclusions are based and the actual conclusions and held, that where providing reasons for proposed supersession were essential, then it could not be held to be a valid reason that the concerned officer's record was not such as to justify his selection was not contemplated and thus was not legal. In this context, the Court held - * "... "Reasons" are the links between the materials on which certain conclusions are based and the actual conclusions. The Court accordingly held that the mandatory provisions of Regulation 5(5) were not complied with by the Selection Committee. That an officer was "not found suitable" is the conclusion and not a reason in support of the decision to supersede him. True, that it is not expected that the Selection Committee should give anything approaching the judgment of a Court, but it must at least state, as briefly as it may, why it came to the conclusion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the appellant was being superseded by one of his juniors, we do not think if it was enough on the part of the Selection Committee to have merely stated unfit, and then to recommend the name of one of his juniors. No reason for unfitness, is reflected in the proceedings, as against what earlier Selection Committees had done to which reference has already been made." In the case of Jawahar Lal Singh V/s. Naresh Singh and Ors. (1987) 2 SCC 222, accepting the plea that absence of examination of reasons by the High Court on the basis of which the trial Court discarded prosecution evidence and recorded the finding of an acquittal in favour of all the accused was not appropriate, the Supreme Court held that the order should record reasons. Recording of proper reasons would be essential, so that the Appellate Court would have advantage of considering the considered opinion of the High Court on the reasons which had weighed with the trial Court. In the case of State of Punjab and Ors. V/s. Surinder Kumar and Ors. [(1992) 1 SCC 489], while noticing the jurisdictional distinction between Article 142 and Article 226 of the Constitution of India, the Supreme Court stated that powers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld as under: "8. Even in respect of administrative orders Lord Denning, M.R. In Breen V/s. Amalgamated Engg. Union observed: "The giving of reasons is one of the fundamentals of good administration." In Alexander Machinery (Dudley) Ltd. V/s. Crabtree it was observed: "Failure to give reasons amounts to denial of justice." "Reasons are live links between the mind of the decision-taker to the controversy in question and the decision or conclusion arrived at." Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out. The "insc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... level of thought and scrutiny by the Court that a bare signal of affirmance, dismissal, or reversal does not." The Court cannot lose sight of the fact that a losing litigant has a cause to plead and a right to challenge the order if it is adverse to him. Opinion of the Court alone can explain the cause which led to passing of the final order. Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the reasons for rejection of its contention is a legitimate expectation on the part of the litigant. Another facet of providing reasoning is to give it a value of precedent which can help in reduction of frivolous litigation. Paul D. Carrington, Daniel J Meador and Maurice Rosenburg, Justice on Appeal 10 (West 1976), observed as under:- "When reasons are announced and can be weighed, the public can have assurance that the correcting process is working. Announcing reasons can also provide public understanding of how the numerous decisions of the system are integrated. In a busy Court, the reasons are an essential demonstration that the Court did in fact fix its mind on the case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher Court. Reasons are the soul of the decision and its absence would render the order open to judicial chastism. The consistent judicial opinion is that every order determining rights of the parties in a Court of law ought not to be recorded without supportive reasons. Issuing reasoned order is not only beneficial to the higher Courts but is even of great utility for providing public understanding of law and imposing self- discipline in the Judge as their discretion is controlled by well established norms. The contention raised before us that absence of reasoning in the impugned order would render the order liable to be set aside, particularly, in face of the fact that the learned Judge found merit in the writ petition and issued rule, therefore, needs to be accepted. We have already noticed that orders even at interlocutory stages may not be as detailed as judgments but should be supported by reason howsoever briefly stated. Absence of reasoning is impermissible in judicial pronouncement. It cannot be disputed that the order in question substantially affect the rights of the parties. There is an award in favour of the workmen and the management had prayed for stay of the oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made;...." As observed in State of Orissa vs. Dhaniram Lunar (2004) 5 SCC 568 In the light of the factual details particularly with reference to the stand taken by the Horticulture Department at length in the writ petition and in the light of the principles enunciated by this Court, namely, right to reason is an indispensable part of sound judicial system and reflect the application of mind on the part of the court, we are satisfied that the impugned order of the High Court cannot be sustained." 19.1 Besides referring to the above well-established principles, it will also be useful to refer to some text on the subject. H.W.R. Wade in the book "Administrative Law, 7th Edition, stated that the flavour of said reasons is violative of a statutory duty to waive reasons which are normally mandatory. Supporting a view that reasons for decision are essential, it was stated:- ".....A right to reasons is, therefore, an indispensable part of a sound system of judicial review. Natural justice may provide the best rubric for it, since the giving of reasons is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t are without jurisdiction considering the fact that once the proceedings under IBC were initiated prior to the proceeding initiated under PMLA there is a bar under Section 32A of the IBC Act and Section 33(5) of the IBC Act as also Section 238 of the IBC. Further considering the orders passed by the competent authorities wherein the order under Section 5 of the PMLA wherein order of provisional attachment passed, has been quashed in the Special Civil Application No. 19387 of 2022 by order dated 17.2.2023. While passing the impugned order under Section 8 of the PMLA as referred above, the same is without assigning any independent reasoning and in view thereof the orders impugned dated 21.9.2022 and 14.3.2023 are required to be quashed and set aside and the same is quashed and set aside. 20.1 It is apposite to refer to (1998) 8 SCC 1, Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai para-15 read thus :- "15. Under Art. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the writ-applicant herein has carved out a case wherein the orders impugned are passed after the IBC proceedings came to be initiated, orders impugned are beyond the jurisdiction of competent authority and without any independent adjudication on the merits. In view thereof, in the opinion of this Court, no useful purpose would be served relegating the writ-applicant herein to avail statutory remedy by filing an appeal under Section 14 of the PMLA Act. 21. Considering the aforesaid, this Court is inclined to pass the following order:- The action undertaken under IBC Act wherein liquidation of ABG Shipyard commenced on 25.4.2019 under the provisions of IBC Act, was prior to the provisional attachment order issued by the respondent No. 1 under Section 5 of the PMLA on 21.9.2022. The action undertaken by the respondent No. 1 under PMLA by provisionally attaching the properties of the writ-applicant came to be issued on 21.9.2022 which resulted in the final adjudication by the impugned order dated 14.3.2023 under Section 8 of the PMLA which is subsequent to the proceedings initiated under IBC and, therefore, in the opinion of this Court, (a) Section 32A of the IBC Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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