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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 ..... it-applicant stands at identical footing to that of the writ-applicant in the Special Civil Application No. 19387 of 2022. Though the order under Section 5 is quashed and set aside, the respondent authority has proceeded to confirm the order of provisional attachment passed under Section 5(1) which can be said to be an order passed without any application of mind. While passing the impugned order pursuant to the show cause notice wherein a detailed reply came to be filed by the petitioner and written submissions came to be filed after personal hearing for release of the subject land for attachment. 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. No reasons are recorded by the adjudicating authority while issuing show cause notice in terms of Section 8(1). Having failed to record reasons to believe in terms of Section 8(1), in the opinion of this Court, the adjudicating authority has passed the impugned confirmation order dated 14.3.2023 which is liable to be quashed and set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 liquidation in terms of Section 33 of the Insolvency and Bankruptcy Code (for short IBC ) in view of the Order dated 25.04.2019 in CP(IB) No. 53/NCLT/AHM/2017 ( Liquidation Order ) passed by the Hon'ble National Company Law Tribunal, Ahmedabad ( NCLT ). 2.3 Pursuant to an application filed by ICICI Bank Ltd ., Corporate Insolvency Resolution Process ( CIRP ) was initiated against ABG Shipyard by the Hon'ble NCLT on 01.08.2017 in CP(IB) No. 53/NCLT/AHM/2017. Since no resolution of ABG Shipyard could take place in terms of the IBC, vide the Liquidation Order, the Hon'ble NCLT initiated liquidation proceedings against ABG Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 having remitted the amount of INR 18,95,00,000.00 the respondent No. 1 by order dated 21.9.2022 provisionally attached the subject land under Section 5 of the Prevention of Money Laundering Act (for short PMLA ) against ABG Shipyard. 3. Being aggrieved by the impugned order passed by the respondent No. 1 herein, the writ-applicant herein approached this Court by preferring the present petition challenging the impugned order dated 21.9.2022 duly produced at page-30 Annex.P/1. 4. Notice came to be issued on 19.1.2023. Pending the present petition the respondent No. 1 filed the complaint before the adjudicating authority which in turn issued show cause notice to the writ-applicant herein. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority 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 adjudged the Successful Bidder . The aforesaid culminated into agreement to sell dated 21.3.2022 , which came to be executed between ABG Shipyard (through Mr. Sundaresh Bhat in his capacity as the Liquidator) and the petitioner for sale and purchase of the subject land, which was registered vide document No. 5867 on 21.3.2022 at Surat. On execution of the agreement to sell, the petitioner has already remitted INR 68,22,00,000 towards acquisition of the subject land. 2.2 Mr. Sanjanwala, learned Senior Counsel submitted that the subject land was provisionally attached by the respondent No. 1 under Section 5 of the PMLA in connection with allegations of money laundering against ABG Shipyard. 2.3 It was submitted that the aforesaid initiation of proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 initiated proceedings qua the subject land under Section 5 of the PMLA post the liquidation order i.e. after 25.4.2019 i.e. by (i) passing the impugned order on 21.9.2022 (ii) provisionally attaching the subject property for 180 days with effect from 21.9.2022 (iii) initiating attachment proceedings against the subject property vide complaint dated 20.10.2022 under Section 5(5) of the PMLA and (iv) causing issuance of show cause notice dated 25.10.2022. (b) It was submitted that the aforesaid order is in clear breach of Section 33(5) of the IBC and in view thereof after liquidation order having been passed on 21.9.2022 all the consequential actions are void ab initio. (c) It was submitted that the order impugned dated 14.3.2023 passed by the respondent No. 1 is in gross violation of Section 32A(2) of IBC. Placing reliance on the aforesaid submissions it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 land is being acquired by the writ-applicant herein in terms of the legislatively sanctioned procedure under the IBC and the writ-applicant herein is nothing but bonafide third party purchaser of liquidation asset. Placing reliance on the aforesaid submissions, it was submitted that all protections to such a purchaser under IBC, especially the immunity under Section 32A, must be afforded to the writ applicant herein and its interest in the subject land be protected. (g) Mr. Sanjanwala, the learned Senior Counsel submitted that the order impugned passed by the respondent No. 1 is wholly without jurisdiction as (i) the same is passed in contravention of the procedural mandates and safeguards under Section 5 of PMLA; (ii) in breach of Sections 32A(2), 33(5) and 238 of IBC, as explained in detail above; (iii) it interdicts and seeks to override the Hon'ble Supreme Court's Order dated 26.08.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 submitted that the final order being wholly without jurisdiction on account of breach of provisions under the IBC the alternative remedy is not a bar to exercise powers under Article 226 of the Constitution of India. (m) Placing reliance on the aforesaid submissions Mr. Sanjanwala, the learned Senior Counsel submitted that the order impugned passed by the respondent No. 1 is required to be quashed and set aside. (n) Mr. Sanjanwala, the learned Senior Counsel placed reliance on the following decisions to substantiate his submissions :- (i) (1998) 8 SCC 1, Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai (para-15) (ii) (2009) 14 SCC 338 (para-13) (2021) 5 SCC page-1, Manish Kumar vs. Union of India. (iii) 2021 SCC OnLine SC 801, Magadh Sugar Energy Ltd., vs. State of Bihar and Ors., (para-25, 26, 27 and 32) (iv) (2021) 6 SCC 771, Radha Krishan Industries vs. State of Himachal Pradesh and Ors. (Para 27) (v) 2022 SCC OnLine Del 3703, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel 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 recorded by the respondent No. 1 authority while passing the final order are devoid of any reasons and the order impugned fails the test of Section 8 of the PMLA wherein the basic ingredients of Section 8, the reason to believe for coming to a conclusion, that the properties are proceeds of crime. 8.1 Mr. Soparkar, the learned Senior Counsel placed reliance on (1993) 1 SCC page-78 wherein it was held that recording of reasons is deterrent against the arbitrary action. It was submitted that the order impugned is also in violation of the provisions of the Section 33(5) and 32A of the IBC. The properties were purchased by the writ-applicant herein in sale process conducted in accordance with law and in compliance with the orders passed by the Hon ble Apex Court. 9. At this stage, it is apposite to refer to Section 32A, 33(5) and Section 238 of the IBC. Section 32A. Liability for prior offences, etc .- (1) Notwithstanding anything to the contrary contained in this Code or any other law for the time being in forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 whom the relevant investigating authority has, on the basis of material in its possession reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court. Explanation .- For the purposes of this sub-section, it is hereby clarified that , (i) an action against the property of the corporate debtor in relation to an offence shall include the attachment, seizure, retention or confiscation of such property under such law as may be applicable to the corporate debtor; (ii) nothing in this sub-section shall be construed to bar an action against the property of any person, other than the corporate debtor or a person who has acquired such property through corporate insolvency resolution process or liquidation process under this Code and fulfils the requirements specified in this section, against whom such an action may be taken under such law as may be applicable. (3) Subject to the provisions contained in sub-sections (1) and (2), and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clause (b), any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act. (2) The Director, or any other officer not below the rank of Deputy Director, shall, 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 under sub-section (2) of section 8 , whichever is earlier. (4) Nothing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued, 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 section (1) of section 5 or retention of property or 16 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 the pendency of the proceedings relating to any 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 alter an order of confiscation is passed under sub-section (5) or sub-section (7) of Section 8 or Section 58-B or sub-section (2-A) of Section 60 by the Adjudicating Authority. (4) Where the provisional order of attachment made under subsection (1) of section 5 had been confirmed under sub-section (3), the Director or any other officer authorised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. Learned counsel had also drawn the attention of the Court to the order dated 26 June 2020 passed on the aforesaid application whereby the Tribunal had restrained the respondent from realisation of the funds based on the attachment order, the validity of which was questioned. It was further contended that the writ petition as it stands has only impugned the provisional attachment orders dated 08 July 2020 and 05 August 2020. It was further contended that insofar as the PAO dated 08 July 2020 was concerned, that also formed subject matter of I.A. No_____/2020 (placed at page 343 of the paper book) in which Signature Not Verified Digitally Signed By:NEHA Signing Date:11.11.2022 15:55:22 Neutral Citation Number: 2022/DHC/004739 too, the petitioners had sought issuance of directions requiring the respondents to desist from proceeding further with the conformation of the PAO. It was lastly urged that the orders in terms of the which the PAO came to be confirmed by the Adjudicating Authority have also not been assailed in the writ petition. 9. On behalf of the petitioners, it was contended that the jurisdiction of the Court to rule upon the challenge which stands raised in the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 5(21) of the IBC. It was submitted that ED would not fall within the definition of an operational creditor as defined by Section 5(20) of the IBC. Learned counsel submitted that when the ED proceeds to attach properties representing proceeds of crime, it is not doing so by virtue of being a creditor of the corporate debtor. Mr. Hossain submitted that while an operational debt would mean a debt arising under any law for the time being in force, proceeds of crimes stand on a completely different pedestal and relate Signature Not Verified Digitally Signed By:NEHA Signing Date:11.11.2022 15:55:22 Neutral Citation Number: 2022/DHC/004739 to ill gotten assets derived or obtained from the commission of a scheduled offence. In view of the aforesaid, learned counsel would submit that it would be wholly incorrect to proceed on the basis that orders of attachment made in respect of properties which constitute proceeds of crime is akin to an action taken by a creditor against the assets of a debtor. Learned counsel submitted that while proceeding to attach and confiscate proceeds of crime, the action of the ED is essentially aimed at taking away from a person or an entity all that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proceeds of crime, there is no doubt, are not even remotely covered by the expressions revenues, taxes, cesses or other rates. The word revenue is the controlling word, the expressions following (taxes, cesses, rates) taking the colour from the same. The word revenue, in the context of Government is to be understood to be conveying taxation [Gopi Pershad v. State of Punjab, AIR 1957 Punjab 45 (DB)]. This is how the expression is defined by Black's Law Dictionary, Eighth Edition as also by Cambridge English Dictionary (accessible online). The reliance by the respondents on the use of the expression non-tax revenue with reference to PMLA under major accounting head 0047 Other Fiscal Services in the list of Heads of Accounts of Union and States issued by Controller General of Accounts, Department of Expenditure in the Ministry of Finance, Government of India under the Government of India (Allocation of Business) Rules, 1961 is misplaced. The use of the expression for accounting purposes - to take care of receipts flowing into the Consolidated Fund - cannot give to the value of proceeds of crime realised by sale of properties confiscated under PMLA the colour of taxation. 104. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the PMLA are to give way to proceedings initiated under the IBC. 115. The Court has independently come to the conclusion that the power to attach under the PMLA would not fall within the ken of Section 14(1)(a) of the IBC. Through Section 32A, the Legislature has authoritatively spoken of the terminal point whereafter the powers under the PMLA would not be exercisable. The events which trigger its application when reached would lead to the erection of an impregnable wall which cannot be breached by invocation of the provisions of the PMLA. The non obstante clause finding place in the IBC thus can neither be interpreted nor countenanced to have an Signature Not Verified Digitally Signed By:NEHA Signing Date:11.11.2022 15:55:22 Neutral Citation Number: 2022/DHC/004739 impact far greater than that envisaged in Section 32A. The aforesaid issue stands answered accordingly. 12. The present writ-applicant herein i.e. AM Mining India Pvt. Ltd., is identically placed with the writ-applicant herein of the Special Civil Application No. 19387 of 2022 i.e. Welspun Steel Resources Pvt. Ltd., vs. Union of India having approached this Court challenging provisional attachment order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed in sub-section (1). In other words, the requirements for invoking the bar against proceeding against the property of the corporate debtor in relation to an offence committed before the commencement of the CIRP, are as follows: 320.1 There must be Resolution Plan, which is approved by the Adjudication Authority under Section 31 of the Code; 320.2 The approved Resolution Plan must result in the change in control of the corporate debtor to a person, who was not (a) a promoter; (b) in the management or control of the corporate debtor or (c) a related party of the corporate debtor; (d) a person with regard to whom the investigating authority, had, on the basis of the material, reason to believe that he has abetted or conspired for the commission of the offence and has submitted a Report or a complaint. If all these aforesaid conditions are fulfilled then the Law Giver has provided that no action can be taken against the property of the corporate debtor in connection with the offence; 321. The Explanation to sub-Section (2) has clarified that the words an action against the property of the corporate debtor in relation to an offence , would include the attachment, seizure, retentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding against the property, affects the interest of stakeholders like the petitioners who may be allottees or other creditors. In short, it appears to be their contention that the provisions cannot stand the scrutiny of the Court when tested on the anvil of Article 14 of the Constitution of India. The provision is projected as being manifestly arbitrary. To screen valuable properties from being proceeded against, result in the gravest prejudice to the home buyers and other creditors. The stand of the Union of India is clear. The provision is born out of experience. The Code was enacted in the year 2016. In the course of its working, the experience it has produced, is that, resolution applicants are reticent in putting up a Resolution Plan, and even if it is forthcoming, it is not fair to the interest of the corporate debtor and the other stake holders. 326. We are of the clear view that no case whatsoever is made out to seek invalidation of Section 32A. The boundaries of this Court s jurisdiction are clear. The wisdom of the legislation is not open to judicial review. Having regard to the object of the Code, the experience of the working of the code, the interests of all stak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise from mere suspicion, gossip or rumour. Merely because the impugned order records alleged fraudulent transactions and diversion of funds, it cannot automatically lead to a conclusion that the properties acquired by the petitioners are proceeds of crime. In order to arrive at a conclusion that reason to believe exists, there must be some material to suggest such formation of opinion. The decisions in the cases of Madhya Pradesh Industries Ltd.(supra), S. Ganga Saran and Sons (Pvt.) Ltd. (supra), Sheo Nath Singh (supra), Radha Krishan Industries (supra), Calcutta Discount Co. Ltd. (supra) and Lakhmani Mewal Das (supra) have set out principles where the courts have held that reason to believe must be founded on sufficient material. It cannot be founded on mere suspicion but based on evidence. It must be held in good faith, cannot be merely a pretense. It is always open for the court to examine whether the reason to believe has a rational connection or a relevant bearing to the formation of the belief and the reasons are not extraneous or irrelevant to the purpose. Reading the contents of the order indicates that such observations are based on only on suspicion and are such which on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 33 of IBC. The Liquidator conducted five public auctions for the sale of assets of ABG Shipyard which were unsuccessful. Consequent to the unsuccessful public auction, Shri Sundaresh Bhat (being the Liquidator) approached the Hon'ble NCLT seeking permission to sell the assets of ABG Shipyard by way of private sale in terms of Regulation 33(2) read with Schedule I, Clause 2 of IBBI (Liquidation Process) Regulations, 2016. The Hon'ble NCLT, vide its order dated 02.12.2020, permitted Respondent No. 2 to sell the assets of ABG Shipyard through private sale. The said order is duly attached at Annexure-P6. The advertisements were issued on 14.12.2021, 24.12.2021, 07.01.2022 and 18.01.2022 in accordance with the regulatory framework governing the liquidation process, for initiating a bid process for sale of the Subject Land admeasuring approximately 2,03,000 square metres, situated near village Gaviar, Taluka Choryasi, District Surat, Gujarat, referred to as ABG Shipyard 1 and 2. The advertisements are duly produced at Annexure P-7 and details of subject land are duly produced at Annexure P-8. (B) The writ-applicant herein on 25.01.2022 submitted a bid for an amount of INR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject land came to be provisionally attached by the respondent No. 1 under Section 5 of the Prevention of Money Laundering Act (for short PMLA ) in connection with the allegation of money laundering against ABG Shipyard. The said provisional attachment resulted in passing of the final order by the adjudicating authority dated 14.3.2023 under Section 8 of the PMLA Act. 15. Having considered the aforesaid submissions advanced by the learned advocates appearing for the respective parties and the ratio as referred above the following emerge:- (i) Under the liquidation process of ABG Shipyard, the writapplicant herein has been declared as successful bidder qua the subject asset, has entered into agreement to sell for acquisition of subject asset, and has paid substantial part of purchase consideration, acquiring an equitable interest in the subject asset and on depositing the entire sale consideration received the sale certificate. (ii) The writ-applicant herein was neither a promoter, manager or related party to the ABG Shipyard (corporate debtor) and an appropriate affidavit under Section 29A was submitted by the writ-applicant herein which is duly produced at Annexure P-10 page-55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that, the only allegation and the gist that has been discussed is that the corporate debtor used the credit used from the Bank for the purposes other then intended purposes to carry out circular transaction with various group companies and making overseas investment. It was further held that no explanation as to how the properties standing in the name of corporate debtor and which form part of assets sold to the writ-applicant herein are proceeds of crime, especially since the assets are neither overseas assets or that the group of companies. As discussed in para-6.4 to 9 of the said order, wherein the Court proceeded to pass the final order in para-10 quashing and setting aside the provisional attachment order of the properties duly annexed at Serial Nos. 13, 14, 15, 17 to 20. The writ-applicant herein is placed at Serial No. 12 and is identically placed as the writ-applicant in the Special Civil Application No. 19387 of 2022. 19. While passing the impugned order under Section 8 the respondent authority proceeded to confirm the order of provisional attachment passed under Section 5(1) of the Act as referred above. No separate finding or independent adjudication has been under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence OC no. 1824/2022 is allowed subject to the order dated 17.02.2023 of the Hon'ble High Court of Gujarat as mentioned at page of this order. Order is pronounced on 14.03.2023 through video conference. Vinodanand Jha Chairperson An appeal against this order lies to The Hon'ble Appellate Tribunal, PMLA, New Delhi under section 26 of the PMLA Act. The Appeal may be filed within a period of 45 days from the date of receipt of the order. Vinodanand Jha Chairperson The soft copy of the order will be uploaded on email of the Defendant (wherever available) within 48 hours from the pronouncement of the order. One hard copy of the order is also dispatched simultaneously on the address available with the Adjudicating Authority. Further, the certified copy of the order will be made available within seven working days after the deposit of required fee with the Registrar of Adjudicating Authority, PMLA. Registrar/AO AA-PMLA 19.1 Without assigning any reasons, without any independent finding on reason to believe the order of provisional attachment under Section 5 of the PMLA has been confirmed. In the opinion of this Court, the order of provisional attachment dated 21.9.2022 came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Anr. [AIR 1976 SC 1785], the Supreme Court held as under:- 6. ......If courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative Law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. Then alone administrative authorities and tribunals exercising quasi-judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere presence of compliance with it would not satisfy the requirement of law. ... 14. In the case of Mc Dermott International Inc. V/s. Burn Standard Co. Ltd. and Ors. (2006) SLT 345, the Supreme Court clarified the rationality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt observed: . . . It would be for the benefit of this Court that a speaking judgment is given . 17. In the cases where the Courts have not recorded reasons in the judgment, legality, propriety and correctness of the orders by the Court of competent jurisdiction are challenged in absence of proper discussion. The requirement of recording reasons is applicable with greater rigor to the judicial proceedings. The orders of the Court must reflect what weighed with the Court in granting or declining the relief claimed by the applicant. In this regard we may refer to certain judgments of this Court. 18. A Bench of Bombay High Court in the case of M/s. Pipe Arts India Pvt. Ltd. V. Gangadhar Nathuji Golamare [2008 (6) Maharashtra Law Journal 280], wherein the Bench was concerned with an appeal against an order, where prayer for an interim relief was rejected without stating any reasons in a writ petition challenging the order of the Labour Court noticed, that legality, propriety and correctness of the order was challenged on the ground that no reason was recorded by the learned Single Judge while rejecting the prayer and this has seriously prejudiced the interest of justice. After a deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to regularisation of service of the respondents in view of certain directions passed by the Supreme Court under Article 142 of the Constitution of India. Absence of reasoning did not find favour with the Supreme Court. The Supreme Court also stated the principle that powers of the High Court were circumscribed by limitations discussed and declared by judicial decision and it cannot transgress the limits on the basis of whims or subjective opinion varying from Judge to Judge. In the case of Hindustan Times Ltd. V/s. Union of India and Ors. [(1998) 2 SCC 242], the Supreme Court while dealing with the cases under the Labour Laws and Employees' Provident Funds and Miscellaneous Provisions Act, 1952 observed that even when the petition under Article 226 is dismissed in limini, it is expected of the High Court to pass a speaking order, may be briefly. Consistent with the view expressed by the Supreme Court in the afore-referred cases, in the case of State of U.P. V/s. Battan and Ors. [(2001) 10 SCC 607], the Supreme Court held as under: The High Court has not given any reasons for refusing to grant leave to file appeal against acquittal. The manner in which appeal against acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in orders is of essence in judicial proceedings. Every litigant who approaches the Court with a prayer is entitled to know the reasons for acceptance or rejection of such request. Either of the parties to the lis has a right of appeal and, therefore, it is essential for them to know the considered opinion of the Court to make the remedy of appeal meaningful. It is the reasoning which ultimately culminates into final decision which may be subject to examination of the appellate or other higher Courts. It is not only desirable but, in view of the consistent position of law, mandatory for the Court to pass orders while recording reasons in support thereof, however, brief they may be. Brevity in reasoning cannot be understood in legal parlance as absence of reasons. While no reasoning in support of judicial orders is impermissible, the brief reasoning would suffice to meet the ends of justice at least at the interlocutory stages and would render the remedy of appeal purposeful and meaningful. It is a settled canon of legal jurisprudence that the Courts are vested with discretionary powers but such powers are to be exercised judiciously, equitably and in consonance with the settled pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or scrutinized by the Appellate Court. The reasons indicated by the Court could be accepted by the Appellate Court without presuming what weighed with the Court while coming to the impugned decision. The cause of expeditious and effective disposal would be furthered by such an approach. A right of appeal could be created by a special statute or under the provisions of the Code governing the procedure. In either of them, absence of reasoning may have the effect of negating the purpose or right of appeal and, thus, may not achieve the ends of justice. It will be useful to refer words of Justice Roslyn Atkinson, Supreme Court of Queensland, at AIJA Conference at Brisbane on September 13, 2002 in relation to Judgment Writing. Describing that some judgment could be complex, in distinction to routine judgments, where one requires deeper thoughts, and the other could be disposed of easily but in either cases, reasons they must have. While speaking about purpose of the judgment, he said, The first matter to consider is the purpose of the judgment. To my mind there are four purposes for any judgment that is written: - (1) to clarify your own thoughts; (2) to explain your decision to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order is silent in this regard. According to the learned Counsel appearing for the appellant, various contentions were raised in support of the reliefs claimed but all apparently, have found no favour with the learned Judge and that too for no reasons, as is demonstrated from the order impugned in the present appeals. 19. The principles stated by this Court, as noticed supra, have been reiterated with approval by a Bench of this Court in a very recent judgment, in State of Uttaranchal V/s. Sunil Kumar Singh Negi [(2008) 11 SCC 205], where the Court noticed the order of the High Court which is reproduced hereunder:- I have perused the order dated 27.5.2005 passed by Respondent 2 and I do not find any illegality in the order so as to interfere under Article 226/227 of the Constitution of India. The writ petition lacks merit and is liable to be dismissed. and the Court concluded as under:- In view of the specific stand taken by the Department in the affidavit which we have referred to above, the cryptic order passed by the High Court cannot be sustained. The absence of reasons has rendered the High Court order not sustainable. Similar view was expressed in State of U.P. V/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating authority to record reason to believe before issuance of show cause notice. At para-9 sub-para 22 at page-657/130 the adjudicating authority records as under :- It is evident from perusal of records including reasons recorded under Section 8 (1) by the undersigned that in this case the alleged criminal activity falling under scheduled offence as enumerated under the PMLA, 2022, resulted in generation of proceeds of crime. Out of this generation of proceeds of crime the ED could not lay hands on the direct deployment of proceeds of crime and hence it has gone for attachment of property as value of the proceeds of crime. As evident from the contents of the Original Complaint the following properties attached under section 5(1) as mentioned on page 09 to 15 of OC and at page 185 to 190 of PAO have been stated to be properties attached as value of the proceeds of crime . No reasons are recorded by the adjudicating authority while issuing show cause notice in terms of Section 8(1). Having failed to record reasons to believe in terms of Section 8(1), in the opinion of this Court, the adjudicating authority has passed the impugned confirmation order dated 14.3.2023 which is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of forensic Whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. 20.2 Civil Appeal No. 5121 of 2021 arising out of SLP (C) No. 13639 of 2021 @ D No. 11555 of 2020. The aforesaid judgment relied upon by Mr. Kshitij Amin, the learned advocate wherein the Hon ble Supreme Court held that wherein efficacious alternative remedy is available, the parties are relegated to avail the said remedy. Reliance was placed on page-8 of the said judgment. However, in the same judgment para-11 wherein exception are carved out, para-11 reads thus :- 11. The respondent had a statutory remedy under section 107. Instead of availing of the remedy, the respondent instituted a petition under Article 226. The existence of an alternate remedy is not an absolute bar to the maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is: (i) a breach of fundamental rights; (ii) a violation of the principles of natural justice; (iii) an excess of jurisdiction; or (iv) a challenge to the vires of the statute or delegated legislation. The case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses, like the present one, the enactment which is subsequent in time overrides the other in line with the ratio as laid down in (2008) 8 SCC 148. (c) The provisional attachment order which was subject matter of challenge and the writ-application herein being identically placed in the Special Civil Application No. 19387 of 2022, the said order was quashed by order dated 17.2.2023. However, without considering the aforesaid and without assigning any reasons to believe while issuing show cause notice, the same having culminated in final adjudication under Section 8 of the Act, in the opinion of this Court, the respondent authority has passed the impugned order without considering the aforesaid and proceeded to pass an unreasoned order. (d) Though Mr. Kshitij Amin, the learned advocate appearing for the respondent authority submitted that the writ-applicant be relegated to avail alternative remedy by filing an appeal before the Tribunal, in the opinion of this Court, the facts of the present case wherein extraordinary jurisdiction under Article 226 of the Constitution of India is required to be exercised considering the ratio as referred above, wherein this Court has come to a con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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