9911796707
TMI Blog2024 (9) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 1499 - DELHI HIGH COURT] ,the direction of the Hon'ble Delhi High Court was that steps shall be taken for filling up the vacant posts ... on an expeditious basis and in any case, within a period of four months from today. Notably, the said case was decided by the same single-judge Bench of the Hon'ble Delhi High Court which later decided Gold Croft Ltd. [ 2023 (9) TMI 1070 - DELHI HIGH COURT] . It is a well-established and indisputable proposition that orders passed by judicial and quasi-judicial authorities should be speaking orders which provide the detailed reasoning for the decisions. Upon a perusal of the impugned order, it is found that the requirement of passing a reasoned order has been violated by the Ld. AA while disposing of the Miscellaneous Applications filed by the appellant before it. It has duly provided its reasons, albeit very succinctly. It can be seen that the Ld. AA has given its reasons while disposing of the Miscellaneous Application. The appellant's grievance appears to be that the Ld. Authority did not address the underlying issue in the Miscellaneous Application which was regarding potential conflict of interest involved in cases generated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 17 provides that for the purpose of search and seizure, the Directors or other Officers not below the rank of Deputy Director may proceed for search and seizure based on the information in his possession and has reasons to believe that any person has committed any Act which constitute money laundering and is in possession of any proceeds of crime involved in money laundering etc., the Authorised Officer may enter and search the building, place, vessel, vehicle etc. and thereupon take further action as given under Section 17(1) of the Act which includes seizure of records and property. However, it would remain in operation only for a period of thirty days unless the officer file an application requesting retention of such records and property before the Adjudicating Authority and at this stage the Adjudicating Authority would serve a show cause notice alongwith the reasons to believe to the parties effected by it. The Adjudicating Authority would supply complete material to the parties concern to seek their response to show cause notice where the reasons to believe recorded by the Adjudicating Authority are also supplied thus the stage prior to the initiation of Section 8(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file an application in Form 7 before it as provided under the Adjudicating Authority (Procedure) Regulations, 2013 instead of which the appellant had resorted to filing of an MA. Accordingly, he disposed of the same. The said issue has also not been agitated before this Appellate Tribunal. Thus, the three appeals before us arise from the remaining three MAs: (1) Appeal No. FPA-PMLA-861/DLI/2024 is against the order of the Ld. AA on the appellant's application seeking necessary orders and directions to constitute a fresh bench for hearing of the captioned Original Application by an independent body and before an impartial forum; (2) Appeal No. FPA-PMLA-862/DLI/2024 is against the order of the Ld. AA on the Application praying that the Ld. AA may be pleased to stay the proceedings in the matter till such time the coram of the Authority as stipulated under Section 6 (7) of PMLA, 2002 is functional; (3) Appeal No. FPA-PMLA-863/DLI/2024 is against the order of the Ld. AA on the Application of the Appellant seeking supply of reasons to believe' as recorded by the concerned officer of the directorate under Section 17(1) of the PMLA, 2002. 3. The relevant facts briefly are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has filed the present appeal before this Appellate Tribunal. FPA-PMLA-861/DLI/2024 7. This appeal is against the order of the Ld. AA on the appellant's application seeking direction to constitute a fresh bench for hearing the O.A by an independent body and before an impartial forum. 8. The relevant part of the order of the Ld. AA is extracted below for the sake of ready reference: 5. MA No. 62: Seeking necessary constitute a fresh Bench. and directions from this Authority to constitute a fresh Bench The brief submission in the MA is as under: 1. The Applicant is preferring the present Application so as to seek directions from this Hon'ble Authority to constitute a separate bench for hearing of the present Petition. 2. The Applicant is filing the present Application on the following grounds: a. A. BECAUSE THIS HON'BLE AUTHORITY HAS BEEN CONSTITUTED AGAINST THE PRINCIPLE OF NATURAL 1 JUSTICE: NEMO DEBETESSE JUDEX IN PROPRIA CAUSA (NO MAN SHALL BE A JUDGE IN HIS OWN CAUSE). b. That this Hon'ble Authority is presided by the Member Finance, wherein statutory requirement qualification is of having at least 2 years work experience with Department of Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) For the Member from the field of finance or accountancy, a person shall be qualified for appointment if he is or has been a member of an All-India Service or a Central Service Group A , and has held the post of a Joint Secretary to the Central Government or an equivalent post in that service. (b) From among such persons, the Selection Committee shall have due regard to the academic qualifications of chartered accountancy or a degree in finance, economics or accountancy or having special experience in finance or accounts by virtue of having worked for at least two years in the finance or revenue department of either the Central Government or a State Government or being in charge of the finance or accounting wing of a corporation for a like period. Nowhere in Rule 3 of the Prevention of Money Laundering (Appointment and Conditions of Service of Chairperson and Members of Adjudicating Authority) Rule, 2007, it has been made mandatory in eligibility criteria to serve in Department of Revenue for 2 years before appointment as Member (Finance). Further, the submission is also not on merit as the present Member (Finance) has never served before under Department of Revenue. Further, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he example of the Income Tax Appellate Tribunal (ITAT) is cited wherein the administrative support comes from the Ministry of Law and Justice and not from the Ministry of Finance. It is alleged that there has been a consistent and constant effort of Finance Ministry to keep the administrative control of the Adjudicating Authority under PMLA with itself which is impermissible in law. 11. The decision of the Hon'ble Supreme Court in Swiss Ribbons (P) Ltd. v. Union of India (2019) 4 SCC 17 is cited wherein the ratio of law laid down in Union of India v. R. Gandhi (2010) 1 SCC1 was reiterated. It is pointed out that the Hon'ble Supreme Court has deprecated the practice of Tribunals receiving administrative support from their respective Ministries/Departments and not from the Ministry of Law Justice. 12. It is asserted that the Adjudicating Authority constituted under the provisions PMLA, 2002 is not an independent and impartial forum. Since the parent department of the sponsoring department, i.e., Directorate of Enforcement has the administrative control of the Tribunal, it is a reasonable apprehension in the mind of the Applicant that the Adjudicating Authority will not functi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld in Para 6 that recording of reasons reveals the inscrutable face of the sphinx without which it can be impossible to adjudge the validity of a decision. Even in respect of administrative orders, it is pointed out that Lord Denning, M.R. in Breen v. Amalgamated Engg. Union observed: The giving of reasons is one of the fundamentals of good administration. In Alexander Machinery (Dudley) Lal. v. Crabtree it was observed: Failure to give reasons amounts to denial of justice. Reasons are live links between the mind of the decisiontaker 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 reasons 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 aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the parties and going through the records of the present application, this Court finds that the cognizance/summoning order dated 25.08.2020 has been passed by the Chief Judicial Magistrate, District Agra without application of mind on a printed format. 19. Next, the appellant seeks to rely upon the judgment of the Hon'ble Supreme Court in State of Rajasthan v. Sohan Lal, 2004 (5) SCC 573, wherein the Apex Court observed that reasons are necessary in the interests of natural justice and that an order without the giving of reasons is amenable to be classified as 'arbitrary': 3. We have carefully considered the submissions of the learned counsel appearing on either side. This Court in State of Orissa v. Dhaniram Luhar, has while reiterating the view expressed in the earlier cases for the past two decades emphasized the necessity, duty and obligation of the High Court to record reasons in disposing of such cases. The hall mark of a judgment/order and exercise of judicial power by a judicial forum is to disclose the reasons for its decision and giving of reasons has been always insisted upon as one of the fundamentals of sound administration justice delivery sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the only indication to know about the manner and quality of exercise undertaken, as also the fact that the court concerned had really applied its mind. All the more so, when refusal of leave to appeal has the effect of foreclosing once and for all a scope for scrutiny of the judgment of the trial court even at the instance and hands of the First Appellate Court. The need for recording reasons for the conclusion arrived at by the High Court, to refuse to grant leave to appeal, in our view, has nothing to do with the fact that the appeal envisaged under Section 373 Cr.P.C. is conditioned upon the seeking for and obtaining of the leave front the court. This Court has repeatedly laid down that as the First Appellate Court the High Court even while dealing with an appeal against acquittal was also entitled and obliged as well to scan through and if need be reappreciate the entire evidence, though while choosing to interfere only the court should find an absolute assurance of the guilt on the basis of evidence on record and not merely because the High Court could take one more possible or a different view only. Except the above, in the matter of the extent and depth of consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Bhambani v. Satyanarayan and Ors. AIR 2021 SC 5610 - the Hon'ble Supreme Court observed that reasons are essential because they indicate the basis of granting an Order. (vii) Central Board of Trustees v. M/s Indore Composite Pvt. Ltd. Civil Appeal No. 7240 of 2018 - due consideration must include factual and legal facets. The only expression used by the Division Bench in disposing of the appeal is on due consideration . It is not clear to us as to what was that due consideration which persuaded the Division Bench to dispose of the writ petition because we fad that in the earlier paras only facts are set out. (viii) Manjunath Rao v. U. Chandrashekhar Anr passed in Civil Appeal No. 9951/2017 - both factual and legal grounds have to be dealt with. There is no discussion with regard to the points urged. 1.1.2.1 The Ld. Adjudicating Authority has passed the impugned order with complete non application of mind as it failed to appreciate the grounds raised in the application and the written submission and various judgments relied upon by the Appellant, which are directly related to the facts of the present case. 21. It is further contended that the impugned order has been passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that count. In Pareena Swarup v. Union of India,Writ Petition No. 634 of 2007 (order dated 30.09.2008) wherein the legality of the Adjudicating Authority under PMLA, 2002 had been called into question in a Public Interest Litigation, it was inter alia submitted before the Hon'ble Apex Court on behalf of the Union Government that: 3. The Adjudicating Authority is a body of experts from different fields to adjudicate on the issue of confirmation of provisional attachment of property involved in money laundering. The functions of Adjudicating Authority are civil in nature to the extent that it does not decide on the criminality of the offence nor does it have power to levy penalties or impose punishment. 6. Adjudication is a function which is performed by Executives under many statutes. The Competent Authority under NDPS/SAFEMA have been conducting Adjudication proceedings routinely since 1978. 24. The Union Government in its considered response in that case, undertook to make many changes in the rules to bring them in line with the constitutional scheme of separation of powers. However, insofar as the issue of composition of the Adjudicating Authority is concerned, it was subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said judgement for the proposition that in order to assure judicial Independence, it is fundamental that members of the Tribunal shall be independent persons and not civil servants. The tribunals should resemble courts and not bureaucratic boards. It was also observed that even the dependence of the tribunals on the sponsoring/parent department for infrastructure facilities or manpower may undermine the independence of the tribunal. The authority of Wade and Forsyth's 'Administrative Law' (10th Edition) was also cited by the Hon'ble Supreme Court. Further the Apex Court went on to refer to the recommendations of the Leggatt Report which culminated in the Tribunals, Courts and Enforcement Act, 2007 in the U.K., which recognizes that tribunals do not form part of administration but are a machinery of adjudication. As a result of the said Act, appointments to the tribunals aremade on the recommendations of a Judicial Appointments Commission in which the sponsoring department, which generates the disputes that the tribunal will have to decide, has no say in the appointments. Neither the infrastructure nor the staff are provided to the tribunals by the sponsoring/pare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functional similarity and their total number was reduced from 26 to 19. The rationale followed in the first phase was to close down tribunals which were not necessary and merge tribunals with similar functions. 2. In the second phase, analysis of data of the last three years has shown that tribunals in several sectors have not necessarily led to faster justice delivery and they are also at a considerable expense to the exchequer. The Hon'ble Supreme Court has deprecated the practice of tribalization of justice and filing of appeals directly from tribunals to the Supreme Court in many of its judgements, including S.P Sampath Kumar versus Union of India (1987) 1 SCC 124, L. Chandra Kumar versus Union of India (1997) 3 SCC 261, Roger Mathew versus South Indian Bank Limited (2020) 6 SCC 1 and Madras Bar Association versus Union of India and another (2020) SCC Online SC 962. Therefore, further streamlining of tribunals was considered necessary as it would save considerable expense to the exchequer and at the same time, lead to speedy delivery of justice. 3. Accordingly, the Tribunals Reforms (Rationalization and Conditions of Service) Bill, 2021 was introduced in Lok Sabha on the 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017; (v) Chairman and Members of the tribunal so abolished shall cease to hold office, and they shall be entitled to claim compensation not exceeding three months' pay and allowances for the premature termination of term of their office or of any contract of service. (vi) The Bill seeks to replace the aforesaid Ordinance. NIRMALA SITHARAMAN. NEW DELHI; The 28th July, 2021 31. From the above, it is evident that the Legislature, acting upon the observations and recommendations of the Hon'ble Supreme Court in Madras Bar Association (which duly considered R. Gandhi),L. Chandrakumar and other cases has enacted a new law which currently governs tribunals, including the Appellate Tribunal set up under PMLA, 2002. 32. Coming to the next case cited on behalf of the appellant, namely, Gold Croft Properties Pvt. Ltd. (supra), the appellant has placed reliance upon para-19 thereof to say, it has been directed to the Central Government to fill the vacancy of Member Law and Administration of (sic) 8 weeks . However, upon perusal of the aforesaid judgment, we find that paragraphs 18 and 19 of the said judgment read as below: 18. Before parting, this Court would like to add that the AA pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rement of passing a reasoned order has been violated by the Ld. AA while disposing of the Miscellaneous Applications filed by the appellant before it. It has duly provided its reasons, albeit very succinctly. In his Miscellaneous Application which has led to the present appeal, the appellant had submitted that as per the Prevention of Money Laundering (Appointment and Conditions of Service of Chairperson and Members of Adjudicating Authority) Rules, 2007, in order to be appointed Member from the field of Finance or Accountancy, a person is required to have worked for at least 2 years in Finance or Revenue Department of either the Central or State Government or been in-charge of Finance or Accounting wing of a corporation for a like period. He further submitted that the Adjudicating Authority is presently headed by a Member Finance who has worked in the Department of Revenue in the past and he is adjudicating upon the case filed by the ED, which itself is working under the supervision of the Department of Revenue. In its order on the Miscellaneous Petition which is impugned before us, the learned Adjudicating Authority has recorded that the applicant has misquoted the aforesaid Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 437(E) dated 01.07.2005) by the Central Govt. in exercise of powers under section 6(1) of the Act wherein it was clearly specificed that it shall function within Department of Revenue, the Ld. AA could not possibly have been expected to pronounce a verdict on the legality of the very notification through which it was created. With the above findings and observations, we hereby dismiss this appeal. Appeal dismissed. (2) FPA-PMLA-862/DLI/2024 38. This appeal has been filed against the order of the Ld. AA on the application filed before it by the appellant praying that the Ld. AA may be pleased to stay in the proceeding in the matter till such time the coram of the Adjudicating Authority as stipulated under Section 6 (7) of PMLA, 2002 is functional. 39. The relevant order of the Ld. AA is reproduced below for ready reference: 4. MA No. 61: Seeking stay of proceedings in the present matter, till such time the coram of the adjudicating Authority The brief submission in the MA is as under: 1. That the present application is preferred on behalf of the Respondent No. 4, (hereinafter referred to as the Respondent herein ) praying this Hon'ble Authority to stay proceedings in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld of law, administration, finance or accountancy. (3) ......... (4) The Central Government shall appoint a Member to be the Chairperson of the Adjudicating Authority. (5) Subject to the provisions of this Act.- (a) the jurisdiction of the Adjudicating Authority may be exercised by Benches thereof: (b) a Bench may be constituted by the Chairperson of the Adjudicating Authority with one or two Members as the Chairperson of the Adjudicating Authority may deem fit; (c) ........ (d) ....... (6)........... (7) If at any stage of the hearing of any case or matter it appears to the Chairperson or a member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit. (8)........... (9)........... (10) If, for reasons other than temporary absence, any vacancy occurs in the office of the Chairperson or any other Member, then, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly, the Adjudicating Authority comprises of only one member viz. Chairperson, who prior to taking charge as Chairperson was Member (Finance Accounts) of this Hon'ble Authority. Thus, presently there is no member having expertise in the field of law, which is in clear violation of the provision of sub-section (2) of section 6 of the PMLA. Further, sub-section (7) of section 6 of the PMLA cannot be given effect to since there is only one member viz. the Chairperson. In view of non-availability/non-appointment of three persons as members of the Ld. Adjudicating Authority, subsection (7) of Section 6 of the PMLA is eclipsed, which is not permitted under the Constitution of India. A provision of the Act cannot be kept in abeyance without amendment by the Parliament and/or without it being struck down by a Competent Court. 11. As per the Adjudicating Authority (Procedure) regulations, 2013 the proceeding before the Hon'ble Adjudicating Authority is a full-fledged judicial enquiry and therefore the coram as provided under Section 6(2) of the PMLA has to be mandatorily followed. 14. It is submitted that the present matter involves important questions of law including but not limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 29 of 2023 SCC Online Cal 2391 has been reproduced herein below for ready reference. 29. In J. Sekar two decisions, one of the High Court of Sikkim and the other of the High Court of Gujarat were relied on by the petitioners which were decisions of Hon'ble Single Benches of the respective high courts. The Hon'ble Division Bench in J. Sekar held that they are unable to agree with the decision by the learned single benches of the Sikkim and Gujarat High Courts as in the said decisions, it has not been noticed that under Section 25 of the PMLA Act, an appeal is provided for from the order of the adjudicating authority before the appellate tribunal and such appellate tribunal is not equivalent to the High Court since an appeal against the order of an appellate tribunal is provided to the High Court. Thus, it was held that the hierarchy of the judicial review under the PMLA Act presents a very different scheme from what is found in other statutes particularly the Administrative Tribunal Act, 1985. Further it was held that no two tribunals are alike, the National Company Law Tribunal (NCLT) comprises of both judicial members and administrative members. However, the same is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is pointed out that the Ld. Adjudicating Authority is functioning with only one non-judicial member who prior to taking charge as Chairperson was Member (Finance Accounts) of the Ld. Adjudicating Authority. There is no member from the field of law which is in violation of S. 6(2) and S. 6(7) PMLA cannot be given effect to due to non-availability of members. 42. It is further contended that as per the Adjudicating Authority (Procedure) Regulations, 2013 the proceeding before the Ld. Adjudicating Authority is a full-fledged judicial enquiry and, therefore, the coram has to be mandatorily followed. It is also contended that the present case is of such nature which is necessarily required to be heard by a bench of more than one member. Further in terms of S.6(10) PMLA the present proceedings cannot continue as in case of vacancy in the Ld. Authority, the matters pending are to continue till such vacancy is filed. 43. It is argued that it is a settled legal position that statute has to be considered in the form it is intended and not otherwise. The scheme of the PMLA, 2002 is evident from the detailed procedure laid down in Section 6, and any act in derogation thereof shall be void ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to appreciate the various judgments relied upon by the Appellant, which were directly related to the facts of the present case. 46. As in FPA-PMLA-861/DLI/2024 above, it is argued that the impugned order has been passed by the Ld. Adjudicating Authority in a mechanical manner and without application of mind as it fails to deal with the contentions raised by the Appellant and on this count alone, the same deserves to be set aside. It is submitted that it is a settled position of law that there is requirement of recording of reasons in an order. It is argued that the impugned order has been passed in a templated formulae which is against the principles of natural justice. The detailed arguments and contentions in this regard are identical to those in FPA-PMLA-861/DLI/2024which have been duly considered by us while disposing of the said appeal. As such, for the sake of brevity, the same are not being repeated here. 47. With the above contentions, it is prayed by the appellant that the present appeal be allowed and the order of the Ld. AA be set aside. 48. Having considered the submissions made on behalf of the appellants carefully, we find ourselves in full agreement with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicating Authority to constitute the Benches consisting of one or two members. Section 6(7) of PMLA provides that if a Chairperson or a member during the course of hearing feels that matter should be heard by a Bench of two members, he/she may transfer the matter to a Bench consisting of two members. 23. Thus, powers under Section 6 can be exercised by an Adjudicating Authority comprising single member. Therefore, the proposition that powers under Section 8 of PMLA can be exercised by the Adjudicating Authority comprising only from member in the field of law does not deserve acceptance as the same would render provisions of Section 6(5) and 6(7) of PMLA nugatory and ineffective. [Emphasis supplied] 50. It may further be pointed out that this Appellate Tribunal in its judgment dated 30/11/2023 in the case of M/s M3M India Pvt. Ltd. v. The Deputy Director, Directorate of Enforcement, Delhi [FPA-PMLA- 6683/DLI/2023] had held as follows: 19. We have considered the submission made by the learned counsel for the appellant and find that the issue raised by the appellant has already been settled by Delhi High Court in the case of Gold Craft Properties Pvt. Ltd. V/s Directorate of Enforcem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Member must invariably be present and the absence of Judicial Member would as a rule render a decision of the Adjudicating Authority illegal. We find that the decisions of this Appellate Tribunal relied upon by the appellant also do not support him. Moreover, the same would in any case not constitute good precedent anymore in view of subsequent judgments of various High Courts. 52. The other issues raised in this appeal were also raised in Appeal No. FPA-PMLA-861/DLI/2024 have already been dealt with while disposing of that appeal. 53. Accordingly, we do not find any merit in the present appeal. Consequently, this appeal is also dismissed. FPA-PMLA-863/DLI/2024 54. This appeal is against the order of the Ld. AA on the Miscellaneous Application of the Appellant seeking supply of 'reasons to believe' as recorded by the concerned officer of the Directorate under Section 17(1) of the PMLA, 2002. The relevant part of the order of the Ld. AA is reproduced below for ready reference: B. In case of MA no. 59, on the Application for supply a copy of Reasons to Believe as recorded by concerned officers of the Directorate of Enforcement. 1. The Miscellaneous Applicant has submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural justice and, subject to the other provisions of this Act, the Adjudicating Authority shall have powers to regulate its own procedure. 7. That supply of reasons to believe is all the more necessary, as in absence of the same, the entire subsequent proceedings shall be vitiated and be null 3 and void ab initio, and that, thus, the Applicant herein, when supplied with the said alleged reasons to believe, shall be in a position to point out that the same is not in compliance of law and would also be in a position to point out that mere mechanical recording of reasons is not enough and there must be material facts to support the alleged Reasons to Believe, and thus, the present OA as filed by the ED is liable to be returned, due to noncompliance and nonfulfilment of the twin conditions, as stipulated in Section 17(1) of the PMLA, 2002, in light of the analogy of the ratio of Vijay Madanlal Choudhary (supra). 8. The Miscellaneous Applicant therefore prayed for that the Adjudicating Authority may graciously be pleased to: a. Issue Notice to Directorate of Enforcement and fix matter for hearing oral arguments on the present application, in light of the principles of natural justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees were not aimed at loan recovery. Instead, they hatched a conspiracy with M3M group promoters to acquire the borrower's land at a lower price than Indiabulls could have legitimately recovered through a genuine sale. 3. The Provisions contained under section 17(1) related to Reasons to believe is as under: Section 17: Search and Seizure (1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in moneylaundering, or (iii) is in 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, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under sub-section (1) or for continuation of the order of freezing served under sub-section (1A), before the Adjudicating Authority It is noted from Section 17 (1) of PMLA, 2002 that the Director or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section, on the basis of information in his possession, has reason to believe has to record reason for such belief in writing. Further in accordance with provision of section 17(2)) the authorized officer under section 17(1) shall, immediately after search and seizure [or upon issuance of a freezing order), forward a copy of the reasons so recorded along with material in his possession, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. However, there is no express provision in the Act for supply of copy of reasons to believe to the Respondents. ORDER The landmark judgment of Vijay Madan Lal Chaudhary states- 79...... Such reason(s) to believe is required to be recorded in writing and contemporaneously forwarded to the Adjudicating Authority alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent directorate either along with the Show Cause Notice, or even subsequently. It is further contended that from a bare perusal of Section 17(1) of PMLA, 2002 it is clear that when ED Officer is satisfied that 'reasons to believe' exist that an offence of money laundering has been committed, he may authorize any officer sub-ordinate to provisionally attach any property. In the present case, it is contended, there is no material on record to show that the applicant/appellant herein has derived or obtained any alleged property as a result of criminal activity relating to a scheduled offence, nor that it had any record or property related to crime. In the absence of recording of reasons to believe, the entire proceedings are bad in the eyes of law. There is non-compliance of the guidelines issued by the Hon'ble Supreme Court in the judgment of Vijay Madanlal Choudhary v. Union of India qua the satisfaction of twin conditions under section 17 of the Act. It is contended that the Directorate has supplied reasons to believe as recorded under section 17 in other matters and thus, the same are required to be supplied in the present case as well. The decision of the passed by Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ED and there is no conclusion recorded that any of the property / records which was seized from the premises was actually related to Money Laundering. 59. It is further submitted that apart from just reproductions of the grounds raised by the Ld. Adjudicating authority, the 'court' (Adjudicating Authority) has failed to appreciate the various judgments relied upon by the Appellant, which are directly related to the facts of the present case. 60. The other contentions raised and arguments presented in support thereof are identical to those in the FPA-PMLA-861/DLI/2024 and FPA-PMLA-862/DLI/2024and are not repeated here in the interest of brevity. 61. In light of the above arguments and contentions, it is prayed by the appellant that the present appeal be allowed and the impugned order passed by the Ld. AA be set aside. 62. We have given careful consideration to the submissions made on behalf of the appellant and the authorities cited in support of the same. We find that the arguments put forward on behalf of the appellant in the present appeal are primarily based on the judgment of the Hon'ble Delhi High Court in the case of J. Sekar. Though the operation of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -6808/DLI/2023 Page 19 of 22 obtaining the sanction of the Commissioner are administrative in character and are not quasijudicial. In the case of Biswanath Bhattacharya V/s. union of India (2014) 4 SCC 392, the Apex Court addressed the same issue and relied the earlier judgment in the case of S. Narayanyappa Ors. (supra). Para 16 of the said judgment is quoted hereunder: - 16. We reject the submission of the appellant for the following reasons. Firstly, there is no express statutory requirement to communicate the reasons which led to the issuance of notice under Section 6 of the Act. Secondly, the reasons, though not initially supplied along with the notice dated 4-3-1977, were subsequently supplied thereby enabling the appellant to effectively meet the case of the respondents. Thirdly, we are of the opinion that the case on hand is squarely covered by the ratio of Narayanappa case. The appellant could have effectively convinced the respondents by producing the appropriate material that further steps in furtherance to the notice under Section 6 need not be taken. Apart from that, an order of forfeiture is an appealable order where the correctness of the decision under Section 7 to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
