9911796707
TMI Blog2014 (1) TMI 1951X X X X Extracts X X X X X X X X Extracts X X X X ..... gs take place at a later stage. At this stage it is not necessary to follow a full fledge adjudication including cross examination of witness, if necessary, to arrive at a final conclusion. The facts of the Shahid Balwa case [ 2013 (2) TMI 39 - DELHI HIGH COURT ] are different from the facts of the present case. In the Shahid Balwa case, the petitioner was charged for the contravention of the provisions of section 42 of the Foreign Exchange Management Act, 1999 and proceedings could have resulted in imposing penalty. Further the provisions pertaining to adjudication proceedings under the FEMA are different from the adjudication proceedings under PML Act. The Supreme Court in Bharat Petroleum Corporation Ltd. and Anr. v. N.R. Vairamani and Anr. [ 2004 (10) TMI 576 - SUPREME COURT ] had also held that a decision cannot be relied on without considering the factual situation. The appellants neither disclosed sufficient reasons or special circumstances in the application for cross examination nor they pressed the application at the time of oral submissions before the Adjudicating Authority. Thus the contention raised by the appellants is rejected. No opportunity was given before passing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds from sale of medicine Body Revival . One of the objects of PMLA is that the perpetrators of scheduled crimes should not be allowed to enjoy the fruits of the money that passed under the activity and the enactment is intended to deprive them of the property which is related to the proceeds of specific crimes listed in the Schedule to the Act. The plea raised by the appellants that the word shall should be read as may and provisions of section 8(4) should be read as discretionary is not relevant in the facts and circumstances and does not require any further consideration in view of The Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - the appellants have failed to make out any illegality or irregularity in the orders of the Adjudicating Authority. Appeal dismissed. - Anil Kumar, J. (Chairperson), Arun Kumar Agarwal and Rabi Narayan Dash, Members For the Appellant : Shri Prateek Kasliwal, Advocate. For the Respondents : Shri Rajiv Awasthi, Advocate. JUDGMENT 1. The appeals FPAs 423/12; 424/12; 425/12; 426/12 and 427/12 are directed against the order of the Adjudicating Authority dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for five-day/ten-day course; that around the year 2003 as the number of patients had increased, he started charging Rs. 15,000/- for a bottle of medicine; that due to interviews on TV, he started getting more and more patients and therefore, he appointed girls to attend to the people making enquiries and also took few Ayurvedic and Homoeopathic doctors on payroll; that these doctors were told to check the patient's case history and then he used to prescribe the dosage and duration of the medicine made by him to be taken by the patient; that later he appointed more Homoeopathic and Ayurvedic doctors to check the patient's cases; that he had kept the doctors only for the satisfaction of the patients and to know only the size of the tumor in case of cancer or percentage of blockage in case of heart disease; that he also obtained a naturopathy certificate from Bharvin's Academy of Naturopathy, Kandivali, Mumbai; that he used to make the medicine at home; that people used to pay for the medicine by cash, cheque or demand draft and that these amounts/instruments used to be deposited in his and his wife's account held with the bank; that later as per advice of one of his p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Munir Khan, their health condition or their relative's health condition instead of improving, had worsened and in some cases had also resulted in their relatives' death. Similarly 143 people have filed complaints against Munir Khan stating that due to the medicines, they and their relatives' condition had worsened and some of them even had died. 6. One Vilas Gopaldas Potdar, aged 53 years resident of Thane filed a complaint with police against Munir Khan. He stated that his wife was suffering from acute vision problem and was under treatment. He had watched a television program about Munir Khan. During the setup program, Munir Khan had claimed that he had made the medicine Body Revival , which could cure incurable diseases like cancer, diabetes, HIV etc. In the program, interview of the people, who were benefited by the said medicine were shown. He along with his friend, Sh. Sayyad Wajid Hussein and wife went to buy the medicine. Without examining his wife, Munir Khan told him to give Body Revival to his wife. Accordingly he purchased the said medicine and gave it to his wife. His wife after taking the medicines instead of getting cured, lost her eyesight completely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the PML Act vide order No. 4/2012 dated 11.07.2012 and filed original complaint No. 150/2012 dated 8.8.2012 before the Adjudicating Authority for confirmation of the provisional attachment order. The matter was placed before the Adjudicating Authority and the order of provisional attachment was confirmed by order dated 7.12.2012 after following the requirements of the law and after giving due opportunity to the various appellants, which is now being assailed before us in the present proceedings. 9. As proceeds of crime were further traced in the immoveable properties purchased in the name of Munir Khan and Rukhsana Munir Khan, respondent provisionally attached these immovable properties vide another provisional attachment order No. 5/2012 passed on 29.9.2012 and filed original complaint No. 162/2012 dated 26.9.2012 before the Adjudicating Authority for confirmation of the provisional attachment order. The matter was placed before the Adjudicating Authority and the order of provisional attachment was confirmed by order dated 22.2.2013 after following the requirements of the law and after giving due opportunity to the appellants which is also now being assailed before us in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the general license or other product approvals, has been revoked by the licensing authority, Ajmer, Rajasthan which has been challenged before the Rajasthan High Court, Jaipur. He pointed out that the Bombay High Court vide its order dated 12.10.2012 has also granted the appellant liberty to approach concerned authorities for renewal of the license. 14. The counsel for appellants further submitted that it is not denied that all the properties which are subject matter of attachment were purchased out of the proceeds collected from the sale of Body Revival which was manufactured after obtaining the permission from the Licensing Authorities as aforementioned. The appellants deposited the monies received from the sale of the product Body Revival , whose manufacture and sale is not a scheduled offence under the PML Act and therefore no offence has been committed by the appellants. The Bank accounts including the account of 'Munir Khan Cancer Trust' was managed by Shri Munir Khan, the managing trustee of the said Trust and no monies from any third parties were accepted in the said Trust. The Trust was managed like a private charitable entity by appellants. The counsel emphaticall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived there from cannot be subject matter of attachment proceedings under PML Act. 18. The Counsel submitted that PML Act as originally enacted only included, under IPC, the offences provided under section 121 and section 121A of IPC in part A-paragraph 1 of the Schedule and the offences under section 302, 304, 307, 308, 327, 329, 364A, 384 to 389, 392 to 402, 467, 489A, 489B of IPC in part B - paragraph 1 of the Schedule. No offence under IPC other than as mentioned above initially was a scheduled offence and the provisions of PML Act could not be resorted to in cases of monies earned by commission of such other offences under IPC. Prevention of Money Laundering (Amendment) Act 2005 made no addition to the schedule. Prevention of Money Laundering (Amendment) Act 2009 which came into force w.e.f. 1st June 2009 inter alia added offences under section 419, 420 and 471 of IPC under part B - paragraph 1 of the Schedule by substituting the then existing provisions. 19. The counsel submitted that the proceedings under PML Act were initiated by the respondent because the offences under section 420, 467 and 471 of the IPC under which charge-sheet has been filed are also now covered under p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of Andhra Pradesh High Court in the case of B. Rama Raju versus Union of India (2011) 108 SCL 491 is erroneous. He submitted that though the Adjudicating Authority quoted some of the observation of the Andhra Pradesh High Court but gave no finding as to whether the respondent could have resorted to and applied the provisions of PMLA in those cases where the alleged offence of cheating was committed prior to 1.6.2009. The counsel contended that the judgment of the Andhra Pradesh High Court is distinguishable. He submitted that Munir Khan committed the alleged schedule offence prior to 1.6.2009, therefore, asset acquired prior to 1.6.2009 as well as after 1.6.2009 could not be attached. 23. The counsel for appellants submitted that the offence of cheating and dishonestly inducing delivery of property is included in part B of schedule of PMLA and such offence, as per section 2(y)(ii) of PMLA, becomes a scheduled offence only if the value involved in the offence is Rs. 30 lakh or more. Such a threshold can be met when single transaction meets the threshold. It cannot be used for joining various offences, even if they are of recurring nature, each of which is distinct and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent has failed to disclose. He submitted that the scheme of PMLA in so far as it pertains to attachment of the properties, be it at the stage of section 5(1) i.e. provisional attachment or section 8(3) i.e. confirmation of the provisional attachment, is quite drastic and draconian and therefore, provisions of the statute are not to be resorted to unless every condition provided in the statute permitting invocation of the powers of attachment has been fully met. Parliament in its right wisdom has not permitted to draw a legal presumption under section 5(1) or any other provision of the statute, against a person accused of a scheduled offence that he or she will in all cases attempt to 'conceal or transfer the property'. Parliament, on the contrary, has expressly specified that powers under section 5(1), should not be resorted to unless the authority has reason to believe (the reason for such belief to be recorded in writing) on the basis of material in his possession that 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 . 29. He submitted that the entire complaint f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of law frustrated. He has rightly taken quick action otherwise by the time when the trial court would convict him for schedule offences committed, he would have disposed off the properties. The above approach of the Adjudicating Authority which proceeds on the assumption against the appellants rather than testing the action of the respondent on the basis of whether the complainant and the provisional order even recorded a belief in writing as mandated by section 5(1) and if yes whether the same is justifiable, is totally untenable in law. Non-compliance with any of the condition of section 5(1), each of which are mandatory, renders the action of the respondent nugatory. 33. The counsel further submitted that as per the scheme of the PMLA, the life of the order of attachment is dependent upon the conviction or acquittal of the accused in the scheduled offence. He contended that recovery of possession during the pendency of trial in every case is not warranted. 'Attachment', an expression defined under section 2(d) preserves the subject property for its ultimate confiscation. Attachment is defined as prohibition on transfer, conversion, disposition, movement of property. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that section 6(15) of PMLA provides that the proceedings before the Adjudicating Authority shall be guided by the principles of natural justice. Section 6(15) of PMLA does not exclude the applicability of the provisions of Indian Evidence Act, 1872. Section 137 of the Indian Evidence Act provides for examination-in-chief, cross examination and re-examination. Section 138 of the Indian Evidence Act confers a right on the adverse party to cross examine a witness who had been examined in chief, subject to expression of his desire to the said effect. 38. Additional Grounds have been taken only in FPA-PMLA/425 Sh. Sarosh Munir Khan vs. the Deputy Director. The counsel submitted that in the case of Sarosh Khan, the respondent has not recorded statement of Sarosh Khan under section 50 of the PMLA which the respondent should have recorded. He further submitted that respondent did not give any opportunity to him before passing the provisional attachment order and thus violated the principles of natural justice. 39. Based on additional Ground taken only in FPA-PMLA/424/2012 and FPA/465/2013 Smt. Rukhsana Munir Khan, the counsel submitted that in the case of Rukhsana Munir Khan, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration received by the accused in his personal name, in the name of his proprietorship firm Health Reactive, in the names of his family members and in the name of Munir Khan Cancer Trust etc. is to be considered. He contended that the total sale consideration received by the accused in the name of all the beneficiaries is more than 30 lakh and this fact is also admitted by the appellants. He submitted that the entire proceeds of crime which is generated from the commission of offence is to be considered and not proceeds of one particular individual transaction. The agency investigating scheduled offence cannot quantify the generation of proceeds of crime, since the investigation is to find out whether offence has been committed or not. 42. The counsel submitted that as regards formation of belief under section 5(1)(c) of the PMLA, Munir Khan has by committing schedule offences generated proceeds of crime which were received in cash as well as by cheque. These proceeds were deposited in the bank accounts maintained in the name of Munir Khan and his family members and Munir Khan Charitable Trust. Thereafter, these proceeds were, with the purpose of further integration and layering, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rfeiture of property, therefore, it is not necessary for summoning witnesses at the stage of attachment for the purpose of cross examination. The counsel submitted that PML Act is a special enactment with the objective of prevention of money laundering, attachment and confiscation of property acquired out of proceeds of crime/involved in money laundering. In the first stage property is provisionally attached and a complaint is filed with the Adjudicating Authority for confirmation. The order of provisional attachment is valid for a period of 150 days only and during this period complaint is filed by respondent and after giving opportunity of a minimum time of 30 days to the defendant, if the Adjudicating Authority prima facie finds that the property is acquired out of proceeds of crime/involved in money laundering, it can confirm the attachment. The final confiscation takes place after the trial for commission of scheduled offence/money laundering offence is over and a person is found guilty. He submitted that appellants will be provided another opportunity to prove their case before final confiscation of the property. In view of the scheme of the PML Act, no opportunity for cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on record. Munir Khan in his statement stated that he has studied only upto XIIth standard. Since 1986 he was preparing ayurvedic medicines to treat people. In the beginning he was living in Kota where he was treating people with his ayurvedic medicines. Later in 1998-99 he shifted to Mumbai with the intention to give his medicines to patients in Mumbai. Articles about him and his medicine were published in newspapers and he also gave interviews on TV which resulted in wide publicity and he started getting large number of patients and he started charging Rs. 15,000/- for a bottle of medicine Body Revival . He appointed girls for attending people making enquiries about his medicine and also appointed a few Ayurvedic and Homeopathic doctors to attend patients. These doctors were told to check the patient's case history and then he used to prescribe the dosage and duration of the medicine to be taken by the patient. He used to make the medicine at home and total weight of the bottle with medicine used to be 150 gms. People used to pay for the medicine by cash, cheque or demand draft, these amounts used to be deposited in his and his family members' accounts. He started Munir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s residence, admeasuring 10 x 10 and without any power or authorization to issue such certificate. The said certificate was issued after taking Rs. 3,500/- from Munir Khan. Similarly Sarosh Khan had also acquired a doctor degree from the same Institute. Munir Khan became doctor in 2 months and his son in 16 days. Charge sheet further revealed that many other documents were also found to be false which were fabricated and obtained by manipulation. Many of the documents relied on by the appellants were either cancelled or withdrawn by the issuing authority. 49. Munir Khan also disclosed that in the year 2008, he had applied for a license to manufacture and sell ayurvedic, unani and siddha medicines to the Licensing Authority and Director of Ayurveda, Ajmer, Rajasthan with respect to a manufacturing facility set up at 2-KHA-1(A), Vigyan Nagar, Kota, Rajasthan in the name and style M/s. Health Reactive. A license bearing number 583-AYU was issued which was in force from 16.04.2008 to 15.04.2011 for the manufacture and sale of medicines. Munish Munir Khan in his statement confirmed that his father Munir Khan used to manufacture medicine at home and as per advise of their advocate, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2009 has also cancelled the license issued to Munir Khan. 51. The appellants have filed copy of a report of Clinical Trial of Body Revival for conducting clinical trial on humans. This report is signed by two doctors Dr. Rama Julka, AMO and Dr. Ajay Mahajan, SDAMO of Govt. Ayurvedic Hospital, Nalagarh, Solan, H.P. The report comprises of 10 pages. Perusal of report reveals that only one page is signed by the issuing doctors and other pages are neither signed nor authenticated, though there is specific column Date when clinical trial started but no date is mentioned to indicate start of clinical trial, date of completion of clinical trial is given as 03.11.2009. The report is very sketchy and apparently unreliable. One thing that can be concluded from this report is that clinical trial was concluded only on 03.11.2009. 52. All the above facts show that during the relevant time that is prior to 2009 when the appellants acquired alleged proceeds of crime, Munir Khan was not having any license to manufacture and sell the medicine Body Revival ; medicine was prepared at home by Munir Khan as stated by Munir Khan and Munish Munir Khan in their statements and Munir Khan falsely projected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B and 420 Indian Penal Code were not included at the time when the said offences were alleged to have been committed by the Petitioner No. 1 and hence, the question of proceeding against the Petitioners under the provisions of the PML Act, would not arise. It was contended by the learned Counsel for the Petitioners that the crime was registered against the 1st Petitioner on 09.01.2009 under Section 420 Indian Penal Code and as on that date, the said offence under Section 420 Indian Penal Code was not forming part of the Schedule appended to the PML Act and thus the question of registering a case under the PML Act against the 1st Petitioner, would not arise. The learned Counsel in the said case had further submitted that the CBI had filed its charge sheet against the 1st Petitioner (arraying him as A-10) on 22-11-2009 and the charge sheet clearly mentioned that the 1st Petitioner therein has been charged for the offence said to have been committed by him under Section 120B r/w Section 420 Indian Penal Code only and that an amendment of the Schedule appended to the PML Act has been brought into force on 01.06.2009 incorporating offences of Sections 120B and 420 Indian Penal Code ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted by the special session of the United Nations General Assembly held between 8th to 10th June, 1998, calls upon the Member States to adopt national money-laundering legislation and programme. 9. As a part of this commitment, this enactment has been made by the Parliament, providing for a completely self contained code of procedure for recognizing and penalizing the offence of money-laundering and also to tackle the proceeds of crime if they eventually percolate into various financial streams of the country, thus, impacting fiscal and economic agendas set forth by the State for its governance. It would be further appropriate to notice that the Financial Action Task Force on Money Laundering (FATF), an inter-governmental body was established by the G-7 Summit that was held in Paris in 1989 and it was assigned with the task of setting standards and promotion of policies to combat the issues relating to money-laundering and terrorist funding, during 1990 drew up forty recommendations - as initiatives to fight the malice of money laundering and terrorist funding - important amongst them are: criminalise money laundering and enable authorities to confiscate the proceeds of money l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located. 12. Since the definition of proceeds of crime in turn used the expression scheduled offence , it would also be appropriate to notice as to how the said expression has been defined in Section 2(y): (y) scheduled offence means - (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more; 13. From a conjoint reading of the expressions proceeds of crime and scheduled offence as defined, the offence must be one that should find a mention either under Part A or Part B of the Schedule appended to the PML Act. Para 1 of Part A of the Schedule listed out the offences under the Indian Penal Code. It is not in dispute that by the Prevention of Money-Laundering (Amendment) Act, 2009 (Act No. 21 of 2009), amongst other things, para 1 of Part A of the Schedule has been amended introducing the offence under Section 120-B criminal conspiracy, and offence under Section 420: cheating and dishonestly inducing delivery of property, therein. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer, conversion, disposition or movement of property by an order issued under Chapter-III; Sub-section (1) of Section 5 authorises the Director, appointed in terms of Sub-section (1) of Section 49 of the said Act by the Central Government, if he has reason to believe, on the basis of material in his possession that; (a) any person is in possession of any proceeds of crime; (b) such person has been charged of having committed a scheduled offence; and (c) 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; by order in writing, to provisionally attach such property for a period not exceeding one fifty days from the date of the order. 17. However, the following conditions are required to be satisfied before a provisional attachment order is passed by the Director or any other Officer authorised by him occupying a rank not below that of a Deputy Director; (1) There should be adequate material before such Officer, which makes him believe that if the attachment of the proceeds of crime are not ordered, it might result in frustrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the total amount involved in the offence is much lower than the limit of Rs. 30 lakh prescribed u/s 2(y)(ii) of PMLA as the total amount involved in crime as per FIR is Rs. 15,000/- which is sale value of one bottle of Body Revival , the argument of the appellants has no force. All the facts and circumstances of the case unequivocally show that the offences were not committed only on a particular day or against a particular person. The offences were committed against large number of persons over a long period of time on continuous basis in pursuance of a larger criminal conspiracy hatched by the perpetrators of the crime and therefore, must be considered from a larger perspective as a continuing offence for the purposes of the PML Act. The entire proceeds collected over the years from sale of Body Revival has to be considered together for ascertaining applicability of the provisions of PML Act and not sale proceeds for one bottle or sale proceeds only for those persons who came forward and filed complaints as contended by the appellants. The contention of the appellants that there is no demarcation as to how much money was earned by committing which offence as charge sheet i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions and in such situation the accused person can argue that as there is no attempt to transfer the property till date, therefore, there is no reason to believe that the property can be transferred or alienated in future. If we accept this argument, it will lead to a situation where the Enforcement Directorate must wait for transfer of a property so that there are reasons to believe but in that case the property would already be transferred/alienated and it will lead to frustration of the proceedings relating to attachment, adjudication and confiscation of proceeds of crime. Such an interpretation of the provisions of section 5(1)(c) of PMLA will render the provisions of the PMLA meaningless and unworkable. However, if the provisions of section 5(1)(c) of PMLA are read with provisions of section 5(1)(a) and (b) and other provisions of PMLA which state that if a person is in possession of proceeds of crime and such person has been charged for commission of a scheduled offence; the proceeds of crime are subject to attachment and confiscation; then the accused is also to be deprived from enjoyment of the proceeds of crime etc. Such a restricted interpretation will defeat the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examining the witnesses. Most of witnesses are either patients or their relatives who came to Munir Khan for treatment and purchased Body Revival and accused him of cheating or doctors/employees of Munir Khan hired by him for assisting him in cheating the gullible people in selling the miracle drugs to them. No specific names of the witnesses are disclosed along with the circumstances in which, appellants want to cross examine them and the points on which the said witnesses were to be cross examined. Further, the Adjudicating Authority has specifically stated in its order on page 50 that the counsel for appellants had not pressed this application at the time of making his oral submissions. By not pursuing the application and not providing assistance to the Adjudicating Authority as to why the application should have been allowed, under the circumstances, the appellants now cannot contend that the Adjudicating Authority should have passed a speaking order either allowing or dismissing the application. The contents on page 50 of the impugned order clearly show that the Adjudicating Authority duly considered the application and as the appellants did not press for it, no detailed order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application for review before the High Court. Incidentally, we may notice that even in the special leave petition no substantial question of law in this behalf has been raised nor has any affidavit been affirmed by the learned advocate who had appeared before the High Court or by any officer of the appellant who was present in court that certain other submissions were made before the High Court which were not taken into consideration. In State of Maharashtra v. Ramdas Shrinivas Nayak this (1982) 2 SCC 463) Court observed: (SCC p. 467, para 4) 4. When we drew the attention of the learned Attorney-General to the concession made before the High Court, Shri A.K. Sen, who appeared for the State of Maharashtra before the High Court and led the arguments for the respondents there and who appeared for Shri Antulay before us intervened and protested that he never made any such concession and invited us to peruse the written submissions made by him in the High Court. We are afraid that we cannot launch into an inquiry as to what transpired in the High Court. It is simply not done. Public policy bars us. Judicial decorum restrains us. Matters of judicial record are unquestionable. They are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem also. If a point is not mentioned in the judgment of a court, the presumption is that that point was never pressed before the learned judge and it was given up. However, that is a rebuttable presumption. In case the petitioner contends that he had pressed that point also (which has not been dealt with in the impugned judgment), it is open to him to file an application before the same learned Judge (or Bench) which delivered the impugned judgment and if he satisfies the Judge (or Bench) that the other points were in fact pressed, but were not dealt with in the impugned judgment, it is open to the court concerned to pass appropriate orders, including an order of review. However, it is not ordinarily open to the party to file an appeal and seek to argue a point which even if taken in the petition or memorandum filed before the court below, has not been dealt with in the judgment of the court below. The party who has this grievance must approach the same court which passed the judgment and urge that the other points were pressed but not dealt with. 15. Since no other point except the point of office of profit has been dealt with in the impugned judgment of the High Court, the presu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage. At this stage it is not necessary to follow a full fledge adjudication including cross examination of witness, if necessary, to arrive at a final conclusion. Bombay High Court in the case of Radha Mohan Lakhotia Others v. The Deputy Director, PMLA, Department of Revenue in first appeal No. 527 of 2010 by the judgment dated 5.8.2010 had held as follow: 19. .......The fact that the Respondents could have acted only if there was reason to believe that a person is in possession of proceeds of crime does not mean that the Authorities at this stage are obliged to prove the fact beyond doubt that the property in possession was in fact proceeds of crime. All that the Authority is required to show is that there was substantially probable cause to form opinion that the property under attachment is proceeds of crime. The circumstances adverted to by the Authorities below do indicate that there was substantially probable cause to form such opinion. 64. As regards principle laid down by the Delhi High Court - single judge in the judgment dated 24.1.2013 in WP (C) 401/2013 CM No. 802/2013 in the case of Shahid Balwa v. The Directorate of Enforcement, Division Bench of Delhi High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of crime, it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies 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. 66. This Tribunal after considering the matter of allowing cross examination of witnesses in the appeal of Jitendra Kumar Jha v. Directorate of Enforcement in FPA-51/Cal/2010 judgment dated 26.08.2010 had held as follows: After considering the reply and material placed for explaining its source of funds for obtaining properties provisionally retained (see section 8(1) on prima facie satisfaction, (see section 20(4)) property can be allowed to be retained till final adjudication or criminal proceedings are over. The orders are only interim arrangements pending final decision. The judgments cited by the appellants are regarding fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision cannot be relied on without considering the factual situation. In the same judgment the Supreme Court also observed:- Court should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. 68. In view of the above facts and circumstances, we are of the considered view that the appellants neither disclosed sufficient reasons or special circumstances in the application for cross examination nor they pressed the application at the time of oral submissions before the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings for Attachment, Adjudication and Confiscation See 5(1) and Sec 8 of the Act reads as under:- 5. Attachment of property involved in money-laundering-(1) Where the Director, or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person is in possession of any proceeds of crime; (b) such person has been charged of having committed a scheduled offence; and (c) 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 ninety days from the date of the order, in the manner provided in the Second Schedule to the Income tax Act, 1961 (43 of 1961) and the Director or the other officer so authorized by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule: .......... 8. Adjudication- (1) On receipt of a complai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved in the trial court and order of such trial court becomes final. ........ 14. From a plain reading of the Sec 5 of the Act, we finds that it does not specifically provide for affording a hearing to the person affected prior to passing of the provisional attachment order. Even if a statute is silent and there are no positive words in the Act or the Rules made there under, there could be nothing wrong in spelling out the need to hear the parties to the acts whose interest are likely to be affected by the orders that may be passed, and making it requirement to follow a fair procedure before taking a decision, unless the statute provides otherwise. The principles of natural justice must be read into unoccupied interstices of the statute, unless there is a clear mandate to the contrary. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice. Where substantial rights of parties are considerably affected, the application of natural justice becomes presumptive, unless found excluded by express words of statute or necessary intendment. Its aim is to secure justice o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is 90 days (now 150 days) from the date of the order or until confirmation order is passed under section 8 after hearing, whichever is earlier (see: section 5(3)). It is only a purely temporary measure so as to protect the property alleged to be involved in money laundering pending proceedings for confiscation so as to avoid frustration of the proceedings and to see that bona fide third party transferees are not cheated. During this period of temporary provisional attachment of the property, parties are not prevented from using or enjoying the attached property (see: section 5(4)). Therefore, the rights of the parties are not substantially affected by the provisional temporary attachment ordered under section 5(1). Having regard to the exigency of the public interest involved in attaching a property believed to be proceeds of crime/involved in money laundering, to prevent frustration of other proceedings under the Act, the maximal due process of hearing an affected party before passing an order of provisional attachment is consciously excluded under the presents of Section 5 of the Act. In our opinion, for these reasons, section 5 of the Act does not provide for giving of a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant portion of this Tribunal's Judgment in the case of Radha Mohan J. Lakhotia Others (supra) reads thus: 15. Money Laundering has been defined in section 2(p) of the Act. It says that money laundering has the meaning assigned to it in section 3. Section 3 of the Act reads thus: Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. The ambit of the above section is very wide and even person who is not actually involved in the commission of schedule crime but directly or indirectly involving/assisting/indulging in any process or activity connected with the proceeds of crime and projecting those proceeds as untainted property is guilty of offence of money laundering. Thus, a person guilty under section 3 will be any person who has committed the schedule offence or/and who is connected with the proceeds of crime and projecting the same as untainted property. The proceeds of crime is defined under section 2(u) of the Act as any property derived or obtained, direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy and suppress the mischief. 16. Thus, we are in full agreement with the reasoning of the Adjudicating Authority given in its order in Original Complaint No. 6 of 2007 and hold that property which is proceeds of crime and is in possession of any person, even though he is not charged of having committed a schedule offence, can be attached. Thus, the appellants are covered under the Act and attachment proceedings commenced by the authorities under the Act were valid proceedings. 72. Hon'ble Bombay High Court affirmed the above decision of this Tribunal in Radha Mohan Lokhatia Others Vs. The Deputy Director, (First Appeal No. 527, 528 and 529 of 2010) and observed as follows: 11. The question is whether section 5 can be invoked against a person who is not named as an accused in the commission of a scheduled offence? Sub-section (1) of Section 5 will have to be read as a whole conjointly with the other provisions of the Act already referred to hitherto, including section 8 thereof. Section 5 authorises the Director or any other officer not below the rank of Deputy Director authorized by Director for the purposes of the said section to resort to action of attachment of property if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y person , coupled with the purpose and intent for which the enactment has been brought into force, accepting the argument of the appellants would result in a pedantic approach and limiting the plentitude of action of attachment and confiscation of proceeds of crimes only in the hands of the persons who have been charged of having committed a scheduled offence and none else. Whereas, the Act has come into being to prevent money laundering and to provide for confiscation of property derived from or involved in, money laundering and for matters connected therewith or incidental thereto. It is the outcome of the Political Declaration and Global Programme of Action, as annexed to the resolution S-17/2 adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990.......... ........That person may not face prosecution under section 3 of the Act of 2002. But even in his case, an order of attachment of the proceeds of crime can be invoked and later end up with confiscation thereof depending on the outcome of the criminal action against the person charged of having committed a scheduled offence. The action of attachment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 161 of IPC and Section 5(2) read with Section 5(1)(d) of the Prevention of Corruption Act, 1947 and sentenced to undergo six months' simple imprisonment and a fine of Rs. 1,000/-, under Section 161 IPC and two years' simple imprisonment and a fine of Rs. 2,000/- for the offence under Section 5(2) read with Section 5(1)(d) of the Prevention of Corruption Act. In the present case, the proceedings are interlocutory in nature and appellants will get one more opportunity to prove their case. Further in the attachment proceedings under the Act, the burden to prove is on appellants. Thus, the above judgment is of no help to the appellants. 75. The counsel for appellants also relied upon the judgment in the case of Uma Charan v. State of Madhya Pradesh Another AIR 1981 SC 1915 and contended that the respondent should have recorded reasons for likelihood of transfer of properties u/s 5(1)(c) of PMLA. In this case the Selection Committee in review of selection list, without recording any reason superseded a member of State Police Service. Hon'ble Supreme Court held that Selection Committee would be said to have contravened regulation 5(5) of Indian Police Service (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -condition of exercise of attachment powers also indicates that attachment is to be made to guard against the eventuality of subject properties being dissipated. He contended that therefore, in the cases where confiscation proceedings may be carried out subsequently, by attachment simplicitor, without dispossessing the accused or other persons in the interregnum, section 8(4) of PMLA should be read as discretionary, rather than being mandatory, to provide for dispossession. He contended that the word 'shall' used therein has to be read as 'may', and possession should be taken only in those cases where properties are capable of being tempered with, which may frustrate the ultimate confiscation proceedings and there lies a possibility of the same e.g. in the cases of movables. 78. The counsel for appellants relied upon judgment in the case of P.M. Doraswamy Reddy v. The Election Authority and Director of Marketing, A.P. and others, AIR 1977 AP 286 and contended that every use of the word 'shall' or 'must' in a particular law does not render that provision mandatory. Reliance was also placed on the judgment in the case of Bhikhabhai Devshi v. State of G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord an opportunity to explain the sources of his income, earning or assets, out of which or by means of which, he has acquired the property attached and to file the evidence on which such person relies and other relevant information and particulars. After the adjudication proceedings, if the order of provisional attachment is confirmed by the Adjudicating Authority, section 8(4) contemplates that Enforcement Director shall forthwith take the possession of the property attached u/s 5(1). Section 8(4) of the Act as applicable before PMLA (Amendment) Act, 2012 is adverted to as follows: 8(4) - Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the attached property. 83. A plain reading of the above provision of section 5(4) and 8(4) of the Act shows that the legislator, has consciously and after considering the change in position of the attachment proceedings after confirmation by Adjudicating Authority u/s 8(3), contemplated that the Enforcement Director shall forthwith (emphasis supplied) take the possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 5(1) a person interested in the enjoyment of the suspect immovable property is not deprived of enjoyment, in view of the provisions of Sub-section (4) thereof. However Section 8(4) enjoins taking over possession of the attached property whose provisional attachment is confirmed under Section 8(3). On an holistic analysis of the several provisions of the Act, in particular of Sections 5 and 8, we are of the considered view that the legislative intent underlying the preservation of the right to the enjoyment of immovable property provisionally attached under Section 5(1) while enjoining taking over of possession on confirmation under Section 8(3), is part of a consciously calibrated legislative schemata to achieve the object which the several provisions of the Act are designed to fulfill. The wholesome legislative intent underpinning the sequential provisions for provisional attachment, confirmation of such attachment and eventual confiscation; or for retention of a seized property, permitting continuance of such retention pending a determination as to confiscation under Section 8, while preserving the right to possession at the stage of provisional attachment while mandating dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched or seized. An order confirming the provisional attachment, as already noticed, may be passed only on the adjudicating authority being satisfied, on considering the material on record including material or evidence furnished in response to the notice issued under Section 8(1); the reply furnished in response thereto; and taking all and other relevant material into consideration, to record a finding that the property or so much of it, is involved in money-laundering. 108. Only at the confirmation stage is taking possession of the attached property legislatively enjoined {Section 8(4)}. The reason for the prescription as to dispossession is apparent. The apparent purpose is also vouchsafed in the counter of the Respondents and the contentions of the Learned Counsel Sri Rajeev Awasthi. The satisfaction as to the provisional attached property constituting proceeds of crime involved in money-laundering is arrived at by the adjudicating authority after considering a fuller basket of information, material and evidence which includes a showing by a person concerned with the property. From the legislative scheme, in particular of Section 8, we infer that dispossession from immovable pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
