Namrata Marketing Pvt. Ltd. ... vs U.O.I.Thru Secy.Finance & ...
2021 Latest Caselaw 3861 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

Court No. - 3							   AFR
 

 
Case :- MISC. BENCH No. - 7362 of 2021
 

 
Petitioner :- Namrata Marketing Pvt. Ltd. Newdelhi Thru Auth.Signatory
 
Respondent :- U.O.I.Thru Secy.Finance & Revenue Deptt. New Delhi & Ors.
 
Counsel for Petitioner :- Karunanidhi Yadav,Krishna Kant
 
Counsel for Respondent :- A.S.G.
 

 
Hon'ble Alok Singh,J.

Hon'ble Saurabh Lavania,J.

(Per Saurabh Lavania, J.)

By means of the present writ petition, a challenge has been made to the provisional attachment order no. 2 of 2021 dated 09.03.2021 (annexed as annexure no. 1 to the writ petition) passed by respondent no. 4 in exercise of power under sub-Section 1 of Section 5 of the Prevention of Money Laundering Act, 2002 (in short 'Act'). The petitioner has also sought consequential relief which is to the effect that respondents may be directed not to give effect to the provisional attachment order no. 2 of 2021 dated 09.03.2021. The reliefs as sought in the writ petition on reproduction, reads as under:-

"a) issue a writ, order or direction in the nature of CERTIORARI quashing the impugned provisional attachment order no. 02/2021 dated 09.03.2021 (Annexure No. 1) passed by respondent no. 4 with respect to the four sugar mills of the petitioner, and all other consequential proceeding arising thereof in respect of the petitioner;

b) issue a writ, order or direction in the nature of mandamus commanding the respondents not to give effect to the provisional attachment order no. 02/2021 dated 09.03.2021 passed by respondent no. 4 and not to unnecessary harass the petitioner."

For the purpose of admission and interim relief sought in the writ petition, Sri Satya Prakash Singh, Learned Senior Advocate assisted by Sri Karunanidhi Yadav, Advocate submitted that the impugned provisional attachment order has been passed in violation of the provisions of Section 5 of the Act. The procedure, as required has not been followed prior to passing of the impugned order. Even no opportunity was provided by the concerned authority before passing the impugned order.

It is further submitted that the entire controversy is related with the dis-investment policy of sugar mills in the State of U.P., which were sold to different companies through auction. Elaborating his arguments, he submitted that, a Public Interest Litigation (PIL) No. 5283 (MB) 2021 (Sacchidanand Gupta vs. State of U.P. and Ors.) was filed before this Court challenging the auction of sugar mills, which was dismissed by this Court vide judgment and order dated 20.08.2016, and the same was challenged before Hon'ble Apex Court in SLP No. 26351 of 2016. In SLP, an order dated 16.09.2016 was passed. As per interim order dated 16.09.2016, the respondents therein (including the petitioner) are free to use the sugar mills purchased by them as sugar mills and make them functional and if the sugar mills have gone out of production, the same cannot be transferred or otherwise alienated or encumbered without the permission of Hon'ble Apex Court. In this way, there is no question of alienation of the property and creation of third party right, as such, the impugned provisional attachment order is liable to be interfered by this Court in the writ jurisdiction.

He further stated that before passing the provisional attachment order under Section 5 of the Act, the concerned authority is required to record the reasons to believe on the basis of material in his possession that if such proceeds of crime are concealed, transferred or dealt with in any manner then it would frustrate the proceedings relating to confiscation of such proceeds of crime and in the instant case, there is already an interim order of Hon'ble Apex Court and as such, no third party right can be created in terms of the same as such also the impugned order is not sustainable.

He further submitted that the proceedings have been initiated on account of political vendetta and to settle the political scores. On this aspect, he submitted that Mohd. Iqbal, father of Mohd. Wazid and Mohd. Javed, who is the director of the Company, had been frontline leader of Bahujan Samaj Party and taking into account the same, an FIR dated 07.11.2017 was lodged at Police Station- Gomti Nagar, Lucknow registered as case crime no. 1409 of 2017, under Sections 420, 468, 471, 477A IPC & 629A of the Companies Act, 1956. Aggrieved by the FIR dated 07.11.2017, Mohd. Wazid and Mohd. Javed approached this Court by means of Writ Petition No. 36872 (MB) of 2018 (Suman Sharma and three ors. vs. State of U.P.), which was disposed of vide judgment and order dated 18.12.2018, wherein it was provided that the petitioners shall not be arrested till submission of police report. In another criminal case, Mohd. Wazid and Mohd. Javed were implicated and being aggrieved, they filed a Writ Petition No. 29757 (MB) of 2017 (Mohd. Wajid and Ors vs. State of U.P. and Ors.) and this Court interfered in the matter and passed an interim order dated 03.12.2019, staying the operation of order dated 04.04.2019, whereby a direction was issued to transfer the investigation of case crime no. 1409 of 2017, under Sections 420, 468, 471, 477A IPC and 629A of the Companies Act, 1956 lodged at P.S.-Gomti Nagar, District Lucknow to CBI. The case crime no. 1409 of 2017 also relates to seven of the closed sugar mills out of 21 auctioned sugar mills.

He further stated that even Competition Commission of India in the year 2013 took cognizance and a case no. 01 of 2013 was registered against the petitioner and other companies. This case was based upon findings in the performance Audit Report of the Comptroller and Auditor General (CAG) of India. The said matter was duly contested by the petitioners and other and after recording the findings in favour of the petitioner and others, the Competition Commission of India closed the proceedings vide order dated 04.05.2017.

Sri Satya Prakash Singh, learned Senior Advocate, based on the aforesaid submission submitted that the proceedings carried out under the Act including the impugned order dated 09.03.2021 has been passed just to settle the political rivalry and score and the same is abuse of process of law. The prayer is to entertain the writ petition and to pass an interim order staying the operation and implementation of impugned provisional attachment order no. 02 of 2021 dated 09.03.2021

Opposing the prayer of learned Senior Advocate appearing on behalf of the petitioner, Sri S.B. Pandey, Assistant Solicitor General of India assisted by Sri Shiv P. Shukla submitted that in view of the opportunity to the petitioner to plead its case before the statutory forum provided under Section 8 of the Act, the present writ petition challenging the provisional attachment order no. 02 of 2021 dated 09.03.2021 passed in exercise of power as envisaged under Section 5 of the Act, is not maintainable. This remedy is statutory remedy. He further stated that against the order of Adjudicating Authority under Section 8 of the Act, there is a provision of appeal under Section 26 before Appellate Tribunal and thereafter any person aggrieved by any decision or order of Appellate Tribunal can file an appeal under Section 42 of the Act before the concerned High Court. He submitted that in view of the statutory remedies available to the petitioner, this Court may not exercise its jurisdiction under Article 226 of the Constitution of India. The relevant provisions of the Act [Section(s) 8, 26 & 42], on reproduction reads as under:-

"8 Adjudication. --

(1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an 13 [offence under section 3 or is in possession of proceeds of crime], he 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 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: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property.

(2) The Adjudicating Authority shall, after--

(a) considering the reply, if any, to the notice issued under sub- section (1);

(b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and

(c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an 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 sub-section (1) of section 5 or retention of property or record seized under section 17 or section 18 and record a finding to that effect, such attachment or retention of the seized property or record shall--

(a) continue during the pendency of the proceedings relating to any scheduled offence before a court; and

(b) become final after the guilt of the person is proved in the trial court and order of such trial court becomes final.

(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.

(5) Where on conclusion of a trial for any scheduled offence, the person concerned is acquitted, the attachment of the property or retention of the seized property or record under sub-section (3) and net income, if any, shall cease to have effect.

(6) Where the attachment of any property or retention of the seized property or record becomes final under clause (b) of sub-section (3), the Adjudicating Authority shall, after giving an opportunity of being heard to the person concerned, make an order confiscating such property.

26. Appeals to Appellate Tribunal.--

(1) Save as otherwise provided in sub-section (3), the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act, may prefer an appeal to the Appellate Tribunal.

(2) Any banking company, financial institution or intermediary aggrieved by any order of the Director made under sub-section (2) of section 13, may prefer an appeal to the Appellate Tribunal.

(3) Every appeal preferred under sub-section (1) or sub-section (2) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or Director is received and it shall be in such form and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may after giving an opportunity of being heard entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.

(4) On receipt of an appeal under sub-section (1), or sub-section (2), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.

(5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Director, as the case may be.

(6) The appeal filed before the Appellate Tribunal under sub-section (1) or sub-section (2) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of filing of the appeal.

42. Appeal to High Court.--Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.

Explanation.--For the purposes of this section, "High Court" means--

(i) The High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and

(ii) Where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain."

Sri Pandey further submitted that in the instant case, it has not been urged by learned counsel for the petitioner that the impugned order is without jurisdiction or has been passed without any foundation as such also, the petitioner is under obligation to avail the remedies available under the statute.

He further stated that prior to passing of the order of provisional attachment, the Act does not provide for giving an opportunity of hearing. In this way, the argument of learned counsel for the petitioner, on this aspect, is fallacious.

It is further submitted that before the High Court of Delhi, a writ petition bearing W.P. (C) No. 5511 of 2019 : (Wave Hospitality Private Limited vs. Union of India) was filed challenging the provisional attachment order, as also challenging Section(s) 5(1), 5(5), 8(3), 8(5) and 8(6) of the Prevention of Money Laundering Act was filed. In the said writ petition, a preliminary objection with regard to maintainability of the writ petition was raised and after considering the factual as also the legal aspect of the case, the High Court of Delhi dismissed the petition vide order dated 30.05.2019 with liberty to the petitioner to show cause the impugned order, which was order of provisional attachment under the Act.

Sri Pandey further submitted that proceedings under Prevention of Money Laundering Act are different from the proceedings carried out by the Competition Commission of India and the decision of Competition Commission of India including the findings therein would not affect the proceedings under the Act. The Act was enacted by the Parliament to prevent Money Laundering and to provide confiscation of property derived or involved in Money Laundering and for matters connected therewith or incidental thereto. Thus, the submission of learned counsel for the petitioner based on the findings of the Competition Commission of India has no force.

He also stated that the impugned order of attachment is not in violation of interim order of the Hon'ble Apex Court, as the same imposes certain restrictions on the purchasers of sugar mills.

Lastly, he submitted that all the pleas which have been raised by the petitioner before this Court can be raised by the petitioner before Adjudicating Authority under Section 8 of the Act and the Adjudicating Authority, as appears from Section 8(2), is under obligation to consider the same.

We have considered the submissions made by learned counsel for the parties.

Before we proceed to take up the issue of maintainability of writ petition, we feel it appropriate to advert, in brief the reason behind enacting the Prevention of Money Laundering Act, which was enacted in the year 2002. This Act was brought in force w.e.f 01.07.2005. The reason for enacting this Act is to implement the political declaration adopted by the United Nations General Assembly held in the month of June, 1998 in which India was a Member. The statement of objects and reasons recognizes that money laundering, is a serious threat not only to financial system of country but also to its integrity and sovereignty. In this view, to prevent money laundering and to provide for confiscation of property derived from or involved in money laundering and for the matter connected therewith, the provision has been made in the Act. The Money Laundering is not only the threat, as aforesaid, to our country, but it is also affecting the entire world.

Taking note of aforesaid, we are considering the issue of maintainability of instant writ petition challenging the provisional attachment order no. 2 of 2021 dated 09.03.2021

The intention behind the Act is to check the money laundering, as defined under Section 3 of the Act, the same reads as under:-

3. Offence of money-laundering --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.

Punishment for money laundering is provided under Section 4 of the Act. Section 5 deals with the provisional attachment, which is limited to 180 days only. Sections 6 to 11 deal with the constitution of Adjudicating Authority and adjudication process.

It reflects from the aforesaid sections that while adjudicating the action of officials related to provisional attachment, a duty is cast upon the Adjudicating Authority to consider entire material and Adjudicating Authority is under statutory obligation to conduct full-fledged enquiry and trial and only thereafter, the provisional attachment can be confirmed or rescinded.

Sections 5 to 11 are under Chapter III of the Act, which provides for attachment, adjudication and confiscation.

In order to protect the right of the concerned person over the property in issue, the process of adjudication after provisional attachment order is provided under the Act.

No doubt, that in certain contingencies, inspite of existence of alternative statutory remedy available to the aggrieved person, the remedy available under Article 226 of Constitution of India can be availed by filing writ petition and Constitutional Courts can entertain the same. These contingencies, broadly, are (i) where it is a case of Inherent Lack of Jurisdiction, (ii) where there is a breach/violation of Principles of Natural Justice, (iii) Where the writ petition has been filed for enforcement of Fundamental Rights and, (iv) where the vires of the Act is challenged.

In the instant case, assailing the provisional attachment order No. 02 of 2021 dated 09.03.2021, no ground has been taken that the order has been passed by an incompetent authority or by an authority having no jurisdiction. In this view, it is not a case of lack of jurisdiction. Further, in this writ petition, the vires of the Act has not been challenged.

In this case, Right to Property is involved. Right to property is a constitutional right, which is always subject to restriction imposed by law. Further, the Right to Property has not been included under Part-III of the Constitution of India, which deals with the Fundamental Rights. Article 300-A is under Chapter IV of Part-XII of Constitution of India and it provides Right to Property. Thus, this is also not a case of enforcement of Fundamental Right. On the other hand, this is a case of right over the property, which can efficaciously be adjudicated by Forums provided under the Act.

So far as the plea of breach of natural justice, as raised by the counsel for the petitioner for entertaining the writ petition is concerned, we are of the view that the same is unsustainable. The reason for it, in our view, is that an order of provisional attachment is akin to "show-cause notice". This observation is based on the following main reasons; inferred by us from the provisions envisaged under Sections 5 & 8 of the Act:-

(i) The life of provisional attachment order is 180 days only and there exists a statutory remedy to the concerned person against the same under Section 8 of the Act, which provides full-fledged hearing/trial and as also complete opportunity of hearing to the aggrieved person to present his case,

(ii) Opportunity of hearing under Section 8 is not a "post-decisional hearing"

(iii) After the adjudication, as per Section 8 of the Act, the order of provisional attachment can be confirmed or rescinded.

(iv) In order to protect the right over the property, to avoid the prejudice to the concerned party on account of the action of the officials, the proper opportunity of hearing is provided to the concerned party under the Act itself.

It is trite law that the writ petition at the stage of show cause notice is not maintainable. (Vide: Special Director vs. Mohd. Ghulam Ghouse, (2004) 3 SCC 440 : 2004 SCC (Cri) 826; Union of India v. Kunisetty Satyanarayana, (2006) 12 SCC 28:(2007) 2 SCC (L&S) 304; State of Orrisa & Ors Vs. MESCO Steels Ltd. & Another (2013) 4 SCC 340; Union of India & Ors Vs. Coastal Container Transporters Association & Others (2019) 20 SCC 446; Commissioner of Central Excise Vs. Krishna Wax Private Ltd.(2020) 12 SCC 572; Union of India v. Guwahati Carbon Ltd., (2012) 11 SCC 651).

We also find from the above quoted provisions of the Act that in addition to remedy available under Section 8 of the Act, the party/person aggrieved by an order made by Adjudicating Authority can prefer an appeal under Section 26 of the Act before the Appellate Tribunal and thereafter any person aggrieved by any decision or order of Appellate Tribunal can file an appeal before the concerned High Court, as provided under Section 42 of the Act.

In addition to what we have already observed hereinabove, on the plea based on principle of natural justice, we would like to further observe that albeit alternative remedy is not absolute bar for entertaining the writ petition but taking note of multi layered remedies available in the statute under consideration itself, it would not be appropriate for this Court to exercise the discretionary jurisdiction provided under Article 226 of the Constitution of India on the plea of violation of Principles of Natural Justice. Further, the Act itself does not provide any opportunity of hearing to the concerned party prior to passing of order of provisions attached under Section 5 of the Act. Rightly so as after the order under Section 5 of the Act, the aggrieved party has multi layered remedies under the Act.

So far as the plea(s) related to recording of 'reasons to believe' while passing the provisional attachment order and other procedural irregularities/illegalities are concerned, the same are statutory infraction and being so the same can be pleaded before the Adjudicating Authority as also in the appeal(s) provided under Sections 26 & 42 of the Act.

Regarding the arguments of the learned Senior Advocate, based on the facts related to the interim order of Hon'ble the Apex Court, political rivalry and finding of Competition Commission, we are of the view that it would not be appropriate for this Court to advert into the same and record finding(s), as it could prejudice the case of either of the parties before the Adjudicating Authority and other forums available under the Act.

We may usefully refer to the exposition of the Apex Court in Titaghur Paper Mills Co. Ltd. & Another vs. State of Orrisa and Ors. 11(1983) 2 SCC 433, wherein it is observed that where a right or liability is created by a statute, which gives a special remedy for enforcing it, the remedy provided by that statute must only be availed of.

In paragraph 11 of the above report, the Court observed thus:-

"11. Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of. The petitioners have the right to prefer an appeal before the Prescribed Authority under sub-section (1) of Section 23 of the Act. If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub-section (3) of Section 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under Section 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Article 226 of the Constitution. It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton6 in the following passage:

"There are three classes of cases in which a liability may be established founded upon statute. . . . But there is a third class, viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it.... The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to."

The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspapers Ltd. (1919 AC 368) and has been reaffirmed by the Privy Council in Attorney-General of Trinidad and Tobago v. Gordon Grant & Co. Ltd. (1935 AC 532) and Secretary of State v. Mask & Co. (AIR 1940 PC 105). It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine." (emphasis supplied)"

(iii) Impugned order of provisional attachment has been passed by competent authority and on this aspect, no ground has been taken in writ petition.

In the subsequent decision in Mafatlal Industries Ltd. & Ors. vs. Union of India & ors. (1997) 5 SCC 536, the Apex Court went on to observe that an Act cannot bar and curtail remedy under Article 226 or 32 of the Constitution. The Court, however, added a word of caution and expounded that the constitutional Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise its jurisdiction consistent with the provisions of the enactment. To put it differently, the fact that the High Court has wide jurisdiction under Article 226 of the Constitution, does not mean that it can disregard the substantive provisions of a statute and pas orders which can be settled only through a mechanism prescribed by the Statute.

For the foregoing reasons, including that the multi-layered remedies are available to the petitioner under the statute in which the impugned order of provisional attachment has been passed as also the judgments referred hereinabove, we are not inclined to entertain this writ petition challenging the provisional attachment order no. 2 of 2021 dated 09.03.2021 under Section 5 of the Prevention of Money Laundering Act, 2002. Accordingly, the writ petition is dismissed with no order as to costs.

However, the petitioner is at liberty to avail the remedies available under the Act.

Order Date :- 18.3.2021

Nitesh

(Saurabh Lavania, J.) (Alok Singh, J.)