Calcutta High Court (Appellete Side)
Fairdeal Supplies Limited & Anr vs Union Of India & Ors on 23 April, 2021
CAN 1 OF 2021 IN WPA 8232 OF 2020
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Present:
THE HON'BLE JUSTICE ARINDAM MUKHERJEE.
CAN 1 OF 2021
IN
W.P.A. 8232 OF 2020
FAIRDEAL SUPPLIES LIMITED & ANR.
VS.
UNION OF INDIA & ORS.
For the petitioners : Mr. Jishnu Chowdhury,
Mr. Sarvapriya Mukherjee,
Mr. Aniruddha Agarwalla,
.... Advocates
For the Respondents no. 2, 3, 4 : Ms. Debjani Ray,
& 13 Mr. Sumitava Chakraborty.
.... Advocates
For the Respondent no. 5 : Mr. Rajarshi Dutta,
Mr. Arjun Mookherjee.
.... Advocates
For the Respondent no.6 : Mr. Om Narayan Rai,
.... Advocate
For the Respondent no.9 : Mr. Rajarshi Dutta,
Mr. Rahul Poddar,
Mr. Sandip Kr. Dutta.
.... Advocates
For the Respondent no.10 : Ms. Rituparna Sanyal,
Mr. Santosh Kr. Roy.
.... Advocates
For the Respondent no. 11 : Mr. Avishek Guha,
Ms. Ruchika Mall.
.... Advocates
For the Respondent no. 12 : Ms. Riti Basu,
Ms. Chandrani Das.
.... Advocates
Heard on : 12.04.2021 and 13.04.2021
Judgement on : 23rd April, 2021.
Arindam Mukherjee, J.:
CAN 1 OF 2021 IN WPA 8232 OF 2020
This is an application inter alia for modification of the order dated 26th
March, 2021 passed in the Writ Petition being WPA 8232 of 2020.
Although, the scope of the instant application is very limited but, for
proper appraisal of the grounds on which the order has been sought to
be modified, the basic facts are stated hereinbelow:
1. On the basis of a complaint made on 14th January, 2015 by Sri Pranav
Kumar, the then Zonal Head, UCO Bank, Zonal Office, Gariahat
Branch, Kolkata,an FIR was registered by Central Bureau of
Investigation(CBI, BS & FC), Kolkata. A charge-sheet bearing number
06/2016 dated 18th August, 2016 was filed before the competent Court
against the petitioner no. 1 and its directors for offence under Sec. 120-
B read with Sections 406 and 420 of the Indian Penal Code (in short
'IPC'). As Sections 120B, 406 and 420 of IPC are scheduled offence as
defined under Section 2 (1) (y) of the Prevention of Money Laundering
Act, 2002 (in short 'PMLA') an investigation under PMLA was initiated
by recording an Enforcement Case Information Report (in short ECIR)
number KLZO/17/2016 on 2nd December, 2016 against the petitioner
no. 1 and its Directors for alleged commission of offence under Section
3 which is punishable under Section 4 of PMLA. The directors of the
petitioner no. 1 have, however, not joined the writ petition as
petitioners. The petitioner no. 2 claims to be an authorized signatory.
2. On 20th January, 2020 the Deputy Director, Directorate of
Enforcement, Government of India being an officer under the provisions
CAN 1 OF 2021 IN WPA 8232 OF 2020
of Section 5 (1) of PMLA passed an order of Provisional Attachment. On
19th February, 2020 a complaint being Complaint no. 1262 of 2020 was
filed by the said Deputy Director before the Adjudicating Authority
under Section 5(5) of PMLA inter alia stating the facts of attachment
and praying for confirmation of the order of provisional attachment
dated 20th January, 2020 under the provisions of Section 8(3) of PMLA.
3. On 19th February, 2020, the Adjudicating Authority issued a notice
under Section 8(1) of the PMLA.
4. The petitioners filed a writ petition on or about 7th October, 2020. In the
said writ petition, on 21 October, 2020 an interim order was passed.
The operative portion of the order is set out hereunder for convenience:
"This Court is of the view that since an adjournment has
been prayed for on behalf of the respondents, the respondent
should not take any steps in terms of the impugned order until
the matter is heard out on merits."
5. The writ petition was again taken up on 5th February, 2021, when the
matter was fixed for hearing in view of the interim order of stay being in
operation.
6. On 18th March, 2021 when the matter was again taken up, it was
submitted on behalf of the petitioners that the petitioners intended to
withdraw the writ petition as the order of provisional attachment had
lapsed with the expiry of 180 days in view of the provisions of Section 5
(1) (b) of the PMLA. The petitioners' prayer was opposed by the
CAN 1 OF 2021 IN WPA 8232 OF 2020
respondents no. 2, 3, 4 and 13 and as such the matter was adjourned.
On 22nd March, 2021, the petitioners prayer for withdrawal of the writ
petition on the ground that the order of provisional attachment had
expired by efflux of time under the provisions of Section 5(1)(b) was
again opposed by respondents no. 2, 3, 4 and 13 on the ground that the
order of provisional attachment according to the said respondents did
not expire by efflux of time in view of the order dated 8th March, 2021
passed by the Hon'ble Supreme Court of India in suo motu Writ
Petition (C) No. 3 of 2020) (In re: Cognizance of Extension of
Limitation). The matter was again taken up on 26th March, 2021,
when an order was passed, the operative portion whereof is set out
hereunder for convenience:
"The petitioners thereafter wanted to withdraw the writ
petition as, according to the petitioners, the order of
provisional attachment dated 20th January, 2020 had lost
its force on expiry of 180 days from the passing of the
same in view of the provisions of Section 5(1)(b) of the
Prevention of Money Laundering Act, 2002 (in short
PMLA).
The prayer for withdrawal of the writ petition was opposed
by the respondent nos.2, 3, 4 and 13 on the ground that
the order of provisional attachment dated 20th January,
2020, which the petitioners say to have lost its force,
according to the said respondents, was in subsistence in
CAN 1 OF 2021 IN WPA 8232 OF 2020
view of the order passed by this Court as also by the
Hon'ble Supreme Court during the pandemic. The
respondent nos.2, 3, 4 and 13 submitted that the
petitioners are free to withdraw their writ petition
simplicitor but no condition or leave or any observation
from this Court should not be attached to the leave to
withdraw the writ petition.
Faced with this situation, the petitioners do not intend to
withdraw the writ petition.
The respondent no.3, on finding that the petitioners are no
more interested to withdraw the writ petition and intend to
proceed with the same, raises the maintainability point of
the writ petition on several grounds, including the
jurisdictional ground. The respondent nos.2, 3, 4 and 13
further submits that the interim order dated 21st October,
2020 was passed only on the premise that the
respondents had sought for time. The matter was not
heard on merits while passing the interim order on 21st
October, 2020. The respondent nos.2, 3, 4 and 13 also
point out to the conduct of the petitioners. The said
respondents submit that the provisional attachment order
lost its force with the expiry of 180 days, as submitted by
the petitioners, then the writ petition has been filed much
CAN 1 OF 2021 IN WPA 8232 OF 2020
beyond 180 days commencing from 20th January, 2020.
The writ petition, according to the petitioners, therefor, is
not maintainable on such ground alone as the only
challenge therein is the provisional order of attachment
dated 20th January, 2020.
So far as the prayer for vacating the interim order made by
the respondent nos.2, 3, 4 and 13 is concerned, the same
cannot be vacated at this stage, particularly in view of the
fact that such interim order is continuing from 21st
October, 2020 and no vacating application has been made
by the said respondents in the meantime.
Pendency of the writ petition will, however, not be an
embargo on the respondents in proceeding with the
complaint no.1262 of 2020 made under the provisions of
Section 5(5) of PMLA as the same will not amount to any
coercive step in terms of the provisional order of
attachment.
After hearing the respective submissions and considering
the materials on record, I find that the matter can be more
effectively heard after calling for affidavits.
CAN 1 OF 2021 IN WPA 8232 OF 2020
Let affidavit-in-opposition be filed within a period of four
week from date. Reply, if any, thereto be filed by two
weeks thereafter.
Liberty to mention after expiry of six weeks for inclusion
in the list under the heading "Hearing".
The directions for filing of affidavits are peremptory in
nature, considering the fact that the interim order is
subsisting as on date."
7. The petitioners have filed this instant application as a portion of the
order dated 26th march, 2021 has been according to the petitioners
misused by the respondents no. 2, 3, 4 and 13 to proceed with the
adjudication under Sections 8(1), 8(2) and 8(3) of PMLA. The portion of
the order dated 26th March 2020 which the petitioners wants
modification is set out hereunder:
"Pendency of the writ petition will, however, not be an embargo
on the respondents in proceeding with the complaint no. 1262 of
2020 made under the provisions of Section 5(5) of PMLA as the
same will not amount to any coercive step in terms of the
provisional order of attachment."
8. Petitioners' Submission:-
CAN 1 OF 2021 IN WPA 8232 OF 2020
(a) The petitioners say that the order of provisional attachment dated
20th January, 2020 passed under the provisions of Section 5(1) has
in fact expired on or about 20th July, 2020 i.e., prior to the writ
petition being filed. Once the order of provisional attachment has
come to an end with the efflux of 180 days from the date of passing
of the order, the Adjudicating Authority to whom an application
had been made under Section 5(5) of PMLA has become functus
officio and as such the question of proceeding for any adjudication
in terms of the provisions of Sections 8(1), 8(2) and 8(3) of PMLA
cannot and does not arise. If the order of provisional attachment is
not there, according to the petitioners, the question of the
Adjudicating Authority confirming such order also does not arise.
Any step taken by the Adjudicating Authority under the provisions
of Sections 8(1), 8(2) and 8(3) of the PMLA is without jurisdiction
and an invalid action according to the petitioners. The petitioners
say that the respondent nos. 2, 3, 4 and 13 should not be allowed
to proceed with the adjudication under the provisions of Sections
8(1), 8(2) and 8(3) of PMLA in the facts and circumstances of the
case as also in view of the order dated 21st October, 2020. Taking
advantage of the order dated 26th March, 2021, no step to confirm
the order of provisional attachment should be allowed to continue
any further. The petitioners therefor, are seeking modification of
the said order.
CAN 1 OF 2021 IN WPA 8232 OF 2020
(b) The petitioners say that so far as the other part of the order
dated 26th March, 2021 is concerned, the petitioners have no
objection and intend to have the writ petition heard after
completion of affidavits. The petitioners also say that so far as the
criminal proceedings for ascertainment of scheduled offence is
concerned, the petitioners have no objection and the trial before
the Special Court may be allowed to continue. The petitioners
have relied upon a judgement dated 8th November, 2020 passed by
a Learned Single Judge of the High Court at Delhi in W.P.(C)
3551/2020 and 12626/2020 M/S VIKAS WSP LTD. & ORS. Vs.
DIRECTORATE ENFORCEMENT & ANR, in support of their
contention that the Adjudicating Authority with the expiry of the
validity/life of an order of provisional attachment becomes functus
officio and cannot proceed any further for adjudication in terms of
provisions of Section 8(1), 8(2) and 8(3) of PMLA. The petitioners
have also relied upon an order dated 9th April, 2021 passed by a
Learned Single Judge, of this Court in WPA no. 4845 of 2021
[Knight Riders Sports Private Limited Vs. Adjudicating
Authority (PMLA)and others]to demonstrate the validity of the
order of provisional attachment to have not been extended
automatically despite its lapse with the expiry of 180 days from
passing of the same in view of the order passed by the Hon'ble
Supreme Court of India (In re: Cognizance of Extension of
Limitation) as contended by the respondent nos. 2, 3, 4 and 13 has
been rejected.
CAN 1 OF 2021 IN WPA 8232 OF 2020
(c) The petitioners further say that the complaint case having
Complaint No. 1262 of 2020 which is the source from where the
Adjudicating Authority is purporting to derive its jurisdiction even
after lapse of the order of provisional attachment should be stayed
otherwise, the said Adjudicating Authority is bent upon to confirm
the order of provisional attachment though the same has lapsed on
expiry of 180 days from the passing of the same.
9. Submission of respondents no. 2, 3, 4 and 13:-
(i) On behalf of the respondent nos. 2, 3, 4 and 13, the order dated
8th March, 2021 passed in (In re:: Cognizance of Extension of
Limitation) is relied upon and in particular paragraph 3 thereof to
contend that the outer limit of 180 days for the order of provisional
attachment has stood extended in view of the said order dated 8th
March, 2021 passed by the Hon'ble Supreme Court. The time
available to the Adjudicating Authority for confirming the order of
provisional attachment under Section 8(3) by terminating the
proceeding shall also stand extended in view of the said order. The
Adjudicating Authority is therefore, free to proceed with the matter
and pass necessary orders under Sec. 8(3) of PMLA by bringing the
adjudication process to a logical conclusion.
(ii) It is also submitted that the definition of proceeding according to
Black's Law Dictionary (11th Edition) is "the regular and orderly
progression of a lawsuit, including all acts and events between the
CAN 1 OF 2021 IN WPA 8232 OF 2020
time of commencement and the entry of judgment". The meaning
of the term 'proceeding' has also been referred from the Supreme
Court on Words and Phrases wherein it appears that the term
'proceeding' has been described as "is a very comprehensive term
and generally speaking means a prescribed scope of action for
enforcing a legal right". It is also submitted that the petitioners
were required to show-cause in terms of the notice dated 19th
February, 2020 on or before 4th May, 2020 and appear before the
respondent no. 13 on 4th may, 2020. The mandate under Sec. 8(1)
according to the respondent nos. 2, 3, 4 and 13 is to serve a notice
of not less than 30 days. If that minimum notice period is taken
into consideration, then the 30 days period from 19th February,
2020 expires on 20th March, 2020. But from 24th March, 2020
national lockdown had been declared due to pandemic. Even after
withdrawal of the lockdown period, owing to the pandemic, the
Adjudicating Authority was not functioning regularly and as such
the maximum time period of 180 days to confirm the order of
provisional attachment should be computed by holding that such
time period has expired between 15th March, 2020 and 14th March,
2021 as per the order of the Hon'ble Supreme Court of India dated
8th march, 2021 thereby allowing the confirmation if necessary to
be completed within a period of 90 days from 15th March, 2020.
(iii) It is further submitted on behalf of the respondent no. 2, 3, 4 and
13 that the adjudication under Sections 8 (1), 8(2) and 8(3) is not
CAN 1 OF 2021 IN WPA 8232 OF 2020
only restricted to the confirmation of the provisional order of
attachment but, for declaration as to whether the property is
involved in money-laundering and therefor, stands on an
independent footing. The Adjudicating Authority as such does not
become functus officio upon lapse of the order of provisional
attachment with the expiry of 180 days from passing of the same.
(iv) The said respondents also say that the adjudication up to a stage
as contemplated under Sec. 8(2) of PMLA should be at least
allowed to continue in the facts of the instant case. The
respondent nos. 2, 3, 4 and 13 further submitted that the order of
the Learned Single Bench of the High Court at Delhi dated 8th
November, 2020, does not take into consideration the order passed
by the Hon'ble Supreme Court on 8th March, 2020. That apart and
in any event, the said judgement and order dated 8th November,
2020 has been stayed by the Division Bench of the High at Delhi
by an order dated 8th January, 2020 in LPA 362/2020 & C.M.
APPL. 30675/2020 (Stay) (Directorate of Enforcement and
Anr. vs. M/s Vikas WSP Limited & Ors). The respondent no. 2,
3, 4 and 13 have also taken a point that the petitioners in the garb
of an application for modification is in effect seeking a review of the
order dated 26th March, 2021. This is impermissible in law and on
this context, the said respondents cite a judgement reported in
2014 12 SCC 713 (Ram Chandra Singh vs. Savitri Devi & Ors.)
CAN 1 OF 2021 IN WPA 8232 OF 2020
10. Since the scope of the application is very limited and adjudication
thereof is dependent only on interpretation of the legal provisions by
consent of parties, I proceed to deal with the same without calling for
affidavits.
11. Findings:
(i) On a plain reading of Section 2(1)(y) and Section 3 of the PMLA , it
appears to me that the legislature has bifurcated the offence under
PMLA into "Scheduled Offence" and "Offence of money-laundering".
"Scheduled Offence" are provided in Part A of the schedule to PMLA
which takes into its sweep offences under various statutes. Scheduled
Offence also includes offences specified under Part B and Part C of the
Schedule to PMLA.
(ii) The offence of money-laundering on the other hand is clearly specified
in Section 3 which may have some overlapping with scheduled offence
but are mostly different. Section 4 of PMLA provides for punishment for
money-laundering. On a conjoint reading of Section 3 and 4 of PMLA, it
appears to me that a separate set of punishment has been clearly
provided by the legislature for offence of money-laundering which is
different from the punishment in case of scheduled offence under
different statutes wherein the punishment for offences under those
statutes are specifically provided.
(iii) On a reading of Section 43 and 44 of the PMLA, it also appears that an
offence punishable under Section 4 and any scheduled offence
connected to the offence punishable under that Section shall be tried by
CAN 1 OF 2021 IN WPA 8232 OF 2020
the Special Court constituted for the area in which the offence has been
committed. It is, therefore, apparent from Section 44 that an offence
punishable under Section 4 and any scheduled offence connected to the
offence under Section 4 shall be tried by the Special Court. The second
proviso of Section 45 of PMLA also clearly provide that the Special
Court shall not take cognizance of any offence punishable under
Section 4 of PMLA except upon a complaint in writing made by the
director or any officer of the Central Government or the State
Government authorised in writing in this behalf by the Central
Government. Sub-Section 1A of Section 45 debars a police officer
otherwise authorised under the Code of Criminal Procedure 1973 (in
short 'Cr.P.C.') from ordinarily investigating an offence under the PMLA.
(iv) Investigation "is defined in Section 2(1)(na) which includes all
proceedings under PMLA conducted by the director or by an authority
authorised by the Central Government under PMLA for collection of
evidence. The legislature, therefor, by including such provisions in the
PMLA has segregated the investigation and trial of an offence under
PMLA or any scheduled offence connected thereto and have provided for
the Court wherein such offence has to be tried. Authorities under
PMLA have been specified in Section 48. The jurisdiction, powers of the
authorities and other officers are provided in Chapter VIII of the PMLA.
On a plain reading of Section 54 of PMLA, it is also clear that the
legislature wanted to include officers from other departments and/or
agencies for fruitful assistance in the inquiry.
CAN 1 OF 2021 IN WPA 8232 OF 2020
(v) The first proviso to Section 5(1) provides that "no such order of
attachment" shall be made unless in relation to the scheduled offence,
report has been forwarded to a Magistrate under Section 173 of Cr.P.C.
Section 3 of Cr.P.C. provides for the manner in which a "Magistrate"
shall be construed. Section 173 (2) (i) of Cr.P.C. speaks about a
"Magistrate" empowered to take cognizance of the offence on a police
report. Since, Section 45(1-A) as by implication eliminate a police
officer from investigating an offence under PMLA, therefore, the police
report under Section 173 (2) (i) of Cr.P.C. to the Magistrate under
ordinary course, has to be submitted by the Director or an officer not
below the rank of Deputy Director under PMLA who is authorised to
investigate under PMLA. This is what has been exactly provided under
the first proviso under Section 5(1) of PMLA. An exception has, however,
been curved out under the second proviso to Section 5(1) of PMLA as to
when a property can be provisionally attached even without complying
with the provisions of the first proviso to Section 5(1) of PMLA. At the
same time, under Section 43 and 44, any offence which is punishable
under Section 4 of PMLA and any scheduled offence connected thereto
has to be tried by a Special Court. Cognizance of an offence cannot be
taken for a second time as a Court of Original Jurisdiction under
Section 193 of Cr.P.C. The role of the Magistrate to whom a report is
filed under the first proviso of Section 5 (1) of PMLA, therefor, requires
further scrutiny to ascertain whether such Magistrate has to take a
passive role in committing the case by not exercising its cognizance
power so that the Special Court is free to exercise the same for the first
CAN 1 OF 2021 IN WPA 8232 OF 2020
time as a Court of Original Jurisdiction under Section 193 of the
Cr.P.C., or that the Magistrate can take cognizance of the matter on a
report under the first proviso of Section 5(1) filed before it. Since I am
not required to answer this question while adjudicating the issue in
hand, I refrain from dealing with this point further. These are so far as
trying an offence punishable under Section 4 of PMLA and a scheduled
offence connected thereto are concerned. Thus, it is apparent that
PMLA is a Complete Code in itself for taking cognizance of an offence
punishable under Section 4 of PMLA with connected schedule offences,
its investigation and trial.
(vi) This now takes me to analyse the role of the Adjudicating Authority
appointed under Section 6 of PMLA as it is necessary to answer the
issue involved.
vii) Section 5 has a heading "Attachment of Property involved in money-
laundering". Attachment has been defined in Section 2 (1) (d) of the
PMLA. However, the Act nowhere defines "provisional attachment",
though section 5(1) speaks of an order in writing to provisionally attach
a property for a period not exceeding 180 days from the date of such
order. If the Director or any other officer not below the rank of Deputy
Director has reasons to believe that a property is involved in money
laundering and records the same in writing on the basis of the
materials in his possession, may provisionally attach a property. The
use of word "may" gives a discretion upon the Director or an officer not
below the rank of Deputy Director to either provisionally attach a
property or not to do so depending upon his perception on the basis of
CAN 1 OF 2021 IN WPA 8232 OF 2020
materials available with him. The second proviso to Section 5(1) further
clarifies the reasons for which a provisional attachment is required to
be made ─ "if such property involved in money-laundering is not
attached immediately under this chapter, the non-attachment of the
property is likely to frustrate any proceeding under this Act". The
second proviso to Section 5(1) of PMLA also authorises the officer
concerned to pass an order of provisional attachment even without first
complying with the provisions of the first proviso to Section 5(1) of
PMLA. The difference of wording of the first and the second proviso also
makes it clear that the first proviso relates to the property of a person
charged of having committed a scheduled offence while the second
proviso relates to property of any other person not necessarily charged
of having committed a scheduled offence. It therefore, appears that
pending investigation when the officer concerned thinks it necessary to
either provisionally attach or that non-attachment of the property
provisionally is likely to frustrate any proceeding may by an order in
writing provisionally attach such property. The provisional attachment
is therefor a temporary measure valid for a specified time unless
confirmed by the Adjudicating Authority and is subject to further
investigation for the purpose of trial before the Special Court.
viii) The Director or an Officer not below the rank of Deputy Director while
exercising jurisdiction under Section 5(1), therefor, has the discretion
either to provisionally attach the property or not to do so. If the officer
chooses to provisionally attach the property, he has to forward a copy of
CAN 1 OF 2021 IN WPA 8232 OF 2020
the order along with materials in his possession to the Adjudicating
Authority. The Prevention of Money-Laundering (Issuance of
Provisional Attachment Order) Rules, 2013 specifies the manner of
issuance of provisional attachment order. The manner of forwarding a
copy of the order of provisional attachment of property with materials
as required under Section 5(2) of PMLA is provided in Rule 3 of the
Prevention of Money-Laundering (the Manner of Forwarding a Copy of
the Order of Provisional Attachment of Property along with the Material,
and copy of the Reasons along with the material in respect of Survey, to
the Adjudicating Authority and its Period of Retention) Rules, 2005.
Rule 6 of the 2005 Rules provides for the period of time such order of
provisional attachment, the materials and copy of the reasons are
required to be retained by the Adjudicating Authority. Section 5(2) of
PMLA, therefor, does not trigger the initiation of any Adjudication under
Section 8(1) of PMLA. The concerned officer on passing an order of
provisional attachment has to within 30 days therefrom file a complaint
before the Adjudicating Authority under Section 5(5) of the PMLA. The
process of adjudication is attracted immediately on such complaint
being filed under Section 5(5) of PMLA. The Adjudicating Authority
upon receipt of such complaint under Section 5(5) if has reasons to
believe that any person has committed an offence under Section 3, may
serve a notice not less than 30 days to such person calling upon him to
show-cause as to 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. The Adjudicating Authority,
CAN 1 OF 2021 IN WPA 8232 OF 2020
therefor, declares whether a property is involved in money laundering.
The procedure to be followed for the adjudication is specified under
Section 8(2) of PMLA. After completion of the adjudication process as
envisaged under Section 8(2) of PMLA the Adjudicating Authority has to
record a finding whether all or any of the properties referred to in the
notice issued under Section 8(1) are involved in money laundering.
Once this finding is arrived at and it is declared by the Adjudicating
Authority that the property/properties are involved in money
laundering, the Adjudicating Authority shall confirm the order of
attachment under Section 5(1) of PMLA i.e., the order provisionally
attaching the property. The Adjudicating Authority after conclusion of
hearing under Section 8 (2) of PMLA, therefor can either declare that
the property or properties are involved in money-laundering or hold
that they are not so. The adjudication process, by the Adjudicating
Authority is thus not dependent on the order of provisional attachment
being in force, though the initiation of adjudication under Section 8(1)
of PMLA had commenced after a complaint being lodged under Section
5(5) of PMLA pursuant to an order of provisional attachment under
Section 5(5) of PMLA. Even Section 8(1) of PMLA empowers the
Adjudicating Authority to form a prima facie independent opinion before
issuing a notice under such Section after receiving a complaint under
Section 5(5) of PMLA. The adjudication by the Adjudicating Authority
is, therefor, independent of the fact whether the order of provisional
attachment on the date of completion of the adjudication under Section
8(2) of PMLA is in operation or not.
CAN 1 OF 2021 IN WPA 8232 OF 2020
ix) The role of the Special Court and the Adjudicating Authority is therefor,
completely different. The Special Court tries the matter for finding
whether an offence punishable under Section 4 connected with
scheduled offence, if any and hold the accused guilty of the same if
finds such offence has been committed. The punishment consequent
upon such finding follows. The Adjudicating Authority on the other
hand makes an endeavour to find out whether the property(s) are
involved in money-laundering and makes a declaration to that effect on
finding it in the affirmative. Upon such declaration being made the
order of provisional attachment is confirmed.
x) In the light of the discussion as above, I am unable to agree with the
view taken by a Learned Single Judge of Delhi high Court in Vikas WSP
(supra) cited by the petitioners that the Adjudicating Authority becomes
functus officio with the expiry of 180 days time period from the date of
passing the order of provisional attachment unless the Adjudicating
Authority completes the adjudication and confirms the order of
provisional attachment before such 180 days period.
xi) In the instant case, the jurisdiction of the Adjudicating Authority was
attracted on a complaint under Section 5(5) being lodged after an order
for provisional attachment under Section 5(1) was made. The Deputy
Director under PMLA in the instant case on 19th February, 2020 i.e.,
within 30 days from the date of passing the order of provisional
attachment had filed the complaint under Section 5(5) of PMLA. The
Adjudicating Authority on receiving the complaint under Section 5(5)
CAN 1 OF 2021 IN WPA 8232 OF 2020
upon having reasons to believe that the petitioner no. 1 has committed
an offence under Section 3 or is in possession of proceeds of crime,
served a notice under Section 8(1) of PMLA on 19th February, 2020
upon the petitioner no. 1 and its Directors calling upon them to
indicate the source of income, earnings or assets out of which or by
means of which the property attached under the provisions of Section
5(1) of PMLA was acquired. It is an admitted position that immediately
upon expiry of the minimum 30 days' notice period for show cause
under Section 8(1) was over, the country went into a national lockdown.
As a natural consequence, the matter being fixed on 4th May, 2020
before the Adjudicating Authority for a hearing under Section 8(2) could
not take place. The petitioner no. 1 also did not file any reply as
required under Section 8(2) of PMLA. Before the adjudication under
Section 8(2) was over, the 180 days time period from the date of passing
of the provisional order of attachment had expired.
(xii) It appears from Section 8(2) of PMLA that there is no time limit for
completing the adjudication. The stipulation in Section 5(3) on a
conjoint reading of the said section along with Section-8(2) also does
not indicate any timeframe. However, on expiry of 180 days the order of
provisional attachment losses its validity unless confirmed prior to
expiry of such 180 days. Thus, an adjudication pursuant to a complaint
under Section 5(5) of PMLA if not completed before expiry of 180 days
from the date of passing of the order of provisional attachment the said
order of provisional attachment at the highest cannot be confirmed
under Section 8(3) if the Adjudicating Authority finds that the property
CAN 1 OF 2021 IN WPA 8232 OF 2020
is involved in money-laundering. The embargo to confirm an order of
provisional attachment in a given case where such order of provisional
attachment has lost its force by efflux of 180 days, however cannot be
an impediment for the Adjudicating Authority in hearing a matter in
terms of section 8(1) and 8(2) of PMLA. The narrow construction of the
stature as sought to be made by the petitioners, therefore cannot be
accepted as it will lead to holding 180 days to be the time period for
completing adjudication under Section 8(2) of PMLA.
xiii) Since I have already held that the Adjudicating Authority does not
become functus officio on expiry of the period of 180 days from the
passing of the order of provisional attachment unless such order is
confirmed under Section 8(3) in view of the provisions of Section 5(3) of
the PMLA, the Adjudicating Authority in the instant case, is, free to
proceed with the Complaint Case being Complaint no. 1262 of 2020 till
the Sec. 8(2) stage i.e., to give a finding whether the property is involved
in money-laundering or not.
xiv) So far as the issue of the order of provisional attachment remained
valid or not after expiry of 180 days due to the pandemic is concerned, I
keep the same open to be decided in the writ petition wherein direction
for affidavits have been given without vacating the interim order passed
on 21st October, 2020. In fact, the confirmation of the order of
provisional attachment under Section 8(3) of PMLA cannot be also
done in the instant case before the writ petition being finally disposed of
even if the Adjudicating Authority comes to a finding that the property
CAN 1 OF 2021 IN WPA 8232 OF 2020
in question is involved in money-laundering in view of the interim order
dated 21st October, 2020.
xv) The other issue raised by the respondents no. 2, 3, 4 and 13 that the
petitioners are seeking review of the order dated 26th March, 2021 does
not fall for any scrutiny in the facts of the instant case though there is
no dispute as to the ratio laid down in Ram Chandra Singh (Supra)cited
by the said respondents.
12. Conclusion:-
The order dated 26th March, 2021 is accordingly clarified that hearing of
Complaint No. 1262 of 2020 now pending before the Adjudicating
Authority shall continue up to the stage indicated in Section 8(2) of
PMLA but the confirmation provided under Section 8(3) of PMLA shall
take place after the final hearing of the writ petition depending upon the
final result. I had in fact meant this in my order dated 26th March,
2021.
13. The application being CAN 1 of 2021 filed in WPA 8232 of 2020 is
accordingly disposed of without any order as to costs.
Urgent photostat certified copy of this judgment and order, if applied
for, be supplied to the parties on priority basis after compliance with
all necessary formalities.
(Arindam Mukherjee, J.)
