Nillesh Parrekh vs Assistant Director
2021 Latest Caselaw 3167 Cal

                                         1




                      IN THE HIGH COURT AT CALCUTTA
                      CIVIL APPELLATE JURISDICTION
                               Appellate Side


Present:
The Hon'ble Justice Arijit Banerjee
               And
The Hon'ble Justice Jay Sengupta


                             FMAT 36 of 2021
                                   With
                               CAN 1 of 2021
                              Nillesh Parrekh
                                   Versus
      Assistant Director, Enforcement Directorate, Kolkata & Ors



For the Petitioners      : Mr. Ranjan Deb
                          Mr. Shyamal Sarkar
                          Mr. Rajesh Gupta
                          Mr. Meghajit Mukherjee
                          Ms. Priyanka Sharma


For the Respondent        : Mr. Bhaskar Prosad Banerjee

Lastly heard on           : 24.03.2021


Judgment on               : 10.06.2021


Jay Sengupta, J

1. This appeal is directed against an order dated January 1, 2021 passed

by the learned Appellate Tribunal, Prevention of Money Laundering Act,

2002 in Appeal No. FPA-PMLA-3332/KOL/2019, thereby, inter alia, holding

that the appeal preferred by the Enforcement Directorate, Kolkata, through

the Assistant Director, purportedly under section 26 of the Prevention of

Money Laundering Act, 2002 (the "PML Act", for short) was maintainable.

2. By an order dated 9th October, 2019, the learned Adjudicating

Authority, among other things, held that the defendants therein did not

commit the scheduled offences or generate proceeds of crime and hence, the

complaint filed against them was dismissed and the provisional attachment

order was also not confirmed. Being aggrieved by the order passed by the

learned Adjudicating Authority under Section 8 of the PML Act, the

Enforcement Directorate, Kolkata filed an appeal through the Assistant

Director. The present appellant contended that the Enforcement Directorate

was not competent to file such appeal. By an order dated 18th August, 2020,

a Division Bench of this Court in an appeal being FMAT 343 of 2020

preferred by the present respondent no. 2, inter alia, held that the

maintainability point shall be formally raised by the appellant by filing a

supplementary affidavit before the Tribunal by 7th September, 2020 and

serving copies thereof on the respondents and the Tribunal shall decide the

point of maintainability as a preliminary issue. Accordingly, a

supplementary affidavit was filed. After hearing the parties, the learned

Tribunal passed the impugned order.

3. Mr Deb, learned senior counsel appearing on behalf of the appellant,

submitted as follows. Section 26 of the PML Act provides that the Director or

any person aggrieved by an order made by the learned Adjudicating

Authority under the Act, might prefer an appeal to the Learned Appellate

Tribunal. But, Section 48 of the PML Act specified the authorities under the

Act and the Enforcement Directorate was not mentioned therein as an

authority. The only authority which could file an appeal under Section 26 of

the Act was a Director. In fact, the term "person" mentioned in Section 26 is

defined in Section 2(s) of the said Act and it does not include the authorities

of the Directorate. Therefore, the appeal preferred by the Enforcement

Directorate through the Assistant Director was not maintainable. While

deciding the issue, the Tribunal erroneously relied on the case of Amarjit

Singh alias Billa, 2009 SCC Online Del 995. It failed to consider that in that

case the appeal was filed under Section 54 of the Foreign Exchange

Regulation Act, 1973, which was not in pari materia with Section 26 of the

PML Act. Moreover, in Amarjit Singh (supra), the appeal was filed by the

Union of India through the Director of Enforcement. The Union of India was

sui juris and section 79 of the Code of Civil Procedure provided for initiation

of litigation by the Central government in that matter. The learned Tribunal

further erred in placing reliance on the decision of the Hon'ble Apex Court in

the case of Sugandhi (Dead) by LRs, (2020) 10 SCC 706, in as much as the

observations made therein were because the defendant wanted to file some

documents which were left out in the written statement. This was not the

case here. Reliance was placed on a decision of the Hon'ble Supreme Court

passed in the case of Opto Circuit India Limited vs. Axis Bank and Ors.,

reported in 2021 SCC Online SC 55. There it was held that if a statute

provided for a thing to be done in a particular manner then it had to be done

in that manner alone and in no other manner. Within the scheme of Section

26 of the PML Act, only the Director was empowered to file an appeal and by

necessary implication any other authority would be barred. Reliance was

also placed on a decision of the Hon'ble Supreme Court in Northern Plastics

Ltd vs Hindustan Photo Films Mfg Co Ltd & Ors, (1997) 4 SCC 452.

4. Mr Banerjee, learned counsel appearing on behalf of the Enforcement

Directorate, submitted as follows. The case at hand related to a defalcation

of Rs. 2672 Crores and apparently involved 25 banks of which five were

private ones. The Enforcement Directorate is a specialised financial

investigating agency under the Department of Revenue, which enforces the

provisions of PML Act. The term "Assistant Director" is defined in Section

2(c) of the said Act. It was duly authorised to act under the PML Act.

According to Section 26 (1) of the said Act, the Director or any other person

aggrieved by an order is entitled to file an appeal before the learned

Tribunal. A harmonious construction was given in order to sub-serve the

object of the said Act which was a penal statute and provided for

imprisonment of the accused. The adjudication regarding properties involved

in proceeds of crime had a different forum, but the said forums were only

assisting preservation of proceeds of crime. The said provisions have to be

read with Section 48 that specifies the authorities under the said Act. In

terms of Section 68, when the proceedings initiated by the Enforcement

Directorate were in consonance with the objects of the said Act, the same

could not be called into question on account of some technicalities.

Moreover, Section 71 gives an overriding power and declares that the

provisions of this Act shall have force notwithstanding anything inconsistent

therewith contained in any other law for the time being in force. The

Director was undoubtedly the head of the Enforcement Directorate.

Therefore, the Director was the authorised officer under the said Act. But,

the Assistant Director was also one of the authorities under the said Act.

When an order of the learned Adjudicating Authority prejudicially affected

the objects of the said Act, it was also the Enforcement Directorate, which

was competent and authorised to challenge the said adjudication order

before the learned Tribunal. The Assistant Director was acting on behalf of

the Government and these officers were the links with the Government and

not its delegates. On this, reliance was placed on A. Sanjeevi Naidu and Ors.

Vs. State of Madras and Anr, (1970) 1 SCC 443.

5. We heard the learned counsels appearing on behalf of the parties and

perused the memorandum of appeal, the impugned judgment and order and

the other orders referred to as also the notes of arguments submitted by the

parties.

6. The prime contention of the appellant is that in view of Section 26(1)

of the PML Act, the Director of the Enforcement Directorate and not the

Enforcement Directorate itself, through its Assistant Director, was entitled

to file an Appeal before the learned Tribunal. According to the appellant, the

Directorate did not come within the sweep of the word 'person' as defined in

section 2(s) of the said Act and as such, it could not file an appeal as an

'aggrieved person'.

7. Section 26(1) of the PML Act provides as follows:

"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".

8. Therefore, even as per Section 26(1) of the said Act, not only the

Director but also an aggrieved person may file such an appeal. Thus, it gives

a rather expansive definition of an 'appellant'.

9. First, let us explore whether the Enforcement Directorate per se has a

right to file an appeal under section 26 of the PML Act even without making

use of the expression 'an aggrieved person'.

10. The Enforcement Directorate happens to be the specialised financial

Investigating Agency under the Department of Revenue, which is entrusted

to enforce the provisions of the PML Act. As such, it will be utterly fallacious

to suppose that only the Director would be aggrieved by an order of

exoneration and not the Directorate itself. Then, it will be like missing the

woods for the trees. Perhaps the Enforcement Directorate, which is an arm

of the State, would be more aggrieved with such an order and thus, be

endowed with a better locus than the Director himself for filing the appeal in

question.

11. Section 26 is a provision enabling certain entities to file an appeal. In

this, so far the Directorate is concerned, the Legislature thought it prudent

to specify the Head of the Directorate i.e., the Director as the authority to

initiate an appeal. This, however, cannot preclude the Enforcement

Directorate itself from preferring an appeal if it decides to do so for some

reason. In doing so, the Directorate may fairly be represented by any of its

authorities, especially the ones who have been specifically mentioned in

section 48 of the Act.

12. Had the appeal been filed by the Assistant Director in his own name

instead of by the Director, then a question could have at all arisen about

proper adherence to the provisions of section 26 of the Act in filing an

appeal. But, when the Directorate itself files the same, whether through the

Assistant Director or any other authority as mentioned in the Act itself, it is

a substantial compliance of the said provision.

13. Moreover, section 68 of the PML Act espouses a spirit of pragmatism

and shuns thwarting actions taken under the said Act merely on the excuse

of technicalities.

14. It is germane to notice that although section 42 of the PML Act

provides for an appeal by an aggrieved person, appeals galore are filed by

the Directorate, even through the Assistant Director, and these are not shut

out by Courts on the anvil of section 2 (s) of the Act.

15. Therefore, now we need to delve into the issue of whether the

Enforcement Directorate could also invoke the locus of an 'aggrieved person'

in filing an appeal under section 26 of the PML Act.

16. Section 2(s) of the PMLA Act, defining the word 'person', albeit by

enumerating what it would include, does not render it implausible that it

may include the Directorate or any of its authorities within its ambit. It is an

inclusive definition and not an exhaustive one.

17. In S K Gupta & Anr vs K P Jain & Anr, (1979) 3 SCC 54, a Three

Judges' Bench of the Hon'ble Apex Court, laid down as follows-

"24. The noticeable feature of this definition is that it is inclusive definition

and where in a definition clause the word 'include' is used it is so done in

order to enlarge the meaning of the words or phrases occurring in the body

of the statute and when it is so used, these words or phrases must be

construed as comprehending not only such things which they signify

according to their natural import, but also those things which the

interpretation clause declares that they shall include (see Dilworth v.

Commissioner of Stamps)..."

18. The ratio laid down in S K Gupta (supra) was subsequently followed

by a Division Bench of the Hon'ble Supreme Court in Ramanlal Bhailal Patel

& Ors vs State of Gujarat, (2008) 5 SCC 449 and it was held as under-

"23. The word 'person' is defined in the Act, but it is an inclusive definition,

that is 'a person includes a joint family'. Where the definition is an inclusive

definition, the use of the words 'includes' indicates an intention to enlarge

the meaning of the word used in the statute..."

19. It is true that in the instant case, there is no interpretation clause

present to qualify the inclusive definition. However, section 48 of the PML

Act, as referred to above, squarely brings an aggrieved entity like the

Enforcement Directorate within the ambit of a 'person' as described in

section 2 (s) of the Act.

20. Therefore, on both the counts, the Enforcement Directorate should be

competent to file an appeal under section 26 of the PML Act.

21. Now, so far as the decision in Opto Circuit India Limited (supra) is

concerned, the facts are totally distinguishable from those of the present

case. It only pertained to freezing of bank accounts. In any event, the broad

ratio that if a statute prescribed doing of a thing in a particular manner,

then it has to be done only in that manner, has not been departed from in

this case.

22. The decision in Northern Plastics Limited (supra) is also based on

completely different facts. Section 129 A of the Customs Act provided for an

appeal against an adjudication order of the Collector of Customs, to be filed

by an 'aggrieved person' and not by the departmental authorities

themselves. However, there was a safeguard provided to the Revenue in

challenging an erroneous order of adjudication before the CEGAT under

Section 129-D of the Said Act. It was in this context that the ratio was laid

down there. It was, inter alia, held that the first respondent/Union of India

did not have any locus standi to file such appeal. Therefore, this decision

has no manner of application on the question of an appeal under the PML

Act.

23. It is, thus, quite indubitably evident from the foregoing discussions

that there is no bar on the Enforcement Directorate to file an appeal under

section 26 of the PML Act, through the Assistant Director, before the learned

Appellate Tribunal.

24. In view of the above, the appeal is dismissed. The interim order

granted earlier stands vacated.

25. However, there shall not be any order as to costs.

26. Urgent photostat certified copies of this judgment may be delivered to

the learned Advocates for the parties, if applied for, upon compliance of all

formalities.

(Jay Sengupta, J)

I agree

(Arijit Banerjee, J)

After delivery of the judgment, Learned Counsel for the appellant

prays for a stay of the judgment and order. The prayer is considered and is

rejected.

(Jay Sengupta, J)

I agree

(Arijit Banerjee, J)