Delhi High Court
M/S Ajanta Merchants Pvt. Ltd. vs Directorate Of Enforcement And ... on 19 May, 2014
Author: Manmohan
43
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 3170/2014
M/S AJANTA MERCHANTS PVT. LTD. ..... Petitioner
Through: Mr. Amit Sibal, Senior Advocate with
Mr. Gurpreet Singh and Mr. Shakhir
Husein, Advocates.
versus
DIRECTORATE OF ENFORCEMENT AND ANR ..... Respondents
Through: Mr. Udit Gupta and Mr. Prasouk Jain,
Advocates for Mr. B.V. Niren, Advocate
for respondent No.1/UOI.
% Date of Decision : 19th May, 2014
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
JUDGMENT
MANMOHAN, J: (Oral)
CM Appl. 6601/2014 (exemption) in W.P.(C) 3170/2014
Allowed, subject to just exceptions.
Accordingly, present application stands disposed of.
W.P.(C) 3170/2014 & CM Appl. 6600/2014
1. Present writ petition has been filed seeking a direction to respondent
No.1 to release the property bearing No.11, Prithvi Raj Road and hand over
possession of the same to respondent No.2-tenant.
2. Mr. Amit Sibal, learned senior counsel for petitioner submits that
taking over of possession by respondent No.1 was contrary to Rule 5(3) of
the Prevention of Money Laundering (Taking Possession of Attached or
Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013,
(for short 'Rules, 2013') formulated by the Central Government in exercise
of its power conferred by Sub-section (1) read with Clause (ee) of Sub-
section (2) of Section 73 of the Prevention of Money-Laundering Act, 2002
(for short 'Act, 2002'). Rule 5(3) of the Rules, 2013 reads as under:-
"5. Manner of taking possession of immovable property--
xxx xxx xxx
"(3) Where the immovable property confirmed by the
Adjudicating Authority is in the form of a land, building, house,
flat etc. and is given on lease or rent to a third party which is
registered in accordance with the provisions of Section 17 of the
Registration Act, 1908, the authorized officer shall issue
direction to the occupant to pay the lease amount or rent in the
form of Demand Draft payable to the Directorate of
Enforcement."
3. Mr. Sibal, further submits that as the property was let out to Ms.
Amrita Rai, Advocate, who is enjoying the status of statutory tenant by
virtue of duly registered lease deed dated 26 th December, 2013, respondent
No.1 could not have taken over possession without issuing notice to
respondent No.2.
4. Upon a perusal of the paper book, the facts that are relevant to the
present case are that on 30th August, 2013, a provisional attachment order
under Section 5(1) of the Act, 2002 was passed by respondent No.1. The
relevant portion of the said order reads as under:-
"17. NOW THEREFORE, having reasons to believe that the
immoveable properties, as mentioned below, which are
Proceeds of Crime, and which are likely to be concealed,
transferred or dealt with in any manner which may result in
frustrating any proceedings relating to confiscation of the said
Proceeds of Crime, I, hereby order Provisional Attachment of
the said immoveable properties and further order that the same
shall not be transferred, disposed, parted with or otherwise
dealt with in any manner, whatsoever, until or unless specially
permitted to do so by the undersigned. Relied upon documents
are mentioned in Annexure „A‟."
5. On 24th September, 2013, respondent No.1 filed a complaint under
Section 5(5) of the Act, 2002.
6. On 26th December, 2013, according to petitioner, registered lease deed
was executed between the petitioner and respondent No.2. The relevant
provisions of the lease deed are reproduced hereinbelow:-
"1. That the LESSOR hereby demises unto the LESSEE all
that the Demises Premises, for a total period of 3 (Three) years
commencing from 01.06.2013. The LESSOR has delivered the
vacant possession of the Demises Premises to the LESSEE and
the LESSEE paying therefore unto the LESSOR during the said
period a monthly rent as provided herein below to the LESSOR
in respect of the Demised Premises payable in advance by the
7th day of each and every month after getting this deed
registered.
xxx xxx xxx
4. PROVIDED AND IT IS HEREBY AGREED BY AND
BETWEEN THE LESSOR AND THE LESSEE AS
FOLLOWS:
i. That the LESSEE shall pay to the LESSOR a Security
Deposit of a sum of Rs.1,60,000/- (Rupees One Lac Sixty
Thousand Only), equivalent to two months rent, vide
Cheque bearing No.068733, dated 26.12.2013, Drawn on
IDBI Bank, Allahabad and the LESSEE has also paid the
LESSOR a sum of Rs.1,40,000/- (Rupees One Lac Forty
Thousand Only), till now @ Rs.4,20,000/- (Rupees Four
Lacs and Twenty Thousand Only) is being paid vide
Cheque bearing No.068732 dated 26.12.2013, Drawn on
IDBI Bank, Allahabad, the receipt of which the LESSOR
hereby acknowledge. The security amount shall be
retained by the LESSOR as interest free deposit and will
be refundable at the time of termination of the said
LEASE against handing over the vacant physical
possession of the Demised Premises to the LESSOR.
However, the LESSEE shall clear all outstanding
electricity, water, before handing over possession to the
LESSOR, failing which such amounts shall be deducted
from the security deposit."
(emphasis supplied)
7. On 26th February, 2014, the provisional attachment order was
confirmed by respondent No.1. The relevant portion of the provisional
attachment order reads as under:-
"16. Therefore, I order for confirmation of the attachment of
the properties made under sub-section (1) of Section 5 of the
PML Act and this order shall
(a) continue during the pendency of the proceedings relating to
any offence under this Act before a court or under the
corresponding law of any other country, before the
competent court of criminal jurisdiction outside India, as the
case may be; and
(b) become final after an order of confiscation is passed under
sub-section (5) or sub-section (7) of Section 8 or Section 58B
or sub-section (2A) of Section 60 by the Adjudicating
Authority.
8. On 14th March, 2014, a notice of eviction was issued by respondent
No.1 and possession of the property in question was taken over.
9. The intent and object of the Act, 2002 is to prevent money-laundering
and to provide for confiscation of property derived from, or involved in.
10. Having regard to the intent and scheme of the Act, 2002 as well as the
Rules, 2013, this Court is of the opinion that the Adjudicating Authority has
the power to issue a provisional attachment order so that during the
pendency of the proceedings, the property is neither transferred nor disposed
of or parted with or dealt with in any manner. Subsequently, if upon a
complaint being filed by respondent No.1, the provisional attachment order
is confirmed, then the authority has the power to take over possession.
However, only if a tenant prior to passing of the provisional attachment
order is in possession of the same, respondent No.1 by virtue of Rule 5(3)
cannot take over possession of the property. According to the said Rule, on
such a circumstance, respondent No.1 has the power only to attach the rent
that means, issue a direction to the occupant to pay the lease amount or rent
in the form of demand draft to respondent No.1.
11. This Court is further of the view that after a provisional attachment
order has been passed, no noticee-owner can create a tenancy or transfer
possession or create third party rights to defeat an ultimate order of taking
over possession under the Act, 2002 and Rules, 2013. It is pertinent to
mention that the expression 'attachment' is defined under Section 2(d) of
Act, 2002 to mean prohibition of transfer, conversion, disposition or
movement of property by an order issued under Chapter III.
12. Though in the present case, it has been averred that the tenancy had
been orally created on 01st June, 2013, yet this Court is of the view that the
alleged oral tenancy would create no right either in favour of the petitioner
or respondent No.2 as the lease deed in question was compulsorily
registerable under Section 17 of the Registration Act, 1908. In Santosh
Jayaswal and Anr. Vs. State of M.P. and Ors., (1995) 6 SCC 520 the
Supreme Court has held that "since the duration of lease is more than a
year, it is an instrument and compulsorily registrable by operation of
Section 18(1)(c) of the Registration Act and liable to stamp duty under the
Indian Stamp Act. Therefore, it cannot be acted upon unless it is duly
engrossed with stamp duty and registered."
13. Further, the covenant in the lease deed that security deposit shall be
paid not at the time of handing over of possession or at the time of
registration throws doubt upon the genuineness of the oral tenancy and the
handing over of possession in June, 2013.
14. This Court also takes judicial notice of the fact that Prirthvi Raj Road
is one of the most prime and posh areas of the city and it is inconceivable
that a property ad measuring 6796.50 sq. ft. would have been leased out in
an arms length transaction at Rs.80,000/-.
15. This Court may mention that the Apex Court and different High
Courts have consistently taken the view that execution of any deed including
a sale deed in disobedience of an interim order of the Court is a nullity.
Some of the relevant judgments are reproduced hereinbelow:-
(i) In Krishna Kumar Khemka vs. Grindlays Bank P.L.C.
(1990) 3 SCC 669, it has been held as under:-
"16. .....Therefore the tenancy created in favour of the
Tatas was in breach of the order of the Court and
consequently the Tatas cannot claim any protection under the
provisions of the Act and they are liable to be evicted. ......In
any event as observed above, the new tenancy created in their
favour contrary to the orders of the Court does not create a
right and is liable to be cancelled....."
(ii) In Satyabrata Biswas vs. Kalyan Kumar Kisku, (1994) 2
SCC 266¸ it has been held as under:-
"29. ...... Hence, the grant of sub-lease is contrary to
the order of status quo. Any act done on the teeth of the
order of status quo is clearly illegal. All actions including
the grant of sub-lease are clearly illegal....
xxx xxx xxx
31. The parties are relegated to the position as on 15-9-
1988. Somani Builders are hereby directed to deliver vacant
possession to the Special Officer within one month from
today...."
(iii) In Surjit Singh vs. Harbans Singh, (1995) 6 SCC 50, it
has been held as under:-
"4. ....In defiance of the restraint order, the
alienation/assignment was made. If we were to let it go as
such, it would defeat the ends of justice and the prevalent
public policy. When the court intends a particular state of
affairs to exist while it is in seisin of a lis, that state of affairs
is not only required to be maintained, but it is presumed to
exist till the Court orders otherwise. The Court, in these
circumstances has the duty, as also the right, to treat the
alienation/assignment as having not taken place at all for its
purposes....."
16. Consequently, as the lease deed in question had been executed only after
the Provisional Attachment order had been passed by the statutory authority, this
Court is of the view Rule 5(3) of the Rules, 2013 would not enure to the benefit
of either the petitioner or respondent No.2-tenant.
17. Accordingly, the present writ petition and application, being bereft of
merits, are dismissed.
MANMOHAN, J
MAY 19, 2014
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