Directorate Of Enforcement vs Shyamal Chakravarty
2022 Latest Caselaw 3452 Jhar

      IN       THE HIGH COURT OF JHARKHAND AT RANCHI
                               A.C. (SB) No. 02 of 2019
                                        with
                             I.A. Nos. 4117 & 4118 of 2019
       Directorate of Enforcement, Government of India
       through its Assistant Director, Amit Kumar .....       ...     Appellant
                                    Versus
       Shyamal Chakravarty                         .....     ...      Respondent
                                        with
                               A.C. (SB) No. 17 of 2018
      Deputy Director, Directorate of Enforcement,
      Patna Zonal Office ,
      through its Assistant Director Anish Kumar .....        ... Appellant
                                   Versus
      Dr. Pradeep Kumar                                ..... ...      Respondent
                                --------

CORAM : HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

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For the Appellants : Mr. Prashant Vidyarthi, Advocate.

      For the Respondents       :        Mr. Ajit Kumar, Sr. Advocate
                                :        Mr. Anshuman Sinha, Advocate.
                                :        Ms Akriti Shree, Advocate.
                                ------

14/ 30.08.2022 In both the appeals, common orders are under challenge and with the consent of the parties, both the appeals are tagged together.

2. The appellants have prayed for setting aside the orders dated 02.11.2018, 16.11.2018 and 25.02.2019 passed in MP-PMLA- 4943/PTN/2018(Stay) and MP-PMLA-4938/PTN/2018(Stay).

3. Mr. Prashant Vidyarthi, learned counsel appearing for the appellants submits that against both the respondents, the appeal being A.C. (S.B.) No. 17 of 2018 was filed on time, since the appeal was required to be filed separately, as the office has made an objection and thereafter the present appeal, being A.C. (S.B.) No. 02 of 2019 has been filed. He submits that there is some delay in filing this appeal, however, the previous appeal was filed before the Registry of this court on time and on this ground, in filing of A.C. (S.B.) No. 02 of 2019, some delay has occurred, but the previous appeal has already been filed on time.

4. Mr. Ajit Kumar, learned senior counsel appearing for the respondent in A.C. (S.B.) No. 02 of 2019 submits that he is not opposing the condonation of delay and issue of condonation may be kept open to be decided in another case, however, in the case in hand, both appeals are filed on time and only on the ground that the two appeals were required to be filed, the A.C. (S.B.) No. 02 of 2019 has been filed later on. Accordingly, the limitation point is kept open to be decided in another case.

5. Mr. Prashant Vidyarthi, learned counsel appearing for the

appellants submits that in both these appeals the Enforcement case has been registered against the respondents, wherein final report has been submitted on 10.08.2011 by the CBI and subsequent final report has also been submitted on 05.09.2011. He submits that the offence has been committed by way of proceeds of crime and the property in the nature of flats have been attached by the authorized officers and confirmed by the adjudicating authority by the order dated 03.08.2018 and the said order was challenged by the respondents before the appellate Tribunal and the said appellate Tribunal directed that the possession be restored forthwith subject to the condition that the respondents shall deposit Rs. 10,000/- per month as use and occupation charges within two weeks from today including the arrear of rent to be deposited from the date of confirmation of order. He further submits that by the subsequent order dated 16.11.2018, the said order was modified to the extent that the property was purchased from the salary and loan taken from the Bank that's why the said property is not the proceeds of crime. He further submits that subsequently by order dated 25.02.2019, the Tribunal reiterated that the Tribunal is required to comply with the order. He submits that aggrieved with these orders, he filed these two appeals. He further submits that the orders, passed by the learned Tribunal is not under the parameters of Prevention of Money Laundering Act, 2002. He also submits that the property has been acquired by the proceeds of crime and the property has been rightly attached, which has been confirmed by the adjudicating authority. On these grounds, he submits that both these appeals are fit to be allowed.

6. On the other hand, Mr. Ajit Kumar, learned senior counsel appearing for the respondent in A.C. (S.B.) No. 02 of 2019 and Mr. Anshuman Sinha, learned counsel appearing for the respondent in A.C. (S.B.) No. 17 of 2018 jointly submit that now this issue has been settled in view of the judgment of Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary & Ors. Versus Union of India (UOI) & Ors., in Special Leave to Appeal (Criminal) No. 4634 of 2014 and its analogous cases (decided on 27.07.2022). They jointly submit that in view of that judgment, it has been held that the possession of the property can be taken up only after the order has been passed in the confiscation case. They submits that in the said judgment, the Hon'ble Court has held that the possession of the property is not required to be taken up and it will reconsider from the case to case basis.

7. By way of referring to Sub-Section 4 of Section 5 of the

Prevention of Money Laundering Act, 2002, they submit that in light of Sub-Section 4 of Section 5, the enjoyment of the property is not prevented by the occupier. By way of referring Sub-Section 4 of Section 8, they jointly submit that the property can be taken into possession in light of Section 17 and the manner prescribed thereunder. According to them, in view of the judgment of Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary & Ors. (Supra), now Sub-Section 4 of Section 8 of the Prevention of Money Laundering Act, 2002 will apply once the confiscation is finalized. Relevant paragraphs (i.e. paras-72, 73, 74, 75 and

76) of the said judgment are quoted hereinbelow:-

"73. The other grievance of the petitioners is in reference to the stipulation in subsection (4) of Section 8 providing for taking possession of the property. This provision ought to be invoked only in exceptional situation keeping in mind the peculiar facts of the case. In that, merely because the provisional attachment order passed under Section 5(1) is confirmed, it does not follow that the property stands confiscated; and until an order of confiscation is formally passed, there is no reason to hasten the process of taking possession of such property. The principle set out in Section 5(4) of the 2002 Act needs to be extended even after confirmation of provisional attachment order until a formal confiscation order is passed. Section 5(4) clearly states that nothing in Section 5 including the order of provisional attachment shall prevent the person interested in the enjoyment of immovable property attached under sub-section (1) from such enjoyment. The need to take possession of the attached property would arise only for giving effect to the order of confiscation. This is also because sub-section (6) of Section 8 postulates that where on conclusion of a trial under the 2002 Act which is obviously in respect of offence of moneylaundering, the Special Court finds that the offence of moneylaundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. Once the possession of the property is taken in terms of sub-section (4) and the finding in favour of the person is rendered by the Special Court thereafter and during the interregnum if the property changes hands and title vest in some third party, it would result in civil consequences even to third party. That is certainly avoidable unless it is absolutely necessary in the

peculiar facts of a particular case so as to invoke the option available under sub-section (4) of Section 8.

74. Indisputably, statutory Rules have been framed by the Central Government in exercise of powers under Section 73 of the 2002 Act regarding the manner of taking possession of attached or frozen properties confirmed by the Adjudicating Authority in 2013, and also regarding restoration of confiscated property in 2019. Suffice it to observe that direction under Section 8(4) for taking possession of the property in question before a formal order of confiscation is passed merely on the basis of confirmation of provisional attachment order, should be an exception and not a rule. That issue will have to be considered on case-to-case basis. Upon such harmonious construction of the relevant provisions, it is not possible to countenance challenge to the validity of sub- section (4) of Section 8 of the 2002 Act.

75. The learned counsel appearing for the Union of India, had invited our attention to the recommendations made by FATF in 2003 and 2012 to justify the provision under 125 consideration. The fact that non-conviction based confiscation model is permissible, it does not warrant an extreme and drastic action of physical dispossession of the person from the property in every case -- which can be industrial/commercial/business and also residential property, until a formal order of confiscation is passed under Section 8(5) or 8(7) of the 2002 Act. As demonstrated earlier, it is possible that the Special Court in the trial concerning money-

laundering offence may eventually decide the issue in favour of the person in possession of the property as not being proceeds of crime or for any other valid ground. Before such order is passed by the Special Court, it would be a case of serious miscarriage of justice, if not abuse of process to take physical possession of the property held by such person. Further, it would serve no purpose by hastening the process of taking possession of the property and then returning the same back to the same person at a later date pursuant to the order passed by the Court of competent jurisdiction. Moreover, for the view taken by us while interpretating Section 3 of the 2002 Act regarding the offence of money-laundering, it can proceed only if it is established that the person has directly

or indirectly derived or obtained proceeds of crime as a result of criminal activity relating to or relatable to a scheduled offence or was involved in any process or activity connected with proceeds of crime.

76. It is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of his acquittal or discharge in connection with the scheduled offence.

Resultantly, we would sum up by observing that the provision in the form of Section 8(4) can be resorted to only by way of an exception and not as a rule. The analogy drawn by the Union of India on the basis of decisions of this Court in Divisional Forest Officer & Anr. vs. G.V. Sudhakar Rao & Ors.510 , Biswanath Bhattacharya511 , Yogendra Kumar Jaiswal & Ors. vs. State of Bihar & Ors.512 , will be of no avail in the context of the scheme of attachment, confiscation and vesting of proceeds of crime in the Central Government provided for in the 2002 Act."

8. In view of paras-10 and 11 of the impugned order of the learned Tribunal, admittedly no final confiscation order has been passed against the respondents and in the light of judgment of Hon'ble Supreme court in the case of Vijay Madanlal Choudhary & Ors. (Supra), the possession is required to be taken after passing the order in the confiscation case. However, the submission of para-11 has been modified slightly by the subsequent order.

9. In view of the judgment of the Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary & Ors. (Supra) and the facts, as disclosed hereinabove, both these petitions are dismissed. The aforesaid interlocutory applications also stand dismissed.

10. In the light of the judgment of Hon'ble Supreme Court, it will be open to the respondents to file appropriate modification petition before the learned Tribunal with respect to payment of rent.

(Sanjay Kumar Dwivedi, J.) Amitesh/-