Kerala High Court
Santiago Martin vs Union Of India on 21 September, 2023
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR. A.J. DESAI
&
THE HONOURABLE MR. JUSTICE V.G. ARUN
THURSDAY, THE 21ST DAY OF SEPTEMBER, 2023 / 30TH BHADRA, 1945
WA NO. 1450 OF 2023
[AGAINST THE JUDGMENT IN WP(C) NO. 21061/2023 DATED 08-08-2023 OF
HIGH COURT OF KERALA]
APPELLANTS/PETITIONERS:
1 SANTIAGO MARTIN,
SON OF SHRI SANTIAGO,
RESIDING AT 135/1, THIRUVALLUVAR STREET,
VELLAKINAR, PIRIVU, G.N MILLS POST,
COIMBATORE, TAMIL NADU - 641029.
2 FUTURE GAMING AND HOTEL SERVICES PVT. LTD.,
54, METTUPALAYAM ROAD, G.N MILL POST,
COIMBATORE, PIN - 641029,
REPRESENTED BY ITS MANAGING DIRECTOR
MR. SANTIAGO MARTIN.
BY ADVS. SRI. ARYAMA SUNDARAM (SENIOR)
SMT. ROHINI MUSA,
SRI. ABISHEK SINGH,
SRI. AMIT BALLA
SRI. A. KUMAR
SMT. G. MINI (1748)
RESPONDENTS/RESPONDENTS:
1 UNION OF INDIA,
REPRESENTED BY THE SECRETARY,
MINISTRY OF FINANCE,
NEW DELHI, PIN - 110001.
2 THE ADDITIONAL DIRECTOR,
ENFORCEMENT DIRECTORATE, COCHIN ZONAL OFFICE,
KANOOS CASTLE, A.K SHESHADRI ROAD,
(MULLASERY CANAL ROAD WEST), COCHIN - 682011.
W.A. 1450/2023 -:2:-
3 THE DEPUTY DIRECTOR,
ENFORCEMENT DIRECTORATE, COCHIN ZONAL OFFICE,
KANOOS CASTLE, A.K SHESHADRI ROAD,
(MULLASERY CANAL ROAD WEST), COCHIN - 682011.
4 ASSISTANT DIRECTOR,
ENFORCEMENT DIRECTORATE, COCHIN ZONAL OFFICE,
KANOOS CASTLE, A.K SHESHADRI ROAD,
(MULLASERY CANAL ROAD WEST), COCHIN, PIN - 682011.
BY ADVS. SRI. L. SUNDARESHAN, ASGI FOR ED
SRI. JAISHANKAR V. NAIR, CGC
SRI. S. MANU, DSGI
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 14.09.2023, THE
COURT ON 21.09.2023 DELIVERED THE FOLLOWING:
W.A. 1450/2023 -:3:-
JUDGMENT
A.J. Desai, CJ
To what extent the High Court would be justified in
entertaining a writ petition under Article 226 of the Constitution
of India when "adjudication" of the provisional attachment of
properties is in progress, as provided under Section 8 of the
Prevention of Money-Laundering Act, 2002 ('the PMLA Act', for
short), and the decision of such adjudicating authority would be
subject to appeal under the Act itself, is the question to be decided
in this intra court appeal filed under Section 5 of the Kerala High
Court Act, 1958.
2. The brief facts emerging from the records are that, against
petitioner No.1, who is one among the two partners of a
partnership firm viz., M/s. M.J. Associates, Palakkad, the 2 nd
petitioner, a private limited company of which petitioner No.1 is
the Managing Director, and other different entities, a charge
sheet was filed by the Central Bureau of Investigation under
Sections 120(b) and 420 of the Indian Penal Code, 1860, Sections
4(d), 4(f), 9 r/w. 7(3) of the Lotteries (Regulation) Act, 1998, and
Rules 3(5) and 4(5) of the Lottery (Regulation) Rules, 2010, on
03.02.2014, in the Court of Chief Judicial Magistrate, Ernakulam,
alleging 7 types of illegal transactions carried out in connivance
with each other.
3. The Department of Enforcement, Cochin Zone, received
information from the Superintendent of Police, Central Bureau of
Investigation, Cochin, about certain transactions recorded in the
charge sheet filed during February, 2014. Having examined the
materials placed before the Directorate of Enforcement, the
officer found a prima facie case for the offence under Section 3 of
the PMLA Act, 2002, having been committed and advised for
further investigation.
4. As provided under Section 5(1) of the PMLA Act, the
Enforcement Directorate authority found that the proceeds of
crime involved therein are to the tune of Rs.910,29,87,566/- and
accordingly, a provisional attachment order came to be passed on
31.03.2016.
5. Later, as provided under Section 5(5) of the PMLA Act, a
complaint stating the facts of such attachment came to be filed
before the adjudicating authority established under the said Act.
Both these proceedings, i.e., passing order of provisional
attachment and filing a complaint under Section 5(5) of the PMLA
Act, came to be challenged by the 1st appellant by filing W.P.(C)
No. 22327/2016 before this Court.
6. By passing an interim order dated 04.08.2016, a learned
Single Judge of this Court permitted to continue the proceedings
initiated against the petitioner/1st appellant herein. However, the
adjudicating authority was directed to decide the question of
jurisdiction raised by the petitioner against the said proceedings.
Said writ petition is pending for final disposal before the learned
Single Judge.
7. The petitioner also filed an application for discharge,
being Crl.M.P. No. 2079/2016, before the learned Single Judge in
the CBI case, which is also pending adjudication. The ED
authorities then filed a criminal complaint under Section 45 of the
PMLA Act, which is numbered as S.C. No.533/2018 and is pending
trial before the Special Court for Trial of PMLA case/Special Court
(SPE, CBI) - I, Ernakulam. As per the said complaint, which is
numbered as S.C. No.533/2018, it is alleged by the complainant
that the present appellant has 51% share in M/s. M.J. Associates,
whereas his partner viz., Sri. N. Jayamurugan has 49% of share. It
was alleged that out of the several illegal transactions, the
estimate of certain properties derived and obtained as a result of
criminal activities relating to a scheduled offence of the Act,
which is defined as "proceeds of crime", was to the tune of
Rs.910,29,87,566/-.
8. The ED authorities thereafter passed several provisional
attachment orders between 2016 and 2023. Following are the
details of the Provisional Attachment Orders (PAO) and the value
of the properties attached under the aforesaid orders:
Sl. No. PAO No. & Date Value of Attachment
(in Rs.)
1 2/2016 dated 31.03.2016 122,04,03,525/-
2 2/2017 dated 09.03.2017 16,52,04,750/-
3 2/2019 dated 22.07.2019 119,59,54,679/-
4 07/2021 dated 22.12.2021 19,59,08,000/-
5 06/2022 dated 01.07.2022 173,47,74,565/-
6 03/2023 dated 09.06.2023 459,07,42,047/-
Total 910,29,87,556/-
9. The total value of the attached properties upto 1.7.2022
comes to Rs.451,22,45,519/-. The properties referred herein-
above at Serial Nos. 1, 3, 4 and 5 worth Rs.434,70,40,769/-
belonged to the 1st appellant, whereas the property to the tune of
Rs.16,52,04,750/-, referred at Serial No.2, belonged to his partner
Sri. N. Jayamurugan.
10. Meanwhile, a supplementary charge sheet was filed in
S.C. No.533/2018. By order dated 12.05.2023, the ED authorities,
exercising its power under Section 17 of the PMLA Act, froze
certain bank accounts, mutual funds, fixed deposits, etc.,
amounting to Rs.1,57,68,57,503/-.
11. After recording several further statements, the
respondent/ED authorities again passed provisional attachment
order No.3 of 2023 on 09.06.2023, attaching the properties of the
1st appellant only to the tune of Rs.459,07,42,047/-, referred
herein-above as item No.6. The 1st appellant/original petitioner
being aggrieved by the said order and also the order of freezing
under Section 17(1A) of PMLA Act dated 12.05.2023, filed the
subject writ petition before the learned Single Judge on various
grounds, seeking to quash the same by issuing a writ of certiorari.
12. The respondent/ED authorities filed a detailed counter
affidavit dated 13.07.2023 through the Assistant Director of
Director of Enforcement, to which a rejoinder came to be filed by
the appellants/writ petitioners.
13. The learned Single Judge, by the impugned judgment,
dismissed the writ petition, mainly on two grounds: that there is
an alternative efficacious remedy available to the appellants, as
well as to raise all the contentions, which have been raised in the
memo of petition, before the adjudicating authority since, in view
of the fact that during the pendency of the petition, a complaint
has been filed before the adjudicating authority under Section
5(5) of the PMLA Act, and a competent independent authority is
adjudicating all the issues. Hence, this appeal.
14. Learned Senior Advocate Sri. Aryama Sundaram, ably
assisted by Sri. A. Kumar, learned counsel for the appellants,
vehemently submitted that the learned Single Judge had
committed a grave error in rejecting the writ petition on the
grounds of availability of alternative remedy. He would further
submit that there is no alternative efficacious remedy against an
order passed under Section 5(1) of the PMLA Act, by which the
competent officer passes an order of provisional attachment of
the property. He would also submit that the Appellate Tribunal,
constituted under Section 25 of the Act, has the power to deal with
appeals, against orders of the adjudicating authority, as provided
under Section 26 of the Act.
15. Learned Senior Advocate appearing for the appellants
would further submit that there is no alternative remedy of filing
an appeal, since Section 26 of the PMLA Act does not empower the
Appellate Tribunal to examine the validity of the provisional
attachment order. According to him, an aggrieved person can get
the remedy of filing an appeal provided under sub-section (6) of
Section 26 only subsequent to an order passed by the adjudicating
authority. In the captioned writ petition, appellants have
challenged the provisional attachment order dated 09.06.2023
and the order of seizure passed under Section 17(1A) of the PMLA
Act. Therefore, the only remedy available to an aggrieved person
questioning the legality of the two orders above would be to
request the High Court to exercise its powers under Article 226 of
the Constitution of India and to issue a writ of mandamus or any
appropriate writ, seeking to quash the said orders. Hence, the
learned Single Judge ought not to have dismissed the writ petition
on that ground.
16. In support of his submissions, learned Senior Advocate
appearing for the appellants has relied upon the decision of the
Hon'ble Supreme Court in Godrej Sara Lee Ltd. v. Excise &
Taxation Officer [Judgment in Civil Appeal No. 5393 of 2010
dated 01.02.2023], wherein it has been held that even if there is an
alternative remedy, if the Court finds that the petitioner is
seeking enforcement of any of his fundamental rights; where
there is violation of principles of natural justice; where the order
or the proceedings are without jurisdiction; or where the vires of
an Act is challenged, the court can exercise its writ jurisdiction
and deal with such cases. He would submit that in the present
case, the authority has passed the impugned order dated
09.06.2023 without jurisdiction and, therefore, the same is
unreasonable and perverse, in view of the fact that there is no
relevant material whatsoever to provisionally seize the additional
properties of the appellants when it is the case of the respondent
authority itself that the share of appellant No.1 in the partnership
is to the tune of 51% only.
17. By relying upon another decision of the Hon'ble Apex
Court in Assistant Commissioner of State Tax and Others v.
Commercial Steel Limited [Judgment in Civil Appeal No.5121 of
2021 arising out of S.L.P(C) No.13639 of 2021 dated 03.09.2021],
wherein it has been held that even if an alternative remedy is
available if the Court finds that it is a case of excess of jurisdiction,
the Court may interfere with such orders and deal with the same
under Article 226 of the Constitution of India, learned Senior
Advocate would submit that the learned Single Judge while
passing the impugned judgment, ought to have examined all the
orders passed under Section 5(5) of the PMLA Act, compared the
allegations made against the appellants, and ought to have held
that the authority has passed the impugned provisional
attachment order in excess of its jurisdiction.
18. By relying upon another decision of the Hon'ble Apex
Court in Union of India and Others v. Tantia Construction
Private Limited reported in (2011) 5 SCC 697, particularly
referring to paragraph (33), learned Senior Advocate for the
appellants would submit the High Court or Supreme Court can
interfere with an injustice, whenever and wherever it takes place,
and can strike it down as an anathema to the rule of law and the
provisions of the Constitution.
19. By relying upon another decision of the Hon'ble Apex
Court in State of H.P. and Others v. Gujarat Ambuja Cement
Ltd., reported in (2005) 6 SCC 499, the learned Senior Advocate
appearing for the appellants would submit that the Hon'ble Apex
Court has dealt with the recourse of exercising powers under writ
jurisdiction even if an alternative remedy is available. By taking
us through the complaint which was filed in the year 2018,
wherein an additional charge sheet was laid, he would submit
that, it is the case of the respondent authority itself that the
proceeds of crime derived from the illegal transactions by the 1 st
appellant is only to the tune of Rs.464.25 Crores (51% of his share
in the total proceeds of crime to the tune of Rs.910,29,87,556/-),
whereas, in the provisional attachment order dated 9.6.2023,
another property of the 1st appellant to the tune of
Rs.459,07,42,047/- has been attached, which is beyond the scope
of the "proceeds of crime".
20. By taking us through the order dated 9.6.2023, the
learned Senior Advocate would also submit that the authority has
not referred to any additional material to establish that the
proceeds of crime received by the 1st appellant are more than
Rs.464.25 Crores, and therefore, the case is required to be dealt
with as if the authority has acted in excess of its jurisdiction.
21. By relying upon a decision of the Hon'ble Supreme Court
in Vijay Madanlal Choudhary and Others v. Union of India and
Others [Judgment in S.L.P(C) Nos.28394 of 2011 and connected
cases dated 27.07.2022], learned Senior Advocate appearing for
the appellants would submit that the authority cannot come to
the conclusion that all the properties belonging to the 1st
appellant are the proceeds of crime, particularly when the
authority itself has held that the proceeds of crime derived by the
1st appellant is to the tune of Rs.464.25 Crores. Therefore, there is
no reason to pass additional orders to attach all the properties
belonging to the 1st appellant.
22. Another submission made by the learned Senior
Advocate is with regard to the reasons recorded by the
respondent authority while passing the orders of provisional
attachment. He would submit that any officer exercising his
power under Section 5 of the PMLA Act has to record the reasons
for his belief, based on the material produced before him, for
finding a person to be in possession of the proceeds of crime,
which is lacking in the case on hand.
23. By relying upon another decision of the Hon'ble Apex
Court in Bhikhubhai Vithlabhai Patel and Others v. State of
Gujarat and Another reported in (2008) 4 SCC 144, the learned
Senior Advocate for the appellants would submit that the words
"is satisfied", "is of the opinion", "has reason to believe" are
indicative of subjective satisfaction and such belief should be
recorded on relevant facts. Therefore, in the absence of such
facts/material available on record, the belief recorded by the
authority is vitiated. Hence, the order ought to have been quashed
by the learned Single Judge.
24. The decision in the case of State of U.P. and Others v.
Aryaverth Chawal Udyog and Others reported in (2015) 17 SCC
324 is relied on to submit that if the authority is passing another
order on the basis of the same facts and material available, which
was therein while passing the earlier orders, the same is required
to be dealt with accordingly. He, therefore, would pray that the
appeal be allowed by quashing the judgment delivered by the
learned Single Judge, and accordingly, the orders impugned in the
writ petition be also quashed.
25. Learned Senior Advocate appearing for the appellants
would further submit that the respondent authority has
provisionally attached the property of the 1st appellant's partner
only to the tune of Rs.16,52,04,750/-. He would also submit that
the appellants were able to collect information about the
property belonging to his partner, Sri. N. Jayamurugan, which is
more than Rs.1000 Crores; therefore, the authority could have
attached the property belonging to the partner and not the
appellants. In support of this submission, the learned Senior
Advocate has produced before this Court the relevant documents.
26. On the other hand, learned Additional Solicitor General
of India Sri. L. Sundareshan ably assisted by Sri. Jaishankar V.
Nair, learned counsel appearing for the respondent/Director of
Enforcement, would vehemently oppose the appeal. He has
supported the orders passed by the Enforcement Directorate
authority and the judgment impugned in this appeal.
27. The learned ASGI would submit that, during the
pendency of the writ petition in which the provisional
attachment orders and other orders of freezing the account came
to be challenged, the respondent authorities had already made a
complaint to the adjudicating authority under Section 5(5) of the
PMLA Act. He would submit that the adjudicating authority,
established under Section 6 of the PMLA Act, which is an
independent authority consisting of judicial members, can
adjudicate all the issues raised in the subject writ petition and
argued in this appeal.
28. He would further submit that the adjudicating authority
has all the powers to deal with a complaint submitted before it
under Section 5(5) of the PMLA Act. If the adjudicating authority
refuses to accept the complaint or adjudicate accordingly, it may
lead to the filing of a criminal case. Either party, including the
authority, if aggrieved by the order passed by the adjudicating
authority, can file an appeal under Section 26 of the Act,
particularly under sub-section (1) of Section 26. That apart, even
a decision rendered by the Appellate Tribunal is appealable under
Section 42 of the Act. Any person aggrieved by the decision or
order of the Appellate Tribunal would be entitled to file an appeal
before the High Court within the prescribed period of limitation.
He would, therefore, submit that the learned Single Judge has
rightly refused to entertain the writ petition filed against a
provisional attachment order, which is yet to be scrutinised by
the competent authority, which is an adjudicating authority. The
life of the order passed under sub-section (5) of Section 5 of the
Act is 180 days, and therefore, the adjudicating authority has
already issued notices to all the parties based on the complaint
under Section 5(5). The said proceeding is in progress and is being
adjourned at the instance of the appellants, pointing out the
pendency of this writ appeal.
29. He would further submit that the High Court would be
loath to scrutinise all the bulky materials to compare two
different provisional attachment orders in exercise of the
extraordinary jurisdiction under Article 226 of the Constitution
of India. The adjudicating authority, already seized of the matter,
will scrutinise the materials and deliver its verdict on whether an
additional charge sheet is required to be filed in connection with
the provisional order dated 09.06.2023.
30. He would further submit that against the order passed
under Section 5(1) of the PMLA Act, i.e., passing orders of
provisional attachment, no direct appeal is provided, but when
the adjudicating authority has complied with Section 5(5) of the
Act, i.e., filing of complaint after recording reasons, within the
prescribed period of 30 days and the authority is seized of the
matter, and whose order is appealable, it is as good as availability
of alternative remedy.
31. Placing reliance on the decision of the Hon'ble Apex
Court in the case of South Indian Bank Limited and Others v.
Naveen Mathew Philip and Another [Judgment in Civil Appeal
Nos. of 2023 arising out of S.L.P(C) Nos.22021-22022 of 2022 dated
17.04.2023], learned ASGI would submit that the High Court has
discretionary power not to entertain a writ petition when
efficacious alternative remedy is available to the aggrieved party.
He would also submit that this is a case where the learned Single
Judge did not find any reason to exercise its discretionary power
under Article 226 of the Constitution of India, as the issue is being
scrutinised in detail by the competent authority established
under Section 6 of the PMLA Act.
32. Placing reliance on another decision of the Hon'ble Apex
Court in Special Director and Another. v. Mohd. Gulam Ghouse
and Another reported in (2004) 3 SCC 440, learned ASGI would
submit that when alternative efficacious remedy is available to
the appellants, ordinarily, the High Court would not entertain
such writ petitions.
33. The learned ASGI has taken us through the provisional
attachment order dated 9.6.2023, which is impugned in the
subject writ petition to submit that several statements have been
recorded and the authority had found sufficient reason to seize
the properties of the appellants mentioned therein, which does
not call for any scrutiny under Article 226 of the Constitution.
34. He would further submit that, as regards the submission
made by the learned Senior Advocate for the appellants about the
property belonging to the partner, of which the details have been
produced for the first time in this appeal by the appellants, the
same can be produced before the adjudicating authority and the
adjudicating authority is expected to deal with all such material
and is empowered to pass appropriate orders, accepting or
refusing the case put forward by the appellants. Therefore,
according to the learned ASGI, all these documents are not
required to be examined by this Court in this intra-court appeal.
35. We have heard the learned Senior Advocate appearing
for the appellants, as well as the learned Assistant Solicitor
General of India, and perused the provisional attachment orders
issued between 2016 and 2022, including the attachment order
dated 9.6.2023 challenged in the writ petition.
36. It is an undisputed fact that the provisional attachment
order is dated 09.06.2023, which the appellants immediately
challenged by filing the captioned writ petition. Before filing the
writ petition, an order had been passed under sub-section (1) of
Section 5 of the PMLA Act. However, within 30 days, as provided
under Section 5(5) of the Act, the appellants filed a complaint
before the adjudicating authority, as provided under Section 6 of
the Act. Section 5 of the PMLA Act reads as under:
"5. Attachment of property involved in money-
laundering.
(1) Where the Director or any other officer not below
the rank of Deputy Director authorised by the
Director for the purposes of this Section, has reason
to believe (the reason for such belief to be recorded in
writing), on the basis of material in his possession,
that-
(a) any person is in possession of any proceeds of
crime; and
(b) such proceeds of crime are likely to be concealed,
transferred or dealt with in any manner which
may result in frustrating any proceedings relating
to confiscation of such proceeds of crime under
this Chapter,
he may, by order in writing, provisionally attach such
property for a period not exceeding one hundred and
eighty days from the date of the order, in such
manner as may be prescribed:
PROVIDED that no such order of attachment shall
be made unless, in relation to the scheduled offence,
a report has been forwarded to a Magistrate under
section 173 of the Code of Criminal Procedure, 1973 (2
of 1974), or a complaint has been filed by a person
authorised to investigate the offence mentioned in
that Schedule, before a Magistrate or court for taking
cognizance of the scheduled offence, as the case may
be, or a similar report or complaint has been made or
filed under the corresponding law of any other
country:
PROVIDED FURTHER that, notwithstanding
anything contained in [first proviso], any property of
any person may be attached under this section if the
Director or any other officer not below the rank of
Deputy Director authorised by him for the purposes
of this section has reason to believe (the reasons for
such belief to be recorded in writing), on the basis of
material in his possession, that 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.
PROVIDED ALSO that for the purposes of
computing the period of one hundred and eighty days,
the period during which the proceedings under this
section is stayed by the High Court, shall be excluded
and a further period not exceeding thirty days from
the date of order of vacation of such stay order shall
be counted.;
(2) The Director, or any other officer not below the
rank of Deputy Director, shall, immediately after
attachment under sub-section (1), forward a copy of
the order, along with the material in his possession,
referred to in that sub-section, to the Adjudicating
Authority, in a sealed envelope, in the manner as may
be prescribed and such Adjudicating Authority shall
keep such order and material for such period as may
be prescribed.
(3) Every order of attachment made under sub-section
(1) shall cease to have effect after the expiry of the
period specified in that sub-section or on the date of
an order made under [sub-section (3)] of section 8,
whichever is earlier.
(4) Nothing in this section shall prevent the person
interested in the enjoyment of the immovable
property attached under sub-section (1) from such
enjoyment.
Explanation. -- For the purposes of this sub-section,
"person interested", in relation to any immovable
property, includes all persons claiming or entitled to
claim any interest in the property.
(5) The Director or any other officer who provisionally
attaches any property under sub-section (1) shall,
within a period of thirty days from such attachment,
file a complaint stating the facts of such attachment
before the Adjudicating Authority."
37. Under Section 25 of the PMLA Act, the Appellate Tribunal
is constituted, and Section 26 provides for the appealable orders.
Section 26 of the PMLA Act reads as under:
"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 [reporting entity] 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."
38. It is true that there is no provision for challenging an
order of provisional attachment, passed under Section 5(1) of the
PMLA Act. In the absence of any statutory appeal being provided
to challenge a provisional attachment order, a petition under
Article 226 of the Constitution of India may be maintainable on its
own merits, and the Court may examine the case on hand and may
or may not entertain the writ petition on its merit. However,
dealing with the present facts of the case, it is undisputed that the
complaint under Section 5(5) of the PMLA Act has already been
made before the adjudicating authority, and notices have already
been issued.
39. Section 6 of the PMLA Act provides composition powers
of the adjudicating authority, and the same reads as under:
"6. Adjudicating Authorities, composition,
powers, etc.--
(1) The Central Government shall, by
notification, appoint [an Adjudicating Authority] to
exercise jurisdiction, power and authority conferred
by or under this Act.
(2) An Adjudicating Authority shall consist of a
Chairperson and two other Members:
PROVIDED that one Member each shall be a
person having experience in the field of law,
administration, finance or accountancy.
(3) A person shall, however, not be qualified for
appointment as Member of an Adjudicating
Authority, -
(a) in the field of law, unless he--
(i) is qualified for appointment as District
Judge; or
(ii) has been a member of the Indian Legal
Service and has held a post in Grade I of
that service;
(b) in the field of finance, accountancy or
administration unless he possesses such
qualifications, as may be prescribed.
(4) The Central Government shall appoint a
Member to be the Chairperson of the Adjudicating
Authority.
(5) Subject to the provisions of this Act, --
(a) the jurisdiction of the Adjudicating Authority
may be exercised by Benches thereof;
(b) a Bench may be constituted by the Chairperson
of the Adjudicating Authority with one or two
Members as the Chairperson of the
Adjudicating Authority may deem fit;
(c) the Benches of the Adjudicating Authority
shall ordinarily sit at New Delhi and at such
other places as the Central Government may,
in consultation with the Chairperson, by
notification, specify;
(d) the Central Government shall, by notification,
specify the areas in relation to which each
Bench of the Adjudicating Authority may
exercise jurisdiction.
(6) Notwithstanding anything contained in
sub-section (5), the Chairperson may transfer a
Member from one Bench to another Bench.
(7) If at any stage of the hearing of any case or
matter it appears to the Chairperson or a Member
that the case or matter is of such a nature that it
ought to be heard by a Bench consisting of two
Members, the case or matter may be transferred by
the Chairperson or, as the case may be, referred to
him for transfer, to such Bench as the Chairperson
may deem fit.
(8) The Chairperson and every Member shall
hold office as such for a term of five years from the
date on which he enters upon his office:
PROVIDED that no Chairperson or other
Member shall hold office as such after he has attained
the age of [sixty-five] years.
(9) The salary and allowances payable to and
the other terms and conditions of service of the
Member shall be such as may be prescribed:
PROVIDED that neither the salary and
allowances nor the other terms and conditions of
service of the Member shall be varied to his
disadvantage after appointment.
(10) If, for reasons other than temporary
absence, any vacancy occurs in the office of the
Chairperson or any other Member, then, the Central
Government shall appoint another person in
accordance with the provisions of this Act to fill the
vacancy and the proceedings may be continued
before the Adjudicating Authority from the stage at
which the vacancy is filled.
(11) The Chairperson or any other Member
may, by notice in writing under his hand addressed
to the Central Government, resign his office:
PROVIDED that the Chairperson or any other
Member shall, unless he is permitted by the Central
Government to relinquish his office sooner, continue
to hold office until the expiry of three months from
the date of receipt of such notice or until a person
duly appointed as his successor enters upon his office
or until the expiry of his term of office, whichever is
the earliest.
(12) The Chairperson or any other Member
shall not be removed from his office except by an
order made by the Central Government after giving
necessary opportunity of hearing.
(13) In the event of the occurrence of any
vacancy in the office of the Chairperson by reason of
his death, resignation or otherwise, the senior-most
Member shall act as the Chairperson of the
Adjudicating Authority until the date on which a new
Chairperson, appointed in accordance with the
provisions of this Act to fill such vacancy, enters
upon his office.
(14) When the Chairperson of the Adjudicating
Authority is unable to discharge his functions owing
to absence, illness or any other cause, the senior-
most Member shall discharge the functions of the
Chairperson of the Adjudicating Authority until the
date on which the Chairperson of the Adjudicating
Authority resumes his duties.
(15) The Adjudicating Authority shall not be
bound by the procedure laid down by the Code of
Civil Procedure, 1908 (5 of 1908), but shall be guided
by the principles of natural justice and, subject to the
other provisions of this Act, the Adjudicating
Authority shall have powers to regulate its own
procedure."
40. The provision mentioned above makes it clear that the
Chairman or Members of the Committee are persons with
sufficient experience in the field of law, administration, finance,
and accountancy. Only a person having the qualification for
appointment as a District Judge or has been a Member of the
Indian Legal Services and has held a post in Grade I of the service
will be appointed as a Member. Therefore, there is expected to be
judicial scrutiny of a complaint filed under Section 5(5) of the
PMLA Act.
41. Section 8 of the PMLA Act provides for the method of
adjudication, and the same 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 offence
under section 3 or is in possession of proceeds of
crime, it 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
[or frozen] 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 or frozen under section 17 or
section 18 and record a finding to that effect,
whereupon such attachment or retention or freezing
of the seized or frozen property] or record shall--
(a) continue during [investigation for a period not
exceeding [three hundred and sixty-five days] or]
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 [Special Court];]
[Explanation. -- For the purposes of computing the
period of three hundred and sixty-five days
under clause (a), the period during which the
investigation is stayed by any court under any
law for the time being in force shall be excluded.]
(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 property
attached under section 5 or frozen under sub-section
(1A) of section 17, in such manner as may be
prescribed:
PROVIDED that if it is not practicable to take
possession of a property frozen under sub-section
(1A) of section 17, the order of confiscation shall have
the same effect as if the property had been taken
possession of.]
[(5) Where on conclusion of a trial of an offence
under this Act, the Special Court finds that the
offence of money-laundering has been committed, it
shall order that such property involved in the
money-laundering, or which has been used for
commission of the offence of money-laundering shall
stand confiscated to the Central Government.
(6) Where on conclusion of a trial under this Act,
the Special Court finds that the offence of money-
laundering 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.
(7) Where the trial under this Act cannot be
conducted by reason of the death of the accused or
the accused being declared a proclaimed offender or
for any other reason or having commenced but could
not be concluded, the Special Court shall, on an
application moved by the Director or a person
claiming to be entitled to possession of a property in
respect of which an order has been passed under sub-
section (3) of section 8, pass appropriate orders
regarding confiscation or release of the property, as
the case may be, involved in the offence of
money-laundering after having regard to the
material before it.]
[(8) Where a property stands confiscated to the
Central Government under sub-section (5), the
Special Court, in such manner as may be prescribed,
may also direct the Central Government to restore
such confiscated property or part thereof of a
claimant with a legitimate interest in the property,
who may have suffered a quantifiable loss as a result
of the offence of money laundering:
PROVIDED that the Special Court shall not
consider such claim unless it is satisfied that the
claimant has acted in good faith and has suffered the
loss despite having taken all reasonable precautions
and is not involved in the offence of money
laundering:]
[PROVIDED FURTHER that the Special Court
may, if it thinks fit, consider the claim of the claimant
for the purposes of restoration of such properties
during the trial of the case in such manner as may be
prescribed.]"
42. As per the aforesaid provision, the adjudicating
authority must either accept the complaint and proceed further
with the same or refuse to accept the complaint. The adjudicating
authority has to follow the procedure prescribed in Section 8,
which suggests that detailed scrutiny would be carried out and
that too, at the earliest.
43. It also appears from the show cause notice dated
10.07.2023, issued by the adjudicating authority to the appellants,
that appropriate orders are required to be passed under Section
8(3) of the PMLA Act, within a period not exceeding 180 days from
the date of the provisional attachment order. Hence, the
authority is fully aware of its powers and time-bound programme,
since the property belonging to a person has been attached and
such attachment cannot be extended for an unlimited time
without adjudication.
44. We are in agreement with the submission made by the
learned Senior Advocate for the appellants that the Court may
exercise its extraordinary powers under Article 226 of the
Constitution of India under exceptional circumstances like; an
order passed without jurisdiction, breach of fundamental rights,
violation of the principles of natural justice, excess of jurisdiction,
or a challenge to the vires of a statute or delegated legislation.
However, in the present appeal, when the authority empowered
under Section 5 of the PMLA Act has scrutinised the materials
relied on while passing the provisional attachment order dated
09.06.2023, and when the adjudicating authority is going to
examine all such issues and pass appropriate orders, we do not
find any justifiable reason to reconsider the same, that too, in this
intra court appeal. Therefore, we dismiss this appeal.
45. We have not expressed any opinion on the finding of the
authority in the provisional attachment order dated 09.06.2023.
It is expected that, with the co-operation of all concerned, the
adjudicating authority shall adjudicate the complaint filed under
Section 5(5) of the PMLA Act at the earliest. It is also expected
that the adjudicating authority shall not be prejudiced by any
observations made by the learned Single Judge in the impugned
judgment or by us in this judgment.
Sd/-
A.J. Desai,
Chief Justice
Sd/-
V.G. Arun
Judge
krj
//TRUE COPY//
P.A. TO C.J.
