Madras High Court
K.Subburaj vs Directorate Of Enforcement on 13 October, 2022
W.P.No.26551 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED 13.10.2022
CORAM
THE HONOURABLE Mr. JUSTICE P.N.PRAKASH
AND
THE HONOURABLE Mr. JUSTICE RMT.TEEKAA RAMAN
W.P.No.26551 of 2022
1.K.Subburaj
2.N.K.Pothiraaj
3.S.Vimala
4.S.Srividhya
5.S.Sreepriya
6.Lalitha .. Petitioners
Vs.
1.Directorate of Enforcement
Rep. by M.Raje Saker
Deputy Director
Directorate of Enforcement
Chennai Zonal Office, Zone-II
5th Floor, B-Wing, Shastri Bhawan
Haddows Road, Chennai 600 006
2.Hon. Adjudicating Authority (PMLA)
Room No.26, 4th Floor
Jeevan Deep Building Parliament Street
New Delhi 110 001 .. Respondents
1/12
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W.P.No.26551 of 2022
Petition filed under Article 226 of the Constitution of India praying to
issue a writ of certiorari, to call for the records of the 2nd respondent dated
22.08.2022 in reference Original Complaint (OC).1626/2022, confirming
the order of the 1st respondent passed in PAO No.01/2022 dated 01.02.2022
in ECIR/CEZO-II/04/2019 u/s. 5 of the Prevention of Money-Laundering
Act, 2002 and quash the same.
For Petitioner : Mr.V.Ramesh
for Mr.T.Thiyagarajan
For Respondents : Mr.N.Ramesh
Special Public Prosecutor
(Enforcement Directorate)
ORDER
[Made by P.N.PRAKASH, J.]
Seeking quashment of the order dated 22.08.2022 passed by the
2nd respondent in Original Complaint (OC).1626/2022, confirming the order
dated 01.02.2022 passed by the 1st respondent in PAO No.01/2022 in
ECIR/CEZO-II/04/2019, this writ petition has been filed.
2. The minimum facts that are required for deciding this writ petition
are as under :
2.1. The CBI, Banking Security and Fraud Cell, Bangalore, registered
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W.P.No.26551 of 2022
a case in FIR No.20 dated 16.10.2018 for the offences under Sections 406,
420, 468, 471 read with 120-B IPC against Cethar Ltd. and others, based on
the complaint given by the Deputy General Manager, Indian Bank, Trichy
Zone.
2.2. Since the FIR registered by the CBI disclosed the commission of
a scheduled offence under the Prevention of Money-Laundering Act, 2002,
(in short “PML Act”), the Enforcement Directorate registered a case in
ECIR No.CEZO-II/04/2019 dated 07.08.2019 and took up investigation.
2.3. After collecting materials, the Deputy Director of Enforcement,
passed a provisional order of attachment dated 01.02.2022 under Section
5(1) of PMLA Act, provisionally attaching certain properties of all the six
persons, who are the petitioners in this writ petition.
2.4. As mandated by Section 5(5) of PML Act, the Deputy Director
filed a complaint in O.C.No.1626/2022 before the Adjudicating Authority
under the PML Act. The Adjudicating Authority issued a show cause notice
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W.P.No.26551 of 2022
to the petitioners on 08.03.2022 and after getting the response from them,
has passed final orders on 22.08.2022, confirming the provisional order of
attachment, challenging which, this writ petition has been filed.
3. The order of adjudication clearly states as under :
“An appeal against this order lies to the Hon'ble Appellate
Tribunal, PMLA, New Delhi under Section 26 of the PMLA Act. The
Appeal may be filed within a period of 45 days from the date of
receipt of the order OR within the time limit as applicable, to be
ordered by the Hon'ble Supreme Court with respect to the orders
dated 23.03.2020, 08.03.2021,27.04.2021, 23.09.2021 & 10.01.2022
in connection with cognizance for extension of limitation.”
4. When we brought this to the notice of Mr.V.Ramesh, learned
counsel for the petitioner, he stated that when there is a jurisdictional error,
the order of the Adjudicating Authority and hence, it may not be necessary
for the petitioners to approach the Appellate Tribunal and instead, they
could approach this Court under Article 226 of the Constitution of India. In
support of this contention, Mr.V.Ramesh placed strong reliance on the
judgment of the Supreme Court in Vijay Madanlal Choudhary and others
vs. Union of India and others [2022 SCC OnLine SC 929]:
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W.P.No.26551 of 2022
“57. It has also been argued that Section 50 infringes upon
the right to liberty of a person summoned under the Act and violates
the right against self-incrimination. The non-compliance with
Section 53 is penalized through Section 63 of the PMLA. The
learned counsel has adopted the arguments made by other learned
counsel in reference to Tofan Singh vs. State of Tamil Nadu (2020
SCC OnLine SC 882). It is argued that the use of the term “any
person” without exclusion of the accused under Section 50 is in
violation of the due process. No safeguards provided under the
Cr.P.C. and the 1872 Act are extended to person proceeded for
PMLA offence. It is stated that the stage at which a person is
guaranteed the constitutional right under Article 20(3), cannot be
made malleable through legislation. It is stated that even though the
PMLA is a complaint-based procedure, by way of Section 50, one
cannot ignore the pre-complaint stage. As such, Section 50 must be
rendered unconstitutional. Further, it is argued that the ED practice
is a perverse incentive structure for constitutional infringement
where an accused is trapped and sweeping interrogations are
conducted aimed at justifying the summons issued. In respect of
Section 44(1)(d), it is stated that the right to a fair trial is taken
away and this provision irreversibly prejudices the accused in the
trial adjudicating the predicate offence.”
5. Mr.V.Ramesh contended that the provisional order of attachment
which was passed on 01.02.2022 can remain in force only for a period of
180 days and in this case, the said period expired on 30.07.2022 and
therefore, the order passed by the Adjudicating Authority on 22.08.2022
confirming the provisional order of attachment is non est in law.
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W.P.No.26551 of 2022
6. Per contra, Mr.N.Ramesh, learned Special Public Prosecutor for
the Enforcement Directorate drew our attention to the preamble portion of
the impugned order, wherein, it is stated as follows :
".... It may be mentioned here that the statutory limitation
period for passing of order under Section 8(3) has expired in this
case on 30.07.2022, in view of the order dated 10.01.2022 of the
Hon'ble Supreme Court of India read with orders dated 23.03.2020,
08.03.2021, 27.04.2021, 23.09.2022 & 10.01.2022 of the Hon'ble
Supreme Court of India, this order is being passed within the
extended time limitation period.”
He contended that in the light of the order of the Supreme Court extending
the period of limitation in the COVID-19 pandemic period, the period of
limitation fixed in Section 5(1) of PML Act, got automatically extended.
7. In reply, Mr.V.Ramesh contended that the Adjudicating Authority
cannot take shelter under the orders of the Supreme Court and violate the
mandate of Section 5(1) of PML Act.
8. We gave our anxious consideration to the rival contentions. Had
there been no Presiding Officer for the Appellate Tribunal, we would have
entertained this petition. Now that a Presiding Officer has been appointed
to the Appellate Tribunal, the petitioners can approach the said Tribunal and
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W.P.No.26551 of 2022
urge all these points. In fact, under Section 42 of PML Act, a further appeal
from the order of the Appellate Tribunal has been provided to the High
Court, which is entertained as a Civil Miscellaneous Appeal (CMA).
In such perspective of the matter, we do not want to arrogate to
ourselves the powers of the Appellate Tribunal by entertaining this writ
petition. Hence, this petition is dismissed with liberty to the petitioners to
approach the Appellate Tribunal constituted under Section 26 of PML Act.
No costs.
(P.N.P.,J.) (T K R, J.)
13.10.2022
gya (2/4)
To
1.The Deputy Director
O/o.The Joint Director
Directorate of Enforcement
Chennai Zonal Office-I
2nd and 3rd Floor, Murugesa Naicker Complex
No.84, Greams Road, Chennai 600 006
2.The Public Prosecutor
High Court, Madras
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W.P.No.26551 of 2022
W.P.No.26551 of 2022
P.N.PRAKASH, J.
AND
RMT.TEEKAA RAMAN, J.
(Order of the Court was made by P.N.PRAKASH, J.)
This writ petition was dismissed by this Bench on 13.10.2022. At the
instance of the learned counsel for the petitioners, this matter has been
posted today under the caption “for being mentioned”.
2. The learned counsel for the petitioners submitted that there is
an error in paragraph no.4 of the order dated 13.10.2022, in that, while
making his submissions on 13.10.2022, he relied only on paragraph nos. 57
and 61 from the judgment in Vijay Madanlal Choudhary and others vs.
Union of India and others downloaded from the Supreme Court website,
which are corresponding to paragraph nos.287 and 291 of the judgment in
the same case available in SCC OnLine Web Edition, whereas, paragraph
no.57 of the judgment in the SCC OnLine Web Edition, has been extracted
in paragraph no.4 of the order dated 13.10.2022.
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W.P.No.26551 of 2022
3. Accepting the aforesaid submission, we direct the Registry to
incorporate paragraph nos.287 and 291 of the judgment in Vijay Madanlal
Choudhary and others vs. Union of India and others available in 2022
SCC OnLine SC 929, which read as under, instead of paragraph no.57 of the
said judgment, which has been extracted in paragraph no.4 of the order
dated 13.10.2022, and issue fresh order copy:
“287. Be that as it may, as aforesaid, sub-section (1)
delineates sufficient safeguards to be adhered to by the
authorised officer before issuing provisional attachment
order in respect of proceeds of crime. It is only upon
recording satisfaction regarding the twin requirements
referred to in sub-section (1), the authorised officer can
proceed to issue order of provisional attachment of such
proceeds of crime. Before issuing a formal order, the
authorised officer has to form his opinion and delineate the
reasons for such belief to be recorded in writing, which
indeed is not on the basis of assumption, but on the basis of
material in his possession. The order of provisional
attachment is, thus, the outcome of such satisfaction already
recorded by the authorised officer. Notably, the provisional
order of attachment operates for a fixed duration not
exceeding one hundred and eighty days from the date of the
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W.P.No.26551 of 2022
order. This is yet another safeguard provisioned in the 2002
Act itself.
..............
291. The third proviso in Section 5(1) of the 2002 Act
is another safeguard introduced vide Act 13 of 2018 about
the manner in which period of one hundred and eighty days
need to be reckoned thereby providing for fixed tenure of the
provisional attachment order. Before the expiry of the
statutory period relating to the provisional attachment order,
the Director or any other officer not below the rank of
Deputy Director immediately after attachment under
subsection (1) is obliged to forward a copy of the
provisional attachment order to the three-member
Adjudicating Authority (appointed under Section 6(1) of the
2002 Act, headed by, amongst other, person qualified for
appointment as District Judge), in a sealed envelope under
Section 5(2), which is required to be retained by the
Adjudicating Authority for the period as prescribed under
the rules framed in that regard. This ensures the fairness in
the action as also accountability of the Authority passing
provisional attachment order. Further, in terms of Section
5(3), the provisional attachment order ceases to operate on
the date of an order passed by the Adjudicating Authority
under Section 8(3) or the expiry of the period specified in
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W.P.No.26551 of 2022
sub-section (1), whichever is earlier. In addition, under
Section 5(5) the authorised officer is obliged to file a
complaint before the Adjudicating Authority within a period
of thirty days from such provisional attachment. Going by
the scheme of the 2002 Act and Section 5 thereof in
particular, it is amply clear that sufficient safeguards have
been provided for as preconditions for invoking the powers
of emergency attachment in the form of provisional
attachment.”
(P.N.P.,J.) (TKRJ)
10.11.2022
nsd
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W.P.No.26551 of 2022
P.N.PRAKASH, J.
AND
RMT.TEEKAA RAMAN, J.
nsd
W.P.No.26551 of 2022
10.11.2022
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