Madras High Court
Unknown vs The Deputy Director on 11 April, 2023
W.P.Nos.26726 & 26727 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 11.04.2023
CORAM :
THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM
W.P.Nos.26726 & 26727 of 2017
Petitioner in
S.Rajkumar .. W.P.No.26726 of 2017
Petitioner in
S.Gracy .. W.P.No.26727 of 2017
vs
1. The Deputy Director
Directorate of Enforcement
Chennai Zonal Office
No.84, Greams Road
Chennai – 600 006.
2. The Chairperson / Adjudicating Authority
(PMLA)
4th Floor, Court Room-1, Room No.25
Jeevan Deep Building
Parliament Street Respondents
New Delhi – 110 001. .. in both W.Ps
Prayer in W.P.No.26726 of 2017: Writ Petition filed under Article 226 of
the Constitution of India for issuance of a Writ of Certiorari, to call for the
records relating to the Provisional Attachment Order, PAO No.7/2017
dated 28.03.2017 passed by the first respondent with the consequential
confirmation of attachment order in OC.No.738/2017 dated 02.08.2017
passed by the second respondent and quash the same as without authority
of law, contrary to the provisions of PMLA and violative principles of
natural justice;
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Prayer in W.P.No.26727 of 2017: Writ Petition filed under Article 226 of
the Constitution of India for issuance of a Writ of Certiorari, to call for the
records relating to the Provisional Attachment Order, PAO No.7/2017
dated 28.03.2017 passed by the first respondent with the consequential
confirmation of attachment order in OC.No.738/2017 dated 02.08.2017
passed by the second respondent and quash the same as without authority
of law, contrary to the provisions of PMLA and violative principles of
natural justice and further direct the respondents to order release of the
seized amount of Rs.6,25,500.00 to the petitioner.
For Petitioner in
both W.Ps : Mr.M.A.Mudimannan
For Respondents in
both W.Ps : Mr.P.Sidharthan
Special Public Prosecutor
for R1 and R2
COMMON ORDER
The writ petitions on hand has been instituted questioning the
validity of the provisional attachment order and the consequential
confirmation order passed by the competent authority.
2. The petitioner joined as a Clerk with the customs clearing
agency, by name M/s.Premier Shipping Agencies in the year 2008. Based
on some information that the customs officers posted at Air cargo
Complex were indulging in wrong practice of passing orders favourable to
the importers of unaccompanied baggage on getting illegal gratification,
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the CBI officers made a surprise inspection on 23.11.2009 in the office of
the Air Cargo Complex, Meenambakkam, Chennai.
3. The learned counsel for the petitioner states that the petitioner
has been falsely implicated in the case as he was no way connected with
the exercise of powers by the customs authorities in Air Cargo Complex.
The CBI Officials filed the First Information Report on 23.11.2009 against
nine customs officers and against Thiru G.Kumar, the petitioner, totalling
to eleven persons. The CBI Officials seized the amount deposited in the
bank as fixed deposit and the charge sheet was filed before the Special
Court for CBI cases.
4. The learned Special Public Prosecutor appearing on behalf of
the respondents brought to the notice of this Court that one criminal case
relates to the order of conviction and the other cases registered are still
pending. The learned counsel for the petitioner mainly contended that the
rules of natural justice has been violated by the competent authorities
under the Prevention of Money Laundering Act (for brevity, herein after
referred to as “the PMLA”) while passing the order of provisional
attachment and while issuing the confirmation order. The petitioner has
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not been afforded with the opportunity to defend his case and thus, they
have violated the provisions of the PMLA. In view of the fact that the
rules of natural justice has been violated, these writ petitions are to be
entertained and therefore, the orders are to be set aside.
5. The learned Special Public Prosecutor appearing on behalf of
the respondents objected the said contention by stating that all such
grounds ought to have been raised by the petitioner before the appellate
authority by preferring an appeal. It is further contended that the
adjudicating authority had passed the order confirming the provisional
attachment order under Section 83 of the PMLA. Admittedly, the
petitioner has not exhausted the efficacious alternate appellate remedy
contemplated under the PMLA and therefore, the writ petitions are to be
rejected.
6. With reference to the provisional attachment order, under
Section 5(1) of the PMLA, the competent authorities are empowered to
pass such provisional attachment order if the authorities have a reason to
believe that any person is in a possession of any proceeds of crime and
such proceeds of crime are likely to be concealed, transferred or dealt with
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in any manner, which may result in frustrating any proceedings relating to
confiscation of such proceeds of crime under the PMLA. Therefore, no
prior notice and other opportunity is contemplated under Section 5(1) of
the PMLA for the purpose of issuing the provisional attachment order.
Thus, the contention of the petitioner that the rules of natural justice is to
be followed deserves no merit consideration, as Section 5(1) of the PMLA
does not contemplate any such opportunity to any person for the purpose
of provisionally attaching the property involved in money laundering.
7. Section 8 of the PMLA denotes adjudication and the
procedure to be followed for adjudication under the Act. The learned
counsel for the petitioner reiterated that if the property is claimed by a
person other than the person to whom 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. As far as Clause 8(2) is concerned,
the authorities are bound to give an opportunity to such persons to prove
that the property has not been involved in money laundering. Therefore, if
at all any person possess certain information or materials to establish that
the property has not been involved in money laundering, then they are at
liberty to participate in the process of adjudication.
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8. However, the authorities are of an opinion that no such
enquiry is required in respect of the third parties. It is for them to take a
decision to proceed with the adjudicatory process. It is for the person who
is claiming the right over the property, has to establish that the property
has not been involved in money laundering. In this regard, if any person is
aggrieved, either they can approach the adjudicating authority or the
appellate authority, as the case may be, under Section 26 of the PMLA.
Therefore, the petitioner cannot claim that an opportunity must be afforded
by the competent authority at the time of adjudication.
9. If at all the petitioner claims that the property has not been
involved in money laundering, then, he is at liberty to approach the
adjudicating authority or the appellate authority under Section 26 of the
Act. Contrarily, the provisional attachment order or the confirmation order
passed need not be interfered with by the Court on the basis that the
person who wants to establish that the property has not been involved in
money laundering must be issued with the notice at the time of
adjudication.
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10. The term “if the property is claimed by the person, other than
the person to whom the notice has been issued” denotes that any third
person who is in possession and enjoyment of the property is of the
opinion that the property in his possession has not been involved in money
laundering, then he is at liberty to approach the adjudicating authority. In
this regard, such a person cannot plead that the authorities have not issued
any notice to him for the purpose of establishing his case. It is in the
opinion of the person concerned and therefore, the chance has been given
under the Act to establish his case.
11. Such an opportunity provided under the Act cannot be
misconstrued for the purpose of claiming that the adjudicating authority
should issue notice for such third parties for the purpose of completing the
adjudicatory process. In the present case, if at all the petitioner possess any
materials to establish that the property has not been involved in money
laundering, then, he is at liberty to approach the appellate authority for the
purpose of establishing his case. As far as the provisional attachment order
dated 28.03.2017 is concerned, the authority under Section 5(1) of the
PMLA has elaborately considered the facts and circumstances of the case
and evidences available on record including the materials / documents.
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The authorities, after elaborate discussion, made a finding that he has a
reason to believe that the case under PMLA is established and therefore,
invoked the powers under Section 5(1) of the PMLA and issued the order
of provisional attachment. The language applied under the Act is “reason
to believe”, therefore, it is sufficient if the authorities form an opinion that
the materials available on record are sufficient for the purpose of
proceeding against the persons.
12. In respect of the appellate remedy contemplated under the
statutes and approaching the High Court under Article 226 before
exhausting the remedy, this Court considered the principles in
W.P.No.3144 of 2016 dated 15.04.2021. The relevant paragraphs of the
said order are extracted hereunder:
“11. This Court is of the considered opinion
that all such grounds raised on merits are to be
adjudicated with reference to the documents and
evidences to be produced and the scope of the writ
petition under Article 226 of the Constitution of India
cannot be expanded so as to exercise the powers of the
appellate authority in the matter of examination or
scrutiny of original documents and evidences produced
by the respective parties. The very purpose of the
statutory appeal is to scrutinize the orders passed by
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the original authorities, and therefore, the legislative
intention in this regard is to be scrupulously followed
in the mater of adjudication of merits with reference to
the documents and evidences.
12. In common parlance, Statutes contain
appeal provisions. In some of the Statutes, there are
two-tier appeal provisions in order to ensure that the
facts, grounds, evidences are appreciated and the
grievances are redressed in the manner known to law.
Such appeal provisions are provided with the
legislative intention to provide remedy to the
aggrieved persons. The High Court, in normal
circumstances, would not interfere nor dispense with
the appellate remedy.
13. The High Court cannot adjudicate the
facts and merits with reference to documents and
evidences. Trial is not entertainable under Article 226
of the Constitution of India. All such procedural
aspects are to be followed by complete
adjudication/trial by the original authorities as well as
by the appellate authorities under the provisions of the
Statute and the powers under Article 226 of the
Constitution of India is limited to find out whether the
processes contemplated under the Statutes and the
procedural aspects are followed by the competent
authorities as well as the appellate authorities or not.
The High Court, under Article 226 of the Constitution
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of India, is not expected to usurp the powers of the
appellate authorities by adjudicating the merits of the
matter on certain documents and evidences. In the
event of adjudication of merits under Article 226 of
the Constitution of India in the absence of complete
trial with reference to the documents and evidences,
there is a possibility of miscarriage of justice, and
therefore, the High Court is expected to be cautious,
while entering into the venture of adjudication of
certain merits with reference to the original documents
and evidences produced by the respective parties to the
lis. This being the legislative intention, High Court is
expected to trust the institutional authorities as well as
the hierarchy of institutions contemplated under the
Statutes. Institutional respects are of paramount
importance for providing complete justice to the
parties and the various stages of adjudication are
important for the purpose of correcting omissions,
commissions, errors in appreciation of evidence, etc.
Powers of the High Court under Article 226 of the
Constitution of India cannot be extended nor widened
so as to allow lay hands on the facts and
circumstances by conducting the trial, nor certain facts
and circumstances with reference to documents and
evidences can be assumed or presumed or inference
can be drawn, which is not preferable.
14.This Court elaborately discussed the
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importance of exhausting the appellate remedy in the
case of M/s.Hyundai Motor India Limited v. The
Deputy Commissioner of Income Tax, Chennai and
another [W.P.No.22508 of 2017 dated 16.07.2018],
from which, the following paragraphs are extracted :
“19.Unnecessary or routine invasion into the
statutory powers of the competent authorities under a
statute should be restrained by the Constitutional
Courts. Frequent or unnecessary invasions in the
executive power will defeat the constitutional
perspectives enshrined under the Constitution of India.
Undoubtedly, the separation of powers under the
Indian Constitution has been narrated and settled in
umpteen number of judgments. Separation of powers
demarcated in the Constitution of India is also to be
considered, while exercising the powers of judicial
review in the matter of dispensing with the appeal
remedy provided for an aggrieved person under a
statute. If the High Courts started interfering with such
Appellate powers without any valid and substantiated
reasons, then the very purpose and object of the statute
and provision of appeal under the statute became an
empty formality and the High Courts also should see
that the provisions of appeal contemplated under the
statutes are implemented in its real spirit and in
accordance with the procedures contemplated under
the rules constituted thereon. While entertaining a writ
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petition as narrated by the Apex Court, the provision
of efficacious alternative remedy under the statute also
to be considered. If the writ petitions are entertained in
a routine manner, by not allowing the competent
Appellate authority to exercise their powers under the
provisions of the statute, then this Court is of an
opinion that the power of judicial review has not
exercised in a proper manner. Thus, it is necessary for
this Court to elaborate the legal principle settled in
respect of the separation of powers under the
Constitution of India.
1. Madras Bar Association vs. Union of India (UOI)
(25.09.2014 - SC) : MANU/SC/0875/2014
If the historical background, the preamble,
the entire scheme of the Constitution, relevant
provisions thereof including Article 368 are kept in
mind there can be no difficulty in discerning that the
following can be regarded as the basic elements of the
constitutional structure. (These cannot be catalogued
but can only be illustrated):
(1) The supremacy of the Constitution.
(2) Republican and Democratic form of government
and sovereignty of the country.
(3) Secular and federal character of the Constitution.
(4) Demarcation of power between the Legislature,
the executive and the judiciary.
(5) The dignity of the individual secured by the various
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freedoms and basic rights in Part III and the mandate
to build a welfare State contained in Part IV.
(6) The unity and the integrity of the Nation.
2. Holiness Kesavananda Bharati Sripadagalvaru v.
State of Kerala and Anr. [MANU/SC/0445/1973 :
(1973) 4 SCC 225].
That separation of powers between the legislature, the
executive and the judiciary is the basic structure of the
Constitution is expressly stated by Sikri, C.J.
3. P. Kannadasan and Ors. v. State of T.N. and Ors.
[MANU/SC/0650/1996 : (1996) 5 SCC 670] the
Supreme Court noted that the Constitution of India
recognised the doctrine of separation of powers
between the three organs of the State, namely, the
legislature, the executive and the judiciary. The Court
said:
It must be remembered that our Constitution
recognises and incorporates the doctrine of separation
of powers between the three organs of the State, viz.,
the Legislature, the Executive and the Judiciary. Even
though the Constitution has adopted the parliamentary
form of government where the dividing line between
the legislature and the executive becomes thin, the
theory of separation of powers is still valid.
4. State of Tamil Nadu and Ors. vs. State of Kerala
and Ors. (07.05.2014 - SC) : MANU/SC/0425/2014
121. On deep reflection of the above discussion, in our
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opinion, the constitutional principles in the context of
Indian Constitution relating to separation of powers
between legislature, executive and judiciary may, in
brief, be summarized thus:
(i) Even without express provision of the separation of
powers,the doctrine of separation of powers is an
entrenched principle in the Constitution of India.
The doctrine of separation of powers informs the
Indian constitutional structure and it is an essential
constituent of rule of law.
In other words, the doctrine of separation of power
though not expressly engrafted in the Constitution, its
sweep, operation and visibility are apparent from the
scheme of Indian Constitution. Constitution has made
demarcation, without drawing formal lines between
the three organslegislature, executive and judiciary. In
that sense, even in the absence of express provision for
separation of power, the separation of power between
legislature, executive and judiciary is not different
from the constitutions of the countries which contain
express provision for separation of powers.
(ii) Independence of courts from the executive and
legislature is fundamental to the rule of law and one
of the basic tenets of Indian Constitution.
Separation of judicial power is a significant
constitutional principle under the Constitution of
India.
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(iii) Separation of powers between three organs--
legislature, executive and judiciary--is also nothing
but a consequence of principles of equality enshrined
in Article 14 of the Constitution of India.
Accordingly, breach of separation of judicial power
may amount to negation of equality Under Article 14.
Stated thus, a legislation can be invalidated on the
basis of breach of the separation of powers since such
breach is negation of equality Under Article 14 of the
Constitution.
(iv) The superior judiciary (High Courts and Supreme
Court) is empowered by the Constitution to declare a
law made by the legislature (Parliament and State
legislatures) void if it is found to have transgressed the
constitutional limitations or if it infringed the rights
enshrined in Part III of the Constitution.
(v) The doctrine of separation of powers applies to the
final judgments of the courts. Legislature cannot
declare any decision of a court of law to be void or of
no effect. It can, however, pass an amending Act to
remedy the defects pointed out by a court of law or on
coming to know of it aligned. In other words, a court's
decision must always bind unless the conditions on
which it is based are so fundamentally altered that the
decision could not have been given in the altered
circumstances.
(vi) If the legislature has the power over the subject-
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matter and competence to make a validating law, it
can at any time make such a validating law and make
it retrospective. The validity of a validating law,
therefore, depends upon whether the legislature
possesses the competence which it claims over the
subject-matter and whether in making the validation
law it removes the defect which the courts had found in
the existing law.”
20. This Court is of a strong opinion that institutional
respects are to be maintained by the constitutional
Courts. Whenever there is a provision for an appeal
under the statute, without exhausting the remedies
available under the statute, no writ petition can be
entertained in a routine manner. Only on exceptional
circumstances, the remedy of appeal can be waived, if
there is a gross injustice or if there is a violation of
fundamental rights ensured under the Constitution of
India. Otherwise, all the aggrieved persons from and
out of the order passed by the original authority is
bound to approach the Appellate Authority. The
Constitutional Courts cannot make an appeal
provision as an empty formality. Every Appellate
Authority created under the statute to be trusted in
normal circumstances unless there is a specific
allegation, which is substantiated in a writ
proceedings. Thus, the institutional functions and
exhausting the appeal remedies by the aggrieved
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persons, are to be enforced in all circumstances and
writ proceedings can be entertained only on
exceptional circumstances. Rule is to prefer an appeal
and entertaining a writ is only an exception. This being
the legal principles to be followed, this Court cannot
entertain the writ petitions in a routine manner by
waiving the remedy of appeal provided under the
statute.
21. Now, let us look into the legal principles settled by
the Apex Court for exhausting the efficacious
alternative remedy provided under the statute.
22. When an effective alternative remedy is available,
a writ petition cannot be maintained
1. In City and Industrial Development Corporation v.
DosuAardeshirBhiwandiwala and Ors.
MANU/SC/8250/2008 : (2009) 1 SCC 168, this Court
had observed that:
The Court while exercising its jurisdiction under
Article 226 is duty-bound to consider whether:
(a) adjudication of writ petition involves any complex
and disputed questions of facts and whether they can
be satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the Petitioner has any alternative or effective
remedy for the resolution of the dispute;
(d) person invoking the jurisdiction is guilty of
unexplained delay and laches;
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(e) ex facie barred by any laws of limitation;
(f) grant of relief is against public policy or barred by
any valid law; and host of other factors.
2. KanaiyalalLalchand Sachdev and Ors. vs. State of
Maharashtra and Ors. (07.02.2011 - SC) :
MANU/SC/0103/2011
It is well settled that ordinarily relief Under Articles
226/227 of the Constitution of India is not available if
an efficacious alternative remedy is available to any
aggrieved person. (See Sadhana Lodh v. National
Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander
Rai and SBI v. Allied Chemical Laboratories.)
3. Commissioner of Income Tax and Ors. v.
ChhabilDass Agarwal, MANU/SC/0802/2013 : 2014
(1) SCC 603, as follows:
Para 15. while it can be said that this Court has
recognised some exceptions to the Rule of alternative
remedy i.e. Where the statutory authority has not acted
in accordance with the provisions of the enactment in
question, or in defiance of the fundamental principles
of judicial procedure, or has resorted to invoke the
provisions which are repealed, or when an order has
been passed in total violation of the principles of
natural justice, the proposition laid down in
ThansinghNathmal case, Titaghur Paper Mills case
and other similar judgments that the High Court will
not entertain a petition Under Article 226 of the
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Constitution if an effective alternative remedy is
available to the aggrieved person or the statute under
which the action complained of has been taken itself
contains a mechanism for redressal of grievance still
holds the field. Therefore, when a statutory forum is
created by law for redressal of grievances, a writ
petition should not be entertained ignoring the
statutory dispensation.
4. Authorized Officer, State Bank of Travancore and
Ors. vs. Mathew K.C. (30.01.2018 - SC) :
MANU/SC/0054/2018
The petitioner argued that the SARFAESI Act is a
complete code by itself, providing for expeditious
recovery of dues arising out of loans granted by
financial institutions, the remedy of appeal by the
aggrieved under Section 17 before the Debt Recovery
Tribunal, followed by a right to appeal before the
Appellate Tribunal under Section 18. The High Court
ought not to have entertained the writ petition in view
of the adequate alternate statutory remedies available
to the Respondent. The interim order was passed on
the very first date, without an opportunity to the
Appellant to file a reply. Reliance was placed on
United Bank of India vs. Satyawati Tandon and others,
2010 (8) SCC 110, and General Manager, Sri
Siddeshwara Cooperative Bank Limited and another
vs. Ikbal and others, 2013 (10) SCC 83. The writ
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petition ought to have been dismissed at the threshold
on the ground of maintainability. The Division Bench
erred in declining to interfere with the same. The
Supreme Court agreed to the arguments and held the
same also noted that the writ petition ought not to have
been entertained and the interim order granted for the
mere asking without assigning special reasons, and
that too without even granting opportunity to the
Appellant to contest the maintainability of the writ
petition and failure to notice the subsequent
developments in the interregnum.
5. State of Himachal Pradesh v. Gujarat Ambuja
Cement Ltd. reported at AIR 2005 SC 3856, the
Supreme Court explained the rule of 'alternate remedy'
in the following terms
Considering the plea regarding alternative remedy as
raised by the appellant-State. Except for a period when
Article 226 was amended by the Constitution (42nd
Amendment) Act, 1976, the power relating to
alternative remedy has been considered to be a rule of
self imposed limitation. It is essentially a rule of
policy, convenience and discretion and never a rule of
law. Despite the existence of an alternative remedy it is
within the jurisdiction of discretion of the High Court
to grant relief under Article 226 of the Constitution. At
the same time, it cannot be lost sight of that though the
matter relating to an alternative remedy has nothing to
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do with the jurisdiction of the case, normally the High
Court should not interfere if there is an adequate
efficacious alternative remedy. If somebody
approaches the High Court without availing the
alternative remedy provided the High Court should
ensure that he has made out a strong case or that there
exist good grounds to invoke the extraordinary
jurisdiction.
6. K.S. Rashid and Sons v. Income Tax Investigation
Commission and Ors., AIR (1954) SC 207; Sangram
Singh v. Election Tribunal, Kotah and Ors., AIR
(1955) SC 425; Union of India v. T.R. Varma, AIR
(1957) SC 882; State of U.P. and Ors. v. Mohammad
Nooh, AIR (1958) SC 86 and M/s K.S. Venkataraman
and Co. (P) Ltd. v. State of Madras, AIR (1966) SC
1089.
Constitution Benches of the Supreme Court held that
Article 226 of the Constitution confers on all the High
Courts a very wide power in the matter of issuing
writs. However, the remedy of writ is an absolutely
discretionary remedy and the High Court has always
the discretion to refuse to grant any writ if it is
satisfied that the aggrieved party can have an
adequate or suitable relief elsewhere. The Court, in
extraordinary circumstances, may exercise the power
if it comes to the conclusion that there has been a
breach of principles of natural justice or procedure
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required for decision has not been adopted.
7. First Income-Tax Officer, Salem v. M/s. Short
Brothers (P) Ltd., [1966] 3 SCR 84 and State of U.P.
and Ors. v. M/s. Indian Hume Pipe Co. Ltd., [1977] 2
SCC 724.
There are two well recognized exceptions to the
doctrine of exhaustion of statutory remedies. First is
when the proceedings are taken before the forum
under a provision of law which is ultra vires, it is open
to a party aggrieved thereby to move the High Court
for quashing the proceedings on the ground that they
are incompetent without a party being obliged to wait
until those proceedings run their full course. Secondly,
the doctrine has no application when the impugned
order has been made in violation of the principles of
natural justice. We may add that where the
proceedings itself are an abuse of process of law the
High Court in an appropriate case can entertain a writ
petition.” ”
13. In view of the principles considered in the aforesaid
judgment, the petitioner is at liberty to prefer an appeal before the
appellate authority under Section 26 of the PMLA. In the event of
preferring an appeal, the same shall be considered on merits and in
accordance with law.
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14. With these directions, these writ petitions stands dismissed.
There will be no order as to costs.
Index : Yes/No 11.04.2023
Neutral Citation : Yes/No
drm
To:
1. The Deputy Director
Directorate of Enforcement
Chennai Zonal Office
No.84, Greams Road
Chennai – 600 006.
2. The Chairperson / Adjudicating Authority
(PMLA)
4th Floor, Court Room-1, Room No.25
Jeevan Deep Building, Parliament Street
New Delhi – 110 001.
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S.M. SUBRAMANIAM, J.
drm
W.P.Nos.26726 & 26727 of 2017
11.04.2023
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