Telangana High Court

Pattuoakkaran Girisha Babu, vs Union Of India, on 9 July, 2024

     THE HON'BLE SRI JUSTICE C. V. BHASKAR REDDY

              WRIT PETITION No.14278 of 2023

ORDER:

This Writ Petition is filed seeking to issue a Writ of

Certiorari by calling for the records relating to the order, dated

30.09.2022 passed by respondent No.4 in Original Complaint

(OC).No.1738/2022, confirming the Provisional Attachment

Order No.11 of 2022 in ECIR/08/HZO/2012 passed by

respondent No.3 and consequently prayed this Court to set

aside the said orders and for other appropriate reliefs.

2. It is the case of the petitioner that he is a Non-Resident

Indian, holding an Indian Passport bearing No.M9957325 and

he is engaged in the business of manufacturing gold jewellery in

Dubai in the name and style of M/s. Yahya Eid Goldsmithing

Jewellery, L.L.C. It is the further case of the petitioner that

initially an F.I.R. was registered vide No.RC-4(E)/2011, dated

19.10.2011 by the Central Bureau of Investigation, Bank

Securities and Frauds Cell, Bangalore, against one Mr. Sanjay

Agarwal, Managing Partner of the firm M/s. Ghanshyamdas

Gems and Jewels and others for the offences punishable under

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Sections 420, 467 and 468 read with 471 of I.P.C, and after

completion of investigation, charge sheet has been laid wherein

he was not arrayed as accused. Subsequently, another FIR

NO.RC-5(E)/2012 dated 17.04.2012 has been registered

against the partners of the said firm for the offences punishable

under Sections 120-B read with Sections 420 and 409 of IPC on

the basis of a complaint lodged by the Punjab National Bank,

Saifabad, Hyderabad, alleging criminal breach of trust resulting

in a wrongful loss of Rs.30,09,63,890/-, wherein also after

completion of investigation, the CBI laid charge sheet and the

petitioner was not arrayed as accused. Basing on the said

information, since the offences under Sections 420, 467 and

471 of IPC are schedule offences under the Prevention of Money

Laundering Act, 2002 (for short "the PML Act"), an Enforcement

Case Information Report (ECIR) No. ECIR/08/HZO/2012, dated

05.10.2012 was recorded and investigation under the

provisions of the Act has been initiated by the Enforcement

Directorate, Hyderabad.

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3. The grievance of the petitioner is that even though his

name is not included in the list of suspected accused in the

said ECIR, after a lapse of more than ten years, the Deputy

Director, Directorate of Enforcement, Hyderabad Zonal Office

i.e., respondent No.3 herein, caused attachment of the

immovable property belonging to the petitioner described at

Sl.No.8 in Schedule-A of the provisional attachment order

No.11/2022 dated 11.04.2022 in F.No.ECIR/08/HZO/2012

and further filed a complaint before the Adjudicating Authority

i.e., respondent No.4, who in turn, allowed the same by

confirming the provisional attachment order, vide order dated

30.09.2022, in Original Complaint (OC) No.1738 of 2022 in

PAO.No.11 of 2022 in ECIR/08/HZO/2012.

4. This Court, vide order dated 12.06.2023, while issuing

notice before admission, granted interim direction to

respondent Nos.1 to 3 not to proceed in any manner against the

immovable properties of the petitioner and suspended the

orders dated 30.09.2022 passed in O.C.No.1738 of 2022 in PAO

No.11 of 2022 in ECIR/08/HZO/2012, on the ground that the

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Chairman of respondent No.3, who passed the impugned order,

is not a judicial member.

5. Heard Sri M.A.Mujeeb, learned counsel for the petitioner

and Sri V.Rama Krishna Reddy, learned Standing Counsel

appearing for respondent No.2.

6. Learned counsel appearing for the petitioner has

submitted that the adjudicating authority consisting of a single

member, who has no experience in the field of law cannot issue

a show-cause notice under Section 8 (1) of the PML Act and

cannot pass an order confirming the provisional attachment of

properties under section 8 (3) of the PML Act as the same are

quasi-judicial functions and only a member having experience

in the field of law can perform quasi-judicial functions.

Learned counsel further submits that respondent No.3, who

passed the impugned order, is not a judicial member and as

such, prayed to set aside the impugned orders.

7. Sri V.Rama Krishna Reddy, learned Standing Counsel

appearing for respondent No.2 has vehemently contended that

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if the petitioner is aggrieved by the confirmation of the

provisional attachment order by the adjudicating authority, he

has to prefer an appeal as provided under Section 26 of the

PML Act before the Appellate Tribunal and as such the present

writ petition is misconceived and the same is liable to be

dismissed.

8. Section 8 of the PML Act deals with adjudication process.

Sub-Section (1) of Section 8 states that on receipt of a

complaint made 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, he

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,

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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. The competent

authority under the PML Act shall make an application under

sub-Section (5) of Section 5 and seek permission or approval of

attachment of property by Adjudicating Authority. Under

subsection (3) of Section 8 of the PML Act, the Adjudicating

Authority is competent to 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.

9. Admittedly, in the instant case, on the complaint filed by

the competent authority under sub-section (5) of Section 5 of

the PML Act, the Adjudicating Authority i.e, respondent No.4 in

exercise of powers conferred under sub-Section (3) of Section 8

of the PML Act, has passed the impugned order dated

30.09.2022 in Original Complaint No.1738 of 2022 confirming

the Provisional Attachment order No.11 of 2022 passed by

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respondent No.3 and against the said order, an appeal lies

under Section 26 of the PML Act.

10. In the case of United Bank of India v. Satyawati

Tondon 1 , the Hon'ble Apex Court laid down the following

principles for entertaining the writ petitions, when alternative

remedy is available.

"43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of

(2010) 8 SCC 110: 2010 (3) SCC (Civ) 260

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the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.

55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."

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11. In the case of Commissioner of Income Tax vs. Chhabil

Dass Agarwal 2, the Hon'ble Apex Court observed as under:

"15. Thus, 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 Thansingh Nathmal case [AIR 1964 SC 1419], Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131] and other similar judgments that the High Court will not entertain a petition under Article 226 of the 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."

12. In the case of PHR Invent Educational Society vs. UCO

Bank and others 3 the Hon'ble Apex Court while reiterating the

principles laid down above, has observed that the High Courts

will not entertain a petition under Article 226 of the

(2014) 1 SCC 603

2024 (3) ALD 142 (SC)

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Constitution of India 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.

13. In the instant case, in view of the complicated issues