Partly allowed

FPA-PMLA-575/CHD/2014 of Suman v/s The Deputy Director Directorate of Enforcement, Chandigarh

ATFP6 Oct 2016FPA-PMLA-575/CHD/2014

Case brief

AI extract

What is this about?

Three applicants challenged the implementation of a final Tribunal order directing the release of attached bank accounts to appellants. The Tribunal dismissed Income Tax applications for recall as not maintainable post-final order but ordered the Enforcement Directorate to release the accounts to the appellants within one month for implementation of its final judgment.

What did the court decide?

Applications for recall dismissed as not maintainable; applications for implementation of final order allowed; direction to release attached properties to appellants within one month.

FPA-PMLA-575/CHD/2014 of Suman v/s The Deputy Director… — Money Laundering | ATFP (2016)

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APPELLATE TRIBUNAL, PREVENTION OF MONEY LAUNDERING ACT AT NEW DELHI

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MP-PMLA-2561/CHD/2016 (Misc.) MP-PMLA-2507/CHD/2016 (U/s 35) MP-PMLA-1384/CHD/2015 (Misc.) MP-PMLA-1206/CHD/2014 (Addl. Doc.) & FPA-PMLA-574/CHD/2014
Hemraj Singh … Appellant/Applicant
Versus
The Deputy Director Directorate of Enforcement, Chandigarh … Respondent
AND
MP-PMLA-2562/CHD/2016 (Misc.) MP-PMLA-2507A/CHD/2016 (U/s 35) MP-PMLA-1383/CHD/2015 (Misc.) MP-PMLA-1103/CHD/2014 (Mou) MP-PMLA-973/CHD/2014 (Stay) & FPA-PMLA-575/CHD/2014
Suman … Appellant/Applicant
Versus
The Deputy Director
Directorate of Enforcement, Chandigarh … Respondent

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Advocates/Authorized Repr	esentatives who appeared
For the appellants (in the main Appeals)	: Shri T.K. Gadoo, Advocate
For the applicant	: Shri Punit Rai, Advocate
For the respondent	: Shri N.K. Matta, Advocate

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014

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Page 1 of 11

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CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN SHRI G.C. MISHRA : MEMBER SHRI B.K. BANSAL : MEMBER

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ORDER

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06.10.2016

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MP-PMLA-2507/CHD/2016 (U/s 35), MP-PMLA-2507A/CHD/2016 (U/s 35) MP-PMLA-2561/CHD/2016 (Misc.), MP-PMLA-2562/CHD/2016 (Misc.)

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As all the applications are connected with a single common order in FPA-574/CHD/2014 and FPA-575/CHD/2014 dated 09/09/2015 and all the pleas and contentions raised by the applicants are common, therefore with the consent of parties all the applications are disposed of by this common order.

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The applications no. MP-PMLA-2507/CHD/2016 & MP-PMLA2507A/CHD/2016 have been filed by the applicants for implementation of the above said order dated 09/09/2015 of this Tribunal. Whereas during the pendency of the above applications, applications no. MPPMLA-2561/CHD/2016 & MP-PMLA-2562/CHD/2016 have been filed by Assistant Commissioner of Income Tax Circle 57(1) praying for opportunity of being heard to the Income Tax Department, recall the directions contain in order dated 09/09/2015 and directing the Deputy Director of Enforcement Directorate to release/handover the possession of the attached properties, possession of which taken by it to the Income Tax Department.

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The facts in brief relevant for the applications under consideration are that Provisional Attachment Order No. 02/2013 dated 30.09.2013 was passed provisionally attaching inter alia the following properties:-

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014

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Page 2 of 11

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S.No.	Name of Bank	Account No.	Nam Acco Hold	e of unt er	Balance amount as in Rs.
1.	State Bank of India, Naraingarh, Chandigarh, Nahan Road, Naraingarh	11117173970	Shri Raj and wife Sum	Hem Singh his Smt. an	1312907.74
2.	State Bank of India, Naraingarh, Chandigarh, Nahan Road, Naraingarh District Ambala	1111786130	Shri Raj and wife Sum	Hem Singh his Smt. an	900502.86
3.	HDFC Bank Limited, Shingar Palace Complex Nicholson Rd., Ambala Cannt.	01311000095004	Shri Raj S	Hem ingh	20170.98
4.	Canara Bank Sector 17C Chandigarh	0385101035231	Shri Raj S	Hem ingh	46897.34
5.	PNB, Naraingarh, District Ambala	27330001001039252	Shri Raj S	Hem ingh	63,545
		TOTAL			23,44,023.92

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Provisional Attachment Order was confirmed by the Adjudicating Authority vide order dated 24.03.2014. On appeal by Shri Hemraj Singh and Smt. Suman this Tribunal passed the order dated 09.09.2015 with the following directions to the respondent:-

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“ Considering the facts and circumstances as discussed above, the applications are allowed and the impugned order dated 24^th March, 2014 passed by the Adjudicating Authority confirming attachment of properties and the provisional attachment order no. 02/2013 dated 30^th September, 2013 attaching properties owned

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014

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Page 3 of 11

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by the appellants is set aside. The respondent will release/handover the possession of the attached properties, possession of which was taken by him, to the appellants within a period of one month from today along with the accretions, if any, thereon. With these orders, the appeals and all the pending appeals and all the pending applications are disposed of. Parties to bear their own cost.

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The applicants in Misc. Applications no. MP-PMLA2507/CHD/2016 & MP-PMLA-2507A/CHD/2016 have contended that the amount lying in the five bank accounts of the applicants totally Rs. 23,44,023.92 is in the possession of the respondent including interest accrued thereof from the date of seizure/attachment and has not been released to them even after the lapse of more than 200 days from the date of the final order. They have also contended that subsequent to the Tribunal’s final order dated 09.09.2015 they have made repeated request vide their letters dated 27.10.2015, 08.10.2015, 21.12.2015 and 02.02.2016 but of no avail. They have thus prayed for enforcement of the final order of the Tribunal under section 35(3) of PMLA, 2002. While the proceedings on the above Misc. Applications were in progress, the Income Tax Authorities moved Misc. Applications no. MP-PMLA-2561/CHD/2016 & MP-PMLA2562/CHD/2016 praying for recalling the directions of Tribunal in order dated 09.09.2015, to handover the possession of the attached property (that were ordered to be released) to the appellant in the said appeal and the same to be released to the Income Tax Department as there are large amount of dues pending against the appellant therein and the Tax Recovery Officer had issued an order in form no. ITCP-10 dated 08.03.2016 for recovery of the said dues.

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014

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Page 4 of 11

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The Income Tax Department have contended that they came to know from the Directorate of Enforcement by letter dated 21/12/2015 that an amount of Rs. 23.44 lakhs lying in the bank accounts of Shri Hem Raj Singh and Smt. Suman has been taken into possession by the Directorate of Enforcement and that the Income Tax Authorities requested the Directorate of Enforcement by letter F.No. JCIT/R56/Dossier/2015-16/485 dated 30.12.2015 to release above said amount to the Income Tax Department and further that a ITCP-10 dated 08.03.2016 was drawn by the Tax Recovery Officer, Office of Pr. CIT-19, New Delhi requesting the Assistant Director, Directorate of Enforcement to attach and hold the above said money and not to release the same in favour of Shri Hemraj Singh and Smt. Suman; that Directorate of Enforcement informed the Income Tax Authorities on 09.05.2016 that the Appellate Tribunal, PMLA vide its order dated 09.09.2015 had set aside the order dated 24.03.2014 passed by the Adjudicating Authority confirming attachment of properties and PAO No. 02/2013 dated 30.09.2014 attaching properties owned by the appellant and directions of the Tribunal to release/handover the possession of the attached property to the appellant within a period of one month from the date of the said order along with accretions, if any. The applicants have also contended that the Income Tax Department was not aware of the proceedings before this Tribunal, therefore the Department was not represented and/or heard at the time of passing of order dated 09.09.2015 and that the fact that the appellant in the main appeal had outstanding dues of the Income Tax Department to the tune of more than Rs. 11.03 crores plus interest could not be

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014

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Page 5 of 11

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brought to the notice of Tribunal at the time of passing of order dated 09.09.2015.

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The appellants in the main appeal, namely, Shri Hemraj Singh and Smt. Suman in the reply have contended that Tribunal would be justified in not entertaining the application under section 35 of the PML Act, 2002 r/w section 151,152 & 153 of the CPC for recalling the order dated 09.09.2015 as section 35(1) of the PML Act, 2002 provides that the Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5) but shall be guided by the principles of natural justice and subject to the other provisions of this Act, the Appellate Tribunal shall have powers to regulate its own procedure.

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It has further been contended that even under section 35(2) of PML Act, 2002 which provides that the Appellate Tribunal shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 in respect of reviewing its decision, the same are applicable only while tying a suit and cannot be extended to a situation in which final order has already been passed by the Tribunal.

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They have also contended that the provisions of section 35 r/w sections 151,152 & 153 of CPC do not allow any third party to approach this Tribunal recalling the directions contained in its order dated 09.09.2015. They further contended that the application has been filed by the Assistant Commissioner of Income Tax after a lapse of more than 250 days from the date of final order which has become final. They prayed for dismissal of the application filed by the

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Assistant Commissioner of Income Tax as not maintainable.

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014

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Page 6 of 11

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The Directorate of Enforcement- respondent in the main appeal FPA-574/CHD/2014 and FPA-575/CHD/2014 has contended that the appellants in the main appeal have not disputed that there are outstanding dues of more than 11.06 crores plus interest of Income Tax Department against them and that the Tribunal has powers of civil court in terms of section 35(2) and section 35(3) of PML Act, 2002 and by virtue of that the Appellate Tribunal has power to attach the properties of the non-applicant in possession of Enforcement Directorate and release the same in favour of Income Tax Department to ensure recovery of legitimate government dues. The respondent relied upon Hon’ble Supreme Court Judgement in Lakshan Swarup Om Prakash vs. Union of India and others 1998 (229) ITR 662 (SC) in which Hon’ble Supreme Court was seized of a similar situation and held that application filed for recovery of government dues in court is maintainable by virtue of section 226(4) of the Act. They have also relied upon the judgment of the full bench of Madras High Court in Manickam Chettiyar vs. Income Tax Officer (1938) 6 ITR 180 (Mad) (FB) in which it was held that the crown has right of priority in payment of dues due to it and the court should exercise its inherent power so as to render justice for the recovery of crown. Hon’ble Apex Court in Income Tax Officer, Cannanore vs. M.K. Mohammed Kunhi (1969) 71 ITR 815 (SC) has also been relied upon to bring home the point that power to do justice and to protect the interest of the Government revenue is an incidental or ancillary power which even otherwise dehors section 35 (3) of the PML Act vests with the Hon’ble Tribunal.

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014

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Page 7 of 11

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It is an undisputed fact in this case that a final order in this case has been passed by this Tribunal on 09.09.2015 setting aside the provisional attachment order as well as the confirmation order in respect of impugned properties with directions to the respondent to release/handover the possession of properties to the appellant in the main appeal within a period of one month from the date of the said order. While the final order of the Tribunal has not yet been implemented the Income Tax Authorities have pleaded for directions to handover the possession of the attached properties to them in view of the large amount of dues pending against appellants in the main appeal. The grounds extended by the Income Tax Authorities viz. lack of information and knowledge on their part about the proceedings in the main appeals before this Tribunal, late communication of the final order dated 09.09.2015 of this Tribunal to them by the Directorate of Enforcement have no force to carry forward their prayers in the Misc. Applications under consideration as they cannot be given the benefit of their own lack of knowledge or communication between two departments for seeking any relief from this Appellate Tribunal. Further, it is also on record in their Misc. Applications that Judicial Magistrate, Chandigarh vide order dated 17.01.2015 had directed the Income Tax Department and the Directorate of Enforcement to file a reply with regard to the fact that, if any proceedings before the said authorities were pending in which the properties of the present case are also attached or otherwise required. Thus the Income Tax Department was made aware of the attachment of the properties by the Hon’ble Court of Judicial Magistrate, Chandigarh in as early as January, 2015. They should have agitated their stand and prayers

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014 Page 8 of 11

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regarding recovery from the properties of the appellants in the main appeal attached under Prevention of Money Laundering Act before all the relevant forum including this Tribunal well within a shortest possible time without waiting for final order to have been passed by this Tribunal and communicated to them by the Enforcement Directorate. No relief can be provided to them at this stage in their applications dated 25.05.2016 when the final order had already been passed by the Tribunal about 7 months before on 09.09.2015.

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As regards the legal provisions of section 35 of PML Act, it is clear as also pointed out by the learned counsel for the appellants in the main appeal that this Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 but for the purposes of discharging its function it shall have the same powers as are vested in the civil court while trying a suit . These powers include the powers of reviewing its own decision also. However such powers can be exercised only while trying a suit, that is when the Appellate proceedings are in progress before this Tribunal. Such powers thus under no circumstances can be exercised after the final order has been issued by this Tribunal.

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As regards the contentions of the Directorate of Enforcement relying upon various judgments of Hon’ble Supreme Court and other High Courts that the applications filed for recovery of government dues in court is maintainable and the Tribunal has incidental or ancillary powers to do justice and to protect the interest of government revenue,

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we find that judgment of the Hon’ble Supreme Court in the case of

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014 Page 9 of 11

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Lakshan Swarup Om Prakash vs. Union of India and others 1998 (229) ITR 662 (SC) has been delivered in a different context where certain amounts deposited in the court had been ordered to be decreed in favour of creditors. As against that in this case there was no such amount deposited with this Tribunal and the order dated 09.09.2015 directed for its release to the appellants rather than appropriation among one or more agencies. The Hon’ble Supreme Court in the case of Income Tax Officer vs. M.K. Mohammed Kunhi which was also relied upoin in Chandra Paper Industries vs. DCTO and others has held that the Income Tax Appellate Tribunal have the power to grant stay as incidental or ancillary to its Appellate jurisdiction even though there is no such empowerment conferred on the Appellate Tribunal in the Income Tax Act. With due respect, these judgments are not applicable in the present case as the issue in hand is not whether this Appellate Tribunal has power to grant stay or not but is whether this Tribunal can entertain a Misc. Application moved after a final order has been passed by it in an appeal. Therefore judgments cited by the learned counsel for the Directorate of Enforcement have no relevance in this case.

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In view of the above it is held that the Misc. Applications no. MP-PMLA-2561/CHD/2016 (Misc.) & MP-PMLA-2562/CHD/2016 (Misc.) are not maintainable and are accordingly dismissed.

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The Misc. Applications no. MP-PMLA-2507/CHD/2016 (U/s 35) & MP-PMLA-2507A/CHD/2016 (U/s 35) moved by the applicants in the main appeals for implementation of the order dated 09.09.2015 of this FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014 Page 10 of 11

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Appellate Tribunal are allowed and the respondent in the main appeals are directed to release/handover the possession of the attached properties, possession of which was taken by the Directorate of Enforcement, to the appellants within a period of one month from the date of this order, along with accretions, if any. With these orders all the pending applications are disposed of.

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Parties to bear their own cost.

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(Justice Manmohan Singh) Chairman

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(G.C. Mishra) Member (B.K. Bansal) Member New Delhi, 6^th October , 2016 ‘R’

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FPA-PMLA-574/CHD/2014 & FPA-PMLA-575/CHD/2014

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Page 11 of 11