FPA-PMLA-2410/PTN/2018 of Bharat Yadav v/s The Deputy Director, Directorate of Enforcement, Patna

ATFP3 Apr 2019FPA-PMLA-2410/PTN/2018

Case brief

AI extract

What is this about?

The Tribunal held that despite the appellant's acquittal on scheduled offences, the Special Court had already taken cognizance of the money laundering case. Relying on PMLA provisions, it ruled that the Special Court, not the Tribunal, has exclusive power to confiscate, release, or restore attached property. Consequently, the appeal was kept in abeyance.

What did the court decide?

Appeal kept in abeyance pending final order by Special Court; interim orders vacated.

FPA-PMLA-2410/PTN/2018 of Bharat Yadav v/s The Deputy Director… — Money Laundering | ATFP (2019)

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APPELLATE TRIBUNAL FOR SAFEMA, FEMA, NDPS, PMLA & PBPT ACT AT NEW DELHI

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DATE OF DECISION: 03.04.2019

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FPA-PMLA-2410/PTN/2018 Bharat Yadav	…	Appellant
FPA-PMLA-2642/PTN/2018
Amit Kumar	…	Appellant
FPA-PMLA-2643/PTN/2018 Smt. Satyabati Devi	…	Appellant
Versus
The Deputy Director,
Directorate of Enforcement, Patna	…	Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellants	:	Ms. Sonia Mathur, Sr. Advocate Shri Naushad Alam, Advocate Shri Jitendra Bharti, Advocate Ms. Noor Rampal, Advocate Ms. Divya Nair, Advocate
For the Respondent	:	Shri S.K. Sharma, Advocate
CORAM
SMT. ANANYA RAY	:	MEMBER
JUDGMENT

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FPA-PMLA-2410/PTN/2018, FPA-PMLA-2642/PTN/2018 & FPA-PMLA2643/PTN/2018

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An appeal has been filed by the above appellants against the impugned order O.C. 873/2018 dated 30.05.2018 wherein attachment of 14 (fourteen) immoveable properties and 2 (two) moveable properties was confirmed. The allegation was that various moveable and immoveable properties both in the name of Bharat Yadav and the other appellants who

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are also his family members were acquired from the proceeds of crime which are scheduled offences under PMLA. The chargesheets are (a) 40/2012 dated 31.03.2012 for offences under Section 302 of the IPC and (b) 318/2013 dated 30.09.2013 for offences under Section 420, 414, 467, 471 etc. of the IPC.

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I have heard both the parties and also perused the written submissions given both before the hearing as well as after the hearing. The appellants‟ main plea was to allow the appeal on the ground that the offences committed by Shri Bharat Yadav have already been tried by the Session Court/Chief Judicial Magistrate and in both these cases he has been acquitted. Hence, once there is no scheduled offence, they stated, there cannot be proceeds of crime and therefore the attachment of the properties which have been held to be proceeds of crime is liable to be set aside and the attachment released. They relied on the following judgments:

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i. Judgment dated 06.06.2018 passed by this Hon‟ble Tribunal in FPA/1620/BNG/2017

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ii. Judgment dated 06.06.2018 passed by this Hon‟ble Tribunal in FPA/1496/BNG/2016

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iii. Judgment dated 06.06.2018 passed by this Hon‟ble Tribunal in FPA/1465/BNG/2016

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iv. Judgment dated 13.04.2018 passed by this Hon‟ble Tribunal in FPA/1748/DLI/2017

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I would deal with this issue first. Section 44 of PMLA which enumerates the powers of the Special Court under the PMLA reads as under:

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“44(1)(a); an offence punishable under Section 4 and any scheduled offence connected to the offence under that Section shall be triable by the Special Court constituted for the area in which the offence has been committed.”

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Section 43(1) of the PMLA prescribes that the Central Government in consultation with the Chief Justice of the High Court shall for trial of offence punishable under Section 4 by notification designate one or more Courts of Session as Special Court or Special Courts for such area or areas or for such case or class or group of cases as may be specified in the notification. Section 43(2) further prescribes that the Special Court shall also try an offence (other than the offence of money laundering) with which the accused may under the Code of Criminal Procedures be charged at the same trial. A reading of both these provision would make it amply clear that the Special Court designated for the purpose will try both the offence of money laundering as well as the scheduled offence. This was reaffirmed by the Hon‟ble Supreme Court in the case of Nikesh Tarachand Shah vs. Union of India WP (Criminal) No. 67 of 2017 dated 23.11.2017.

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“8. Under Section 5 of the Act, attachment of such property takes place so that such property may be brought back into the economy……….. Section 44 is very important in that the Section provides for the trial of a schedule offence and (emphasis added) the offence of money laundering together by the same Special Court, which is to try such offences under the Code of Criminal Procedure as if it were a court of sessions.”

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From the facts of the case, it is indisputable that the Court of Additional District and Session Judge, Special Court, Munger and the Chief

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Judicial Magistrate, Munger while acquitting Shri Yadav in the said two offences have not at all examined Section 4 of PMLA alongwith the schedule offence as mandated under Section 44 of PMLA and upheld by the Supreme Court. Hence, it cannot be said that the acquittal has attained finality.

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On merits, the appellants‟ plea was that they were involved in construction as well as had retail licenses for liquor sale since 2002 till March, 2016 (when the retail sale of liquor was banned in the State of Bihar) and this generated enough revenue for them to invest in properties. They also took a plea that many of the properties were purchased before coming into force of PMLA and that PMLA does not have retrospective effect. They relied on the judgment of Delhi High Court in the case of Arun Kumar Mishra vs. Directorate of Enforcement dated 09.04.2015 and Delhi High Court judgment in the case of M/s. Mahanivesh Oils & Foods Pvt. Ltd. vs. Directorate of Enforcement, although they fairly agreed that an LPA against the same has been filed. The other plea that the appellants took was that there was no reason to believe which is an essential ingredient before any property can be attached. They have also given a written submission after the conclusion of the hearing.

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In response, the learned counsel for the respondent has stated that Shri Bharat Yadav had a history of cases booked against him including serious crimes like under the Arms Act which is also a schedule offence although he fairly agreed that the present order does not emanate from the same. He stated that the source of money for acquisition of the said properties does not stand the test of reality. While Bharat Yadav has not maintained any books of accounts in respect of the liquor business held in his name or in the name of his family members and have not submitted any

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details thereof while the onus was on them, the information that was culled out from the ITRs of the appellant and from the Income Tax department showed the income of Bharat Yadav to be Rs. 21,87,410/- which if added with the income of the construction companies i.e. M/s. Jai Maa Kali Construction, M/s. Rani Construction and M/s. Khushboo Construction comes to only Rs. 38,66,773/- which is much less compared to the total value of the moveable and immoveable properties of Rs. 4,23,61,990/- for which they have not given any explanation. In his written submissions submitted after the hearing, the learned counsel for the respondent has also mentioned that a case has been filed by the ED before the Special Court set up under PMLA and the court has already taken cognizance of the same and summons have been issued to the appellants.

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While both the appellants and the respondents have argued at length on the merits of the case, however I think it necessary to first deal with the issue of the Special Court taking cognizance of the case. As per Section 44(1)(a) of PMLA “an offence punishable under Section 4 and any scheduled offence connected to the offence under that Section shall be triable by the Special Court constituted for the area in which the offence has been committed.………..” The above therefore implies that whoever commits the offence of money laundering shall be tried by the Special Court. Section 3 of PMLA, 2002 defines what an offence of money laundering is. Section 5(b) states that such proceeds of crime are likely to be……….. or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime………… In the present case, the Special Court has already taken cognizance and hence is therefore pending before the said court. Section 8(5) of PMLA reads as “where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence

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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.” Section 8(6) further states “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 entitle to receive it.” Section 8(8) second proviso reads “provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of the restoration of such properties during the trial of the case in such manner as may be prescribed.” Hence, it is the Special Court only who can adjudge on the offence of money laundering and the money laundering necessarily relates to „the proceeds of crime‟ only.

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It is pertinent to note that Section 8 deals with adjudication by the adjudicating authority which as per Section 8(3) authorizes, the adjudicating authority to confirm the attachment of the property if it is involved in money laundering. Hence, while the attachment powers are with the adjudicating authority the power to confiscate, release or restore to a claimant of the said property lies specifically with the Special Courts. This Tribunal has not been assigned any specific powers under PMLA, 2002 with relation to confiscation, release or restoration of the property attached. Since the Special Court has initiated the proceedings in the present case and taken cognizance of the same, it is my considered view that the Special Court has to decide the case including the offence of money laundering as discussed above, which in any case only the Special Court can decide and not the Appellate Tribunal. The scheme of things as it exists under the PML Act shows that it is the same property which can be provisionally attached,

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thereafter this attachment can be confirmed by the adjudicating authority, that the order with regard to the same property would become final after an order of confiscation is passed by the Special Court (Section 8(3)(b), or released or restored as per Section 8(6) or Section 8(8) second proviso as the case may be.

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In this background, it would be appropriate to keep this appeal in abeyance until the Special Court who has already taken cognizance finally disposes of the case. The interim orders are also vacated. Both the parties are directed to inform this tribunal as and when the final order is pronounced by the Special Court.

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(Ananya Ray) Member

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New Delhi, 3^rd April, 2019

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„A‟

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FPA-PMLA-2410/PTN/2018 of Bharat Yadav v/s The Deputy Director, Directorate of Enforcement, Patna

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FPA-PMLA-2410/PTN/2018 of Bharat Yadav v/s The Deputy Director, Directorate of Enforcement, Patna

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