Allowed

FPA-PMLA-964/CHD/2015 of Munish Kumar v. The Deputy Director Directorate of Enforcement, Chandigarh

ATFP3 May 2019FPA-PMLA-964/CHD/2015

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed appeals filed under Section 26 of the Prevention of Money Laundering Act, 2002. It held that the statutory period for retention of seized property and records under Sections 20 and 21 expired after ninety days as no prosecution complaint was filed, declaring the seizures invalid and ordering them set aside and defrozen.

What did the court decide?

The impugned orders of retention dated 25.05.2015 set aside, seizures declared lapsed, and properties and records ordered to be defrozen.

FPA-PMLA-964/CHD/2015 of Munish Kumar Vs The Deputy Director… — Money Laundering | ATFP (2019)

¶1

APPELLATE TRIBUNAL, PREVENTION OF MONEY LAUNDERING ACT AT NEW DELHI

¶2

Date of Decision: 3" May, 2019

¶3

1) MP-PMLA-3454/CHD/2015 Misc FPA-PMLA-963/CHD/2015 Rajinder Kr.Mittal	Appellant
Versus
The Deputy Director
Directorate of Enforcement, Chandigarh	Respondent
2) FPA-PMLA-964/CHD/2015
Munish Kumar	Appellant
Versus
The Deputy Director Directorate of Enforcement, Chandigarh	Respondent
3) FPA-PMLA-965/CHD/2015
Vineet Goyal	Appellant
The Deputy Director
Directorate of Enforcement, Chandigarh	Respondent
4) FPA-PMLA-966/CHD/2015
Lai Chand	Appellant
Versus
The Deputy Director Directorate of Enforcement, Chandigarh	Respondent
5) FPA-PMLA-967/CHD/2015
Mukesh Mittal	Appellant
The Deputy Director
Directorate of Enforcement, Chandigarh	Respondent
6) FPA-PMLA-968/CHD/2015
Praveen Kumar	Appellant
The Deputy Director
Directorate of Enforcement, Chandigarh	Respondent

¶4

Page lot 10

¶5

FPA-PMLA-963-969/CHD/2015

¶6

MP-PMLA-3455/CHD/2015 Misc FPA-PMLA-969/CHD/2015 Shri Ram Dharmarth Trush (Morinda)... Appellant

¶7

Versus

¶8

The Deputy Director Directorate of Enforcement, Chandigarh... Respondent

¶9

Advocates/Authorized Representatives who appeared

¶10

For the Appellant: Mr. Saurabh Kapoor, Advocate Mr. Mayank Jain, Advocate Ms. Aakriti Dhawan, Advocate

¶11

For the Respondent:Mohd. Faraz, Advocate

¶12

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

¶13

JUDGEMENT

¶14

FPA-PMLA-963-969/CHD/2015

¶15

1.The above-mentioned appeals have been filed under Section 26 of the Prevention of Money Laundering Act, 2002 against the Order of Original

¶16

Application no. 24/2015 dated 25.05.2015.

¶17

2.The operative part of the order is mentioned in paras 14 to 17, which

¶18

read as under:-

¶19

"14. Further, during the proceedings it is seen that following discrependes are there

¶20

i. Certain defendants have been repeated.

¶21

li It has been conveyed by the defendants that certain persons who have been made defendants have expired.

¶22

Hi. It was pointed out during proceedings that there are certain joint accounts also.

¶23

iv. Defendants pointed out during arguments that certain accounts have been closed, certain accounts did not exist, and certain accounts are in-operative.

¶24

FPA-PMLA-963-969/CHD/2015Page 2 of 10

¶25

Initially when O.A. was sent only two defendants were made and O.A. showed a large no. Of bank accounts of various persons other than these two persons. Later on a total of 43 defendants were made by Applicant. Such things should be avoided infuture."

¶26

a15. It is expected of applicant that when he conducts further enquiries and investigation that he will ensure proper investigation and follow due approach. Such lapses should not occur again. Further if Applicant wants to proceed against deceased person, his legal heirs are required to be made party. And in case ofjoint accounts all the

¶27

joint accounts holders should be made party and the notices should be properly served on all such persons before conducting further enquiries and conducting further investigations. The Applicant should not only to be fair but also appear to be fair while conducting enquiries and investigations. Applicant should avoid such glaring lapses also."

¶28

"16. Both sides will co-operate with each other in investigations for fair play & for action in accordance with law."

¶29

"17. Keeping in view the facts conveyed in 0.A, submission of both the side, prima facie case for allowing O.A. is made out."

¶30

1. While allowing the retention appliction, following directions are issued in

¶31

para 21, which is also reproduced hereunder:-

¶32

"21. The Order shall:

¶33

(a)continue during the pendency of proceedings relating to any offence under this Act before a court or under corresponding law of any other country before competent court of criminal jurisdiction outside India as the case may be;

¶34

(b)become final after an order of confiscation is passed under sub-section (5} /(6) and sub-section (7) of section 8 or section 58B of sub-section (2A) of section 60 by the Adjudicating Authority."

¶35

The impugned order was passed on 25.05.2015. More than 3 year and 11 months have been passed. No prosecution complaint has been filed against the appellants. The said fact has been admitted by the learned counsel for the respondent, who has made the statement after verifying the same from the records.

¶36

FPA-PMLA-963-969/CHD/2015Page 3 of 10

¶37

Section 17 of PMLA, 2002 reads as under:

¶38

"17 Search and seizure. —(1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person — (i) has committed any act which constitutes moneylaundering, or

¶39

(ii) is in possession of any proceeds of crime involved in money-laundering, or (Hi) is in possession of any records relating to moneylaundering, (or)

¶40

(iv) is in possession of any property related to crime]

¶41

then, subject to the rules made in this behalf, he may authorize any officer subordinate to him to -

¶42

(a)enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept;

¶43

(b)break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available;

¶44

(c)seize any record or property found as a result of such search;

¶45

(d)place marks of identification on such record or [property, if required or] make or cause to be made extracts or copies therefrom;

¶46

(e)make a note or an inventory of such record or property;

¶47

(f)examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act:

¶48

[Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an

¶49

FPA-PMLA-963-969/CHD/2015Page 4 of 10

¶50

officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.]

¶51

1(1A) Where it is not practicable to seize such record or property, the officer authorised under sub-section (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned:

¶52

Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of Section 8 or Section 58B or sub-Section (2A) of Section 60, it becomes practical to seize a frozen property, the officer authorised under sub-Section (1) may seize such property.]

¶53

(2) The authority, who has been authorized under subsectionfl) shall, immediately after search and seizure [or upon issuance of a freezing order] forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reason and material for such period, as may be prescribed. (3) Where an authority upon information obtained during survey under section 16, is satisfied that an evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence. Provided that no authorization referred to in subsection (1) shall be requiredfor search under this subsection. (4) The authority seizing any record or property under subSection (1) or freezing any record or property under sub-Section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-Section (1) or for continuation of the order offreezing served under sub-Section (1A), before the Adjudicating Authority.].

¶54

Section 18 of PMLA, 2002 reads as under:

¶55

U18. Search of persons. —

¶56

FPA-PMLA-963-969/CHD/2015Page 5 of 10

¶57

[1} If an authority, authorised in this behalf by the Central Government by general or special order, has reason to believe (the reason for such belief to be recorded in writing) that any person has secreted about his person or in anything under his possession, ownership or control, any record or proceeds of crime which may be useful for or relevant to any proceedings under this Act, he may search that person and seize such record or property which may be useful for or relevant to any proceedings under this Act:

¶58

[Provided that no search of any person shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be.]

¶59

(2} The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed.

¶60

(3)Where an authority is about to search any person, he shall, if such person so requires, take such person within twenty-four hours to the nearest gazetted officer, superior in rank to him, or a Magistrate:

¶61

Provided that the period of twenty-four hours shall exclude the time necessary for the journey undertaken to take such person to the nearest gazetted officer, superior in rank to him, or Magistrate's Court.

¶62

(4)If the requisition under sub-section (3) is made, the authority shall not detain the personfor more than twenty-four hours prior to taking him before the Gazetted Officer superior in rank to him, or the Magistrate referred to in that sub-section:

¶63

Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of detention to the office of the Gazetted Officer, superior in rank to him, or the Magistrate's Court.

¶64

(5} The Gazetted Officer or the Magistrate before whom any such person is brought shall, if he sees no reasonable ground for search, forthwith discharge such person but otherwise shall direct that search be made.

¶65

(6)Before making the search under sub-section (1) or sub section (5) the authority shall call upon two or more persons to attend and witness the search, and the search shall be made in the presence of such persons.

¶66

(7)The authority shall prepare a list of record or property seized in the course of the search and obtain the signatures of the witnesses on the list.

¶67

FPA-PMLA-963-969/CHD/2015Page 6 of 10

¶68

(8)No female shall be searched by any one except a female.

¶69

(9)The Authority shall record the statement of the person searched under sub-section (1) or sub-section (5) in respect of the records or proceeds of crime found or seized in the course of the search:^* [***]

¶70

(10)The authority seizing any record or property under sub section (1) shall, within a period of thirty days from such seizure, file an application requesting for retention of such record or property, before the Adjudicating Authority.

¶71

Sub-section (11. (2) and (3) of Section 20 read as under:-

¶72

Retention of property.—

¶73

(1)Where any property has been seized under section 17 or section 18 or frozen under sub-Section (1A) of Section 17 and the officer authorised by the Director in this behalf has, on the basis of material in his possession, reason to believe (the reason for such belief to be recorded by him in writing) that such property is required to be retained for the purposes of adjudication under section 8, such property may, if seized be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such property was seized orfrozen, as the case may be.

¶74

(2)The officer authorized by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the property for purposes of adjudication under section 8, forward a copy of the order along with the material in his possession, referred to in sub-section (1), to the Adjudicating Authority, in a sealed cover, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed.

¶75

(3)On the expiry of the period specified in sub-section (1), the property shall be returned to the person from whom such property was seized or whose property was ordered to be frozen unless the A^judicating Authority permits retention or continuation of freezing of such property beyond the said period.

¶76

Section 21 of PMLA reads as under:-

¶77

"21. Retention of records. -

¶78

(1) Where any records have been seized, under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the Investigating Officer or any other officer authorised by the Director in this behalf has reason to believe that any of such records are required to be retained for any inquiry under this Act, such records may if seized, be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such records were seized or frozen, as the case may be.

¶79

FPA-PMLA-963-969/CHD/2015Page 7 of 10

¶80

(2)The person, from whom records seized or frozen, shall be entitled to obtain copies of records.

¶81

(3)On the expiry of the period specified under sub-section (1), the records shall be returned to the person from whom such records were seized or whose records were ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such records beyond the said period.

¶82

(4)The Adjudicating Authority, before authorising the retention or continuation of freezing of such records beyond the period specified in sub-section (1), shall satisfy himself that the records are required for the purposes of adjudication under section 8.

¶83

(5)After passing of an order of confiscation [or release under sub-section (5)or sub-section (6) or sub-section (7) of section 8 or section 58B or sub section (2A) of section 60] , the Adjudicating Authority shall direct the release of the records to the person from whom such records were seized.

¶84

(6)Where an order releasing the records has been made by the Court [Adjudicating Authority under section (5) of section 21] the Director or any other officer authorised by him in this behalf may withhold the release of any such record for a period of ninety days from the date of (receipt of] such order, if he is of the opinion that such record is relevant for the appeal proceedings under this Act. ]

¶85

It is clear from the reading of Sections 17 to 21 that outer limit upto the date for deciding the application for retention of property within the meaning of sub-section 4 of Section 21 is 180 days from the date of seizure of any property or records. The said period is not extendable.

¶86

10.The person concerned/aggrieved party of such order, is entitled to file the appeal under Section 26 of the Act. The same shall be heard and after giving an opportunity of being heard, the appellant Tribunal shall pass the order either to confirm the order of retention or to modify or setting aside the same.

¶87

11.Where the Adjudicating Authority decides by an order confirm the retention under Sub-section (1} of Section 17 or Section 18 for the purpose of continuation during investigation for a period not exceeding ninety days under this Act before the Competent Court, or under the corresponding law of any

¶88

FPA-PMLA-963-969/CHD/2015Page 8 of 10

¶89

other countries as the case may be under Sub-section (3) (a) of Section 8 may take necessary action within the time prescribed. In failure to do so under this Act, all the proceedings, seizures /frozen under Section 17 would be lapsed ipso facto.

¶90

It is settled law that if a particular thing is to be done in a particular manner, it must be done in that manner only and none other. Reliance in this regard is also placed on a judgements of Hon^ble Supreme Court in the cases of Dipak Babaria and another vs. State of Gujarat 2014 (3) SCC 502 and J. Jayalalitha & Anr vs State ofKamataka & Ors 2014 (2) SCC 401. 13. The provisions of section 8 (3) (a) provides that the attachment or retention of property or record seized shall continue during the investigation for a period not exceeding ninety days.

¶91

14.It is admitted, position that no prosecution complaint has been filed \ against the Appellant herein. The properties and records of the Appellant were seized only for the purpose of investigation. The period of 90 days as prescribed under section 8 (3) (a) has already elapsed as more than 3 years and 11 months have been expired. No prosecution complaint has been filed by the respondent against the appellants. The said fact has been admitted by the learned counsel for the respondent.

¶92

15.Thus, we allow the appeals. The impugned orders 25.05.2015 in abovementioned appeals is set-aside as the seizure lapses after the expiry of statutory period of ninety days. Admittedly, no prosecution complaint has been filed. The seized properties are defreezed accordingly.

¶93

PPA-PMLA-963-969/CHD/2015Page 9 of 10

¶94

16.Since, we have decided the appeal, in the light of the amendment brought in the statute as mentioned above, hence, we have not gone into other legal issues raised herein.

17.No costs.

(Jwkiice Maniiofiari

(G.C. Mishra) Member

New Delhi,

3"> May, 2019

•skb'