Karampal Goyal and Nirmala Devi V. Assistant Director, Directorate of Enforcement

CRM-M/693/2011

AI Insights

The case involves two petitions filed by Karampal Goyal and Nirmala Devi against the provisional attachment orders issued under the Prevention of Money Laundering Act, 2002 (PMLA). The petitions challenged the summoning order dated 08.12.2010 and subsequent proceedings. The primary legal issue was whether the petitioners could bypass the statutory appeal process under the PMLA and seek relief under Section 482 of the Cr.P.C. The court found that the petitioners had an alternative statutory remedy under the PMLA, which they failed to utilize. Additionally, the court addressed the issue of whether the 150-day period for provisional attachment should be extended due to delays caused by court proceedings, ruling that such delays should not prejudice the respondents.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 806029 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 10-01-2012
• Assessment Year: misc
• Other Referred Cases: V.Suryanarayana Prabhakara Gupta and another v. Union of India and others (Writ Petition No. 27898 of 2010)
• Laws Referred To: Prevention of Money Laundering Act, 2002, Code of Criminal Procedure, 1973, Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAJIV AWASTHY
• Assessee Lawyers: SUNIL CHADHA
• Keywords: High Court jurisdiction; Money laundering; Provisional attachment; Quashing of summoning order; Appeal to Appellate Tribunal
• Section: 5; 26; 42; 50; 482

Judgement Text

"CRM M 693 of 2011 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH -- Date of decision: 10.01.2012 1. CRM M 693 of 2011 Karampal Goyal ........ Petitioner Versus Assistant Director, Directorate of Enforcement .......Respondent(s) 2. CRM M 13453 of 2011 Nirmala Devi ........ Petitioner Versus Assistant Director, Directorate of Enforcement .......Respondent(s) Coram: Hon'ble Ms Justice Nirmaljit Kaur -.- Present: Mr. Sunil Chadha, Advocate for the petitioner Mr. Rajiv Awasthy, Advocate for the respondent -.- 1. Whether Reporters of local papers may be allowed to see the judgement? 2. To be referred to the Reporter or not? 3. Whether the judgement should be reported in the Digest? Nirmaljit Kaur, J. Both the aforementioned petitions shall be disposed of by this common order having been filed against the same order dated 08.12.2010 CRM M 693 of 2011 2 (P4) as the question involved in these petitions is identical. However, for the sake of arguments, the facts are being taken from CRM M 693 of 2011. The petitioner herein has filed a petition under section 482 Cr.P.C for quashing of the order dated 08.12.2010 (P4) as well as all the subsequent proceedings taken in pursuance thereof, which is a summoning order passed by the respondent in exercise of the powers conferred upon under sub section (2) and sub Section (3) of Section 50 of the Prevention of Money Laundering Act, 2002 (herein after to be called as Act, 2002) After noticing the arguments of learned counsel for the petitioner, notice of motion was issued on 12.01.2011 for 24.02.2011. In response thereto, reply was filed in the registry on 25.05.2011. Meanwhile, the matter was listed for hearing before the Adjudicating Authority as per Section 5(5) of the Act, 2002 on 26.06.2011. Accordingly, learned counsel for the petitioner moved an application before this Court seeking stay of the proceedings. However, on 07.06.2011, learned counsel for the respondent gave an undertaking before this Court that the final order shall not be passed till the next date of listing. On 12.07.2011, learned counsel for the respondent also moved an application for pre-poning the date of hearing from 24.08.2011 to an early date as the period of limitation prescribed under the Act was going to expire on 05.08.2011. However, this Court declined to prepone the said date of hearing vide order dated 15.07.2011. Learned counsel for the respondent, at the very outset, raised the preliminary objection that the petitioner has come before this Court under Section 482 Cr.P.C. for quashing of the summoning order dated 08.12.2010 (P4) as well as all the subsequent proceedings initiated under the Act, 2002 but the CRM M 693 of 2011 3 said proceedings under the Act, 2002 were quasi judicial in nature and there was a specific provision for filing of an appeal before the Appellate Tribunal against the order of the Adjudicating Authority constituted under the Act, 2002. Thus, the present petition was liable to be dismissed on the ground of alternative statutory remedy available to the petitioner under the Act,2002. After hearing learned counsel for the parties at length on the preliminary objection raised by the learned counsel for the respondent, this Court finds merit in the arguments raised by the learned counsel for the respondent. Chapter III of the Act, 2002 deals with Attachment, Adjudication and Confiscation of property. Section 5 of the Act, 2002 is reproduced hereunder:- “5. Attachment of property involved in money- laundering.-- (1) Where the Director, or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that— (a) any person is in possession of any proceeds of crime; (b) such person has been charged of having committed a scheduled offence; and (c) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one CRM M 693 of 2011 4 hundred and fifty days from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other officer so authorised by him, as the case may be, shall be deemed to be an officer under sub- rule (e) of rule 1 of that Schedule: Provided that no such order of attachment 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 cognisance of the scheduled offence, as the case may be; Provided further that, notwithstanding anything contained in Clause (b) any property of any person may be attached under this Section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this Section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act. (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as CRM M 693 of 2011 5 may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under sub- section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (2) of section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation.- -For the purposes of this sub- section, \"person interested\", in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub- section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority. It is evident from sub Section (3) of Section 5 above that the such property can be seized for a period not exceeding 150 days from the date of the order in the manner provided in the Second schedule of the Income Tax Act, 1961. Thus, the time period has been fixed i.e.150 days to comply with the orders of provisional attachment by the Competent Authority/Enforcement Director as prescribed under the Act, 2002. Section 26 of the Act, 2002 provides an opportunity of appeal to the Appellate Authority against the order made by the Adjudicating CRM M 693 of 2011 6 Authority under the Act, 2002. Section 26 reads thus:- “26. Appeal to Appellate Tribunal.-- (1) Save as otherwise provided in sub-section (3), the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act, may prefer an appeal to the Appellate Tribunal. (2) Any banking company, financial institution or intermediary aggrieved by any order of the Director made under sub-section (2) of section 13, may prefer an appeal to the Appellate Tribunal. (3) Every appeal preferred under sub-section (1) or sub- section (2) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or Director is received and it shall be in such form and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may, after giving an opportunity of being heard entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. (4) On receipt of an appeal under sub-section (1) or sub- section (2), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. (5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Director, as the case may be. (6) The appeal filed before the Appellate Tribunal under CRM M 693 of 2011 7 sub-section (1) or sub-section (2) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of filing of the appeal.” The Act, 2002 has also provided the remedy of an appeal under Section 42 of the Act against the order of the Appellate Tribunal to the High Court. Section 42 of the Act,2002 reads thus:- “42. Appeal to High Court.-- Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. Learned counsel for the petitioner, however, does not dispute that the statutory remedy of an appeal is provided under the Act, 2002. In fact, in the present case as of now, only immoveable properties as mentioned in the summon order have been attached and complaint No. 89 of 2011 under Section 5(5) of the Act, 2002 has been instituted before the Chairperson, Adjudicating Authority under the Act, 2002. A notice has been sent to the petitioner from New Delhi Bench of Adjudicating Authority, New Delhi for appearance on 08.06.2011 in the said complaint. As such, the petitioner has the liberty and the right to file response to the CRM M 693 of 2011 8 said notice under the Act, 2002. After giving proper opportunity, the Adjudicating Authority may or may not confirm the orders of provisional attachment of the property. In case, any adverse order is passed, the petitioner still has a right to file an appeal before the Appellate Tribunal under Section 26 of the Act, 2002 and if the petitioner is still not satisfied by the order passed by the Appellate Tribunal, the petitioner has a remedy of an appeal before the High Court under section 42 of the Act, 2002. Although, learned counsel for the petitioner does not dispute with respect to the above remedies available to him under the Act, has objected on the ground that the time period of 150 days as laid down in sub Section (3) of Section 5 of the At, 2002 has since lapsed and, as such, the complaint cannot be adjudicated upon by the Adjudicating Authority. The said argument of the learned counsel for the petitioner has no merit in view of the fact that after following due procedure as laid down under Section 5 of the Act, 2002, the matter has finally reached the Adjudicating authority and was listed for hearing on 26.08.2011. The stipulated time was to expire on 05.08.2011. However, the same was not taken up for hearing in view of the undertaking given by the learned counsel for the respondent before this Court on 07.06.2011. Learned counsel for the respondent had moved an application on 12.07.2011 in the present case, seeking preponement of the date of hearing. However, the same was dismissed by this Court. As such, the delay caused on account of proceedings pending before this Court cannot cause prejudice to the respondent. Thus, the period from the date, the learned counsel for the respondent gave an undertaking till the passing of the order has to be CRM M 693 of 2011 9 excluded from the stipulated period of 150 days as provided under the Act, 2002. Learned counsel for the respondent has also relied on the judgement rendered by the Andhra Pradesh High Court in the case of V.Suryanarayana Prabhakara Gupta and another v. Union of India and others (Writ Petition No. 27898 of 2010), wherein, question as to whether the order of provisionally attachment passed by the Enforcement Director ceases to have effect after expiry of period of 150 days as provided under sub Section (1) of the Section 5 of Act, 2002 on the ground of interim stay granted by the Court, was held thus:- “In the instant case, the notice issued by the adjudicating authority under sub section (10 of Section 8 has also been stayed on 10.11.2010 along with the provisional orders of attachment passed by the Enforcement Director under Sub Section (1) of Section 5. Undoubtedly, the period of 150 days, reckoned from 21.10.2010 has already expired. It is appropriate to notice that this Court passed an order on 10.11.2010 granting interim stay as prayed for by the petitioners. Therefore, by virtue of the operation of the order passed by this Court on 10.11.2010, the further process ofo the adjudicating authority for determining the lis under sub section (2) has been settled. In such circumstances, can the order of this Court passed on 10.11.2011 be construed as causing prejudice to the respondents? The answer in this regard is not hard to seek. The principle is rested upon a public policy enunciated ini the maxim 'actus curiae neminem gravabit”. This maxim is founded upon justice and good sense and also affords safe and certain guide for the administration of CRM M 693 of 2011 10 law. By virtue of the intervention of a Court, which intended to examine the veracity of the claim made in the case, no party can be construed to have been prejudice by the delay that occasioned in testing the question by the Court. Since, the order that was passed by this Court on 10.11.2010, is likely to cause prejudice to the respondents, it is only appropriate for this Court to declare that the time between 10.11.2010 up to today, shall be excluded from reckoning for purposes of sib Section (3) of Section 5 of the PML Act.” The principle laid down shall also be applicable in the facts of the present case. The delay caused on account of the proceedings having been stalled on the statement made by the learned counsel for the respondent before this Court which he later on sought to rectify by moving an application for preponing of the date of hearing, cannot be used to prejudice the respondents. Thus, the period from the date when the learned counsel for the respondent gave an undertaking before this Court i.e. 07.06.2011 till the passing of the order shall have to be excluded from the stipulated time period of 150 days as provided under the Act, 2002 for the purpose of sub Section (3) of Section 5 of the Act, 2002. In view of the facts of the case and foregoing discussion, the present petitions are disposed of with liberty to the petitioner to file his reply/response to the notice dated 20.04.2011 (P8) served by the New Delhi Bench of Adjudicating Authority, New Delhi, if not already responded to. The Adjudicating Authority thereafter, shall proceed to decide the matter after giving proper opportunity of hearing to the petitioner as per principle of natural justice and shall not be prejudiced by the fact that the present petitioner did not submit his stand/objection before the Enforcement CRM M 693 of 2011 11 Director. Disposed of in the above terms. Photo copy of this order be placed on the connected file. (Nirmaljit Kaur) Judge 10.01.2012 mohan "