Rajanikanta Pattnaik V. Union of India and others

WP(C)/2099/2024

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Rajanikanta Pattnaik, the petitioner, challenged a notice issued under Section 8(1) of the PMLA, which was part of proceedings related to his alleged involvement in scheduled offenses under the same act. The notice required him to explain the source of his income and assets used to acquire property that was provisionally attached. The petitioner argued that being in custody hindered his ability to respond to the notice, a claim the court rejected, citing that he was capable of filing the writ petition. The Enforcement Directorate opposed the petition, highlighting that the legal framework and previous court decisions supported the issuance of the notice. The court dismissed the writ petition, reinforcing the statutory obligation to respond to the notice and the procedural integrity of the PMLA.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 816278 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 12-03-2024
• Assessment Year: misc
• Other Referred Cases: Vijay Madanlal Choudhary and others Vs. Union of India and others, Hyundai Motor India Limited Vs. the Deputy Commissioner of Income Tax
• Laws Referred To: Prevention of Money Laundering Act, 2002
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GOPAL AGRAWAL
• Assessee Lawyers: DEEPALI MAHAPATRA
• Keywords: Prevention of Money Laundering Act; Proceeds of Crime; Provisional attachment; Show cause notice
• Section: 45; 8(1); 5(1)

Judgement Text

" Page 1 of 5 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 2099 OF 2024 Rajanikanta Pattnaik .... Petitioner Miss Deepali Mahapatra, Advocate -versus- Union of India and others …. Opp. Parties Mr. Gopal Agrawal, Advocate (For Enforcement Directorate) CORAM: JUSTICE K.R. MOHAPATRA ORDER Order No. 12.03.2024 4. 1. This matter is taken up through hybrid mode. 2. Petitioner in this writ petition prays for setting aside notice dated 7th December, 2023 (Annexure-9) issued under Section 8(1) of the Prevention of Money Laundering Act, 2002 (for brevity ‘PML Act’). 3. Miss Mahapatra, learned counsel for the Petitioner submits that the property of the Petitioner cannot be attached in connection with the schedule offence under PML Act unless it is determined by the competent Court that the property attached is proceeds of crime. The same can only be established if the Petitioner is convicted for commission of scheduled offences alleged against him. Therefore, she submits that the notice under Annexure-9 of the PML Act is without jurisdiction and is liable to be set aside. 3.1 It is her submission that the Petitioner is in custody since 7th September, 2023 in connection with the scheduled offences under PML Act and PML Case No.16 of 2023 pending before Digitally Signed Signed by: SASANKA SEKHAR SATAPATHY Designation: A.R.-CUM-SR. SECRETARY Reason: Authentication Location: HIGH COURT OF ORISSA CUTTACK Date: 13-Mar-2024 18:29:06 Signature Not Verified // 2 // Page 2 of 5 Special Court, Bhubaneswar. Although the Petitioner moved this Court to enlarge him on bail in BLAPL No.11879 of 2023, but the said application was rejected vide order dated 16th February, 2024. As such, the Petitioner being in custody is handicapped to file reply to the show cause notice under Annexure-9. Hence, the Petitioner should not be insisted upon filing the reply to the said show cause notice. Thus, the notice under Annexure-9 is premature and is liable to be set aside. 4. Mr. Agrawal, learned counsel for the Enforcement Directorate vehemently opposes the above submission, as the same has no legal basis. The issue raised in this writ petition has already been raised and answered by this Court in BLAPL No.11879 of 2023, wherein, this Court relying on a decision of the Hon’ble Supreme Court in the case of Vijay Madanlal Choudhary and others Vs. Union of India and others; reported in (2022) SCC Online SC 929, held as under: - “9. There appears certain restriction for grant of bail under PMLA which has been provided in Section 45 of PMLA. One of such restrictions is that where Public Prosecutor opposes the bail application, the Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is unlikely to commit any offence while on bail. With regard to compliance of Sec. 45 of PMLA, it is, however, argued by learned counsel for the petitioner by referring to the decision in Vijay Madanlal Choudhary (supra) that all the properties recovered or attached by the investigating agency in connection with criminal activity relating to scheduled offence under general law cannot be regarded as proceeds of crime within the meaning of Section 2(1)(u) of PMLA. It is true that the possession of unaccounted property acquired by a person through legal means cannot be regarded as proceeds of crime, but if the same is prima facie found to be proceeds of crime, the provision of PMLA will get Digitally Signed Signed by: SASANKA SEKHAR SATAPATHY Designation: A.R.-CUM-SR. SECRETARY Reason: Authentication Location: HIGH COURT OF ORISSA CUTTACK Date: 13-Mar-2024 18:29:06 Signature Not Verified // 3 // Page 3 of 5 attracted. In the present case, on a conspectus materials placed on record together with the allegations leveled against the petitioner in the complaint and the admitted facts of the property recovered in relation to commission of scheduled offence as a “proceeds of illicit Drugs” being attached U/S.68(2) of NDPS Act by Competent Authority and Administrator SAFEM (FOP) A, 1976, Kolkata which is under challenge before the Appellate Tribunal for forfeited property, New Delhi in Appeal No.503 of 2022, this Court is of the considered view that the ED Authorities have collected sufficient materials to show that the property derived by the petitioner prima facie constitute “proceeds of crime” which is of course subject to prove in accordance with law in the trial and therefore, this Court at this stage is unable to record satisfaction of the mandatory conditions of Section 45 of PMLA to grant bail to the petitioner. Hence, the bail application of the petitioner stands rejected.” (emphasis supplied) In the instant case, charge sheet has already been submitted against the Petitioner and he is in custody. Thus, the plea of learned counsel for the Petitioner that the property in question should not be attached does not hold good. He further submits that the notice under Annexure-9 has been issued under Section 8(1) of the PML Act, which is a statutory notice. Adjudicating authority is under legal obligation to issue such notice when there is an order of provisional attachment. It is further submitted that there is no impediment on the part of the Petitioner to file reply to the show cause notice under Annexure-9. As such, the writ petition is misconceived and should be dismissed. 5. Taking note of the contentions of the parties, this Court finds that the property provisionally attached under Section 5(1) of the PML Act. Hence, notice under Section 8(1) of the said Act (PML Act) has been issued to indicate the source of his earning, income and assets out of which or by means of which the Digitally Signed Signed by: SASANKA SEKHAR SATAPATHY Designation: A.R.-CUM-SR. SECRETARY Reason: Authentication Location: HIGH COURT OF ORISSA CUTTACK Date: 13-Mar-2024 18:29:06 Signature Not Verified // 4 // Page 4 of 5 Petitioner acquired the property attached under Section 5(1) of PML Act and to show cause as to why the provisional attachment order shall not be confirmed. The Petitioner is under legal obligation to respond to such statutory notice under Annexure-9. No case is made out by the Petitioner to arrive at a conclusion that the notice issued under Section 8(1) of the PML Act is without jurisdiction or incompetent. 9. Miss Mahapatra, learned counsel for the Petitioner contended that the Petitioner being in custody is handicapped to submit reply to the notice to show cause. I don’t find any force in such submission. Since the Petitioner is in a position to move this Court by filing the instant writ petition, this Court finds no reason as to why he is handicapped to submit a reply to the notice under Annexure-9. Be that as it may, the Petitioner should have responded to the notice under Annexure-9 before moving this Court. The issue with regard to “proceeds of crime” has already been raised and answered in BLAPL No.11879 of 2023. Thus, the same requires no reiteration. Madras High Court in the case of Hyundai Motor India Limited Vs. the Deputy Commissioner of Income Tax (W.P. No.22508 of 2017 and WMP No.38346 of 2027 disposed of 16th July, 208) (as relied upon by Mr. Agrawal, learned counsel for the Enforcement Directorate), in para-20 observed as under:- “20. This Court is of a strong opinion that institutional respects are to be maintained by the constitutional Courts. Whenever there is a provision for an appeal under the statute, without exhausting the remedies available under the statute, no writ petition can be entertained in a routine manner. Only on exceptional circumstances, the remedy of appeal can be waived, if Digitally Signed Signed by: SASANKA SEKHAR SATAPATHY Designation: A.R.-CUM-SR. SECRETARY Reason: Authentication Location: HIGH COURT OF ORISSA CUTTACK Date: 13-Mar-2024 18:29:06 Signature Not Verified // 5 // Page 5 of 5 there is a gross injustice or if there is a violation of fundamental rights ensured under the Constitution of India. Otherwise, all the aggrieved persons from and out of the order passed by the original authority is bound to approach the Appellate Authority. The Constitutional Courts cannot make an appeal provision as an empty formality. Every Appellate Authority created under the statute to be trusted in normal circumstances unless there is a specific allegation, which is substantiated in a writ proceedings. Thus, the institutional functions and exhausting the appeal remedies by the aggrieved persons, are to be enforced in all circumstances and writ proceedings can be entertained only on exceptional circumstances. Rule is to prefer an appeal and entertaining a writ is only an exception. This being the legal principles to be followed, this Court cannot entertain the writ petitions in a routine manner by waiving the remedy of appeal provided under the statute.” 9.1 In view of the observation of the Madras High Court, as quoted above, I am of the considered opinion that when the Petitioner is capable of filing a comprehensive reply to the show cause notice under Annexure-9, he should have raised all the grounds for consideration by the adjudicating authority instead of approaching this Court. There being no infirmity in the notice under Annexure-9, the writ petition fails and is accordingly dismissed. Issue urgent certified copy of the order on proper application. (K.R. Mohapatra) Judge s.s.satapathy Digitally Signed Signed by: SASANKA SEKHAR SATAPATHY Designation: A.R.-CUM-SR. SECRETARY Reason: Authentication Location: HIGH COURT OF ORISSA CUTTACK Date: 13-Mar-2024 18:29:06 Signature Not Verified "