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Appellate Tribunal, Prevention of Money Laundering Act (New Delhi): A Coram of Manmohan Singh (Chairman), J. and G.C. Mishra (Member) allowed an appeal under Section 26 of the Prevention of Money Laundering Act, 2002 against an order passed by the Adjudicating Authority for attaching property.

In the instant case the CBI registered a criminal case under Section 120-B of Penal Code, 1860 read with Sections 7, 12, 13(2) and 13(1)(d) of Prevention of Corruption Act, 1988 against one Joint Director of Enforcement Directorate (ED) wherein it was alleged that he assisted the appellant (herein), indulging in corrupt practices in an investigation. It was also alleged that they had taken a huge amount of bribes as quid-pro-quo for acts of omission and commission during the said investigation. As a result, the appellant was arrested by CBI and a charge sheet was filed against him. On the basis of the registration of the case by CBI, a Prevention of Money Laundering Act, 2002 (PMLA) case was also recorded at New Delhi. The ED provisionally attached the immovable property of the appellant which was confirmed by the Adjudicating Authority.

The respondent’s counsel, Shilpi Satyapriya Satyam, contended that the aforesaid property was attached as a “value thereof” in accordance with provision made under Section 2(1)(u) read with Section 2(1)(v) of the PMLA. The counsel for the appellant, R.K. Handoo, drew the attention of the Tribunal to the provision in Section 8(3)(a) of PMLA, 2002 as amended by Act 13 of 2018 which reads as, “a) continue during [investigation for a period not exceeding ninety days or] the pendency of the proceedings relating to any [offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be. On the basis of this the counsel contended that the confirmation order of attachment passed by the Adjudicating Authority did not survive. Also, no prosecution complaint was filed against the appeal, and hence the appeal be allowed.

The Tribunal found, “It is strange to note here that an immovable property of a person has been made part of a prosecution complaint for confiscation without making that person as a party and affording that person an opportunity to defend his case.” It was further noted, “Section 8(3)(a) of PMLA has been amended by the Act 13 of 2018, wherein a limitation period has been provided for continuation of attachment or retention of property or record post confirmation of attachment/retention and it is the intention of the legislature not to allow the Investigating Authority to get the property attached or retained the record/documents/items indefinitely in the name of investigation.”

Thus, the appeal was allowed. The Tribunal directed the appellant to move to the concerned Special Court for an appropriate remedy, wherein the Prosecution Complaint was pending and his property was made part and parcel of that complaint.[Sanjay Kumar v. Deputy Director Directorate of Enforcement, New Delhi, 2019 SCC OnLine ATPMLA 9, decided on 12-04-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Appellate Tribunal for Prevention of Money Laundering Act: The Bench of Manmohan Singh, J. (Chairman) and G.C. Mishra (Member) set aside Adjudicating Authority’s order allowing retention of property seized from appellant.

An Enforcement Case Information Report (ECIR) was filed against the appellant, for acting as a mediator and helping two people in providing tax evasion to a set of corporate entities. A search was conducted at appellant’s office under Section 17(1) of Prevention of Money Laundering Act, 2002 on the strong belief that records/documents relating to money laundering could be recovered from his office. Pursuant to seizure of requisite property and documents, the respondent filed an application under Section 17(4) of the Act for retention of the seized property until pendency of the proceedings. The said application was allowed by the Adjudicating Authority. Aggrieved thereby, instant appeal was filed.

Appellant argued that the impugned order was contrary to law as due process mandated under Section 20 of the Act had not been followed by the Enforcement Directorate.

The Court noted that Section 17(4) of the Act mandates that the authority seizing any record or property under Section 17(1) PMLA shall, within a period of thirty days from such seizure, file an application, requesting for retention of such record or property. In the present case, the respondent had filed this application. However, it was further noted that as per Section 20(2) PMLA, immediately after passing of retention order, a copy of the said order along with the material is to be referred to the Adjudicating Authority in a sealed envelope. But no order had been passed under Section 20 (2) of the Act.

It was observed that PML Act is a special Act, provisions of which are very stringent and have to be applied strictly. No different meaning can be given in the absence of ambiguity in any provision. Reliance in this regard was placed on Dipak Babaria v. State of Gujarat, 2014 (3) SCC 502 and J. Jayalalitha v. State of Karnataka, 2014 (2) SCC 401 to hold that if a particular thing is to be done in a particular manner, it must be done in that way and none other. In view thereof, it was held that the impugned order was unsustainable in the eyes of law.[Rajesh Kumar Agarwal v. Directorate of Enforcement, Delhi, 2019 SCC OnLine ATPMLA 1, decided on 06-02-2019]

Case BriefsSupreme Court

Supreme Court: The bench of RF Nariman and SK Kaul, JJ declared Section 45(1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act is involved, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India.

The Conditions that the Court held to be unconstitutional are:

  • Public Prosecutor must be given an opportunity to oppose any application for release on bail;
  • The Court must be satisfied, where the Public Prosecutor opposes the application, that there are reasonable grounds for believing that the accused is not guilty of such offence, and that he is not likely to commit any offence while on bail.

Calling Section 45 of PMLA Act a drastic provision, the Bench said the provision

“turns on its head the presumption of innocence which is fundamental to a person accused of any offence. Before application of a section which makes drastic inroads into the fundamental right of personal liberty guaranteed by Article 21 of the Constitution of India, we must be doubly sure that such provision furthers a compelling State interest for tackling serious crime. Absent any such compelling State interest, the indiscriminate application of the provisions of Section 45 will certainly violate Article 21 of the Constitution.

Senior Advocate Mukul Rohatgi, appearing for the petitioners, argued before the Court that Clauses 43 and 44 of the 1999 Bill, which correspond to Sections 44 and 45 of the present Act, were very differently worded and dealt only with offences under the 2002 Act. He said that the twin conditions laid down as additional conditions for grant of bail were, at this stage, only qua offences under the 2002 Act. However, when Parliament enacted the 2002 Act, this scheme was completely changed in that Section 45 of the Act now spoke only of the predicate/scheduled offence and not the offence under the 2002 Act.

Attorney General AK Venugopal, on the other hand, argued that the twin conditions contained in Section 45 are only in furtherance of the object of unearthing black money and that the Court should, therefore, be very slow to set at liberty persons who are alleged offenders of the cancer of money laundering.

Taking note of the Para 18 of State of Uttar Pradesh v. Amarmani Tripathi, (2005) 8 SCC 21, that laid down the conditions for grant of bail, the Court held that it is obvious that the twin conditions set down in Section 45 are a much higher threshold bar than any of the conditions laid down in para 18 of the said judgment. In fact, the presumption of innocence, which is attached to any person being prosecuted of an offence, is inverted by the conditions specified in Section 45, whereas for grant of ordinary bail the presumption of innocence attaches, after which the various factors set out in paragraph 18 of the judgment are to be looked at.

The Court further noted:

“a classification based on sentence of imprisonment of more than three years of an offence contained in Part A of the Schedule, which is a predicate offence, would have no rational relation to the object of attaching and bringing back into the economy large amounts by way of proceeds of crime. When it comes to Section 45, it is clear that a classification based on sentencing qua a scheduled offence would have no rational relation with the grant of bail for the offence of money laundering and hence, the twin conditions need to be annulled on the basis of the equal protection clause.”

The Court, hence, directed that all the matters that were placed before it, in which bail has been denied, because of the presence of the twin conditions contained in Section 45, will now go back to the respective Courts which denied bail and considering that persons are languishing in jail and that personal liberty is involved, all these matters are to be taken up at the earliest by the respective Courts for fresh decision. [Nikesh Tarachand Shah v. Union of India,  2017 SCC OnLine SC 1355, decided on 23.11.2017]