Deputy Director Directorate Of Enforcement vs Sandeep Arjun Vazarkar & Ors.

The Directorate of Enforcement has preferred this appeal under section 26 of the Prevention of Money Laundering Act, 2002 (in short refer to the Act of 2002). It is to challenge the order dated 14.12.2020 passed by the Adjudicating Authority on an Original Complaint Number 132420. It has denied confirmation of the attachment of immovable property.

Brief facts of the case:-

It is submitted that a First Information Report (F.I.R.) bearing number 276 / 2019 was registered on 26.12.2019 against non-appellant, Sandeep Arjun Vazarkar and other respondents for commission of offence punishable under section 419, 420, 467 and 471 of IPC. It was alleged that the respondent had fraudulently taken possessional right of an immovable property of Survey Number 404, Sub-Division - 1, having an area of 7975 square meter in village Socorro. It is by im-personating Mr. Arjun Mahadev Vazarkar who expired on 17.05.2005 itself but forging his signature on application dated 25.10.2017, mutation of the land was sought. it was also alleged that Sh. Agnelo C Lobo, the Attorney of Communidade of Serula, issued NOC on 19.11.2017 to carry out mutation of the land without verification of the details of Arjun Mahadev Vazarakar.

The accused person produced forged documents as genuine before the authorities for mutation process and succeeded in deleting the name of Arjun Mahadev Vazarakar and entering their names in the revenue record.

Based on the material, the Appellant Department recorded an ECIR on 27.02.2020 against the respondents for the offence under PMLA Act of 2002.

The mutation application dated 25.10.2017 was submitted by dead person namely Arjun Mahadev Vazarakar under section 96 of the Land Revenue Code, 1968 for the mutation of the property claiming to be the owner by virtue of Aforamento of Comunidade of Serula.

In the investigation under the Act of 2002, the commission of offence was found and for ready reference we reproduce material found in the investigation and quoted by the Adjudicating Authority in para 10. It is reproduced hereunder:

During the course of investigation under the provisions of PMLA, 2002, it was revealed that:

i. Sh. Sandeep Vazarkar, in connivance with Sh. Sandeep Vazarkar both sons of Late Sh. Arjun Mahadev Vazarkar, signed and submitted the mutation application dated 25.10.2017 in the name of Late Sh. Arjun Mahadev Vazarkar regarding mutation entry in survey No. 404/1 of Socorro, Bardez, Goa before the office of the Mamlatdar of Bardez on 25.10.2017. The alleged title documents in Portuguese pertaining to the said immovable property surveyed under Sy. No. 404/1 of Village Socorro, Bardez Goa, i.e. File bearing no. 205 of 1963 of the office of Administrator of Comunidades Bardez in respect of Aforamento of Comunidade of Serula were also submitted along with the said mutation application dated 25.10.2017, thereby fraudulently applying for mutation application dated 25.10.2017, thereby fraudulently applying for mutation application for the immovable property situated at Sy. No. 404/1 of Socorro, Bardez, Goa. The contact number mentioned in the said mutation application dated 25.10.2017 was 9818151515 that is being used by Sh. Sandeep Vazarkar, although the said number belongs to Sh. Shivdas Vazarkar.

ii. In response to the letter dated 26.10.2017 issued by Jt. Mamlatdar II Mapusa, Bardez, Goa, Sh. Rohan J. Kaskar, the then Administrator of Comunidades, North Zone, Mapusa, Bardez, Goa vide letter dated 14.11.2017, replied to the Jt. Mamlatdar II, Mapusa that the documents submitted by Sh. Arjun Mahadev Vazarkar showed that those were certified copies from his office despite the fact that the same could not be traced in his office. He submitted that if any objection application for mutation may be decided on its own merit, keeping note of the said facts. The then Administrator of Comunidade did not raise any objection to the office of Mamlatdar, Mapusa, in respect of the mutation application dated 25.10.2017 despite that act that the alleged title documents enclosed with the said mutation application could not be traced in his office. Moreover, as per Circular no. 17/24/1008-RD/3919 dated 16.07.2009 issued by the Under-Secretary, Revenue Department, Government of Goa, the Administrators of Comunidades have been directed not to give any NOC/consent for deleting the name of Comunidade from Form I & XIV without the prior approval of Government of Goa. In the instant case, the then Administrator of Comunidades did not take any prior approval from the Government of Goa before instructing the Jt. Mamlatdar II to decide the matter on its own merit.

iii. Further, in the true English translation of the said title documents in Portuguese i.e. File bearing no. 205 of 1963 of the office of Administrator of Comunidades Bardez, which were forwarded to Administrator of Comunidades, NZ along with the said mutation application dated 25.10.2017 by the Jt. Mamlatdar II, Mapusa Bardez, Goa, it was stated that an extraordinary meeting of this Comunidade was held by the Managing Committee of Comunidade of Serula on 15.06.1963 to discuss the said matter of Aforamento, and the intimation for the same was made by way of public notice published on Government Gazette number Thirty eight of Third Series dated 30.05.1963. However, in the Government Gazette number Thirty eight of Third Series dated 30.05.1963, no such notice was published by Comunidade of Serula. This fact was not verified by the then Administrator of Comunidade before issuing the aforesaid letter dated 14.11.2017 to the Jt. Mamlatdar II, Mapusa, Bardez, Goa. Moreover, as per the aforesaid letter dated 14.11.2017 issued by Sh. Rohan J. Kaskar, the then Administrator of Comunidades, NZ, the said title documents i.e. File bearing Nno. 205/1963 of the office of Administartor of Comunidades Bardez could not be traced int he office of Administrator of of Comunidades, NZ, Mapusa, Bardez, Goa. Hence, the said title documents i.e. File bearing NO. 205/1963 of the office of Administrator of Comnidades Bardez are fraudulent in nature. Thus, it is clear that the documents submitted alongwith the application dated 25.10.2017 were not authentic and were forged.

iv. Sh. Agnelo C. Lobo, the then Attorney of Comunidade of Serula, issued NOC vide letter dated 19.11.2017 addressed to the Jt. Mamlatdar II, Mapusa, Bardez, Goa, in respect of mutation application dated 25.10.2017, without following the due procedure. As per the articles laid down in the 'Code of Comunidade', if and when any such application concerning property/ies of Comunidade is received by the office of Comunidade, the same is brought to the notice of the Managing Committee which comprises of the President, the Attorney and the Treasurer. The President of Comunidade then convenes a General Body meeting or Managing Committee meeting after publishing about the same in the Government Gazette. During such meeting, a resolution is passed for or against such matter. After such resolution is passed, the same is informed to the concerned authorities such as Office of Administrator of Comunidades, Office of Mamlatdar, etc. However, the office of Comunidade of Serula, vide letter dated 28.05.2020, submitted that there was neither any inward entry in the office for the letter dated 14.11.2017 issued by the office of Administrator of Comunidade nor any outward entry in the office for the NOC letter dated 19.11.2017 issued by the then Attorney of Comunidade of Serula. Also, there was no record of Managing Committee meeting in the Meeting book of Comunidade of Serula in respect of the aforesaid letter dated 19.11.2017 received from the Administrator of Comunidade, NZ, Mapusa Mardez, regarding the aforesaid mutation application dated 25.10.2017.

v. In the statement of Sh. Agnelo C. Lobo dated 11.03.2020 recorded u/s 50 (2) and (3) of PMLA, 2002, he stated that he orally discussed the said mutation matter regarding said letter dated 14.11.2017 issued by the then Administrator of Comunidades, NZ, Mapusa, Bardez, and took oral consent from the Managing Committee of Comunidade of Serula before issuing the NOC vide letter dated 19.11.2017 issued to the Jt. Mamlatdar II, Mapusa, Bardez. However, Sh. Alex Periera, the then Treasurer of Comunidade of Serula, in his statement recorded u/s 50 (2) and (3) of PMLA, 2002 on 09.06.2020, stated that neither the said mutation matter was discussed in any Managing Committee during the period, nor any oral consent was taken from the Managing Committee by Sh. Agnelo C. Lobo before issuing the NOC vide letter dated 19.11.2020. He further submitted that there is no provision of oral discussion or oral consent for dealing in such matters as laid down under the Articles of ‘Code of Comunidade’.Also, Sh. Aneclato Martins,the then President of Comunidade of Serula,in his statement recorded u/s 50 (2) and (3) of PMLA, 2002 on 12.06.2020, stated that neither the said mutation matter was discussed in any Managing Committee during the period, nor any oral consent was taken from the Managing Committee by Sh. Agnelo C. Lobo before issuing the NOC vide letter dated 19.11.2020 and that there is no provision of oral discussion or oral consent for dealing in such matters as laid down under the Articles of ‘Code of Comunidade’. Hence, in the instant case, after the receipt of the said letter dated 14.11.2017 issued by the then Administrator of Comunidades, NZ, Mapusa, Bardez, Goa, Sh. Agnelo C. Lobo, the then Attorney of Comunidade of Serula, fraudulently issued NOC in respect of the said mutation application dated 25.10.2017 on his own accord without bringing the matter to the notice of Managing Committee of Comunidade of Serula or taking its prior approval in the said mutation matter.

vi. Moreover, Sh. Agnelo C. Lobo, the then Attorney of Comunidade of Serula, in the said NOC letter dated 19.11.2017 addressed to the Jt. Mamlatdar II, Mapusa, Bardez, Goa, stated that the Comunidade of Serula does not have any objection to carry out the mutation of the property surveyed under survey no. 404/1 of Village Socorro of an area of 7975 sq. meters as per the documents produced by Sh. Arjun Vazarkar on Aforamento basis for construction of house and cultivation of crops after following the due procedure. As Sh. Arjun Mahadev Vazarkar had already expired on 17.10.2005, the application itself was fraudulent. Sh. Agnelo C. Lobo also did not check the veracity of the aforesaid submitted along with the said fraudulent application dated 25.10.2017. Fruther, as details in para (iv) & (v), Sh. Agnelo C. Lobo did not take consent from the Managing Committee of Comunidade of Serula regarding iss62087uing NOC in the mutation matter. In his statement dated 11.03.2020 recorded u/s 50 (2) and (3) of PMLA, 2002, Sh. Agnelo C. Lobo admitted that he was aware that Sh. Arjun Mahadev Vazarkar has expired on 17.10.2005. Therefore, it is seen that Sh. Agnelo C. Lobo fraudulently issued NOC in respect of the said mutation application dated 25.10.2017.

vii. The then Joint Mamlatdar II, Mapusa, Bardez, Goa issued a notice dated 27.11.2017 under 110(1), copies of which were marked toComunidade of Serula and Administrator of Comunidades, NZ, Mapusa, regarding raising any issue in respect of mutation of the immovable property surveyed at Sy. No. 404/1 of Village Socorro for deletion of name of Comunidade of Serula and insertion of the name of Mr. Arjun Vazarkar in the Revenue records of subject property. As submitted by the Administrator of Comunidades, NZ, vide letter dated 06.2020, no objection was raised by Adminsitrator of Comunidades, NZ or Comunidade of Serula. Consequently, mutation entry no. 62087 was made to replace the name of occupant i.e. ‘Comunidade of Serula’ with ‘Arjuna Mahadeva Naique Vozorcar’.

viii. Therefore, it can be seen that Sh. Shivdas Vazarkar, along with his brother Sh. Sandeep Vazarkar and Mr. Agnelo C. Lobo, the then Attorney of Comunidade of Serula hatched a conspiracy to fraudulently acquire the immovable property situated at Sy. No. 404/1 of Village Socorro, Bardez, Goa belonging to the Comunidade of Serula.It is further seen that, apart from Sh. Sandeep Vazarkar and Sh. ShivdasVazarkar, the aforementioned 9 persons belonging to Vazarkar family have been made accused in the FIR bearing No. 276/2019 dated 26.12.2019 registered with Goa State Police in Mapusa Police station under section 419, 420, 467 and 471 of Indian Penal Code, 1860, and are also beneficiaries of the fraudulently acquired immovable property surveyed under Sy. No. 404/1 of Village Socorro, Bardez, Goa. The aforementioned sections are scheduled offences under Para 1 of Part A of the Schedule to PMLA, 2002. Thus, in terms of Section 2(1)(u) of PMLA, 2002, the subject immovable property known as ‘Ambrina’ or ‘Amberia’ surveyed under Sy. No. 404/1 of Village Socorro, Bardez, Goa admeasuring area of 7975 sq. mts. qualifies to be proceeds of crime as it was obtained as a result of commission of criminal activity relating to the scheduled offence.

The appellant Department therefore issued a provisional attachment order of the property by invoking section 5 (1) of the Act of 2002. The order was passed finding that proceeds of crime is changing hands and there remains future uncertainty of the ownership of the property. Under such circumstances, the officer recorded reasons to believe that identified proceeds of crime, if not attached, would be dealt in a manner which would frustrate the confiscation proceedings under the Act of 2002.

The attachment of the property was thus made after invoking second proviso to section 5 (1) of the Act of 2002. The learned Adjudicating Authority did not confirm the Provisional Attachment Order mainly on the ground that mandate of section 5 (1) has not been complied. It otherwise does not contain language of amended provision rather Competent Authority has made alteration therein.

The provisional attachment was not made after invoking second proviso to section 5 (1) rather shown to be under first proviso. It was also on the ground that there exist no proceeds of crime. The counsel for the appellant has made elaborate arguments on facts and law for challenge to the order and it would be dealt with while considering rival submissions.

The counsel for the respondents have contested the appeal and prayed for confirmation of the order of Adjudicating Authority.

It was submitted that there exists no proceeds of crime because transfer and the mutation of the property was as per law and otherwise Provisional Attachment Order was passed under un-amended section 5(1) of the Act and even misquoted by the competent officers. Thus, the attachment order was not confirmed by the Adjudicating Authority.

It is further submitted that for mutation of the land, the required procedure was adopted. The Civil Court also decreed the partition suit filed by the respondents. The opinion was given even to file suit for declaration of the ownership. The respondent is in the process of filing it.

It is also submitted that property in question was heritable, thus mutation of the land was rightly made by the authority concerned and for which Government Gazette was not required.

Therefore, taking all those facts into consideration, the Adjudicating Authority rightly denied confirmation of the order of attachment. The following defences were taken by the respondents and have been quoted in the impugned order are reproduced hereunder:-

The Answering Defendant submits that the aforesaid conclusion arrived at by the Complainant are erroneous for the following reasons:

a. The said property, though originally ownedby the Communidade of Serula, was acquired by the Defendants’ father by way of an “Aforamento” or Emphyteusis or permanent lease under the CODE OF COMMUNIDADE, 1961.

b. Upon the death of the Defendants’ father, the attached property, inter alia, has devolved upon the Defendants by law, i.e. under thelaw of inheritance and succession.

c. The order of the Inventory Court was not based on the revenue entry, but on the documents of title placed on record, and relied upon by the Answering Defendant.

d. A mere discrepancy in an application under Sec. 96 of the GOA LAND REVENUE CODE, 1968, for mutation of revenue records (which are not documents of title), and which has not resulted in any additional benefit accruing in the Answering Defendant’s favour cannot amount to the alleged scheduled offences.

e. The Complainant has failed to provide sufficient “reasons to believe” to sustain the order of attachment.

It was submitted that by the Resolution dated 16.06.1963 in terms of Article 324 of the Code of Comunidade 1961, the attached property was granted and based on the said resolution, public notice was issued on 30.05.1963. It was in pursuance to the application by Arjun Mahadev Vazarakar for a land to raise construction of residential house and for agricultural purposes.

The Managing Committee resolved to grant land to the respondent’s father and was affirmed by the officer of Governor General on 12.11.1964. A confirmation about the occupation of land was also made in the year 1969. Thus, mutation of the said land in favour of the respondents was proper. The reference of the right of inheritance was also given. The Adjudicating Authority rightly accepted the defence taken by the respondents. It was to show that no offence has been committed by them and therefore rightly accepted by the Adjudicating Authority. It also submitted that the mutation does not confer title of the land, thus an application for it could not have constituted an offence. The prayer is accordingly to dismiss the appeal.

We have considered the rival submissions of the parties and perused the record. We may first address the issue in reference of section 5 (1) of the Act of 2002. The Adjudicating Authority has referred para 14 of the provisional attachment order to show that ingredients to second proviso of section 5 (1 ) of the Act of 2002 has not been satisfied. Para 14 of the order was quoted for the aforesaid. It is after ignoring Provisional Attachment Order where Competent Authority has recorded reasons to believe that if the proceeds of crime is not attached, it would be dealt with in a manner which can frustrate the confiscation proceedings under the PMLA Act, 2002. The fact aforesaid is mentioned in para 12 of the impugned order but conveniently ignored by the Adjudicating Authority. In fact, ingredients to invoke second proviso of section 5 (1) were satisfied and therefore the impugned order would not be sustainable.

It would further be necessary to refer that once second proviso of section 5 (1) is invoked, then condition of first proviso is not required to be satisfied and for ready reference section 5(1) of the Act is reproduced hereunder:-

Section 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 the Director 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; and

(b) 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 hundred and eighty days from the date of the order, in such manner as may be prescribed:

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 that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country:

Provided further that, notwithstanding anything contained in 2[first proviso], 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.]

Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted.

We further find that Adjudicating Authority refused to confirm the provisional attachment as the amended provision notified on 14.05.2015 has not been referred therein. The clause (a) and (b) exists after amendment, however provisional attachment order refers to clause (1) and (2). On the aforesaid hyper technical ground, the impugned order was passed to deny confirmation of attachment.It is ignoring section 68 of the Act of 2002 which provides that an order cannot be rendered invalid only because of mistake, defect or omission in the order, if in substance and in fact, it is in conformity and purpose of the Act. The impugned order has been passed in ignorance of section 68 of the Act of 2002 and otherwise on a hyper technical ground to deny confirmation. A wrong reference of the provision does not vitiate an order if otherwise it is in conformity to the provisions. The Judgement of the Apex Court in the case of P. K. Palanisamy Vs. N. Arumugham & Anr. (MANU/SC/1304/2009) has been relied.  The relevant para is quoted hereunder:-

…..It is a well settled principle of law that mentioning of a wrong provision or non-mentioning of a provision does not invalidate an order if the court and/or statutory authority had the requisite jurisdiction therefor.

In Ram Sunder Ram v. Union of India & Ors. [2007 (9) SCALE 197], it was held:

".....It appears that the competent authority has wrongly quoted Section 20 in the order of discharge whereas, in fact, the order of discharge has to be read having been passed under Section 22 of the Army Act. It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law [see N. Mani v. Sangeetha Theatre and Ors. (2004) 12 SCC 278]. Thus, quoting of wrong provision of Section 20 in the order of discharge of the appellant by the competent authority does not take away the jurisdiction of the authority under Section 22 of the Army Act. Therefore, the order of discharge of the appellant from the army service cannot be vitiated on this sole ground as contended by the Learned Counsel for the appellant."

In N. Mani v. Sangeetha Theatres & Ors. [(2004) 12 SCC 278], it is stated:

"9. It is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law."

In view of the above, we find that denial of confirmation in reference to alleged violation of section 5 (1) is not made out and accordingly, the order would not be sustainable on that ground.

The other issue is in reference to the finding of the Adjudicating Authority that property is not involved in money laundering. The finding aforesaid has been recorded in the conclusions without averting the issue on facts. The Adjudicating Authority did not ponder upon the facts of the case to find out whether the property is involved in the money laundering or not so as to record a finding adverse to the Appellant Department.

Without discussion as to whether property is involved in the money laundering or not, the conclusions recorded by the Adjudicating Authority cannot sustain and accordingly impugned order is set aside with remand of the case to the Adjudicating Authority for passing fresh orders in reference to the fact as to whether attached property is involved in money laundering or not. The finding in reference to section 5 (1) having being recorded by us and the finding in reference to section 8 (1) has recorded by the Adjudicating Authority in favour of the Appellant Department, thus both the issues stand concluded. The appeal has otherwise been filed by the Department without cross objection or cross appeal by the respondent.

The parties are directed to appear before the Adjudicating Authority on 5th February, 2024.