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Judgment
FPA-PMLA-828/DLI/2015, MP-PMLA-3223/DLI/2017 (Directions) & MP-PMLA-2355/DLI/2016 (Review)
We have heard the submissions of both counsel in the application under section 35 (2) (f) of the PMLA, 2002 for review of Judgment dated
31.12.2015 passed in FPA-PMLA-828/DLI/2015.
The operative part of the impugned order reads as under:
“In view of the above discussed facts and circumstances and provisions of law and considering the second prayer of the appellant, the
impugned order dated 6.2.2015 in respect of allowing retention of jewellery is set aside and remanded to the Adjudicating Authority for
readjudication within 180 days from the date of this order. The Adjudicating Authority shall give an opportunity of hearing under section 8
of PM LA to all the parties claiming rights in the seized property. The Adjudicating Authority shall in accordance with the provisions of sub
section (2) of section 8 of PMLA, record a finding whether all or any of the jewelleries seized are involved in money laundering and
accordingly pass an order, if any, under sub-section (3) of section 8 of PMLA. This Tribunal has not expressed any opinion on merits of the
source of income, earning or assets out of which or by means of which the appellant has acquired property seized. During the pendency of
proceedings before the Adjudicating Authority, the retention order shall continue and all the parties shall maintain status quo in respect of
seized jewelries. Parties to bear their own cost.â€
Reply has also been filed on behalf of respondent. The prayer sought by the appellant is strongly opposed on behalf of respondent.
It is alleged by the appellant in the review application that the said impugned order dated 31.12.2015 suffers from grave jurisdictional error as well
as errors both on facts and law which are apparent on the fact of the judgment itself and as such requires to be reviewed by this Honâ€ble Tribunal in
exercise of its powers and jurisdiction under Section 35 (2)(f) of the Act.
In his application for review, it is stated interalia that the impugned judgment suffers from the following errors on the face of the judgment, thus the
same requires to be reviewed:
(i) The impugned judgment suffers from jurisdictional error in remanding the matter to the Adjudicating Authority inasmuch as under Section 26 (4) of
the Act, the Appellate Tribunal has no jurisdiction whatsoever to remand the matter to the Adjudicating Authority for re-adjudication; it can only pass
an order “confirming, modifying or setting aside†the order appealed against. The interpretation principle of expressio unius est exclusion alterius
states that express inclusion of one thing is the exclusion of all others. In the absence of any express provision empowering the Appellate Authority to
remand the case, it does not have any inherent powers for remand, in fact it does not have any inherent powers at all, unlike a Civil Court, under
Section 151 CPC. Whenever Parliament intends to confer such jurisdiction on Appellate Authorities /Tribunals, such power of remand is expressly
conferred by statute. In this connection the Applicant refers to provisions of Section 129B of the Customs Act, 1962 and the provisions of Section 35A
(3) of the Central Excise and Salt Act, 1944 before its amendment by Act 14 of 2001 effective from 11 05 2001. In fact, after the said amendment
deleting the express provision of remand (i.e. in the absence of such express provision for remand), the Honâ€ble Supreme Court in the case of MIL
India Ltd Vs. Commissioner of Central Excise has held that the Commissioner no longer has power of remand. The power of this Hon'ble Tribunal in
passing order in Appeals, under section 26 (4) is in pari material with section 35A (3) of the Central Excise and Salt Act, 1944 after the said
amendment in 2001 Accordingly, in the absence of express provision for remand this Hon'ble Tribunal lacks power and jurisdiction to pass an order of
remand.
(ii) The appeal under the Act is not an action at common law nor in equity, it is a statutory proceeding to which neither the common law nor the
principles of equity apply but only those provisions which the statute makes and applies. It is a special jurisdiction and special jurisdiction has always
been exercised in accordance with the statute creating it. Concepts familiar to common law and equity must remain strangers to appeal under the Act
unless statutorily embodied. This Tribunal has no right or jurisdiction to them. In fact, if the Tribunal is allowed to remand the proceedings the time
frame prescribed for adjudication and for that matter retention of properties under the Act, without any adjudication about the properties being
involved in money laundering will get nullified and the Department will have an unbridled discretion to continue the proceedings and retention of
properties for indefinite period in excess of the statutory time limits By the impugned order of remand, this Hon'ble Tribunal has allowed the
Respondent to retain the seized jewelleries for a period exceeding the prescribed period of 180 days allowed under the Act. It is the submission of the
Applicant that no Court or Tribunal can pass an order contrary to the statutory provisions. In fact, even the Supreme Court in its extra ordinary
jurisdiction under Article 142 of the Constitution, cannot pass any order contrary to the express provisions of statute.
(iii) The Honâ€ble Tribunal has erred in holding that the Applicant's contention that the retention order under section 20 is without jurisdiction as
Respondent did not have any material in his possession to have reason to believe that the seized properties are required to be retained for adjudication
is unsustainable. In this connection, the Applicant had relied upon Rule 2 (1)(f) of The Prevention of Money Laundering (The Manner of Forwarding
A copy of the Order of Retention of seized Property Along with the Material to the Adjudicating Authority and the Period of its Retention) Rules,
2005 (for short, the PMLA Rules). The said Rule 2 (1) (f) expressly states that material for the purpose of Section 20 (1) of the Act means material in
possession of an officer authorised under sub section (1) of Section 20 of the Act including.... (ii) report forwarded to a Magistrate under section 173
of the Code of Criminal Procedure ...†The impugned order refers to some other Rules unconnected with section 20 (1) of the Act The requirement
of report under section 173 Cr. P.C. for passing an order under section 20 (1) of the Act has been mandatory because it is only on conclusion of
investigation by the Investigating Agency, investigating the scheduled offence and on such completion of investigation, the Investigating Agency files a
report under section 173 Cr P.C, that it can be said that there is “reason to believe†of commission of the scheduled offence, mere report under
section 157 Cr P.C. gives rise only to reason to suspect.
(iv) That the Tribunal failed to appreciate that the Adjudicating Authority while issuing notice under section 8 (1) of the Act could not have reason to
believe that the Applicant is in possession of proceeds of crime. In the absence of section 173 Cr. P.C. report, the Investigating Agency investing the
scheduled offence is only having a reason to suspect of the commission of the crime and not reason to believe of commission of a crime, In the
absence of such reason to believe that a scheduled offence has been committed, one cannot say that a person can have reason to believe that there is
proceeds of crime {scheduled offence). If the Investigating Agency yet is to have such reason to believe, it is surprising how the Adjudicating
Authority can have reason to believe of the Applicant being in possession of proceeds of crime, without a crime there cannot be proceeds of crime.
(v) That the Tribunal has failed to appreciate that the Adjudicating Authority has not applied his mind to the material placed before him before issuing
a notice under section 8 (1) of the Act. On receipt of the original application the Adjudicating Authority has issued notice to show cause dated
22.10.2014 calling upon the Applicant to indicate the sources of income etc. by which he has acquired the property provisionally attached under sub
section (1) of Section 5 of PMLA. It was only later on that the second show cause notice dated 20.11.2014 was issued. Even the said second show
cause notice talks of provisionally attached properties and not seized properties. The Applicant during the hearing has mentioned about the original
show cause notice dated 22.10.2014 after an inspection was made by the Applicant's Advocates of the records before the Adjudicating Authority. A
true certified copy of the said Notice dated 22.10.2014 has since been obtained by the Applicant, a copy whereof is annexed with the application. The
said defect in the notice is indicative of complete non-application of mind at the time of issuing notice under section 8 (1) of the Act. Such non
application cannot be cured by resorting to section 68 of the Act.
(vi) After the Tribunal held that the Adjudicating Authority has committed serious error by not giving ay finding whatsoever under section 8(2) of the
Act in respect of jewelleries, retention of which was sought, this Tribunal ought not to have directed continuation of retention contrary to provisions of
Section 20(3) of the Act. This Honâ€ble Tribunal has committed the said mistake by allowing retention of jewelleries without any adjudication. The
Tribunal erred in allowing continued retention of seized jewelleries beyond the period of 180 days from the date of seizure without any order of
adjudication that the said jewelleries are involved in money laundering The Applicant submits that the said order is directly contrary to the express
provisions of the Act and is violative of the Constitutional rights of the Applicant conferred under Article 300A of the Constitution.
(vii) In the absence of an appeal by the Respondent, the Respondent cannot be given a relief of retention of seized jewelleries beyond 180 days of
seizure without any adjudication under Section 8(2); the Respondent ought to have appealed praying for direction to the Adjudicating Authority for
adjudication in respect of seized jewelleries.
(viii) The reliance of the Appellate Authoirty on the judgment in the case of State of Maharashtra Vs. Ramdas Shrinivas Nayak (1982) 2 SCC 46 3for
not entertaining the Applicantâ€s contention that the Adjudicating Authority has wrongly recorded his submission is quite misplaced, the said judgment
is in respect of a Court of Record like a High Court and the same cannot be applied to the Adjudicating Authority. In respect of the High Court, one
can correct the record through a review petition. Further, in case of Adjudicating Authority, records cannot be corrected through review since there is
no provisions of review in case of the Adjudicating Authority. Thus the impugned order dated 31.12.2015 in remanding the matter is otherwise bad
both in law and facts of the case and is liable to be reviewed by this Tribunal in exercise of its powers and jurisdiction under section 35(2)(f) of the
Act.
Mr. P.V. Kapoor, the learned Sr. Counsel for the appellant has referred various provisions of the Act and rules and has also referred various
decisions in support of his submission in support of the grounds raised by the appellant in the review petition.
Mr. Vikas Garg, learned counsel appearing on behalf of respondent has strongly opposed the prayer of the review application. It is argued by him
that review of the order dated 31.12.2015 passed by this Ld. Appellate Tribunal, Prevention of Money Laundering Act is not maintainable and even
otherwise the same cannot be heard by this Tribunal in view of pendency of writ-petition challenging the same very order and the relief sought is also
similar to the relief claimed therein. It is stated by him that Smt. Ritu Khaitan the wife of the applicant has filed a Writ Petition (Civil) No. 1766 of
2016 against the said very same order dated 31.12.2015 passed by this Ld. Appellate Tribunal for the Prevention of Money Laundering Act before the
Hon'ble High Court of Delhi at New Delhi. The same order cannot be challenged in two different forums. He further argues that the writ-petitioners
ought to have been impleaded as appellant or the respondents in the main appeal filed by the appellant and as the appellants†wife is not prepared to
withdraw the said writ petition, the present review petition should not be heard. It is also submitted by Mr. Garg that it is wholly immaterial that the
writ-petition has been filed by wife and son of the appellant herein as it was merely a Poly otherwise they are members of the same family. The writ
petitioners could have earlier challenged the confirmation order which they did not do. It is clear move of the appellant by abusing law.
It is also submitted by Mr. Vikas Garg that O.A. No. 19 of 2014 was filed against Gautam Khaitan in Oct., 2014 by the Respondent before the
Adjudicating Authority under section 17(4) praying for order of retention of inter alia, seized jewelleries. Provisional Attachment Order under section 5
(1) passed on 15.11.2014 in respect of properties including seized jewelleries. Notice under section 8(1) issued to Gautam Khaitan only by the
Registrar, Adjudicating Authority, seeking reply to the O.A.
Initially the stay order was passed by Learned Single Judge on 22.12.2014 of Delhi High Court restraining the Respondent from initiating any further
steps. (Order continued when hearing was going on beforeAdjudicating Authority and also when hearing was concluded and order was reserved on
15.01.2015). The main challenge in the writ-petition was initiating the proceedings under section 5 of the Act. On 04.02.2015 the Single Judge
dismissed the writ petition.
The appellant herein filed the letters patent appeal 72/2015 filed on 06.02.2015. On the same date the Adjudicating Authority passed the order inter
alia, directing retention of seized jewelleries. Division Bench of Delhi High Court in LPA against the judgment of the Single Judge passed an order on
13.02.2015 restraining the respondent from taking further steps pursuant to order of attachment against the appellant. On 27.02.2015 order dated
13.02.2015 was clarified by Division Bench of Delhi High Court, inter alia, clarifying that all further proceedings pursuant to impugned order of
provisional attachment including proceedings under section 8 of PMLA for confirmation of provisional attachment shall remain stayed and on
15.01.2016 the present review petition was filed.
It is admitted position that LPA is still pending before the Honâ€ble Division Bench of Delhi High Court wherein the Provisional Attachment order
dated 15.11.2014 passed by the Ld. Adjudicating Authority PMLA has been challenged. That on 13.02.2015 the Honâ€ble division Bench passed the
following order:-
“Pending further orders, the respondents are restrained from initiating any further steps pursuant to the impugned order of attachment
against appellants/petitionersâ€
Apparently in the said LPA after passing of the said order the Respondent has been restrained from initiating any steps pursuant to the said
attachment order against the appellants/petitioners.
It is also admitted fact that in the said L.P.A. the Petitioners filed a clarification Application bearing No. 3697 of 2015 on which the following order
dated 27.02.2015 came to be passed:
“....Having heard the learned counsel for both the parties and having regard to the facts and circumstances explained in the application,
we make it clear that by virtue of the said order dated 13.02.2015, all further proceedings pursuant to the impugned order of provisional
attachment dated 15.11.2015, including the proceedings under Section 8 of Prevention of Money Laundering Act, 2002 for confirmation of
the provisional attachment, shall remain stayed. However, attachment of the property in question shall continue.
It is further made clear that the period of stay pursuant to the interim order dated 13.02.2015 shall not be taken into consideration for the
purpose of Section 5(1) of the Prevention of Money Laundering Act, 2002 according to which, the provisional attachment can be
operational only for a period of 180 days from the date of the order of attachment..........â€.
From the above order it is clear that the attachment in the property is to continue which includes the jewellery worth Rs. 1.62.57.245/-. In
question.
Mr. Kapoor, the learned Sr. Counsel appearing on behalf of the appellant has not denied the fact that the order passed on 31st December, 2015
has been challenged by the wife of the appellant Ms. Ritu Khaitan and their son before the Honâ€ble High Court in the writ petition no. 1766/2016.
The same is pending for consideration.
On 22nd March, 2016 in the said petition the following order was passed
This order is in continuation of the earlier order dated 4th March, 2016.
The counsel for the respondents in reference to my query in the last order states that the relief claimed in this petition does overlap with
LPA No.72/2015 pending before the Division Bench. He has in this regard invited attention to page 90 of the paper book i.e. the order
dated 27lh February, 2015 in LPA No.72/2015 titled Gautam Khaitan Vs. Union of India inter alia directing that the attachment of the
property in question shall continue. He states that the petitioners, in this petition are seeking removal of attachment.
The counsel for the petitioners controverts. He has in this regard contended that the petitioners in this petition are not impugning the
attachment or seeking the revocation of attachment. It is contended that the Prevention of Money Laundering Act, 2002 (PMLA) makes a
distinction between “attachment†and “possession / custody†of the attached property.
It is contended that the jewellery of the petitioners in the present case was seized on 22nd September, 2014 and the period of 180 days
for which the respondents could have retained possession thereof under Section 21 of the PMLA expired on 22nd March, 2015.
Attention in this regard is invited to:
(I) Section 17(iv)(c) of PMLA providing for seizure of property:
(II) Section 20(1) & (3) of PMLA to contend that on expiry of the period of 180 days, the property seized has to be returned to the person
from whom such property was seized, unless the Adjudicating Authority under Section 17(4) permits retention of the property for any longer
period;
(III) the fact that respondents did not invoke Section 17(4) of PMLA in the present case;
(IV) the fact that only if the respondents had invoked Section 17(4) of PMLA, would the Adjudicating Authority under Section 20(4) of
PMLA have authorised retention of the property for a longer period;
(V) to Section 8(1),(3) & (4) of PMLA but it is contended that the same are not applicable to the facts of the present case;
(VI) to Section 2(d) defining “attachment†as “prohibition of transfer, conversion, disposition or movement of propertyâ€.
On the basis of the aforesaid, it is contended that the petitioners in the present petition are claiming only the relief of release of “custody
/ possession†of the jewellery seized, while continuing to remain under attachment for which the petitioners have invoked the appellate
remedy. It is further contended that the challenge in the petition to the order dated 31st December, 2015 of the Appellate Tribunal is
confined to para 35 of the order, where in an appeal filed by the husband and father respectively of the two petitioners, it has been
observed that during the pendency of the proceedings before the Adjudicating Authority, the “retention†shall continue.
Though the claim of the petitioners appears to be on legal pleas but the counsel for the respondents besides claiming that a counter
affidavit needs to be filed has also drawn attention to an application filed by the petitioner No.l and her husband in LPA No.72/2015
aforesaid seeking clarification of the order dated 27th February, 2015 supra to the effect that the continuation of attachment does not come
in the way of the petitioners seeking release of custody of the jewellery if they are otherwise liable to be released in accordance with law.
Issue notice.
Notice is accepted by the counsel for the respondents.
Counter affidavit be filed within four weeks.
Rejoinder thereto, if any be filed before the next date of hearing.
List on 25th May, 2016
No interim orders has been passed in the said writ petition filed by the wife and son of the appellant.
Mr. Kapoor, learned Sr. Counsel has argued that the writ petition is not filed by the appellant, it is filed by his wife and son only therefore, there is
no impediment on the part of this Tribunal to hear the review application and pass the order on merits although. It is not denied on behalf of the
appellant that the jewelleries is owned by him, his wife and son. The appellant cannot deny that in case the prayer in the review petition is allowed not
only the appellant would get the relief of releasing the jewellery, by the benefit of relief would also get by his wife and son. Mr. Vikas Garg submits
that in the main appeal when filed both could have joined or being aggrieved parties, wife and son could have filed separate appeal as per the
provisions, but did not do so.
We agree with the submission of Mr. Garg at this stage, that if the prayer is granted the writ-petitioners would also be beneficiary of the said
order.
In normal case, we would have decided the review petition filed by the appellant but considering the facts that similar prayer is sought by his wife
and son in W.P. No. 1766/2016 which is pending before High Court with the same prayer, we are of the view, it would be appropriate to await the
decision of the writ-petitioner as the appellant also intends to continue the said proceedings. Even otherwise, we feel that in view of order passed in
LPA to the effect that the attachment shall continue, it is better to await the direction from the higher court.
Thus the present review is adjourned sine die till the writ petition no. 1766/2016 (which was filed Ms. Ritu Khaitan wife and his son) either is
decided or some clarificatory order are passed.
Copy of the order be give “Dasti†to both parties.