AI Structured Summary
Not yet generated for this judgment
Judgment
Manmohan Singh, J
FPA-PMLA-2785/DLI/2019, MP-PMLA-5446/DLI/2019 (E.H.) & MP-PMLA-5447/DLI/2019 (Stay)
Fresh appeal has been filed under section 26 of Prevention of Money Laundering Act, 2002 against the order dated 29.11.2018 passed by the
Adjudicating Authority. Issue notice in the appeal as well as in the interim application to the respondent. Mr. Nitesh Rana, counsel for the respondent
accepts the notice. Let the replies be filed within six weeks with an advance copy to the counsel for the appellant who may file the rejoinders four
weeks thereafter.
List the appeal for final hearing on 20th May, 2019.
The counsel for the appellant is pressing for interim order which is strongly opposed by the Nitesh Rana, counsel for the respondent. The subject
matter of the property attached by the respondent/ED is also attached under the Prohibition of Benami Property Transaction Act, 1988 which is not
disputed by Mr. Rana however he states that in addition to the attachment of the property by the ED who also take the possession of the same. The
question before this court is that as to whether the ED is entitled to take the possession once the property is already attached by the Prohibition of
Benami Property Transaction Act, 1988 and the subject matter which is holding the property in custodia legis.
The learned counsel for the appellant states that the appellant is not inclined to dispose of the said property till the appeal is finally decided. After
hearing, I am of the view that there is no force of the argument of Shri Nitesh Rana to take the possession of the property at this stage as in the case
of Kanhaiyalal V. Dr. D.R. Banaji and others [1959 SCR 333: AIR 1958 SC 725], it is settled that without leave of that court/tribunal, it would amount
committing for contempt of the Court as the property is already held by other authority who, ultimately may be adjudged the proceeding as per law.
The proposition canvassed are appropriately considered in rendering the findings.
“It is also settled law that proceedings taken in respect of a property which is in the possession and management of a Receiver appointed
by Court under Order 40, Rule 1 of the Code of Civil Procedure, without the leave of that Court, are illegal in the sense that the party
proceeding against the property without the leave of the Court concerned, is liable to be committed for contempt of the Court, and that the
proceedings so held, do not affect the interest in the hands of the Receiver who holds the property for the benefit of the party who,
ultimately, may be adjudged by the Court to be entitled to the same. The learned counsel for the respondent was not able to bring to our
notice any ruling of any Court in India, holding that a sale held without notice to the Receiver or without the leave of the Court appointing
the Receiver in respect of the property, is void ab initio. In the instant case, we do not think it necessary to go into the question raised by the
learned counsel for the respondents that a sale of a property in the hands of the Court through its Receiver, without the leave of the Court,
is a nullity. The American Courts appear to have taken the view that such a sale is void. In our opinion, it is enough to point out that the
High Court took the view that the sale was voidable and could be declared illegal in a proper proceeding or by suit. We shall assume for
the purposes of this case that such a sale is only voidable and not void ab initio.
On the assumption that the sale held in this case without the leave of the Court and without notice to the Receiver, is only voidable and
can be declared illegal on that very ground, the suit had been instituted for the declaration that the sale by the revenue courts was illegal.
The plaint was subsequently amended by adding the relief for recovery of possession, „because in the meanwhile, the auction-purchaser
had obtained delivery of possession of the property through the revenue authorities, some time in 1940. The general rule that property in
custodia legis through its duly! appointed Receiver is exempt from judicial process except to the extent that the leave of that court has been
obtained, is based on a very sound reason of public policy, namely, that there should be no conflict of jurisdiction between different Courts.
If a court has exercised its power to appoint a Receiver of a certain property, it has done so with a view to preserving the property for the
benefit of the rightful owner as judicially determined. If other Courts or Tribunals of co-ordinate or exclusive jurisdiction were to permit
proceedings to go on independently of the Court which has placed the custody of the property in the hands of the Receiver, there was a
likelihood of confusion in the administration of justice and a possible conflict of jurisdiction. The Courts represent the majesty of law, and
naturally, therefore, would not do anything to weaken the rule of law, or to permit any proceedings which may have the effect of putting
any party in jeopardy for contempt of court for taking recourse to unauthorised legal proceedings. It is on that very sound principle that
the rule is based. Of course, if any Court which is holding the property in custodia legis through a Receiver or otherwise, is moved to grant
permission for taking legal proceedings in respect of that property, the Court ordinarily would grant such permission if considerations of
justice require it. Courts of justice, therefore, would not be a party to any interference with that sound rule. On the other hand, all Courts
of justice would be only too anxious to see that: property in custodia legis is not subjected to un-controlled attack, while, at the same time,
protecting the rights of all persons who may have claims to the property.â€
The principle of law laid down also helps the facts of this case prima facie in favour of the appellant.
List on 20th May, 2019.
I direct that both parties shall maintain status quo as of today. However, attachment shall continue.