FPA-PMLA-3182-3186/COCHIN /2019
By this appeal, a challenge has been made to the order dated 10.07.2019 passed by the Adjudicating Authority confirming the provisional attachment
order dated 18.01.2019. The provisional attachment order was passed after registration of the FIR and charge-sheet thereupon on 25-01-2018 against
appellant Shri T.O. Sooraj for the offence under Section 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988 (In short the Act of 1988). The
ECIR for the offence under the Act of 1988 was earlier recorded on 12.02.2015. In the investigation, it is alleged that appellant Shri T.O. Sooraj was
having assets of Rs. 11,84,25,530/-disproportionate of his known-sources of income during the check period from 01.01.2004 to 19.11.2014.
Learned counsel for the appellant submits that the offence under the Act of 1988 was added in the schedule by an amendment under the PMLA Act
of 2002 (In short the Act of 2002) by the Amendment Act 21 of 2009. It was further amended by the Amendment Act 2 of 2013.
The check period to determine the alleged disproportionate assets to the known-sources of income relates to the period when the offence under the
Act of 1988 was not a scheduled offence. In view of the above, the respondents could not have attached the property as the amendment brought in
the year 2009 followed by an amendment of 2013 has not been given retrospective effect.
It is further stated that the properties in question were attached by the Trial Court by its order dated 19.03.2015 thus there was no reason for the
Competent Authority to presume transfer, alienation or concealment of the property to frustrate the proceeding of confiscation under Chapter III of
the Act of 2002. The attachment of property was thus without application of mind. On the aforesaid grounds also, the impugned order deserves to be
set aside.
The further argument is that the appellant Shri T.O. Sooraj had explained the sources of assets. It is not disproportionate to the known-sources of
income and thereby the appellant has not committed any offence. Ignoring the aforesaid, the Adjudicating Authority has confirmed the Provisional
Attachment Order. Thus on all the grounds raised above, the provisional attachment and the order passed by the Adjudicating Authority deserves to
be set aside.
The learned counsel for the respondents has contested the appeal and submitted that the FIR for the offence under Section 13(1)(d) and 13(2) of the
Act of 1988 was registered on 17.11.2014 i.e., much subsequent to the amendment under the Act of 2002 to make offence under the Act of 1988 to
be scheduled offence. The amendments were notified in year 2009 and 2013. The ECIR was recorded on 12.02.2015. The FIR was registered in the
year 2014 and the charge-sheet was filed on 25.01.2018. The Provisional Attachment Order was issued on 18.01.2019. The offence under the
Prevention of Corruption Act was a scheduled offence at time of registration of FIR and the ECIR. It is now settled law of the land that the relevant
date for taking note of the schedule offence under Act of 2002 would be when a case of money laundering is found. It can be when the accused
project tainted property to be untainted or launder the proceeds. In the instant case, FIR was registered in November, 2014 followed by ECIR, thus
there is no question of retrospective application of the Act of 1988.
The learned counsel for the respondents further submitted that order of Provisional Attachment dated 18.01.2019 was passed under Section 5(1) of
the Act 2002. It is after recording reasons to believe in writing. The appellant was found in possession of the proceeds of crime and as provisions of
the Act of 2002 stand-alone having over riding effect to the other enactment, the respondent had rightly exercised their authority to attach the property
for which the Special Judge may have passed an order of attachment prior to it. The purpose of passing the attachment order by the Trial Court is
different than by the respondent Department. The attachment of the proceeds of crime or value thereof is to make the property available for
confiscation on the completion of trial and conviction therein for an offence under the PMLA Act, 2002. The trial for the offence under PMLA is
separate than the trial in the predicate offence. Looking to the aforesaid and to avoid frustration of the proceeding of confiscation, the respondents
rightly invoked Section 5(1) of the Act. The prayer is not to interfere in the order of the Adjudicating Authority confirming the provisional attachment.
It is further, argued that in the investigation by the vigilance and even under the Act of 2002, the property disproportionate to the known-source of
income was found in the hands of appellant Shri T.O. Sooraj. The charge-sheet was filed after collecting the evidence for the aforesaid. At this stage,
the Tribunal would not be competent to decide the issue finally as to whether the appellant was holding property disproportionate to known source of
income rather it would be decided by the Special Court. If the known sources exists with the appellant, it would be considered in the trial and in case
of acquittal of the appellant, the property would be released but if the conclusions of the Special Court remains adverse to the appellant holding an
offence under Section 13(1)(d) and 13(2) of the Act of 1988, it would proceed to confiscate of the property under the Act of 2002. The prayer is
accordingly to dismiss the appeal.
We have considered the rival submission of the parties and scanned the record carefully. The appellant has raised three issues to question the order
passed by the Adjudicating Authority to confirm provisional attachment order.
The first issue is in reference to the application of the Act of 2002. It is in reference to the offence under the Prevention of Corruption Act, 1988. It
was not a scheduled offence in the year 2002 but was added by the notification issued in the year 2009 followed by further amendment in the year,
2013. According to the appellant, the check period to find out disproportionate property to the known-sources of income is of the period prior to the
amendment and therefore the Act of 2002 could not have been enforced to attach the property. It is for the reason that amendment of year 2009 and
2013 has not been given retrospective effect. We find no substance in the argument. The relevant date to find out the scheduled offence is the date
when one projects tainted property to be untainted or involves oneself in money laundering and not the date of actual commission of predicate offence.
The check period of income may be from the year 2004 to 2014 but the FIR was registered in the year 2014 and thereupon, ECIR was recorded on
12.02.2015. It is much subsequent to the amendment in the Act of 2002 to make an offence under the Prevention of Corruption Act to be a scheduled
offence. In view of the above, we do not find that amendment under the Act by the notification of year 2009 or 2013 have been given retrospective
effect in this case.
The second argument is on the facts. It is to show that no offence under Section 13 (1) (d) or 13 (2) of the Act of 1988 is made out. The appellant is
not having disproportionate property to the known-sources. We find that facts available record prima facie shows a case of disproportionate property
in the hands of the appellant to his known-sources. We would not like to go further in deep as the finding on the aforesaid would be recorded by the
Special Court after completion of trial. In view of the above, we do not find any substance even in the second argument.
The third argument is in reference to Section 5(1) of the Act of 2002 and for ready reference the said provision is quoted as under.
(1) Where 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 reason for such belief to be recorded in writing), on the basis of material in his possession, thatâ€
(a) any person is in possession of any proceeds of crime;
(b) such person has been charged of having committed a scheduled offence; and
(c) 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 fifty days] from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and
the Director or the other officer so authorised by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that
Schedule:
[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 the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be: Provided further that,
notwithstanding anything contained in clause (b), 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.]
It is submitted that an order of attachment requires reasons to believe in writing and it should be on the basis of the material in possession that a
person is in possession of proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which
may frustrate the confiscation of the property. An order of attachment pre supposes the conditions referred to above and given under Clause (a) and
(b) of sub Section (1) of Section 5. In the instant case, the respondents have failed to show any likelihood of concealment or transfer of the properties
so as to frustrate the proceeding of confiscation rather the property in question was attached by the Special Court much prior to the order for
provisional attachment. The Special Court attached the properties by its order dated 19.03.2015 thus there was no likelihood of transfer or
concealment of the property. Ignoring the requirement and mandate of Section 5(1) of the Act of 2002, the order of provisional attachment was
passed. It is no doubt that the provisions of the Act of 2002 are having over riding effect to other legislation in case of conflict but in this case we do
not find any conflict between two legislations. The property can be attached by the respondent department under Section 5 of the Act of 2002 but it
can be when they possess material to show that property may be concealed, transfer or be dealt with in any manner to frustrate the proceeding of
confiscation. When the property was already attached by the Special Court, how it could have been transferred or concealed. We, therefore, find that
reasons to believe were recorded without application of mind. The material to attract Clause (b) of Sub Section (1) of Section 5 of the Act of 2002 is
missing.
Accordingly, the last argument raised by the appellant is accepted and accordingly the order of provisional attachment so also the order passed by the
Adjudicating Authority are set aside. It is however with clarity that if, the Special Court withdraws the attachment order or the trial pursuant to the
FIR is completed, the respondents would be at liberty to exercise their authority under Section 5 (1) of the Act of 2002 in case of an apprehension of
concealment or transfer of property. With the aforesaid, appeal is disposed of.