Research › Search › Judgment

Orissa High Court · body

2017 DIGILAW 1114 (ORI)

Aries Mineral Pvt. Ltd. v. Adjudicating Authority

2017-10-09

B.R.SARANGI, VINEET SARAN

body2017
JUDGMENT : DR. B.R.SARANGI, J. 1. The appellants have filed this intra-Court appeal challenging the order dated 05.09.2017 passed by the learned Single Judge in W.P.(C) No.12218 of 2017, whereby the writ petition has been disposed of by relying upon the order dated 22.08.2017 passed by this Court in W.A. No.140 of 2017. 2. The brief facts of the case are that appellant no.1, a company registered under the Companies Act, 1956, of which appellant no.2 is the Managing Director, pursuant to notice inviting expression of interest, was appointed as Marketing Agent of Odisha Consumer Cooperative Federation Limited (OCCF) by agreement (Terms of Reference) dated 09.09.2008 and 08.05.2009 to manage the coal business of OCCF. The aforesaid coal business was scrutinized by State Vigilance Police and upon preliminary enquiry the Vigilance Police found that the coal distribution was not done properly, as a result of which there was pecuniary loss to the State Exchequer to the tune of Rs.62,20,903/-. Accordingly, an FIR was registered on the basis of the written report filed by the Inspector, Vigilance Special Cell, Bhubaneswar on 02.06.2010 against appellant no.2 along with four others who were officers of District Industries Centre and OCCF under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and under Sections 420, 468, 471 and 120-B of the Indian Penal Code. After completion of investigation, the Vigilance Police filed charge-sheet under Section 173 Cr.P.C. before the learned Special Judge, Vigilance, Cuttack on 14.09.2015 vide Charge Sheet No.17 dated 14.09.2015. The offences alleged in the Vigilance F.I.R. are scheduled offences under the provisions of Prevention of Money Laundering Act, 2002 (for short “PML Act, 2002”). Accordingly, the Enforcement Directorate initiated an Enforcement Case by lodging a report vide ECIR No. ECIR/23/BSZO/2010 dated 02.12.2010. Summon was issued to appellant no.2 and he received the same on 23.02.2017 from the office of respondent no.3 directing him to appear in person on 28.02.2017 along with the documents stated therein. Accordingly, he appeared with the documents. Again he was summoned on 15.03.2017 to appear on 20.03.2017 along with further documents as stated therein. In compliance of the same, he appeared and furnished all the documents. But, without considering such documents in proper perspective, respondent no.3 passed a provisional attachment order dated 27.03.2017 attaching the property belonging to appellant no.2 in exercising power under Section 5(1) of the PML Act, 2002. In compliance of the same, he appeared and furnished all the documents. But, without considering such documents in proper perspective, respondent no.3 passed a provisional attachment order dated 27.03.2017 attaching the property belonging to appellant no.2 in exercising power under Section 5(1) of the PML Act, 2002. Pursuant to such provisional attachment order dated 27.03.2017, respondent no.3 filed a complaint before respondent no.1 to confirm the same. Accordingly, O.C. No.722 of 2017 was initiated and notice to show-cause dated 19.04.2017 was issued under Section 8 of the PML Act calling upon appellant no.2 to appear and show-cause as to why the provisional attachment order passed by the Joint Director, Enforcement Directorate (PMLA) would not be confirmed. 2.1 Challenging the said show-cause notice dated 19.04.2017 issued under Section 8 of the PML Act, 2002, the appellants filed W.P.(C) No.7851 of 2017 which was disposed of vide order dated 11.05.2017 allowing the appellants to file an application before the authority ventilating their grievance with respect to the contentions raised by them which would be considered in the light of the observations made in the said writ petition and to take a decision whether to continue with the proceeding or to keep the same in abeyance till a particular stage in the criminal trial is achieved. It was further observed that the Enforcement Directorate is manned by very Senior Officers, experts and knowledgeable officers and if the appellants made their grievance before such a forum, then their grievance would be considered and disposed of as per law and till such decision was taken by the authority, the appellants should not create any 3rd party interest of the property attached even after expiry of 180 days and they were given liberty to present a properly articulated petition before the authority within 21 days and on such event, the authority would act upon production of certified copy of that order. In compliance of the same, the appellants filed an application before respondent no.1 to keep the proceeding in O.C. No.722 of 2017 initiated under Section 8 of the PML Act, 2002 for confirmation of provisional attachment order vide show-cause notice dated 19.04.2017 in abeyance till conclusion of the criminal proceeding. Respondent no.1 thereafter called upon respondent no.3 to file its response, which was filed on 13.06.2017 by serving a copy on the appellants’ counsel on 15.06.2017. Respondent no.1 thereafter called upon respondent no.3 to file its response, which was filed on 13.06.2017 by serving a copy on the appellants’ counsel on 15.06.2017. But the Adjudicating authority-respondent no.1 heard the matter on the very same day (15.06.2017) and rejected the said application stating as follows: “(i) The proceeding U/S. 8 of the PML Act being a civil proceeding, Article-20 of the Constitution does not apply. (ii)The Adjudicating Authority has no power U/s. 8 of the PML Act to stay the proceeding. (iii) The Adjudicating Authority does not have the power to extend the life of provisional order of attachment beyond 180 days as prescribed in the Act. (iv) PML Act is a special statute and Section-71 thereof has overriding effect, hence Article-20(3) of the Constitution has no application.” 2.2 The said order dated 15.06.2017 was the subject matter of challenge before this Court in W.P.(C) No.12218 of 2017 which has been disposed of by relying upon the order dated 22.08.2017 of this Court in W.A. No.140 of 2017 with an observation that the findings, which may be recorded by the adjudicating authority, would be prima facie findings under the provisions of the PML Act, 2002 and the same would not have any binding effect on the trial court, which would try the case/charges against the appellant in the criminal case under the provisions of the Code of Criminal Procedure and further added another stipulation that since the civil proceeding is separate and distinct proceeding, the show cause filed by the appellants before the adjudicating authority will be in no way used by the prosecuting agency against the appellants in the criminal trial pending before the learned Vigilance Judge and allowed the appellants to file their show cause before the adjudicating authority within a period of 15 days. As the order of provisional attachment is valid for 180 days and in the meantime since substantial time was elapsed during pendency of the said writ petition and the earlier writ petition, the said time should not be counted while calculating 180 days as stipulated in Section 5(1) of the PML Act, 2002 and the entire period for which the two writ petitions filed by the appellants were pending before this Court till the disposal of the writ petitions and 15 days given to the appellants to file show cause shall be excluded while calculating 180 days as envisaged in the aforesaid provision and accordingly disposed of the writ petition and vacated the interim order vide order dated 05.09.2017. Hence this appeal. 3. Mr. Asok Mohanty, learned Senior Counsel appearing along with Mr. S.S. Padhy, learned counsel for the appellants contended that the Joint Director, Enforcement Directorate initiated a proceeding by relying on the charge-sheet filed by the State Vigilance Police. The trial in the criminal case is yet to begin while investigation into the compliant under the PML Act remains incomplete. The enquiry in the proceeding under Section 8 of the PML Act is civil in nature and the adjudicating authority-respondent no.1 has been vested with the powers of civil court as per Section 11 of the PML Act. Thus, attachment proceedings have been initiated under the PML Act and criminal proceedings have been initiated on the basis of F.I.R. involved similar issue to be tried by two separate forums, i.e., Adjudicating Authority which involves civil enquiry, and the enquiry before the learned Special Judge, Vigilance is criminal in nature. In both the enquiries, the primary issue is whether appellant no.2 has committed any offence under which he has been implicated as per the charge-sheet and through such offence he has accumulated properties sought to be attached under the PML Act, 2002. The appellants being accused in the criminal case are enjoying the protection of Article 20 (3) of the Constitution of India to remain silent. It is further contended that the nature of the order dated 15.06.2017 passed by respondent no.1 impugned in the writ petition filed by the appellants is different from the order impugned in W.A. No.140 of 2017 which arises out of W.P.(C) No.9141 of 2017. It is further contended that the nature of the order dated 15.06.2017 passed by respondent no.1 impugned in the writ petition filed by the appellants is different from the order impugned in W.A. No.140 of 2017 which arises out of W.P.(C) No.9141 of 2017. The present appellants assail the order of respondent no.1 on the preliminary issue whereas the appellants in W.A. No.140 of 2017 had challenged the show-cause notice issued by respondent no.1. Therefore, factually and legally both the cases stand on different footing all together and, as such, the ratio decided in the judgment and order passed in W.A. No.140 of 2017 has no application to the present context. Therefore, he seeks for quashing of the order dated 05.09.2017 passed by the learned Single Judge in W.P.(C) No.12218 of 2017. 4. Mr. A.K. Bose, learned Assistant Solicitor General appearing for the Union of India raises preliminary objection with regard to maintainability of the writ appeal and contended that where an efficacious and alternative remedy is available under the Statute, without availing the same, the appellants could not have approached this Court by preferring a writ petition and this appeal. Since the PML Act, 2002 is a complete code, wherein a right or liability is created, which gives remedy for enforcement of the provisions of the Act, the remedy under the said Act must be availed of first. Without availing the remedy under the Act, if the writ appeal is admitted, then the legislative intent manifested in the provisions of the Act shall be frustrated, thereby causing prejudice to the interest of the prosecution. It is further contended that the provisional attachment order, issued under Section 5 of the PML Act, 2002, remains in force for 180 days from the date of order. Therefore, the adjudicating authority is required to pass the order, either confirming or otherwise, following the due procedure of adjudication as contained in Section 8 of the said Act. The confirmation of provisional attachment becomes final only after an order of confiscation is passed in due process of law and the order so passed by the adjudicating authority is appealable under Section 26 of the PML Act, 2002 to the appellate tribunal and any person aggrieved by the decision or order of the tribunal may file appeal to the High Court under Section 42 of the PML Act, 2002. Therefore, the filing of writ petition challenging the order of the adjudicating authority on preliminary issue is premature and not tenable in the eye of law. Therefore, the appeal preferred against the order of learned Single Judge cannot sustain. More so, the finding of the adjudicating authority will be confined to the provisions of the said Act and as such any finding arrived at by the adjudicating authority, cannot have any binding effect on the criminal proceedings. Therefore, he seeks for dismissal of the writ appeal preferred by the appellants. 5. We have heard Mr. Asok Mohanty, learned Senior appearing for the appellants and Mr. A.K. Bose, learned Assistant Solicitor General for the respondents and perused the records. With the consent of learned counsel for the parties, we dispose of the writ appeal finally at the stage of admission. 6. The facts as delineated above are admitted by the parties. For just and proper adjudication of the case, the relevant provisions of PML Act, 2002 are quoted below: “Section 2(p) :-“money-laundering” has the meaning assigned to it in section 3.” “Section 2(u) :-“proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property.” “3. Offence of money-laundering.—Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the 1 [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering.” “5. Attachment of property involved in money-laundering. Attachment of property involved in money-laundering. [(1) Where the Director, or any other officer not below the rank of Deputy Director authorised by 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 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.] (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. xx xx xx” 8. xx xx xx” 8. Adjudication.— (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an [offence under section 3 or is in possession of proceeds of crime], it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized [or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after— (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides under subsection (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or 3 [record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property] or record shall— (a) continue during 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; and] [(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the Adjudicating Authority] xx xx xx” “11. Power regarding summons, documents and evidence, etc.-production of xx xx xx (2) All the persons so summoned shall be bound to attend in person or through authorised agents, as the Adjudicating Authority may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (3) Every proceeding under this section shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).” “26. Appeals to Appellate Tribunal.—(1) Save as otherwise provided in sub-section (3), the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act, may prefer an appeal to the Appellate Tribunal. (2) Any 2 [reporting entity] aggrieved by any order of the Director made under sub-section (2) of section 13, may prefer an appeal to the Appellate Tribunal. (2) Any 2 [reporting entity] aggrieved by any order of the Director made under sub-section (2) of section 13, may prefer an appeal to the Appellate Tribunal. (3) Every appeal preferred under sub-section (1) or sub-section (2) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or Director is received and it shall be in such form and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may, after giving an opportunity of being heard, entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. (4) On receipt of an appeal under sub-section (1) or sub-section (2), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. (5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Director, as the case may be. (6) The appeal filed before the Appellate Tribunal under subsection (1) or sub-section (2) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of filing of the appeal.” “42. Appeal to High Court.—Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. Explanation.— For the purposes of this section, “High Court” means— (i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.” 7. On perusal of the above mentioned provisions, the term “money laundering” can be made applicable where it is proved that it has taken birth from commission of scheduled offence. Therefore, the consequence of the analogy of the aforementioned provisions would indicate to establish the offence of money laundering to the extent that for proving that a person had committed a scheduled offence, it has to be proved that such commission of scheduled offence had given rise to “proceeds of crime” and only after that a person is said to be involved in money laundering. The definition of the phrase “proceeds of crime” read with Section 3, if construed strictly, the meaning attributable to “proceeds of crime” under the PML Act, 2002 whereby the ‘crime’ contemplated as scheduled offence for which a notice of show cause has to be issued under Section 5(1) of the PML Act, 2002 and consequentially, a provisional attachment has to be made and the procedure has been envisaged under Section 8 of the said Act. By following such procedure, if the final order of attachment has been passed, that itself is appealable under Section 26 of the PML Act, 2002 and further second appeal lies to this Court under Section 42 of the PML Act, 2002. 8. Mr. Asok Mohanty, learned Senior Counsel appearing for the appellants does not dispute the forum available under the statute against the final order of attachment passed by the adjudicating authority. But the sole grievance lies that in the event of filing of show cause and disclosing the defence before the adjudicating authority, which may be utilized against the appellants in the criminal trial pending before the appropriate criminal courts, there is every likelihood of utilizing the same against them, which will cause prejudice to the appellants. As such, the protection available under Article 20(3) of the Constitution of India will be infringed. As such, the protection available under Article 20(3) of the Constitution of India will be infringed. In other words, filing the show cause in PML proceeding would amount to disclosing his defence ahead of prosecuting and proving the same against the appellants in the appropriate criminal proceedings, which violates the mandate of Article 20(3). Therefore, the present proceeding ought to be kept in abeyance till the prosecution in the criminal case examined its witnesses. The appellants are not questioning the finding, rather contending the right against self incrimination as protected under Article 20(3) of the Constitution of India. In response to the said contention, Mr. A.K. Bose, learned Asst. Solicitor General appearing for the Union of India contended that the proceedings before the adjudicating authority are summary in nature and confined to the provisions of the PML Act, 2002 where only prima facie findings are to be recorded and he has thus submitted that the findings arrived at by the adjudicating authority will have no binding effect on the criminal courts trying the case against the appellants. 9. This question has already been considered by this Court in W.A. No. 140 of 2017 (Bharat Bhushan Swain v. The Adjudicating Authority) disposed of on 22.08.2017 and relying upon the same learned Single Judge has disposed of the writ application by its judgment dated 05.09.2017 with the observation how to deal with the statutory limits of 180 days as envisaged in Section 5 of the PML Act, 2002. In our considered view, no illegality or irregularity has been committed by the learned Single Judge by passing the impugned judgment and order so as to warrant interference by this Court in the present appeal. Accordingly, we dispose of the writ appeal with the observation and direction that the appellants shall participate and cooperate in the proceedings before the adjudicating authority in terms of the observation made by the learned Single Judge in the judgment and order dated 05.09.2017 passed in W.P. (C) No. 12218 of 2017.