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2022 DIGILAW 1395 (CAL)

Enforcement Directorate v. Rashmi Metaliks Ltd

2022-09-28

PRAKASH SHRIVASTAVA, SUGATO MAJUMDAR

body2022
JUDGMENT : Prakash Shrivastava, J. 1. This intra-court appeal is directed against the order of the learned Single Judge dated 10th of August, 2022 whereby WPA 17454 of 2022 has been disposed of by granting interim relief. 2. The respondent (writ petitioner) had filed the writ petition challenging the order of freezing dated 13th of July, 2022 and further prayer to restrain the appellants from taking any further action or prosecution in relation to ECIR No. ECIR/KLZO/06/2012. 3. Learned Single Judge by the order under appeal has stayed the operation of the freezing order dated 13th of July, 2022 and has directed the respondents not to act in terms of the said order or take steps in furtherance therein. With the above order, learned Single Judge has accordingly disposed of the petition. 4. Submission of learned counsel for the appellants is that the writ petition has been allowed on the first date of hearing itself without giving any opportunity to the appellants to file affidavit-in-opposition in the writ petition. He has further submitted that the case is at the investigation stage and the investigation cannot be stayed and in terms of the provisions of the Act, the proceeds of crime are required to be frozen. He has further submitted that the reasons to believe as required by Section 17 of the Prevention of Money-Laundering Act, 2002 (for short, ‘the PMLA’) were available and could be produced before the learned Single Judge if an opportunity would have been given or case diary would have been called. He has referred to the reasons to believe recorded for retention of the property under Section 20 of the PMLA filed on page 163 of CAN 1 of 2022. Referring to the documents dated 20th of July, 2022 relating to retention of property under Sub-Section (1) of Section 20 of the PMLA (page 165 of CAN 1 of 2022), he has pointed out that the adjudicating authority was duly intimated about reasons to believe for the searches conducted on 13th of July, 2022 as per Section 17(2) of the PMLA by the communication dated 15th of July, 2022. He has submitted that there is no requirement under Section 17 of the PMLA to supply the reasons to believe to the writ petitioner or to mention the same in the freezing order. He has submitted that there is no requirement under Section 17 of the PMLA to supply the reasons to believe to the writ petitioner or to mention the same in the freezing order. He has referred to the provisions of the PMLA to show the scheme of the Act and has also submitted that the remedy of appeal is available to the writ petitioner under Section 26 of the PMLA. In support of his submission, he has placed reliance upon the judgments of the Hon’ble Supreme Court in the matter of Vijay Madanlal Choudhary and Others vs. Union of India and Others reported in 2022 SCC OnLine SC 929 and in the matter of Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra and Others reported in 2021 SCC OnLine SC 315 and the judgment dated 2nd of August, 2022 passed in Criminal Appeal No. 1044 of 2022 in the matter of Siddharth Mukesh Bhandari vs. The State of Gujarat and Anr. 5. Opposing the prayer, learned counsel for the respondents has submitted that only the freezing order has been stayed and that investigation has not been stayed. His further submission is that if the appellant contends that the investigation has been stayed, then the appeal cannot be maintained in view of the judgment of the Hon’ble Supreme Court in the matter of Ram Kishan Fauji vs. State of Haryana and Others reported in (2017) 5 SCC 533 as no LPA lies against the order passed by the learned Single Judge of the High Court in exercise of the criminal jurisdiction. He has also submitted that the order of the learned Single Judge does not suffer from any error and in this regard, he has referred to the various orders passed in respect to the proceedings for the years up to 2010 and also 2011-12 and has placed reliance upon order of the Hon’ble Supreme Court dated 14th of December, 2015 passed in Transfer Petition (C) No. 832-854 of 2015 and has submitted that further proceedings in the petitioners’ earlier cases have been stayed by the Hon’ble Supreme Court. He has also submitted that for the year 2011-12, High Court had stayed the proceedings in RC No. 0102014A0015 dated 14th of June, 2014 under Sections 120B/420 of the IPC by order dated 4th of April, 2017 passed in CRR No. 1089 of 2017 and the said order of stay is continuing till now. In support of the reasoning given by the learned Single Judge, he has placed reliance upon the judgments of the Allahabad High Court in the matter of Motilal and Others vs. Preventive Intelligence Officer, Central Excise and Customs, Agra and Others reported in 1970 SCC OnLine All 313 and Madras High Court dated 1st of September, 2022 in the matter of B. Shanmugam vs. Karthik Dasari. 6. We have heard learned counsel for the parties and perused the record. 7. Learned Single Judge while passing the impugned order was considering the prayer for grant of stay as is clear from the opening paragraph of the order. In the concluding paragraph also, learned Single Judge has stayed the impugned freezing order dated 13th of July, 2022. Hence, the order under appeal is an interlocutory order, therefore, at the stage of passing interim order, learned Single Judge ought not to have disposed of the writ petition. 8. That apart, it is also noticed that on the first date itself, learned Single Judge has disposed of the writ petition without giving an opportunity to the appellants to file their affidavit-in-opposition or produce the record. Without calling for any response from the opposite party, learned Single Judge has examined the factual issues and recorded the conclusions thereon. The appellants has produced before this Court, the reasons to believe recorded for retention of the property under Section 20 of the PMLA which were intimated to the Adjudicating Authority, (PMLA) vide letter dated 15th of July, 2022. This may have some bearing on the issue under consideration but appellants had no opportunity to file these documents before the Writ Court. 9. Learned counsel for the respondent (writ petitioner) has fairly stated that in compliance of the order of the learned Single Judge, the accounts in question have been defreezed but the amount is still lying intact in those accounts. 10. We find that learned Single Judge has only examined the issue of stay of defreezing order. 9. Learned counsel for the respondent (writ petitioner) has fairly stated that in compliance of the order of the learned Single Judge, the accounts in question have been defreezed but the amount is still lying intact in those accounts. 10. We find that learned Single Judge has only examined the issue of stay of defreezing order. The prayer (a) in the writ petition relating to quashing of ECIR being No. ECIR/KLZO/06/2012 has not been considered or granted by the learned Single Judge, therefore, we are of the opinion that the appeal is maintainable as learned Single Judge has not exercised the criminal jurisdiction. 11. Considering the nature of controversy involved in the matter, we find that the appellants are entitled to an opportunity before the learned Single Judge and to file the requisite documents along with affidavit-in-opposition. The order of the learned Single Judge is interlocutory in nature, therefore, the conclusions drawn therein and findings recorded therein are only tentative in nature. 12. Thus, we dispose of the appeal by setting aside the last sentence of paragraph 21 of the order of the learned Single Judge which states “WPA 17454 of 2022 is disposed of in terms of the above” and permit the appellants to file affidavit-in-opposition within two working weeks from today before the learned Single Judge in WPA 17454 of 2022 and thereafter, affidavit-in-reply be filed within two working weeks. 13. The learned Single Judge is requested to decide the writ petition expeditiously. Meanwhile, the parties are directed to maintain the status quo existing as on today in respect of the accounts in question which were subject matter of orders of freezing dated 13th of July, 2022. 14. We have refrained ourselves from going into the merits of the matter as the same would prejudice the rights of the parties in the writ petition which is yet to be heard and finally decided by the learned Single Judge on merits. Therefore, the parties will be at liberty to rely upon the judgment cited before this Court at the time of argument before the learned Single Judge. 15. The appeal is accordingly disposed of.