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Gujarat High Court · body

2023 DIGILAW 120 (GUJ)

Rina Jain W/o. Vineet Gangwal v. Union Of India

2023-01-12

NIRZAR S.DESAI

body2023
JUDGMENT : 1. Rule. Learned advocate Mr.Kshitij Amin waives service of notice of Rule on behalf of Respondent Nos.1, 2, 3 and 5 and learned Additional Public Prosecutor Mr.Soaham Joshi waives service of notice of Rule on behalf of Respondent No.4 – State. 2. By way of this petition, the petitioner has prayed for following reliefs : “A. this Hon’ble Court be pleased to issue a Writ of Certiorari, or a Writ in the nature of Certiorari, or any other appropriate writ, calling the records for the assets seized under Panchnama dated 22.05.2015 (Annexure A) and after going into the legality, validity and propriety thereof, to quash and set aside seizure of the assets seized under Panchnama dated 22.05.2015 (Annexure A) belonging to the Petitioners; B. this Hon’ble Court be pleased to issue a Writ of Mandamus or in the nature of Mandamus, or any other appropriate Writ, Order or direction to the Respondent to i. withdraw all communications/instructions/orders issued to the Banks for freezing the bank account, bank lockers of the Petitioners; ii. Release fixed deposits and Life Insurance Policies of the Petitioners seized under Panchnama dated 22.05.2015 (Annexure A); iii. Release the passport of Petitioner No.3 seized under Panchnama dated 22.05.2015 (Annexure A) iv. Release any other assets of the Petitioners that have been seized under Panchnama dated 22.05.2015 (Annexure A) which are not part of the complaint filed by the Respondents; (BB) That this Hon’ble Court be pleased to issue a Writ of Certiorari, or a Writ in the nature of Certiorari, or any other appropriate writ, calling for the records for the order dated 31.12.2020 passed by Respondent No.5 (Annexure-J) and after going into the legality and propriety thereof, the same may kindly be quashed and set aside with consequential relief; C. for interim/ad-interim relief in terms of prayer A and B above; D. for costs of the petition/application and orders thereon; and E. for such further and other reliefs, as this Hon’ble Court may deem fit and proper under the facts and circumstances of the case.” 3. In nutshell by way of aforesaid prayers, the petitioners have prayed for defreezing of their bank accounts and bank lockers and to release the Fixed Deposits and Life Insurance Policies in the name of the petitioners, to release the passports and other assets seized under the panchnama dated 22.05.2015. 4. In nutshell by way of aforesaid prayers, the petitioners have prayed for defreezing of their bank accounts and bank lockers and to release the Fixed Deposits and Life Insurance Policies in the name of the petitioners, to release the passports and other assets seized under the panchnama dated 22.05.2015. 4. Heard learned advocate Mr.Hardik Modh for the petitioner and learned advocate Mr.Kshitij Amin for the Union of India and Joint Director Enforcement Department as well as Adjudicating Authority. 5. It is the case of the petitioner that petitioners were searched on 22.05.2015 under provisions of Sections 17(1) of ‘the Prevention of Money Laundering Act, 2002’ (‘PMLA’ for short) in connection with offences allegedly committed by Rahul Gangwar and Vineet Gangwar under ECIR/03/FZO/2015. Since the present petitioners were out of station with the family, the residential premises of the petitioners were locked. However, the lock was broke opened and premises was searched by the respondents and alleged incriminating documents, jewellery and other valuable items including Fixed Deposits, LIC policies, bank lockers etc. were seized by the respondents under the panchnama dated 22.05.2015. According to the petitioners, though the aforesaid goods and other materials and documents were seized since 22.05.2015 and though the Act does not provide for retention of the same beyond period of 180 days unless permitted by the adjudicating authority under the proceedings under Section 17(4) of ‘PMLA’, despite there being any order permitting the respondents to retain the seized goods and other materials, which are stated herein before, the authorities in violation of provisions of Act have continued to retain the goods and other seized materials with them and, therefore, by way of this petition the petitioners have prayed for release of the same. 6.1 Learned advocate Mr.Hardik Mode appearing for the petitioners points out that the present petitioner nos.1 and 2 happen to be respective wives of accused Vineel Agrawal and Rahul Agrawal whereas petitioner nos.3 and 4 happen to parents of aforesaid two accused persons. 6.1 Learned advocate Mr.Hardik Mode appearing for the petitioners points out that the present petitioner nos.1 and 2 happen to be respective wives of accused Vineel Agrawal and Rahul Agrawal whereas petitioner nos.3 and 4 happen to parents of aforesaid two accused persons. He submitted that on 22.05.2015, after the seizure took place, as per Section 17(4) of ‘PMLA’ the authorities were required to file an appropriate application before the adjudicating authority seeking permission to retain the seized goods and other articles and once such application is preferred, in view of Section 20 of ‘PMLA’, more particularly in view of Section 20(1), unless permitted by the authority, the authorities cannot retain the goods and other articles beyond period of 180 days. Learned advocate Mr.Hardik Modh submitted that in the instant case, except for the jewellery and cash seized from the residential premises of the petitioners, rest of the goods and articles were not permitted to be retained by the adjudicating authority and thereafter despite the aforesaid fact having been put to the notice of the respondents, the respondents have not released the goods and other articles and defreezed the bank accounts and lockers of the present petitioners. 6.2 Learned advocate Mr.Hardik Modh also drawn attention of this Court to the affidavit-in-reply filed by Assistant Director of Enforcement, Ahmedabad, on 14.10.2022 and by drawing attention to para:14 of the affidavit submitted that even as per the respondents no application for retention of record of properties was filed before adjudicating authority within prescribed time and except for cash and jewellery, which were attached vide PAO Nos.8 of 2015 and 10 of 2015 and the same was confirmed by the adjudicating authority, there is no order in respect of rest of the goods and articles seized from the petitioners. 7. Learned Central Government Counsel Mr.Kshitij Amin vehemently opposed the application and submitted that the respondent authorities have rightly seized the goods and articles and freezed the bank accounts and lockers while exercising powers prescribed under the Act and even the adjudicating authority has also permitted the retention of cash and jewellery by PAO Nos.08 of 2015 and 10 of 2015 and, therefore, present application may be dismissed. However, learned advocate Mr.Amin appearing for the respondent Central Government and its agency and the Enforcement Director could not point anything either from the provisions of PMLA or from any document on record or from the affidavit submitted by Assistant Director of Enforcement Directorate that the respondent authorities have power to retain the seized goods and other articles beyond a period of 180 days in absence of there being any order by the adjudicating authority permitting them such retention. 8. I have heard learned advocate Mr.Hardik Modh, learned advocate Mr.Kshitij Amin and learned Additional Public Prosecutor Ms.Maithili Mehta for respective parties. 9.1 Before considering the issue at hand, what is required to be considered is Section 17 of the ‘PMLA’ which are reproduced as under: “17. Search and seizure. 8. I have heard learned advocate Mr.Hardik Modh, learned advocate Mr.Kshitij Amin and learned Additional Public Prosecutor Ms.Maithili Mehta for respective parties. 9.1 Before considering the issue at hand, what is required to be considered is Section 17 of the ‘PMLA’ which are reproduced as under: “17. Search and seizure. – (1) Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section], on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person - (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii) is in possession of any records relating to money-laundering, [or] (iv) is in possession of any property related to crime] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to – (a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept; (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks of identification on such record or [property, if required or] make or cause to be made extracts or copies therefrom; (e) make a note or an inventory of such record or property; (f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act: [(1A) Where it is not practicable to seize such record or property, the officer authorized under sub-section (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned: Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60, it becomes practical to seize a frozen property, the officer authorised under subsection (1) may seize such property.] (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure [or upon issuance of a freezing order] forward a copy of the reasons so recorded along with 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 reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence. Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section. (4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing served under sub-section (1A), before the Adjudicating Authority.]” 9.2 Joint reading of Section 17(1) and 17(3) with Section 17(1)(i)(c) of ‘PMLA’ empowers the authority to carry out search at the premises of any person on the basis of information and to seize the record and property found as a result of such search. Pursuant to the aforesaid powers available to the respondent authority, respondent authority has searched the premises of the petitioners and seized the goods and articles in the form of fixed deposits, life insurance policies and passport of the petitioners. The respondent authority has also issued various communications, instructions and orders to the Banks for freezing the bank accounts and lockers of the petitioners and other assets of the petitioners are seized vide panchnama dated 22.05.2015. 9.3 Section 17(4) of ‘PMLA’ provides that once the seizure takes place, the authority seizing the property is required to file an application requesting for retention of such property or property seized under section 17(1) or for continuation of order of seizure served under sub-section (1A) of Section 17 within a period of 30 days from the date of seizure to the adjudicating authority. 9.4 In the instant case, Section 20 of ‘PMLA’ is also relevant and therefore the same is reproduced as under: “20. Retention of property. 9.4 In the instant case, Section 20 of ‘PMLA’ is also relevant and therefore the same is reproduced as under: “20. Retention of property. - (1) Where any property has been seized under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the officer authorized by the Director in this behalf has, on the basis of material in his possession, reason to believe (the reason for such belief to be recorded by him in writing) that such property is required to be retained for the purposes of adjudication under section 8, such property may, if seized, be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such property was seized or frozen, as the case may be. (2) The officer authorised by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the property for purposes of adjudication under section 8, forward a copy of the order along with the material in his possession, referred to in subsection (1), 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. (3) On expiry of the period specified in subsection (1), the property shall be returned to the person from whom such property was seized or whose property was ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such property beyond the said period. (4) The Adjudicating Authority, before authorising the retention or continuation of freezing of such property beyond the period specified in sub-section (1), shall satisfy himself that the property is prima facie involved in money-laundering and the property is required for the purposes of adjudication under section 8. (5) After passing the order of confiscation under sub-section (5) or sub-section (7) of section 8, [Special Court] shall direct the release of all property other than the property involved in money-laundering to the person from whom such property was seized or the persons entitled to receive it. (5) After passing the order of confiscation under sub-section (5) or sub-section (7) of section 8, [Special Court] shall direct the release of all property other than the property involved in money-laundering to the person from whom such property was seized or the persons entitled to receive it. (6) Where an order releasing the property has been made by the [Special Court] under subsection (6) of section 8 or by the Adjudicating Authority under section 58B or sub-section (2A) of section 60, the Director or any officer authorised by him in this behalf may withhold the release of any such property for a period of ninety days from the date of [receipt of] such order, if he is of the opinion that such property is relevant for the appeal proceedings under this Act.” 9.4.1 Section 20 (1) provides that while the property has been seized under Section 17 or Section 18 or frozen under sub-section 1(a) of Section 17, the officer authorized by the Director, in this behalf, on the basis of material in his possession, and if he has reason to believe that such property is required to be retained for the purpose of adjudication under Section 8, such property which is seized or retained or frozen may continue to remain frozen for a period not exceeding 180 days from the date on which such property was seized or frozen. Once such application is preferred, in that case, sub-section (3) provides that on expiry of aforesaid period specified in sub-section (1) i.e. 180 days, the property shall be returned to the person from whom such property is seized for whose property was ordered to be frozen unless the adjudicating authority permits the retention or continuation of freezing of such property beyond the said period. 10. In view of the aforesaid position, if the facts are examined the facts indicate that once the search took place on 22.05.2015 and goods and other articles were seized or frozen, thereafter no such application, as prescribed under Section 17(4) of ‘PMLA’ was ever made before the adjudicating authority. Even the application under Section 20(1) of ‘PMLA’ was also never made before the adjudicating authority. Even the application under Section 20(1) of ‘PMLA’ was also never made before the adjudicating authority. However, in respect of an order dated 31.12.2020, upon an application made by the present petitioners, before the adjudicating authority, on perusal of record it seems that the authority preferred an application for retention of goods and other articles, seized, frozen or attached and while adjudicating such application, as per powers conferred under Section 8 of the ‘PMLA’, the authority vide order dated 05.02.2016 confirmed the provisional attachment order. However, it is noteworthy that the aforesaid application was filed in respect of Mr.Vineet Gangwar and Mr.Rahul Gangwar only and not against the present petitioners which would indicate that at no point of time, as indicated by the record, any application under Section 17(4) or under Section 20 of ‘PMLA’ was ever preferred against the present petitioners. 11. Vide order dated 05.06.2016 the aforesaid attachment in respect of jewellery and cash was confirmed and the authority was permitted to retain the same with it. However, when the present petitioners preferred application for review being Miscellaneous Application No.523A in Original Complaint OC No.523 of 2015, vide order dated 31.12.2020 the Review Application preferred by the petitioner was not entertained on the ground that there is no power of review conferred upon the Adjudicating Authority under PMLA and what is provided and permissible under PMLA is filing of an appeal against the order of adjudicating authority in terms of provisions of Section 26 of PMLA by the aggrieved person. 12. The fact remains that, at no point of time, any application was preferred by the authority for retention of goods and other articles seized upon search made under Section 17 of the Act. The aforesaid fact is substantiated from affidavit-in-reply filed by Mr.Putta Venu, Assistant Director, Directorate of Enforcement, Ahmedabad Zonal Office, in his affidavit dated 14.10.2022 wherein in para:14 it is stated as under: “14. As per the requirement of Section 17(4) of PMLA, 2022, the authority seizing any record or property under sub-section 1 of Section 17, shall file an application before Adjudicating Authority for retention of such records or property, however, in this case no application for retention of records or properties has been filed before Ld. Adjudicating Authority, within the prescribed time limit. However, it is respectfully submitted that the cash and jewellery etc. Adjudicating Authority, within the prescribed time limit. However, it is respectfully submitted that the cash and jewellery etc. seized during the search operations, were attached vide PAO No.08/2015 and 10/2015 and were also confirmed by the Hon’ble Adjudicating Authority.” 13. The aforesaid paragraph:14 categorically stated that “...in this case no application for retention of records or properties has been filed before Ld.Adjudicating Authority within prescribed time limit” and it is stated in the aforesaid paragraph that it is only “...cash and jewellery etc. which were seized during search operations were, attached vide PAO No.08/2015 and 10/2015” which is confirmed by the adjudicating authority. 14. Considering the provisions of the Act more particularly Section 20(3) of the Act which prohibits the authority to retain any goods or articles seized under Section 17 of the Act beyond period of 180 days unless it is permitted by the Adjudicating Authority coupled with the fact that as stated on oath by the Assistant Director of Enforcement Directorate that in the instant case that no such application for retention of seized goods or articles was preferred under Section 17(4) of the Act within prescribed time limit and also as the record indicates that no such application was preferred against the present petitioners the action of retaining of goods and articles seized or bank accounts which are frozen belonging to the present petitioners vide panchnama dated 22.05.2015 is in violation of provisions of Section 17(4) and 20(3) of the Act. Further, even the affidavit-in-reply filed by the respondent does not justify the action of respondents of retaining the aforesaid goods and articles and, therefore, in absence of there being any legal valid and logical justification behind retention of goods and articles and instructions/directions/orders about freezing the bank accounts and locerks of the petitioners when the same is in violation of the provisions Act, respondents are directed to release the same and return it to the present petitioners. 15. The respondent authorities, therefore, are directed to return all other goods and articles except for cash and jewellery or the articles and goods which are no included in the order of the adjudicating authority dated 05.02.2016 while deciding Original Complaint OC No.523 of 2015. 16. In view of above discussion, present petition is allowed. Rule is made absolute. No order as to costs. 17. 16. In view of above discussion, present petition is allowed. Rule is made absolute. No order as to costs. 17. In view of disposal of the main petition, Criminal Miscellaneous Application No.1 of 2022 would not survive and it is disposed of accordingly.