FARIDA BEGUM BISWAS vs. UNION OF INDIA & ORS.

* IN THE HIGH COURT OF DELHI AT NEW DELHI

nd
% Date of decision: 02 September, 2015

+ W.P.(C) 8266/2015
FARIDA BEGUM BISWAS ..... Petitioner
Through: Mr. Farook M. Razack, Sr. Advocate
with Mr. Faisal Farook and Mr.
Shubail Farook, Advocates.
versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr. Ripu Daman Bhardwaj, CGSC,
Mr. Raj Kumar Dahiya and Mr. T.P.
Singh, Advocates for R-1 to R-3.
+ W.P.(C) 8359/2015
BARIK BISWAS ..... Petitioner
Through: Mr. Gopal Subramanium, Sr.
Advocate with Mr. Faisal Farook and
Mr. Shubail Farook, Advocates.
versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr. Ripu Daman Bhardwaj, CGSC,
Mr. Raj Kumar Dahiya and Mr. T.P.
Singh, Advocates for R-1 to R-3.
CORAM:
HON'BLE MR. JUSTICE VED PRAKASH VAISH

VED PRAKASH VAISH, J. (ORAL)

C.M. Appl. No.17415/2015 in W.P. (C) No.8266/2015
C.M. Appl. No.17724/2015 in W.P. (C) No.8359/2015
Exemption is allowed subject to all just exceptions.
The applications stand disposed of.

W.P.(C) Nos.8266/2015 & 8359/2015 Page 1 of 13


W.P.(C) No.8266/2015 & W.P.(C) No.8359/2015
1. By way of present petitions under Article 226 of the Constitution of
India the petitioners seek quashing of show cause notice dated 19.06.2015
in O.C. No. 501/2015 under Section 8 of the Prevention of Money
Laundering Act, 2002 (for short “PMLA”) issued by respondent No.3 and
the provisional attachment order bearing F.No. KLZO/03/2015/AD(AKS)/
NKM/3742 dated 21.05.2015 under Section 5 of the PMLA issued by the
respondent No.2.

2. Since both these petitions have arisen out of the same show cause
notice and involves common question of law therefore, both the petitions
are taken up together.
3. The facts as borne out from W.P.(C) No. 8266/2015 are that on
08.03.2014, officers of Directorate of Revenue Intelligence (for short
“DRI”), Kolkata intercepted one Toyota Fortuner Car on Taki road, near
Beliaghata Bill, North 24 Parganas. At the time of interception the
petitioner‟s husband (petitioner in 8359/2015) was present in that car and
the same was being driven by Mr. Mokesed Mondal. A total 44.659 Kgs of
Gold of foreign origin (containing 12 pcs. of gold Bars and 280 pcs. of
Gold Biscuits) valued at 13.56 crores was recovered and seized by the
officers of DRI. A show cause notice under Section 124 of the Customs
Act, 1962 was issued to the petitioner‟s husband and to Mr. Moksed
Mandal. Thereafter, a case under the PMLA was initiated against the
petitioner‟s husband and the same is now pending before the learned Chief
Judge City Sessions Court and Special Court under PMLA. On 21.05.2015
the petitioner received a provisional attachment order, in terms of which,
W.P.(C) Nos.8266/2015 & 8359/2015 Page 2 of 13


she was informed that various movable and immovable properties attributed
to her and her family members have been provisionally attached by the
respondent No.2 under Section 5 of the PMLA. Thereafter, on 19.06.2015,
a notice to show cause was issued by the respondent No.3 under Section 8
of the PMLA to the petitioner herein amongst others.
4. Learned senior counsel for the petitioner submits that the impugned
notice to show cause dated 19.06.2015 issued by respondent No.3 under
Section 8 of the PMLA and the impugned Provisional Attachment Order
dated 21.05.2015 issued by the respondent No.2 under Section 5(1) of the
PMLA are illegal, arbitrary and malafide and have been issued without
following the procedure established under the PMLA, and as such, the same
are violative of petitioner‟s rights as guaranteed under Article 21 of the
Constitution of India. He further submits that the notice to show cause dated
19.06.2015 has been issued without there being any “reason to believe” that
(i) the person concerned has committed an offence under Section 3 i.e.,
offence of money-laundering, or (ii) the person concerned is in possession
of proceeds of crime. The aforesaid two pre-conditions, which are
mandatory in nature for issuance of a notice under section 8 of the PMLA,
are conspicuous by their absence in the instant case, and as such, the
resultant notice impugned herein is liable to be set aside by this Court. He
also submits that the order dated 21.05.2015 and the notice to show cause
dated 19.06.2015 impugned herein have been issued in great haste without
application of mind by the makers of the same and are premature.
5. Before examining the merits of the case it is necessary to consider
relevant provisions of the PMLA. The term „proceeds of crime‟ has been
W.P.(C) Nos.8266/2015 & 8359/2015 Page 3 of 13


defined in Sub-section u) of Section 2 (1) of the PMLA, which reads as
under: -

(1) Where the Director or any other officer not below the rank
of Deputy Director authorised by the 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:
W.P.(C) Nos.8266/2015 & 8359/2015 Page 4 of 13


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 [first proviso], 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.
(3) Every order of attachment made under sub-section (1) shall
cease to have effect after the expiry of the period specified in
that sub-section or on the date of an order made under sub-
section (2) of section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person interested in
the enjoyment of the immovable property attached under sub-
section (1) from such enjoyment.
Explanation.--For the purposes of this sub-section, "person
interested", in relation to any immovable property, includes all
W.P.(C) Nos.8266/2015 & 8359/2015 Page 5 of 13


persons claiming or entitled to claim any interest in the
property.
(5) The Director or any other officer who provisionally attaches
any property under sub-section (1) shall, within a period of
thirty days from such attachment, file a complaint stating the
facts of such attachment before the Adjudicating Authority.
Section 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
W.P.(C) Nos.8266/2015 & 8359/2015 Page 6 of 13


(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 sub-
section (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 [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 [Special Court];]
(4) Where the provisional order of attachment made under sub-
section (1) of section 5 has been confirmed under sub-section
(3), the Director or any other officer authorised by him in this
behalf shall forthwith take the [possession of the property
attached under section 5 or frozen under sub-section (1A) of
section 17, in such manner as may be prescribed:
Provided that if it is not practicable to take
possession of a property frozen under sub-section
W.P.(C) Nos.8266/2015 & 8359/2015 Page 7 of 13


(1A) of section 17, the order of confiscation shall
have the same effect as if the property had been
taken possession of.].
[(5) Where on conclusion of a trial of an offence under this
Act, the Special Court finds that the offence of money-
laundering has been committed, it shall order that such property
involved in the money-laundering or which has been used for
commission of the offence of money-laundering shall stand
confiscated to the Central Government.
(6) Where on conclusion of a trial under this Act, the Special
Court finds that the offence of money-laundering has not taken
place or the property is not involved in money-laundering, it
shall order release of such property to the person entitled to
receive it.
(7) Where the trial under this Act cannot be conducted by
reason of the death of the accused or the accused being
declared a proclaimed offender or for any other reason or
having commenced but could not be concluded, the Special
Court shall, on an application moved by the Director or a
person claiming to be entitled to possession of a property in
respect of which an order has been passed under sub-section (3)
of section 8, pass appropriate orders regarding confiscation or
release of the property, as the case may be, involved in the
offence of money-laundering after having regard to the material
before it.]
[(8) Where a property stands confiscated to the Central
Government under sub-section (5), the Special Court, in such
manner as may be prescribed, may also direct the Central
Government to restore such confiscated property or part thereof
of a claimant with a legitimate interest in the property, who
may have suffered a quantifiable loss as a result of the offence
of money laundering:
Provided that the Special Court shall not consider
such claim unless it is satisfied that the claimant
has acted in good faith and has suffered the loss
despite having taken all reasonable precautions
W.P.(C) Nos.8266/2015 & 8359/2015 Page 8 of 13


and is not involved in the offence of money
laundering.]
Section 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 [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 sub-
section (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.”
W.P.(C) Nos.8266/2015 & 8359/2015 Page 9 of 13

Director or any other officer not below the rank of Deputy Director
authorised by the Director, has reason to believe, on the basis of material in
his possession that any 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, he may provisionally attach such proceeds of crime based on
the said material reasons to believe that are to be given in writing. After
every order of such attachment 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, to the adjudicating authority. The provisional attachment under
Section 5(1) of PMLA is only a cautious and tentative step and only
becomes effective after an order is passed by the adjudicating authority
under Section 8 of PMLA.
W.P.(C) Nos.8266/2015 & 8359/2015 Page 10 of 13

W.P.(C) Nos.8266/2015 & 8359/2015 Page 11 of 13

very amplitude of the jurisdiction exercised under Article 226 of the
Constitution of India demands that it will, ordinarily, be exercised subject to
certain self-imposed limitations, and is not to be issued as a matter of
course.

the provisional attachment order dated 21.05.2015 under Section 5 of the
PMLA issued by the respondent No.2. The action of coming to this Court is
premature and therefore, this Court is of the view that since the petitioners
have effective and efficacious remedy under PMLA, necessitating
institution of the petition by invoking extraordinary jurisdiction of this
Court is not appropriate at this stage. If this Court were to enter into the
merits of this case at this stage, it would amount to scuttling the statutorily
engrafted mechanism i.e. PMLA.
12. In view of the aforesaid discussion, I am not inclined to entertain the
present petitions and the same are hereby dismissed.

W.P.(C) Nos.8266/2015 & 8359/2015 Page 12 of 13


C.M. Appl. No.17414/2015 in W.P. (C) No.8266/2015
C.M. Appl. No.17723/2015 in W.P. (C) No.8359/2015
The applications are dismissed as infructuous.


(VED PRAKASH VAISH)
JUDGE
SEPTEMBER 02, 2015
hs



W.P.(C) Nos.8266/2015 & 8359/2015 Page 13 of 13