S. Rajendran & Ors vs Deputy Director Directorate Of Enforcement, Chennai

FPA-PMLA-2942-2945/CHN/2019

By this Order, this Tribunal proposes to decide the above-mentioned four appeals under Section 26 of the Prevention of Money Laundering Act,

2002, against the Order dated 29.01.2019, attested on 30.01.2019 and served on 03.02.2019 in O.C. No. 943/2018 passed by the Adjudicating

Authority, PMLA.

The brief facts are that on 23.09.2003, FIR (First Information Reports) has been registered by the CBI i.e. SPE/CBI/ EOW/ Chennai being R.C.

No. FIR No. RC8/E/2003 CBI/EOW/ Chennai. The Charge sheet was filed on 5.7.2005 against Star Forex India Pvt. Ltd. (2) S. Rajenderan, (3)

Naganathan and (4) Chockalingam for the offences under Section 120B read with 419, 420, 467, 468, 471 IPC and substantive offence under Section

420/467/468 & 471 IPC.

On the basis of Charge-Sheet, material and documents from the CBI a case was registered under PMLA being ECIR No. ECIR/02/CEZO/2015

Zone Chennai dated 05.02.2015. It is not mentioned in the ECIR that what was the date of the commission of the alleged offence and when the FIR/

RC was registered by the CBI and when the Act has come into force.

The provisional attachment order 08/2018 was passed on 28.03.2018. The Complaint was filed on 19.04.2018 by the Joint Director, respondent No.

3 before Adjudicating Authority U/s 5 (5) of the PMLA 2002.

The show cause notice was issued on 2.5.2018 to the appellants u/s 8 of the Act by the Registrar/ Administrative Officer Adjudicating Authority

PMLA and the same was replied.

The reply was filed by the appellants on 5.7.2018 before the Adjudicating Authority.

Smt. Mallika, one of the appellants, approached the Honâ€ble High Court of Delhi in July, 2018 to set aside/ quash the Provisional Attachment

Order No. 08/2018 dated 28.03.2018 under Section 5(1) of the Prevention of Money Laundering Act, 2002 issued by Respondent and all consequential

proceedings arising there from qua the petitioner arising out of Enforcement Case Information Report ((ECIR No. CEZO/02/2015/KCM dated

05.02.2015 purportedly invoking Sections 3/4 of the Prevention of Money Laundering Act, 2002.

The proceedings were pending before Adjudicating Authority, however, in the meanwhile, by order dated 27.07.2018, the Honâ€ble High Court

passed the order to the effect that the proceedings before the Adjudicating Authority may continue. But the orders, if any, is passed shall not be

implemented. It was clarified that the provisional attachment shall continue to be operative, meaning thereby, no further steps under section 8(4) of the

Act can be invoked if confirmation is passed.

On 9.10.2018, an application for dropping of proceeding was filed as the period for passing the order i.e. 180 days expired on 21.09.2018 and no

order was passed.

After hearing the arguments the order was passed by the Adjudicating Authority on 29.01.2019 in O.C. No. 943/2018 beyond the period of 180

days in spite of the fact that in view of the High Court order there was no stay and Adjudicating Authority was free to pass the impugned order only

directions was that the order of the Adjudicating Authority shall not be implemented.

Thereafter, the petition was listed before the Honâ€ble High Court and further directions given that Smt. Mallika approached to the Appellate

Tribunal and the appellant shall not be dispossess from the property for the period of one month.

Section 5 of the Prevention of Money Laundering Act 2002 reads as under.

“5. Attachment of property involved in money-laundering. â€

(1) Where the Director, or any other officer not below the rank of Deputy Director 4uthorized 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, thatâ€

(a) any person is in possession of any proceeds of crime;

(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.â€​

In view of the order dated 27.07.2018 passed in Writ Petition No. 7758/2018 filed by the one of the appellants herein Smt. Mallika, it is evident that

the High Court has clarified that proceeding before Adjudicating Authority may continue. However, order if any is passed, shall not be implemented,

meaning thereby that after passing the final order, no steps under section 8(4) for taking the actual possession be taken by the respondent.

In the present case in terms of Section 5 (1) of the PMLA no Provisional Attachment Order has been confirmed within 180 days as prescribed

under the Act which is mandatory from the date of the issuance of the provisional attachment order i.e. 28th March, 2018 bearing No. 08/2018, as

such the provisional attachment order was expired on 24.09.2018 and after the expiry of the such period the provisional attachment order is not to be

confirmed and the Adjudicating Authority was having no option but to return the file to the complainant, with directions for release of the properties

attached. No adjournment during the proceedings for adjournment of hearing was sought by the counsel of the appellants as alleged.

Section 5 (1) mandates that properties cannot be attached for more than 180 days, otherwise such proceedings are entitled to be dropped, as the

prescribed period of time is mandated in the statute itself. It is a Special Act. The Section 5(1) has to be construed strictly. The said period of time

cannot be extended under any circumstances.

In the judgment delivered on 1st March, 2017 by three Judges Bench of Honâ€ble Supreme Court in the matter of ONGC v/s Gujarat Energy

Transmission Corporation Ltd. and Others in civil no. 1315 of 2010 reported in 2017 SCC online SC 223, while dealing with section 125 of the

Electricity Act 2003, it is held at para no. 16 of the said Judgment that;

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From the aforesaid decisions, it is clear as crystal that the constitution Bench in Supreme Court Bar Association (supra) has ruled that

there is no conflict of opinion in Antulayâ€s case or in Union Carbide Corporationâ€s case with the principle set down in Prem Chand

Garg Vs. Excise Commr. Be it noted, when there is a statutory command by the legislation as regards limitation and there is the postulate

that delay can be condoned for a further period not exceeding sixty days, needless to say, it is based on certain underlined, fundamental,

general issues of public policy as has been held in Union Carbide Corporationâ€s case. As the pronouncement in Chhattisgarh State

Electricity Board (supra) lays down quite clearly that the policy behind the Act emphasizing on the constitution of a special adjudicatory

forum, is meant to expeditiously decide the grievances of a person who may be aggrieved by an order of the adjudicatory officer or by an

appropriate commission. The Act is a special legislation within the meaning of section 29(2) of the Limitation Act and, therefore, the

prescription with regard to the limitation has to be the binding effect and the same has to be followed regard being had to its mandatory

nature. To put it in a different way, the prescription of limitation in a case of present nature, when the statute commands that this Court may

condone the further delay not beyond 60 days, it would come within the ambit and sweep of the provisions and policy of legislation. It is

equivalent to section 3 of the Limitation Act. Therefore, it is uncondonable and it cannot be condoned taking recourse to Article 142 of the

constitution.

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In the aforesaid judgment Honâ€ble Supreme Court has categorically held that the limitation can be condoned within the extended period and not

thereafter.

16.1 In the matter of Chhattisgarh State Electricity Board vs. Central Electricity Regulatory Commission& others reported in (2010) 5 SCC 23, while

dealing with Electricity Act, there lordships of Honâ€​ble Supreme Court held that:

The relevant paras of the judgment are reproduced below:

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Section 34(3) of the Arbitration and Conciliation Act, 1996, which is substantially similar to Section 125 of the Electricity Act came to be

interpreted in Union of India v. Popular Construction Co. The precise question considered in that case was whether the provisions of Section 5 of the

Limitation Act are applicable to an application challenging an award under Section 34 of the Arbitration and Conciliation Act, 1996. The two-Judge

Bench referred to earlier decisions in Mangu Rum v. MCD6 7 8, Vidyacharan Shukla v. Khubchand RaglieP, Hukumdev Narain Yadav v. Lailit

Narain Mishra, Patel Naranbhai Marghabhai v. Dhulabhai Galbabha and held: (Popular Construction Co. case, SCC pp. 474-76, paras 12 & 16)

“12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter†used in the proviso to sub-

section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would

therefore bar the application of Section 5 of that Act. “Parliament did not need to go further. To hold that the court could entertain an application to

set aside the award beyond the extended further period under the proviso, would render the phrase “but not thereafter†wholly otiose. No

principle of interpretation would justify such a result.

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Furthermore. Section 34(1) itself provides that recourse to a court against an arbitral award may be made only by an application for setting aside

such award “in accordance with†sub-section (2) and sub-section (3). Sub-section (2) relates to grounds for setting aside an award and is not

relevant for our purposes. But an application filed beyond the period mentioned in Section 34. sub-section (3) would not be an application “in &

accordance with†that sub-section. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond

the period prescribed. The importance of the period fixed under Section 34 is emphasised by the provisions of Section 36 which provide that:

“36. Enforcement.â€"Where the time for making an application to set aside the arbitral award under Section 34 has expired the award shall be

enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the court.â€​

This is a significant departure from the provisions of the Arbitration Act, 1940. Under the 1940 Act, after the time to set aside the award expired, the

court was required to “proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall followâ€

(Section 17). Now the consequence of the time expiring under Section 34 of the 1996 Act is that the award becomes immediately enforceable without

any further act of the court. If there were any residual doubt on the interpretation of the language used in Section 34, the scheme of the 1996 Act

would resolve the issue in favour of curtailment of the courtâ€s powers by the exclusion of the operation of Section 5 of the Limitation Act.

(emphasis supplied)

In Singh Enterprises v. CCE- the Court interpreted Section 35 of the Central Excise Act, 1944 which is pari materia to Section 125 of the

Electricity Act and observed:

“8. The Commissioner of Central Excise (Appeals) as also the tribunal being creatures of statute are not vested with jurisdiction to condone the

delay beyond the permissible period provided under the statute. The period up to which the prayer for condonation can be accepted is statutorily

provided. It was submitted that the logic of Section 5 of the Limitation Act, 1963 (in short “the Limitation Actâ€) can be availed for condonation of

delay. The first proviso to Section 35 makes the position clear that the appeal has to be preferred within three months from the date of communication

to him of the decision or order. However, if the Commissioner is satisfied that the appellant was prevented by sufficient cause from presenting the

appeal within the aforesaid period of 60 days, he can allow it to be presented within a further period of 30 days. In other words, this clearly shows that

the appeal has to be filed within 60 days but in terms of the proviso further 30 days†time can be granted by the appellate authority to entertain the

appeal. The proviso to sub-section (I) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be

presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain

the appeal by condoning delay only up to 30 days after the expiry of 60 days which is the normal period for preferring appeal Therefore, there is

complete exclusion of Section 5 of the Limitation Act. The Commissioner and the High Court were therefore justified in holding that there was no

power to condone the delay after the expiry of 30 daysâ€​ period.â€​

(emphasis supplied)

The same view was reiterated in CCE and Customs v. Punjab Fibres Ltd.

In CCE and Customs v. Hongo India (P) Ltd.4 a three-judge Bench considered the scheme of the Central Excise Act. 1944 and held that the High

Court has no power to condone delay beyond the period specified in Section 35-H thereof. The argument that Section 5 of the Limitation Act can be

invoked for condonation of delay was rejected by the Court and observed:

In the earlier part of our order, we have adverted to Chapter VI-A of the Act which provides for appeals and revisions to various authorities.

Though Parliament has specifically provided an additional period of 30 days in the case of appeal to the Commissioner, it is silent about the number of

days if there is sufficient cause in the case of an appeal to the Appellate Tribunal. Also an additional period of 90 days in the case of revision by the

Central Government has been provided. However, in the case of an appeal to the High Court under Section 35-G and reference application to the

High Court under Section 35-H, Parliament has provided only 180 days and no further period for filing an appeal and making reference to the High

Court is mentioned in the Act.

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As pointed out earlier, the language used in Sections 35, 35-B. 35-EE, 35-G and 35-H makes the position clear that an appeal and reference to the

High Court should be made within 180 days only from the date of communication of the decision or order. In other words, the language used in other

provisions makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning the delay only up to 30

days after expiry of 60 days which is the preliminary limitation period for preferring an appeal. In the absence of any clause condoning the delay by

showing sufficient cause after the prescribed period, there is complete exclusion of Section 5 of the Limitation Act. The High Court was, therefore,

justified in holding that there was no power to condone the delay after expiry of the prescribed period of 180 days.

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It was contended before us that the words “expressly excluded†would mean that there must be an express reference made in the special or

local law to the specific provisions of the Limitation Act of which the operation is to be excluded. In this regard, we have to see the scheme of the

special law which here in this case is the Central Excise Act. The nature of the remedy provided therein is such that the legislature intended it to be a

complete code by itself which alone should govern the several matters provided by it. If on an examination of the relevant provisions, it is clear that the

provisions of the Limitation Act are necessarily excluded, then the benefits conferred therein cannot be called in aid to supplement the provisions of

the Act. In our considered view, that even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by

an express reference, it would nonetheless be open to the court to examine whether and to what extent, the nature of those provisions or the nature of

the subject-matter and scheme of the special law exclude their operation. In other words, the applicability of the provisions of the Limitation Act,

therefore, is to be judged not from the terms of the Limitation Act but by the provisions of the Central Excise Act relating to filing of reference

application to the High Court.â€​(emphasis supplied)

In view of the above discussion, we hold that Section 5 of the Limitation Act cannot be invoked by this Court for entertaining an appeal filed

against the decision or order of the Tribunal beyond the period of 120 days specified in Section 125 of the Electricity Act and its proviso. Any

interpretation of Section 125 of the Electricity Act which may attract the applicability of Section 5 of the Limitation Act read with Section 29(2)

thereof will defeat the object of the legislation, namely, to provide special limitation for filing an appeal against the decision or order of the Tribunal and

proviso to Section 125 will become nugatory.

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16.2 In an another matter i.e. Fair Growth Investments Limited v/s Custodian reported in (2004) 11SCC 472 in which their lordships of Divison Bench

of Honâ€​ble Supreme Court held that:

The relevant paras of the judgment are extracted below “………….

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We are of the view that the provision prescribing a time limit for filing a petition for objection under Section 4(2) of the Act is mandatory in the

sense that the period prescribed cannot be extended by the Court under any inherent jurisdiction of the Special Court. Prescribed periods for initiating

or taking steps in legal proceedings are intended to be abided by, subject to any power expressly conferred on the court to condone any delay. Thus

the Limitation Act 1963 provides for different periods of limitation within which suits, appeals and applications may be instituted or filed or made as the

case may be. It also provides for exclusion of time from the prescribed periods in certain cases, lays down bases for computing the period of limitation

prescribed and expressly provides for extension of time under Section 5 in respect of certain proceedings. If the periods prescribed were not

mandatory, it was not necessary to provide for exclusion or extension of time in certain circumstances nor would the method of computation of time

have any meaning.

Section 4 (2) of the Act plainly read similarly requires a person objecting to a notification issued under sub-section (2) of Section 3 to file a petition

raising such objections within 30 days of the issuance of such notification. The words are unequivocal and unqualified and there is no scope for

reading in a power of Court to dispense with the time limit on the basis of any principle of interpretation of statutory provisions. In R. Rudraiah v. State

of Karnataka 1998(3) SCC 23 it was contended on behalf of the appellants that Section 48-A of the Karnataka Land Reforms Act, 1961 which

provided for the making of an application within a particular period should be construed liberally in favour of tenants so that the period was to be read

as extendable. The submission was rejected on the ground that the language of Section 48-A was unambiguous and could not be interpreted

differently only on the ground of hardship to the tenants.

The mere fact that the Special Court may have been imbued with the same status of a High Court would not alter the situation. We are of the

view that it was not necessary for Section 4(2) of the Act to use additional peremptory language such as ""but not thereafter"" or ""shall"" to mandate that

an objection had to be made within 30 days. The mere use of the word ""may"" in Sections 4 (2) of the Act does not indicate that the period prescribed

under the Section is merely directory. The word “may†merely enables or empowers the objector to file an objection. The language in Section

4(2) of the Act may be compared with Sections 4 and 6 of the Limitation Act, 1963. Section 4 of the Limitation Act provides: ""4.Expiry of prescribed

period when court is closed:- Where the prescribed period for any suit, appeal or application expires on a day when the court is closed, the suit, appeal

or application may be instituted, preferred or made on the day when the court reopens."" Certain sub-sections of Section 6 of the Limitation Act also

provide for the period within which a minor or insane or an idiot may institute suits. It cannot be contended that the word ""may"" in these Sections

indicate that the prescribed periods were merely directory. This Court in Mangu Ram v. Municipal Corporation of Delhi 1976 (1) SCC 392 described

statutory provisions of periods of limitation as ""mandatory and compulsive"" and also said:- ""It is because a bar against entertainment of an application

beyond the period of limitation is created by a Special or local law that it becomes necessary to invoke the aid of Section 5 (of the Limitation Act) in

order that the application may be entertained despite such bar"".

If the power to condone delay were implicit in every statutory provision providing for a period of limitation in respect of proceedings before Courts,

Section 29(2) of the Limitation Act 1963 would be rendered redundant. We will discuss the scope and applicability of Section 29(2) in greater detail

subsequently.

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Mr. Nitish Rana, learned counsel for the respondent has not denied the fact that the Honâ€ble High Court in its order dated 27.07.2018, it was

clarified that the proceedings before the Adjudicating Authority shall continue. ED was the party there. Thus, once the said factual position is

admitted, the Adjudicating Authority was supposed to pass the confirmation order within 180 days as prescribed in section 5(1) of the Act. If the order

of the High Court was to exclude the period of litigation before the High Court, then the said period has to be excluded. But in the present case, the

specific period was that the proceedings shall continue. The ED and the Adjudicating Authority was fully aware about the High Court order.

No doubt, that Section 5 has been amended by the amendment to Act 15 of 2003 and in Section 5 the following amendment has been made which

reads as under:-

“(b) In section 5:-

(i) IN such â€"Section (1), after the second proviso, the following proviso shall be inserted, namely:-

“Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings

under this section is stayed by the Honâ€ble Court, shall be excluded and if further period not exceeding thirty days from the date of order

of vacation of such stay order shall be counted:-

However, the above provisions have been inserted under the Act on 29th March, 2018 and corrected by the corrigenda notification dated 03rd April,

2018 published in the gazette of India extra Pt. II Section 1 No. 20 dated 03rd April, 2018. The said provision is applicable to the perspective and

retrospective. In the present case, the provisional attachment order in the present case was passed on 28.03.2018 as such the amended is also not

applicable in the facts of present case.

As already discussed, the prescribed period of time stipulated in the section of any statutes cannot be extended under any circumstances. In the

present case, under section-5 provides that the judgement proceeding shall be completed within 180 days. The same has not happened despite of the

direction issued by the Honâ€ble Court, therefore, the attachment does not exist. The impugned order has been passed without application of mind.

Thus, the same is set-aside. The provisional attachment order is also quashed by allowing the present appeals.

Admittedly, the FIR/ RC was registered on 23rd September, 2003. The case of appellants was that after filing the charge sheet the Act of PMLA

cannot be invoked as such whole exercise is without jurisdiction. The said fact was not mentioned in ECIR. Reasons to believe are not produced. It

was the duty of the authorised officer to mention the date of registering the FIR. This Tribunal does not wish to express any opinion as to whether it is

deliberately done or it was due to mistake as the provisions of schedule offences were incorporated only on 1.6.2009.

It is pertinent to mention that the appellants have raised many other issues, however, this Tribunal has since decided the main issue in hand,

therefore, there is no need to discuss the other issues.

All the appeals and pending applications are disposed of.

No costs.