Vineet Gupta vs Deputy Director Directorate Of Enforcement, Delhi

FPA-PMLA-1851/DLI/2017

The appellant has filed the appeal under Section 26 of the Prevention of Money Laundering Act, 2002 against the order dated 31st May, 2017.

Issue notice to the respondent. Mr. Atul Tripathi, learned counsel for the respondent accepts the notice, he seeks four weeks time to file the reply. Let

the same be filed within four weeks with an advance copy to the learned counsel for the appellant who may file the rejoinder within four weeks

thereafter.

List the appeal for final disposal on 02nd February, 2018.

MP-PMLA-3770/DLI/2017 (Stay)

The learned counsel for the appellant is pressing for Interim Order. The prayer is opposed on behalf of respondent. Counsel for the appellant has

made few submissions which are outlined as under:

a). His first submission is that the property attached is at B-175, Shalimar Garden, Village Pasorda, Extn-II, Ground Floor, Sahibabad, Ghaziabad, U.P.

which was purchased by the appellant’s father in 1999. Under the MOU it came in favour of the appellant no. 1 in the year 2012. He submits that

the property in question is not proceeds of alleged crime as the FIR in present case was registered in November, 2016.

b). The next submissions is that the property was attached in lieu of the value thereof by the respondent who was aware as the said property does not

involve in the Money Laundering which was purchased in 1999 i.e. 17 years before which is not in dispute. He submits that the impugned property

could not have been attached under section 5 of the Act as no charge-sheet under section 173 has been filed prior to the date of attachment order was

passed and till date. No report under section 173 is filed and his clients was always willing to give an undertaking not to sell or disposed of or create

any third party interest in the said attached property but despite of that attachment order was passed clearly contrary to the provision of Section 5 of

the PMLA, 2002.

Brief facts are that the appellant no. 1 was posted as Vice-President with Axis Bank. The appellant no. 2 is the wife of the appellant no. 1. The

allegation against the appellant no. 1 was that he has facilitated two people for concealing their black money against which he has allegedly received a

one kg. Gold brick and Rs. 8 Lacs in cash.

He was arrested and is in judicial custody. He was raided by I.T. officials and ED but nothing incriminating was recovered by them. The said fact

has not been denied by the respondent.

Section 5(1) of the Prevention of Money Laundering Act, 2002 which reads as under:

Attachment of property involved in money-laundering.-

5[(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:

Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to

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 1[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.].

Under the provisional attachment order, his resident was attached on 27.01.2017. The said order was confirmed by Adjudicating Authority in the

impugned order, the same has been challenged before us. After confirmation order, ED wishes to take the possession of the house (wherein his wife

and daughter are residing). The appellants have undertaken not to sell and dispose the said house till the trial is over in prosecuting complaint.

As far as the first proviso is concerned, it is a mandatory provision wherein it is mandated that no such order or attachment shall be passed

 unless in relation of the schedule offence, a report has been filed under section 173 of the Code of Criminal Procedure 1973. In the present case no

report has been submitted in the schedule offence under section 173 of the Code of Criminal Procedure, 1973, thus, under said first proviso the

property in question could not have been attached.

The second proviso mandates that if the property is involve in money laundering then it can be attached subject to the condition that there must be

material that if such property (involve in the money laundering) is not attached immediately, under this chapter the non attachment of the property is

likely to frustrate any proceedings under this Act.

In the facts of the present case, it is doubtful as whether the second proviso would be applicable, firstly, there is no material to show that the

appellants are likely to dispose the property. Secondly, the property was not purchased from the alleged proceed of crime as the same was purchased

by the father of appellant no.1 in 1999. Thirdly, there is no material on record to show that the appellant no. 1 has taken any step to dispose of the

property and, therefore an immediately order of attachment is to be passed otherwise non-attachment is likely to frustrate the proceedings. Nothing

specifically recorded backed by even prima-facie evidence that the property is likely to be sold in order to frustrate the proceeding under this act. The

appellants have now given the undertaking not to sell property till the further orders.

Therefore, prima-facie case is made out by the appellant for grant of interim order sought. The arguments of Mr. Atul Tripathi, learned counsel for

the respondent cannot be accepted at this stage that the appellants are not entitled to any relief in view of facts recorded by us. As far as merit of the

case is concerned, the same is to be decided by the Special Court and we are not expressing any opinion. As far as immovable property is concerned,

it is directed that both parties shall maintain the ‘Status-quo’ of the attached property till the next date of hearing.

The attachment order of immovable property shall continue. The appellant shall also not sell, dispose or create any third party interest in any manner

directly or indirectly.

List on 02nd February, 2018.

Copy of the order be given ‘dasti’ to both the parties.