Case Law Details
Seema Garg Vs Deputy Director, Directorate of Enforcement (PMLA) (Punjab and Haryana High Court)
Conclusion: Where property acquired could not be attached prior to the commission of a scheduled offence such as criminal offence or introduction of Prevention of Money Laundering Act (PMLA) unless the property obtained from the offence was held or taken outside the country.
Held: Two appellants had purchased their property in 1991 and in 2011. As per FIR of scheduled offence, ECIR and different orders passed by Officers, M/s J Exports, a proprietorship concern of Raman Garg fraudulently obtained VAT refund from VAT authorities without actual export of goods. Deputy Director vide order provisionally attached Plot belonging to Smt. Seema Garg & Smt. Sangeeta Garg and Flat belonging to Saiyrah Garg. The Officer praying confirmation of provisional attachment filed a complaint before Adjudicating Authority which culminated into order dated 28.5.2019. Adjudicating Authority confirmed the attachment for a period of 90 days during the pendency of investigation or pendency of the proceeding before a court under PMLA. Appellants filed appeal before Tribunal which dismissed all the appeals. Appellants contended that i) at the time of expiry of 90 days from the date of confirmation order investigation was pending; ii) property in question was purchased much prior to not only commission of alleged offence but also introduction of PMLA; iii) there was non-compliance of the requirement of recording of reasons prior to provisional attachment of property. It was held that the property was purchased in 1991 and mortgaged with bank in 2009. The alleged offence was committed in 2013 whereas attachment order was passed in December’ 2017. There was nothing on record to show that Appellants after 2009 or 2013 attempted to dispose of property in question which prompted Deputy Director to pass attachment order. Officer had simply taken wording of Section 5(1) of the PMLA and reiteration of these words would not constitute recording of reasons that if property was not attached, it might result in frustrating any proceedings of confiscation. Deputy Director was bound to record the reasons on the basis of material in his possession that property was likely to be concealed or transferred or dealt with in any manner. Use of all the words i.e. concealed, transferred or dealt with in any manner showed that the Officer was not specific with respect to possibility of action of Appellant which would have frustrated proceedings of confiscation. It further showed that there was no application of mind and Officer had simply picked up words from Section 5 of the PMLA and inserted in the order. Accordingly,Deputy director had passed attachment order without recording the reasons on the basis of material in his possession that property in question was likely to be concealed, transferred or dealt with in any manner which would frustrate confiscation proceedings. In case investigation was pending, filing of complaint against others was not sufficient to deprive any person from benefit of time cap of 365 days, property acquired prior to commission of scheduled offence i.e. criminal activity or introduction of PMLA could not be attached unless property obtained or acquired from scheduled offence was held or taken outside the country, Director or any other officer authorised by him was bound to record reasons which must be specific and mere reproduction of wording of Section 5 was not sufficient.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. By this common order, three PMLA Appeals No. 1-3 of 2019, involving common questions and filed against common impugned order dated 09.08.2019 (Annexure A-7) are disposed of.
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