Writ not entertained as authority empowered u/s. 5 of PMLA Act scrutinized material while passing provisional attachment order

By POONAM GANDHI Corporate Law Judiciary October 2, 2023

TaxGuru Citation: 2023 taxguru.in 6157
Case Name: Santiago Martin Vs Union of India (Kerala High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All High Courts, Kerala High Court

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Santiago Martin Vs Union of India (Kerala High Court)

Kerala High Court dismissed the writ petitioner stating that as authority empowered u/s. 5 of PMLA Act scrutinized the materials while passing provisional attachment order and hence it is not justifiable to exercise extraordinary powers under Article 226 of the Constitution of India.

Facts- Against petitioner No.1, who is one among the two partners of a partnership firm viz., M/s. M.J. Associates, Palakkad, the 2nd petitioner, a private limited company of which petitioner No.1 is the Managing Director, and other different entities, a charge sheet was filed by the Central Bureau of Investigation u/s. 120(b) and 420 of the Indian Penal Code, 1860, Sections 4(d), 4(f), 9 r/w. 7(3) of the Lotteries (Regulation) Act, 1998, and Rules 3(5) and 4(5) of the Lottery (Regulation) Rules, 2010, on 03.02.2014, in the Court of Chief Judicial Magistrate, Ernakulam, alleging 7 types of illegal transactions carried out in connivance with each other.

The Department of Enforcement, Cochin Zone, received information from the Superintendent of Police, Central Bureau of Investigation, Cochin, about certain transactions recorded in the charge sheet filed during February, 2014. Having examined the materials placed before the Directorate of Enforcement, the officer found a prima facie case for the offence u/s. 3 of the PMLA Act, 2002, having been committed and advised for further investigation.

As provided u/s. 5(1) of the PMLA Act, the Enforcement Directorate authority found that the proceeds of crime involved therein are to the tune of Rs.910,29,87,566/- and accordingly, a provisional attachment order came to be passed on 31.03.2016.

Later, as provided u/s. 5(5) of the PMLA Act, a complaint stating the facts of such attachment came to be filed before the adjudicating authority established under the said Act. Both these proceedings, i.e., passing order of provisional attachment and filing a complaint u/s. 5(5) of the PMLA Act, came to be challenged by the 1^st appellant by filing W.P.(C) No. 22327/2016 before this Court.

By passing an interim order dated 04.08.2016, a learned Single Judge of this Court permitted to continue the proceedings initiated against the petitioner/1^st appellant herein. However, the adjudicating authority was directed to decide the question of jurisdiction raised by the petitioner against the said proceedings. Said writ petition is pending for final disposal before the learned Single Judge.

ED authorities passed several provisional attachment orders which included attachment of properties of the 1^st appellant. The 1^st appellant/original petitioner being aggrieved by the said order and also the order of freezing under Section 17(1A) of PMLA Act dated 12.05.2023, filed the subject writ petition.

Conclusion- Held that in the present appeal, when the authority empowered under Section 5 of the PMLA Act has scrutinised the materials relied on while passing the provisional attachment order dated 09.06.2023, and when the adjudicating authority is going to examine all such issues and pass appropriate orders, we do not find any justifiable reason to reconsider the same, that too, in this intra court appeal. Therefore, we dismiss this appeal.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

To what extent the High Court would be justified in entertaining a writ petition under Article 226 of the Constitution of India when “adjudication” of the provisional attachment of properties is in progress, as provided under Section 8 of the Prevention of Money-Laundering Act, 2002 (‘the PMLA Act’, for short), and the decision of such adjudicating authority would be subject to appeal under the Act itself, is the question to be decided in this intra court appeal filed under Section 5 of the Kerala High Court Act, 1958.

2. The brief facts emerging from the records are that, against petitioner No.1, who is one among the two partners of a partnership firm viz., M/s. M.J. Associates, Palakkad, the 2nd petitioner, a private limited company of which petitioner No.1 is the Managing Director, and other different entities, a charge sheet was filed by the Central Bureau of Investigation under Sections 120(b) and 420 of the Indian Penal Code, 1860, Sections 4(d), 4(f), 9 r/w. 7(3) of the Lotteries (Regulation) Act, 1998, and Rules 3(5) and 4(5) of the Lottery (Regulation) Rules, 2010, on= 03.02.2014, in the Court of Chief Judicial Magistrate, Ernakulam, alleging 7 types of illegal transactions carried out in connivance with each other.

3. The Department of Enforcement, Cochin Zone, received information from the Superintendent of Police, Central Bureau of Investigation, Cochin, about certain transactions recorded in the charge sheet filed during February, 2014. Having examined the materials placed before the Directorate of Enforcement, the officer found a prima facie case for the offence under Section 3 of the PMLA Act, 2002, having been committed and advised for further investigation.

4. As provided under Section 5(1) of the PMLA Act, the Enforcement Directorate authority found that the proceeds of crime involved therein are to the tune of Rs.910,29,87,566/- and accordingly, a provisional attachment order came to be passed on 31.03.2016.

5. Later, as provided under Section 5(5) of the PMLA Act, a complaint stating the facts of such attachment came to be filed before the adjudicating authority established under the said Act. Both these proceedings, i.e., passing order of provisional attachment and filing a complaint under Section 5(5) of the PMLA Act, came to be challenged by the 1^st appellant by filing W.P.(C) No. 22327/2016 before this Court.

6. By passing an interim order dated 04.08.2016, a learned Single Judge of this Court permitted to continue the proceedings initiated against the petitioner/1^st appellant herein. However, the adjudicating authority was directed to decide the question of jurisdiction raised by the petitioner against the said proceedings. Said writ petition is pending for final disposal before the learned Single Judge.

7. The petitioner also filed an application for discharge, being Crl. M. P. No. 2079/2016, before the learned Single Judge in the CBI case, which is also pending adjudication. The ED authorities then filed a criminal complaint under Section 45 of the PMLA Act, which is numbered as S.C. No.533/2018 and is pending trial before the Special Court for Trial of PMLA case/Special Court (SPE, CBI) – I, Ernakulam. As per the said complaint, which is numbered as S.C. No.533/2018, it is alleged by the complainant that the present appellant has 51% share in M/s. M.J. Associates, whereas his partner viz., Sri. N. Jayamurugan has 49% of share. It was alleged that out of the several illegal transactions, the estimate of certain properties derived and obtained as a result of criminal activities relating to a scheduled offence of the Act, which is defined as “proceeds of crime”, was to the tune of Rs.910,29,87,566/-.

8. The ED authorities thereafter passed several provisional attachment orders between 2016 and 2023. Following are the details of the Provisional Attachment Orders (PAO) and the value of the properties attached under the aforesaid orders: