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2011 (3) ALT 443
High Court of Andhra Pradesh
MR. GODA RAGHURAM & MR. R. KANTHA RAO
B. Rama Raju
Versus
Union of India, Ministry of Finance, Department of Revenue, Represented by its Secretary, (Revenue), New Delhi & Others
WRIT PETITION Nos. 10765, 10769 & 23166 of 2010
Decided on : 04-03-2011
B) PREVENTION OF MONEYLAUNDERING ACT, 2002, Section 5 (1) Second Proviso (incorporated by 2nd Amendment Act (Central) 21 of 2009 w.e.f. 6-3-2009) - Second Proviso to Section 5 (1) – The provisions of attachment, confiscation etc. of the illegally acquired monies is applicable even in case of such activities committed and earned prior to the amendment and the amended provision is not unconstitutional merely because of such retrospective application of the penal provisions. Parliament in its supreme authority validly recognized the enormous harms the economic offences committed by corporatge sharks is causing to the extent of eating the vitals of the rule of law and had rightly gave retrospective effect to its provisions. (Para 46 and 51)
C) PREVENTION OF MONEYLAUNDERING ACT, 2002, Section 8:- The -provision providing for deprivation of the immovable property on attachment of the proceeds of crime in the possession of the accused till conviction or conclusion of the proceedings is not void for vagueness or ambiguity with regard to the onus of proof or standard of proof. A provision can be held as void for vagueness or ambiguity only on examining the provisions as it is and its consequence, but not upon the possibilities of its excesses by the enforcer.(Para 128(iii) (Paras 61 and 63)
D) PREVENTION OF MONEYLAUNDERING ACT, 2002, Section 23:- Where money laundering involves more than one transaction and were one or more transactions are proved to be connected with money laundering, the connected transactions are also presumed to be money laundering for the purpose of proceedings of attachment and confiscation. This presumption being rebuttable and the process of money laundering having and Since placement, layering and integration are among the essential features of money-laundering, it is not arbitrary or illegal or is it excessively harsh and onerous . (Para 117)
E) PREVENTION OF MONEYLAUNDERING ACT, 2002; Section 24:- The placing of the burden of proof is not only on the prosecution for the offences under Section 8, but also in respect of attachment and confiscation provisions under Chapter III. But where the property as proceeds of crime is under the control and custody of a person not accused of an offence Section 3, only presumption under Section 23 arises but not the onus of proof under Section 24. (Para 122)
F) CONSTITUTION OF INDIA, Article 226:- While the judicial review of the High Court encompasses the jurisdiction to annul such limitations which transgress limitations, but at the same time it shall respect the separation of powers ingrained in the constitutional structure and respect the power vested with the legislature to take policy decisions in respect of social, economic and political spheres of the society. In areas of social and economic choices, the State in its legislative and executive processes is traditionally vouchsafed a wide power to experiment and identify the balance between individual liberties and the larger public good by regulation of rights and liberties. (Para 124)
G) INTERPRETATION OF STATUTES Prevention of Money-Laundering Act, 2002 – The Act shall be interpreted as per the established principles of interpretation of statutes. It shall be taken as a whole and examined in view of the lofty ideals it purports to achieve and the individual provisions on the test of constitutional checks and balances within the framework of the Act without taking recourse to the outside sources. (Para 15)
H) PREVENTION OF MONEYLAUNDERING ACT, 2002, Section 5 (1) Second Proviso:- Proceeds of crime in possession of any person even other than the person charged with the scheduled offences can be attached under this provision. (Para 22)
I) PREVENTION OF MONEYLAUNDERING ACT, 2002, Sections 3 and 5 (1):- In the case of attachment and confiscation proceedings, knowledge of the monies having originated from criminal activities is not imputed to persons not charged with Section 3 by legislative provision. (Para 26)
Key Points: - The judgment holds that property in the possession of a person not charged with a scheduled offence can be attached and confiscated under Chapter III, by applying Sec.5, Sec.8, Sec.23, and Sec.24, as clarified by the 2nd Amendment Act (2nd proviso to Sec.5(1)) (!) (!) (!) - Proceeds of crime is defined expansively to include property derived or obtained from criminal activity relating to a scheduled offence or the value of such property, enabling broader attachment (!) (!) (!) (!) - Section 23 establishes a rebuttable presumption for interconnected transactions, shifting burden to the holder of property to show non-involvement in money-laundering (!) (!) (!) - Section 24 shifts the burden of proving untainted proceeds onto the accused person for proceedings tied to Section 3, while not applying to non-accused for attachment/confiscation but allowing Section 23 presumption to operate (!) (!) (!) - The adjudicatory process under Section 8 involves a prima facie threshold at notice, with opportunity to present evidence, and final confiscation only after proof of guilt in trial Court (!) (!) (!) - Section 8(4) dispossession after confirmation is upheld as balancing governmental interest with rights, not deemed arbitrary (!) (!) - The court emphasizes the holistic interpretation of the Act and upholds vires and procedures, including retrospective amendments, as valid within constitutional checks and balances (!) (!) - Writ petitions challenging vires are dismissed; available statutory appellate remedies remain (!)
COMMON ORDER: (Goda Raghuram, J.)
These writ petitions substantially challenge the vires of certain provisions of the Prevention of Money Laundering Act, 2002 (Central Act 15 of 2003) [‘the Act’]; amended by the Prevention of Money Laundering (Amendment) Act, 2005 (Central Act 20 of 2005) [‘the Amendment Act’]; further amended by the Prevention of Money-Laundering (Amendment)Act, 2009 [Central Act 21 of 2009] (the 2nd Amendment Act) and orders passed by the primary and attaching authorities and the adjudicating authority. The particulars, the circumstances and the defence to the provisions of the Act and the impugned orders are set out hereinafter.
W.P. No. 10765 of 2010:
B. Rama Raju s/o B.Ramalinga Raju seeks (i) invalidation of Sections 5(1), 8(1), 8(2), 8(3), 8(4), 23 and 24 of the Act; (ii) a declaration that the provisional attachment order No. 1/09 in ECIR No. 01/H20/2009, dated 18.08.2009 passed by the Deputy Director, Enforcement, Hyderabad (R-3), is arbitrary and illegal; (iii) that the order dated 14.01.2010 passed by the Adjudicating Authority (R-4) in OC. No.38/09 is arbitrary and illegal; (iv) a declaration that the 4th respondent’s direction to the petitioner to hand over possession of the attached properties is without jurisdiction and contrary to law and the Directorate of Enforcement (R-2) or any other officer is not entitled to take possession of the petitioner’s properties; (v) a declaration that the petitioner’s properties sought to be attached by the impugned provisional attachment order (dated 18-08-2009) as confirmed by the impugned order (dated 14-01-2010) of the 4th respondent are free from attachment or encumbrance; and (vi) for attendant reliefs.
W.P. No. 10769 of 2010:
B. Teja Raju also s/o B.Ramalinga Raju seeks (i) invalidation of the same provisions of the Act as in W.P.No. 10765/10; (ii) invalidation of the provisional attachment order No. 01/2009 in ECIR Nl. 01/HZO/1009, dated 18.08.2009 of the Deputy Director Enforcement; (iii) invalidation of the order of the 4th respondent dated 14.01.2010 in OC No.38/09 and other declarations as to the properties of the petitioner herein as in W.P.No.10765/10.
W.P. No. 23166 of 2010:
N. Subba Raju s/o Janakirama Raju seeks (i) invalidation of Sections 2(u), 3, 5(1), 8, 23 and 24 of the Act; (ii) invalidation of the provisional attachment order No. 01/2009 in ECIR No. 01/HZO/2009 dated 18.08.2009 of the Deputy Director, Enforcement; (iii) a direction that the petitioner’s properties sought to be attached by the impugned provisional attachment order are free from attachment or encumbrance.
Since the grievance, the challenge to the vires of certain provisions of the Act and the contentions in this behalf are substantially similar in all the writ petitions, we record a summary of the pleadings in W.P. No. 10765/10.
W.P.No. 10765/2010:
A) The Deputy Director, Enforcement, passed the provisional attachment order dated 18.08.2009, purportedly u/Sec. 5 of the Act, in respect of movable properties comprising the shares of M/s SRSR Holdings Ltd., in M/s Satyam Computer Services Ltd., and 287 immovable properties of various companies and persons including the petitioner. The petitioner’s immovable properties enumerated at Sl. No. 246 to 251 in the table of immovable properties in the order were provisionally attached.
B) The Deputy Director, Enforcement, filed Application No. 38/2009 on 15.09.2009 before the Adjudicating Authority against 132 defendants. The petitioner is the 8th defendant therein. The Adjudicating Authority issued notice to all the 132 defendants in respect of the movable and immovable properties enumerated in the complaint of the Deputy Director, Enforcement, on 15.09.2009, the day the complaints were filed.
C) Several of the defendants including the petitioner filed applications before the Adjudicating Authority setting out objections to its jurisdiction; seeking dismissal of the complaint; and discharge of the notice. The A
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