2020 Supreme(Bom) 993

IN THE HIGH COURT OF BOMBAY AT GOA BENCH
M.S. Sonak, M.S. Jawalkar, JJ.
Digambar Kamat - Appellant
Versus
Joint Director (pjzo), Directorate Of Enforcement, Government Of India - Respondent
Appeal Under Prevention Of Money Laundering No. 1 of 2019, 2 of 2019, 3 of 2019
Decided On : 26-10-2020

The Court emphasized the requirement for the director or the authorized officer to have a reason to believe, based on material in his possession, that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, transferred, or dealt with to frustrate confiscation proceedings under the PMLA. It also clarified that the expression 'and' in Section 5(1) of the PMLA should not be construed as 'or'.

Headnote:

Money Laundering - Attachment of Properties - Prevention of Money Laundering Act, 2002 (PMLA) - Section 5(1) - Section 2(u)

Fact of the Case:

The appeals challenged a common judgment and order dated 26.07.2019 made by the Appellate Tribunal for SAFEMA, FEMA, PMLA, NDPS, PBPT Act at New Delhi in proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). The appeals concerned the attachment of properties and FDRs of the appellants under the PMLA.

Finding of the Court:

The Tribunal concluded that the attachment orders were liable to be set aside, but instead of setting aside the same, it confirmed the attachment of the FDRs and imposed conditions for raising the attachment on the immovable properties. The directions issued by the Tribunal were contrary to its reasoning in the preceding paras and were unsustainable.

Issues: The issues included the legality of the attachment orders under Section 5(1) of the PMLA, the interpretation of the expression 'proceeds of crime' in Section 2(u) of the PMLA, and the compliance with the predicates of Section 5(1)(b) of the PMLA.

Ratio Decidendi: The Court held that the attachment order was vitiated for non-compliance with the predicates of Section 5(1) of the PMLA. It emphasized that the director or the authorized officer must have reason to believe, on the basis of material in his possession, that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, transferred, or dealt with to frustrate confiscation proceedings under the PMLA. The Court also rejected the contention that the expression 'and' in Section 5(1) should be construed as 'or'.

Final Decision: The appeals were allowed, and the impugned order was set aside. The Court directed the Special Court to dispose of the PMLA case as expeditiously as possible and within one year from the date of the order. The Court also accepted the statement made by the appellants that they will not sell, transfer, alienate, encumber, or liquidate the attached properties/FDRs until the conclusion of the PMLA case pending before the Special Court and for one month thereafter.