2020-TIOLCORP-12-HC-DEL-PMLA
Vikas Wsp Ltd Vs Directorate Enforcement
PMLA - Respondent no. 1, in exercise of its powers under Section 5(1) of the Act, passed a Provisional Attachment Order dated 13.11.2019, provisionally attaching certain properties of the petitioners amounting to Rs.52,21,16,797/- for a period of 180 days from the date of the said order - Respondent no.1 thereafter, in terms of Section 5(5) of the Act, filed a complaint before the Adjudicating Authority on 05.12.2019 and accordingly, Adjudicating Authority, on 18.12.2019, issued a Show Cause Notice under Section 8(1) of the Act to the petitioners - Petition raises an interesting question of the effect of the lockdown declared by the Central Government due to the outbreak of the COVID-19 Pandemic on the period of the Provisional Attachment Orders passed under Section 5(1) of the Prevention of Money Laundering Act, 2002 - Adjudicating Authority, on 18.12.2019, issued a Show Cause Notice under Section 8(1) of the Act to the petitioners - However, before the proceedings could be concluded, on 23.03.2020, the Government of India declared a nationwide lockdown with effect from 24.03.2020 due to the spread of the COVID-19 Pandemic - On 26.05.2020, the Adjudicating Authority issued the Impugned Notice/Summons to the petitioners by way of an e-mail, indicating the next date of hearing in the complaint to be 16.06.2020 - The petitioners filed the present petition on 15.06.2020 claiming therein that as the period of 180 days from the date of the Provisional Attachment Orders had expired, in terms of Section 5(3) of the Act, the said order ceased to have effect and, therefore, the Adjudicating Authority had become functus officio and the proceedings in the complaint cannot proceed.
Held:
+ Sub-section (1) of Section 5 of the Act empowers the Director or any other officer not below the rank of the Deputy Director authorized by the Director of Enforcement in this regard, to pass an order provisionally attaching property of a person "for a period not exceeding 180 days from the date of the order".
+ In terms of the third proviso to sub-section (1) of Section 5, this period is extended by 30 days from the date of the order vacating any stay order granted by the High Court on such Provisional Attachment Order or proceedings before the Adjudicating Authority.
+ Sub-section (3) of Section 5 to the Act provides that every Provisional Attachment Order passed under sub-section (1) of Section 5 of the Act, shall cease to have effect after the expiry of the period of one hundred and eighty days or on the date of the order made under sub-section (3) of Section 8, "whichever is earlier".
+ Therefore, one hundred and eighty days from the date of the order passed under sub-section (1) of section 5 of the Act, is the outer limit of the validity/life of such order and the same ceases to remain in effect, by efflux of time, beyond that date, in case no order confirming the Provisional Attachment Order is passed by the Adjudicating Authority under sub-section (3) of Section 8 of the Act prior thereto. [para 18]
+ A reading of the above provisions would clearly show that one hundred and eighty days from the passing of the Provisional Attachment Order is not prescribed as a period of limitation to do a particular act, but as the outer period of validity of the Provisional Attachment Order itself. On expiry of the said period, in absence of an order passed by the Adjudicating Authority under sub-section (3) of Section 8 of the Act, the Provisional Attachment Order ceases to have effect or lapses on its own. Such lapsing does not require any confirmation from the Authority or any Court of law; it is automatic; it is pre-emptory in nature. [para 20]
+ It is also to be noted that the Act, except in the third Proviso to Section 5(1) of the Act, does not provide for any extension of validity of the period of the Provisional Attachment Order. There are no exceptions; there is no provision for extension. [para 21]
+ A reading of sub-section (1) of Section 5 with Section 2(1)(d) of the Act leaves no manner of doubt that the effect of the Provisional Attachment Order is deprivation of the right to property. [para 23]
+ Article 300A of the Constitution creates a Constitutional right in every person to hold and enjoy his property, unless deprived by authority of law. [para 24]
+ In the present case, the Act clearly deprives the person against whom the Provisional Attachment Order is passed of his right to deal in the property against which the attachment is ordered. Such deprivation can, therefore, be for a maximum of 180 days and no further, except where such order is confirmed by the Adjudicating Authority prior thereto under Section 8(3) of the Act. Once the 180 day period has lapsed without such order being passed under Section 8(3) of the Act, the Provisional Attachment Order ceases to have effect and, therefore, there is no order before the Adjudicating Authority to confirm under Section 8(3) of the Act. The Adjudicating Authority therefore, becomes functus officio. [para 25]
+ There is no power with any Authority or the Court to relax or extend the validity of the Provisional Attachment Order. [para 26]
+ Submission of the respondents that as the delay in proceedings before the Adjudicating Authority cannot be blamed on the respondents, the respondents must not be penalized and the time period should be extended, cannot be accepted. It is not a question of penalization of the respondents for the delay, but of application of the mandate of law from which there is no escape. Equally, the principle of Actus Curiae Neminem Gravabit can also have no application. [para 28]
+ In the present case, Section 5(1) and 5(3) do not provide the period of limitation, but the period of validity of the Provisional Attachment Order. The same would not stand extended due to the order (dated 23.03.2020) of the Supreme Court. [para 30]
+ The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 on 31.03.2020, extends the time limit for completion of any proceedings or passing of any order etc. specified in the Acts specified therein. However, the Prevention of Money Laundering Act, 2002 is not one of the "specified Acts" under the Ordinance. Therefore, the respondents cannot take benefit of even this Ordinance. On the other hand, the Ordinance clearly shows that the reliance of the respondents on the orders of the Supreme Court is liable to be rejected. [para 32]
+ The reliance of the respondents on Section 8(1) of the Act to contend that the orders of Supreme Court would apply to extend the validity of the Provisional Attachment Order, is also unfounded and is liable to be rejected. Order dated 23.03.2020 was not meant to deny any person his/her property rights. [para 33, 35]
+ In view of the above, the 180 days from the date of the Provisional Attachment Order dated 13.11.2019 having expired without any order under Section 8(3) of the Act being passed by the Adjudicating Authority, it is held that the Adjudicating Authority has been rendered functus officio and cannot proceed with the Original Complaint, being O.C. No. 1228/2019 pending before it. The Notice/Summons dated 26.05.2020 is accordingly set aside. [para 37]
+ Bench has intentionally refrained itself from making any comment on whether the period of total lockdown declared by the Central Government, that is from 24.03.2020 to 20.04.2020, can be excluded for computation of the 180 days, as it is not disputed that even on exclusion of this period, the 180 days would have expired on 16.06.2020, the returnable date of the notice issued by the Adjudicating Authority. [para 38]
- Petition allowed: DELHI HIGH COURT | 
