[PMLA] Order For Confiscating Property Is Not Interlocutory Since It Determines Interim Custody, Can Be Challenged In Revision Plea: P&H HC

The Punjab & Haryana High Court has made it clear that an order for confiscation of property passed by the trial court can be challenged in a revision plea before the High Court.

In the present case, the property mortgaged in a Bank in lieu of credit facilities availed by an accused under the Prevention of Money Laundering Act, 2002 (PMLA), was confiscated by the Enforcement Directorate (ED). The Court rejected the objection raised by the ED that the plea challenging the confiscation order was not maintainable before the High Court.

Justice Anoop Chitkara said, "In a criminal case, an order confiscating property is not an interlocutory order because it determines the rights of interim custody till the conclusion of the criminal trial."

The judge refused to accept the argument of ED that the appropriate remedy is under Section 8 of the PMLA read with PMLA Rules 2016, and not Section 47 of PMLA read with S.397 CrPC, 1973.

"S. 8(8) of PMLA Act and Rules 3 and 3-A of the Prevention of Money Laundering (Restoration of Confiscated Property) Rules, 2016, would not apply in the present case because the accused have been declared as proclaimed offenders and charges have not been framed in the trial," the Court noted.

The Court was hearing a plea of the Union of Bank of India under Section 47 of PMLA read with Section 397 of CrPC. The bank was aggrieved by the order passed by the Special Judge, PMLA (Haryana), by which the properties mortgaged with the petitioner Bank were confiscated in favour of the ED.

Facts in brief

The ED had filed an application under Section 8(7) of the PMLA seeking confiscation of a Farmhouse land in Delhi and the trial Court allowed the same by the impugned order. 

The Union Bank of India claims to have a first charge over the said property, which was mortgaged to it in lieu of the credit facilities availed by ABW Infrastructure Ltd. The order was challenged before the High Court.

ASG S.V. Raju appearing for ED raised a preliminary objection to the maintainability of the petition, that the appropriate remedy is under Section 8 of the PMLA read with PMLA Rules 2016, and not Section 47 of PMLA read with 397 CrPC, 1973.

The ED further argued that the confiscation order under section 8(7) of PMLA, is an Interlocutory Order. It does not finally determine the parties' rights and liabilities but deals with the procedural or intermediate stage in the proceedings.

On the other hand, senior counsel appearing for the petitioner argued that the revision petition has been filed because the Trial of the offences under PMLA, 2002 has not yet begun as the charges had not been framed against the Borrower, the Promoters, or the Guarantors.

Section 8(8) PMLA Will Not Be Applicable Due To Non-Framing Of Charges

After examining the submissions from both the sides, the Court referred to Section 8 (1), (5), (7), and (8) of PMLA, 2002.

"The statute provides for confiscating of property where accused is a proclaimed offender and trial cannot be conducted by the reason of detention of accused under S. 8(7) of PMLA. As such, the property in the present case was confiscated by resorting to this provision," the Court noted.

It further said that S. 8(8) of PMLA applies only when the confiscation is under S. 8(5) of PMLA. Thus, the confiscation of property made under S. 8(7) of PMLA cannot be challenged under S. 8(8) because S. 8(8) applies to confiscation under S. 8(5) of PMLA.

"Rule 3 of the Prevention of Money Laundering (Restoration of Confiscated Property) Rules, 2016, would also apply only when the confiscation is under S. 8(5) of PMLA; as such, an application could not have been filed under Rule 3," added the Court.

Perusing Rule 3A, the judge said, Rule 3A applies only when the charges have been framed. In the present case, the charges have not been framed and the accused are proclaimed offenders.

Reliance was placed on Section 47 of PMLA, which states that "The High Court may exercise, so far as may be applicable, all the powers conferred by Chapter XXIX or Chapter XXX of the Code of Criminal Procedure, 1973 (2 of 1974), on a High Court, as if a Special Court within the local limits of the jurisdiction of the High Court were a Court of Session trying cases within the local limits of the jurisdiction of the High Court."

Consequently, the Court opined that "It is clear that S. 8(8) of PMLA Act and Rules 3 and 3-A of the Prevention of Money Laundering (Restoration of Confiscated Property) Rules, 2016, would not apply in the present case because the accused have been declared as proclaimed offenders and charges have not been framed in the trial."

Confiscation Order Can Be Challenged By Revision Plea

The Court further considered the question of whether the impugned confiscation order can be challenged by filing a revision petition or exercising inherent jurisdiction under S. 482 CrPC, 1973/528 BNSS. 

It held that a perusal of the PMLA, 2002, or the Prevention of Money Laundering (Restoration of Confiscated Property) Rules, 2016, does not provide any specific remedy. The test is whether the impugned order is a final or interlocutory order.

It added that the "answer is irrespective of the outcome of the PMLA trial, and this order cannot be recalled except per the statutory provisions or rules made thereunder. As far as the PMLA Court is concerned, it has attained finality, and the review, modification, alteration, or recalling will be subject to the bar of S. 362 CrPC, 1973/ 403 BNSS, 2023."

In light of the above, the Court held that the criminal revision was maintainable, and the preliminary objection was overruled.

Mr. Akshay Bhan, Sr. Advocate with Mr. H.P.S. Sandhu, Advocate

Mr. Shantnu Bansal, Advocate Mr. Shaurya Khanna, Advocate and Ms. Anjali Sheoran, Advocate for the petitioner.

Mr. S.V. Raju, Additional Solicitor General of India (Through VC) with Mr. Jagjot Singh Lalli, Dy. Solicitor General of India

Mr. Zoheb Hussain, Special Counsel (Through VC)

Mr. Lokesh Narang, Sr. Panel Counsel (Through VC) and Mr. Manish Verma, Advocate for the respondent-ED.

Title: Union of Bank of India vs. Assistant Director, Directorate of Enforcement

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