PMLA | 180 Days Period Of Provisional Attachment Not Extended By SC Orders Extending Limitation During Covid-19: Calcutta High Court
The Calcutta High Court has held that the Supreme Court's suo moto orders extending the period of limitation during the Covid-19 pandemic do not apply and will not extend the 180 days period prescribed for provisional attachment of property under Section 5 of the Prevention of Money-Laundering Act, 2002.A single judge bench of Justice Moushumi Bhattacharya was hearing the plea moved by...
The Calcutta High Court has held that the Supreme Court's suo moto orders extending the period of limitation during the Covid-19 pandemic do not apply and will not extend the 180 days period prescribed for provisional attachment of property under Section 5 of the Prevention of Money-Laundering Act, 2002.
A single judge bench of Justice Moushumi Bhattacharya was hearing the plea moved by directors of K.P. Garments Private Limited, whose properties were provisionally attached by the ED on 30th September, 2021 and ideally should have been released after 180 days, ending on 31st March, 2022. However, the ED had retained the attachment citing SC's suo moto orders.
Disagreeing with ED's approach, the Bench held,
"Section 5(3) is a clear embargo on the order of attachment continuing to have effect after the expiry of 180 days. Section 5(1) designates the authority and the steps to be taken for proceeding against any person who is in possession of any proceeds of crime. The section is hence concerned with the procedure to be undertaken for provisional attachment of a property subject to the fulfillment of the other conditions in Section 5. A prescribed procedure after the same has been initiated cannot be equated to institution of a suit or filing of a petition/application which is a starting point of litigation for a person who seeks relief under a statute. The 180 days window in Section 5 contemplates an end-point whereas the Supreme Court in the Suo Motu writ petition sought to protect the starting-point, which was at the risk of being defeated by reason of the pandemic."
In other words, the Court held that what was being protected by the orders of the Supreme Court was the right to remedy, not the right to take away a remedy under a given statute.
The counsel appearing for the ED relied on the Supreme Court orders passed in Suo Motu Writ Petition (Civil) No.(S) 3/2020 to urge that by the said orders the limitation period provided in the PMLA also stood extended. It was also submitted that the petitioners, having participated in the process, cannot seek reliance on the statutory time limit under the PMLA.
The court referred to the order of the Supreme Court (Suo Motu) and said that the order was intended as a special measure in the wake of the pandemic to address the restrictions on movement and the consequential difficulties faced by litigants in approaching Courts/Tribunals for instituting proceedings.
It was meant to meet the on-going crisis caused by Covid-19 and to ensure that litigants do not lose their right of approaching the Courts for filing petitions and other proceedings by reason of the prescribed limitation period under the general or special laws.
Thus, the Court was of the view that the said orders cannot be applied to "deprive a litigant" of his rights. In this regard, reference was made to a clarification issued by the Supreme Court that its suo moto order extending limitation and the lockdown restrictions of the government will not affect the right of an accused to seek default bail under Section 167(2) of the Code of Criminal Procedure.
Hence, it was held that:
"Although, the right of the petitioners before the Court is more to do with the right not to be deprived of property save by authority of law - Article 300A, the petitioners have established a case where such right is under threat by the action of the ED. The litigants have been conferred a benefit under Section 5(1)(b) and 5(3) of the PMLA on the failure of the Authority to take action within the specified time frame."
"It is further relevant to state that the orders passed by the Supreme Court in the Suo Motu writ petition mention specific provisions in specific statutes such as Sections 23(4) and Section 29A of The Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and Section 138 provisos (b) and (c) of the Negotiable Instrument Act, 1881. On an examination of the specific statutes mentioned by the Supreme Court, it will be seen that all these statutes prescribed provide for specific time frame for instituting a suit, filing a claim/counter claim or an application in furtherance of a remedy provided under the statute. The intention was hence to preserve the right of a litigant to seek a remedy under the Act and not to deprive a litigant of such right of remedy where the litigant has not been able to physically come to the Court or to the Tribunal to file the proceeding in aid of the right. The right thus conferred by the Supreme Court is in relation to the prescribed period of limitation in instituting a proceeding." The court noted
The court also noted that what was being protected by the orders of the Supreme Court was the right to remedy, not the right to take away a remedy under a given statute. "The respondents before this Court seek to do the latter." It added
"The only step taken by the ED is the order of the provisional attachment dated 30th September, 2021. No other steps were taken by the ED before the petitioners reply on 3rd January, 2022 or before the expiry of 180 days period on 31st March, 2022. By its inaction and failure to act in terms of Section 5(1)(b) or the other conditions of the said section, the ED has made itself vulnerable to Section 5(3) of the PMLA. The petitioner in turn has been given the breather of exhaustion of the 180 days window from 1st April, 2022 and the ED cannot now revive the proceedings after more than 80 days have passed from the end point of the 180 days period." The court concluded
Case Title : Hiren Panchal & Anr.v. Union of India
Case No: WPA 9699 of 2022
Citation: 2022 LiveLaw (Cal) 265