Writ Court Can't Determine Whether A Case Warrants Action U/S 8(4) PMLA, Appellate Authority Appropriate Forum: J&K&L High Court

The observations were made by a bench comprising Chief Justice Ali Mohammad Magrey and Justice Sanjay Dhar while dismissing the pleas of Syed Akeel Shah and Syed Adeel Shah in an alleged arms license case being investigated under PMLA.

On October 18, a single bench had declined to quash eviction notice against Akeel Shah and Adeel Shah, while holding that the Director or the authorized officer is not bound to wait till the expiry of the period of limitation for filing appeal for the purpose of taking action in terms of Section 8(4) of the PMLA.

Deciding the LPA, the bench observed that Section 8(4) of the PMLA authorizes the Director or any other officer to take possession of the property regarding which provisional order of attachment has been confirmed.

The bench recorded that as per the Rule 5(2) of the Prevention of Money Laundering Rules, 2013, once the attachment of immovable property has been confirmed by the Adjudicating Authority and it is found to be in possession of the owner, the authorized officer has to issue a notice of eviction of ten days so as to prevent the person from enjoying such property and if such person does not vacate the property within the stipulated time, he has to be evicted by taking possession thereof.

The bench underscored that Section 26 of the PMLA gives a right of appeal to the aggrieved person against an order made by the Adjudicating Authority and the said appeal has to be filed within a period of 45 days from the date a copy of the order is received by the aggrieved person.

The court noted that while an aggrieved person has a right of appeal against the order of attachment passed by the Adjudicating Authority which the aggrieved person has to avail within 45 days of receipt of order of attachment, the authorized officer or the Director has the jurisdiction to "forthwith" take possession of the property attached.

"The expression "forthwith" is of great significance, in as much as it gives power to the Director or authorized officer to immediately proceed against the person whose property has been attached by virtue of order of Adjudicating Authority," said the court.

Deliberating further on the issue the bench observed that the jurisdiction to proceed under Section 8(4) of the PMLA would come into play immediately upon passing of the order of attachment by the Adjudicating Authority and there is no scope to interpret the provisions contained in Section 8(4) and Section 26 of the PMLA and Rule 5(2) of the Rules of 2013 to hold that for taking action under Section 8(4) of the PMLA, the authorized officer has to await the expiry of period of limitation i.e., 45 days.

"The order of confirmation of attachment passed by the Adjudicating Authority is just like a decree of a civil court which becomes executable the moment it is drawn," the bench underscored.

It pointed out that just like execution of a decree of civil court is not to await the period of limitation for filing an appeal before the appellate court, similarly, an order passed under Section 8(3) of the PMLA is to be acted upon immediately and it cannot await the expiry of period of limitation for filing appeal against the said order.

"Thus, the respondents were well within their powers to issue the impugned notice, which is in tune with the legal position as discernible from the provisions contained in Sections 8 and 26 of the PMLA read with Rule 5(2) of the Rules of 2013," the bench said while dismissing the pleas.

They cannot bypass the remedy of appeal by invoking the writ jurisdiction of this Court simply by laying challenge to the proceedings which are essentially an offshoot of the order passed by the Adjudicating Authority, which is appealable under Section 26 of the PMLA," the court said.

Dealing with the contention of the appellants that as per the ratio laid down by the Supreme Court in Vijay Mandal Choudhary & Ors. Vs, Union of India & Ors. 2022 LiveLaw (SC) 633, that resort to action under Section 8(4) of the PMLA should be only by way of an exception and not as a rule, the bench answered that there can be no dispute to the legal position in this regard, as has been clearly spelled out by the Supreme Court in the aforesaid case but the question whether a particular case is of exceptional nature or not, can be determined only by the appellate authority at the time of considering the merits of the appeal and not by this Court in exercise of its writ jurisdiction.

Dismissing the plea the division bench said that they do not find any ground to interfere in the judgments passed by the single bench as "the same are well-reasoned and lucid and deserve to be upheld."

The court, however, left it open to the petitioners to "immediately" approach the appellate authority and persuade the said authority to stay the order of attachment in case, the appellants apprehend an immediate action against them by the respondents.

Case Title : Syed Akeel Shah vs Directorate Of Enforcement.

Citation : 2022 LiveLaw (JKL) 192

Click Here To Read/Download Judgment