Bombay High Court
Mukesh Doshi And Another vs Directorate Of Enforcement And Another on 17 June, 2021
Equivalent citations: AIRONLINE 2021 BOM 1627
Author: M.S. Karnik
Bench: S.C. Gupte, M.S. Karnik
Chittewan 1/5 3. WPL 10807-21.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO.10807 OF 2021
Mr. Mukesh Doshi
And Another ... Petitioners
Versus
Directorate of Enforcement
And Another ... Respondents
....
Mr. Aabad Ponda, Senior Counsel a/w Mr. Manish Parekh,
Mr Devansh Bheda, Mr. Harshil Parekh and Ms. Jheel Mehta i/b M/s
Purnanand & Co. for the Petitioners.
Mr. H.S. Venegavkar, Additional Government Pleader for the
Respondents.
....
CORAM : S.C. GUPTE AND
M.S. KARNIK, JJ.
DATE : 17 JUNE 2021 P.C. . Heard learned Counsel for the Petitioners and learned Counsel
for the Respondents-Directorate of Enforcement. The subject matter of the present petition is the Petitioners' challenge to provisional attachment of their property, namely, Rs.1.5 crores in cash under Section 5 of The Prevention of Money-Laundering Act, 2002 ("PML Act"), purportedly on the ground that it represents proceeds of a ::: Uploaded on - 19/06/2021 ::: Downloaded on - 19/06/2021 20:35:20 ::: Chittewan 2/5 3. WPL 10807-21.doc crime.
2 The Petitioners' main grievance is that Section 5 of the PML Act provides for two pre-conditions, which must co-exist before any action is taken thereunder by Director or other authorized officer. These pre-conditions are, firstly, that the person, against whom action is taken, is found to be in possession of proceeds of crime as defined in Section 2(u) of the PML Act and, secondly, that such proceeds are likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating to their confiscation under Chapter III of the PML Act. It is submitted that before passing his order under Section 5 of the PML Act, the Respondent-Director had already acted under Section 17 of that Act by searching and seizing the subject property. It is submitted that once property is seized under sub-section (1) of Section 17 of the PML Act, purportedly on the ground that it was likely to be transferred, concealed or otherwise dealt with, the only option for the Respondent-Director, in case he was of the opinion that such seizure sought to be continued, was to apply under sub-section (4) of Section 17 within 30 days of the original seizure to the adjudicating authority for retention of the property. It is further submitted that since, on the date when the Director passed the impugned order under Section 5 of the PML Act, the property was already seized and in possession of the Directorate by virtue of exercise of powers under Section 17 of the PML Act, there was no likelihood of it being transferred, concealed or ::: Uploaded on - 19/06/2021 ::: Downloaded on - 19/06/2021 20:35:20 ::: Chittewan 3/5 3. WPL 10807-21.doc otherwise dealt with and, accordingly, there was no compliance with the second pre-condition of Section 5, assuming that the property could be treated as "proceeds of crime", so as to result in frustrating of proceedings relating to its confiscation. It is submitted that the very fact that the property was in possession of the Director on the date when the impugned order under Section 5 was passed implies negation of any likelihood of its being concealed, transferred or dealt with by the person from whose possession it was seized.
3 It is important to note that in the present case, the property was seized, after a search was carried out under Section 17 of the PML Act on 23 March, 2021, and on 9 April, 2021, that is to say, within about a fortnight of such seizure, the Director, who was of the view that there was a sufficient case to proceed under Section 5 of the PML Act, ordered its provisional attachment. There is no substance in the Petitioners' contention that having seized the property under Section 17 of the PML Act, the State was bound to apply for continuation of seizure under sub-section (4) of that section, and not exercise powers under Section 5 of the PML Act. The initial search followed by seizure may well be under Section 17 of the PML Act, but if the Director had reason to believe that the seized property was proceeds of crime and was likely to be dealt with by the person from whose possession it was seized, the Director may still choose to act under Section 5 of the PML Act and order its provisional attachment. The two provisions, namely, Sections 5 and 17 are not ::: Uploaded on - 19/06/2021 ::: Downloaded on - 19/06/2021 20:35:20 ::: Chittewan 4/5 3. WPL 10807-21.doc mutually exclusive alternative powers; there is no reason why they cannot be simultaneously resorted to.
4 It would be too hyper-technical to suggest that on the date when the order was passed under Section 5 of the PML Act, that is to say, on 9 April 2021, there had to be a reason to believe that the property was likely to be dealt with, and not anterior to that case, particularly when search was made under Section 17 or seizure was ordered under that Section. We are concerned here with one unitary transaction, namely, search of the Petitioners' premises and seizure of their property on 23 March 2021, followed by provisional attachment under Section 5 on 9 April 2021. This is one continuous transaction. The fact that on 23 March 2021, when the property was seized following search under Section 17, there was a likelihood of the property being transferred or dealt with by the person from whose possession it was seized, would offer a good ground for the Director to act under Section 5 of the PML Act.
5 Mr. Ponda, learned Senior Counsel appearing for the Petitioners, submits that the law on the point requires the formation of reason to believe the existence of the two pre-conditions under Section 5 on the basis of material in possession of the Director. Learned Counsel submits that on the date when the order was passed under Section 5, there was no such material. It is submitted that there was no material to indicate that the cash was likely to be transferred or dealt ::: Uploaded on - 19/06/2021 ::: Downloaded on - 19/06/2021 20:35:20 ::: Chittewan 5/5 3. WPL 10807-21.doc with by the Petitioners, considering particularly that it was under
seizure at that time under Section 17 of the PML Act and placed in a designated bank account under the control of the Director. Insofar the argument of learned Counsel that likelihood of transfer or dealing with the property must exist on the very date of the order under Section 5 and not on any anterior date or on the date when order was passed under Section 17 of the PML Act, is concerend, that has already been dealt with by us above. The other leg of Counsel's submission that there was no material for arriving at the reason that the cash was, in any event, likely to be transferred or dealt with by the Petitioners, merely needs to be noted to be rejected on ex facie consideration. The fact that the property seized was hard cash, by itself and without anything more, did give rise to a reason to believe that it was likely to be transferred or dealt with by the person in whose possession it was found.
6 There is, thus, adequate compliance with both pre-conditions of Section 5 of the PML Act for the Director to pass the impugned order of provisional attachment.
7 Accordingly, there is no merit in the present petition. The petition is dismissed.
(M.S. KARNIK, J.) (S.C. GUPTE, J.)
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