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Adjudicating Authority to not become functus officio on expiry of the period of 180 days from the passing of the order of provisional attachment unless confirmed u/S 8 of PMLA: Calcutta High Court

A period of 180 days after passing of the provisional attachment by the adjudicating authority cannot obstruct it from hearing the matter specified under section 8(1) and 8(2) of PMLA. The Calcutta High Court quorum consisting of Arindam Mukherjee J. ruled that there was an inherent difference between special courts and the adjudicating authorities and there was no time limit for completing the adjudication under Section 8(2) of PMLA. The matter in Fairdeal Supplies Ltd. & Anr. VS. Union of India & Ors [W.P.A. 8232 OF 2020] arose out of delay due to the pandemic.

The facts arose from an FIR registered u/S120B, 406 and 420 of IPC scheduled offence as defined under Section 2 (1) (y) of the Prevention of Money Laundering Act, 2002 (in short ‘PMLA’) an investigation under PMLA was initiated by recording an Enforcement Case Information Report (in short ECIR) number KLZO/17/2016 on 2nd December 2016 against the petitioner and its Directors for alleged commission of offence under Section 3 which is punishable under Section 4 of PMLA. The petitioners have filed this instant application as a portion of the order dated 26th march, 2021 has been according to the petitioners misused by the respondents no. 2, 3, 4 and 13 to proceed with the adjudication under Sections 8(1), 8(2) and 8(3) of PMLA.

The petitioners contended through the cited judgement in M/S Vikas WSP LTD. & ors. Vs. Directorate Enforcement & anr W.P.(C)3551/2020, in support of their contention that the Adjudicating Authority with the expiry of the validity/life of an order of provisional attachment becomes functus officio and cannot proceed any further for adjudication in terms of provisions of Section 8(1), 8(2) and 8(3) of PMLA. Further reliance was also placed in Knight Riders Sports Private Limited Vs. Adjudicating Authority (PMLA)and others [WPA no. 4845 of 2021] to demonstrate the validity of the order of provisional attachment to have not been extended automatically despite its lapse with the expiry of 180 days from passing of the same in view of the order passed by the Hon’ble Supreme Court of India (In re: Cognizance of Extension of Limitation) as contended by the respondent nos. 2, 3, 4 and 13 has been rejected.

The court distinguished between the role of the Special Court (u/S 43 and 44 of PMLA) and the Adjudicating Authority as completely different. The Special Court tries the matter for finding whether an offence punishable under Section 4 connected with scheduled offence, if any and hold the accused guilty of the same if finds such offence has been committed. The punishment consequent upon such finding follows. The Adjudicating Authority on the other hand makes an endeavour to find out whether the property(s) are involved in money-laundering and makes a declaration to that effect on finding it in the affirmative. Upon such declaration being made the order of provisional attachment is confirmed.

The bench after treading carefully through the analysis observed that the embargo to confirm an order of provisional attachment in a given case where such order of provisional attachment has lost its force by efflux of 180 days cannot be an impediment for the Adjudicating Authority in hearing a matter in terms of section 8(1) and 8(2) of PMLA. The narrow construction of the stature as sought to be made by the petitioners, therefore cannot be accepted as it will lead to holding 180 days to be the time period for completing adjudication under Section 8(2) of PMLA.

The court ruled that “The Adjudicating Authority does not become functus officio on expiry of the period of 180 days from the passing of the order of provisional attachment unless such order is confirmed under Section 8(3) in view of the provisions of Section 5(3) of the PMLA, the Adjudicating Authority in the instant case, is, free to proceed till the Sec. 8(2) stage i.e., to give a finding whether the property is involved in money-laundering or not.”

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