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SC Orders Extending Limitation During Covid-19 Do Not Extend 180 Days Period Of Provisional Attachment: In Calcutta High Court

The 180 days required for provisional property attachment under Section 5 of the Prevention of Money-Laundering Act, 2002, according to the Calcutta High Court, do not apply and will not be extended by the Supreme Court’s suo moto orders extending the statute of limitations during the Covid-19 pandemic.

Disagreeing with the ED’s strategy, a single judge bench presided over by the Honorable Justice Moushumi Bhattacharya held that Section 5(3) clearly prohibits the order of attachment from continuing to be in effect after 180 days had passed. This ruling was made in the case of Hiren Panchal & Anr. v. Union of India (WPA 9699 of 2022). The procedure to be followed for taking legal action against anyone found in possession of any proceeds of crime is outlined in Section 5(1). The procedure to be followed for a provisional attachment of a property, subject to the other conditions in Section 5, is thus the focus of the section. A prescribed procedure that has already been started cannot be compared to the filing of a petition or application, which is the first step in legal action for someone seeking relief under a statute. The Supreme Court in the Suo Motu writ petition sought to protect the starting-point, which was in danger of being defeated because of the pandemic, whereas the 180-day window in Section 5 contemplates an end-point.

Facts of the case:

The ED temporarily attached K.P. Garments Private Limited’s properties on September 30, 2021, and they were supposed to be released on March 31, 2022, 180 days later. The court was currently hearing the directors’ motion to release the properties. The ED had nevertheless kept the attachment, citing the SC’s suo moto orders.

In other words, the Court decided that the right to a remedy, not the right to remove a remedy under a specific statute, was what was protected by the Supreme Court’s orders.

The attorney representing the ED cited the Supreme Court rulings made in Suo Motu Writ Petition (Civil) No.(S) 3/2020 in order to argue that the PMLA’s limitation period was also extended by the aforementioned rulings. Additionally, it was argued that the petitioners cannot rely on the PMLA’s statutory time limit because they took part in the process.

Court’s Observation:

The Supreme Court’s (Suo Motu) order was cited by the court, which stated that it was intended as a special measure in the wake of the pandemic to address the travel restrictions and the ensuing challenges litigants faced when approaching Courts/Tribunals to begin proceedings.

Its purpose was to address the ongoing crisis brought on by Covid-19 and make sure that litigants would not lose their ability to approach the courts for the purpose of filing petitions and other proceedings due to the general or special laws’ prescribed limitation period.

The Court consequently believed that the aforementioned orders could not be used to “deprive a litigant” of his rights. In this regard, it was noted that the Supreme Court’s clarification that its suo moto order extending limitation and the government’s lockdown restrictions will not affect the right of an accused to request default bail under Section 167(2) of the Code of Criminal Procedure was brought up.

Thus, it was decided that “Even though the petitioners’ primary right before the court is Article 300A’s prohibition against being deprived of property without a court order, the petitioners have established a situation in which this right is in danger due to the ED’s actions. In light of the Authority’s failure to act in a timely manner, the litigants have been granted a benefit under Sections 5(1)(b) and 5(3) of the PMLA.”

” It is also important to note that the Supreme Court’s rulings in the Suo Motu writ petition specifically referenced certain provisions found in certain laws, including Sections 23(4) and 29A of the Arbitration and Conciliation Act of 1996, Section 12A of the Commercial Courts Act of 2015, and Section 138 provisos (b) and (c) of the Negotiable Instruments Act of 1881. Examining the specific statutes cited by the Supreme Court reveals that each one of them prescribes a deadline for instituting a lawsuit, submitting a claim or counterclaim, or making an application to further a remedy made available by the statute. Thus, it was intended to protect a litigant’s right to pursue a remedy under the Act and not to deny that right of remedy in cases where the litigant was unable to physically appear before the court or the tribunal to file the proceeding in support of the right. The Supreme Court has thus granted a right in relation to the legal deadline for starting a proceeding.” The court noted

The Supreme Court’s rulings only protected the right to a remedy; they did not protect the right to remove a remedy under a specific statute, the court added. The latter is what the respondents who are before this Court seek to do.

The judge made a  concluded “The ED only took the provisional attachment order, dated September 30, 2021, as a step. Before the petitioners’ reply on January 3, 2022, or before the 180-day period expired on March 31, 2022, no additional actions were taken by the ED. The ED has exposed itself to Section 5(3) of the PMLA by remaining silent and failing to take action in accordance with Section 5(1)(b) or the other requirements of the said section. The petitioner has received notice that the 180-day window has expired as of April 1, 2022, and the ED is unable to reopen the case at this time because more than 80 days have passed since the 180-day window’s end.”

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Judgement Reviewed By Manju Molakalapalli.

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