The respondent is a Proprietor of M/S. Maa Tara Agency had put in, three immovable properties purchased through registered sale deeds and two registered sale deeds as the mortgage for securing the overdraft loan facility from the petitioner HDFC Bank Limited.
Thereafter two FIRs were lodged. The informant Shashi Kumar, the Proprietor of Firm Shiva Agro Industries alleged that he had a checking account, within the Bank of India. Younger brothers of the informant, namely, Shailesh Kumar and Rajnish Kumar, had also separate bank accounts opened within the same branch. The informant inquired from the bank about debit and credit status within the said accounts and it had been noticed that massive cash was deposited within the said accounts by some fake persons and money was transferred to other accounts.
The Deputy Director of Enforcement by the impugned order provisionally attached the above referred three mortgaged properties besides bank accounts etc of the respondent in the exercise of power under Section 5 of the Prevention of cash Laundering Act, 2002.
The counsel for the Petitioner contended that before the filing of this criminal writ application, filed a written objection before the Deputy Director, Directorate of Enforcement, against the order of provisional attachment ventilating his grievance on the bottom that the petitioner has preferential claim over the mortgaged property under Section 31B of Recovery of Debts and Bankruptcy Act,1993.
The petitioner further looked for issuance of certiorari to quash the show-cause notice contained whereby the petitioner was asked by the Deputy Director, Directorate of Enforcement, to seem before the Adjudicating Authority under PMLA of 2002. Mr. Sandeep Kumar, counsel for the petitioner, submits that under Section 5 of the PMLA, 2002 only “proceeds of crime” are often provisionally attached if the authority has reason to believe that the property is “proceeds of the crime”. Such “reason to believe” presupposes material within the possession of the authority concerned for such belief and therefore the reason is to be recorded in writing. consistent with learned counsel the property-in-question was acquired much before the alleged act of scheduled offenses under PMLA.
The single Judge Bench held that the property in question wasn't proceeds of crime as defined under the Prevention of Money-Laundering Act nor the impugned order reveals that there was an immediate nexus between the property in question and therefore the proceeds of crime. Therefore, there was no material before the authority concerned to possess “reason to believe” that the property in question was proceeds of crime.
“Only perfunctory recording of the very fact that the authority has “reason to believe” and has material before him for such belief wouldn't suffice unless there's evident material for such belief. Therefore, this is often a case wherein the statutory authority has not acted per the provisions of the enactment. The authority has passed the impugned order in flagrant violation of the principles of natural justice. within the circumstance, asking the petitioner to travel before the statutory forum would amount to sending the petitioner from “Caesar to Caesar’s wife”,” the Court said.