Section 102 of CrPC and PMLA; Foreign Assets and Attachment in India under PMLA

Court :- Delhi High Court , Citation :- MANU/DE/0051/2019

In this case, two substantial and important issues were answered by the Hon'ble Court:

 

  1. whether Section 102 of the Code of Criminal Procedure (“CrPC”) is applicable to proceedings under the Prevention of Money Laundering Act, 2002 (“PMLA”), and

     
  2. whether the provisions of PMLA would apply if the shares were purchased before the enactment of PMLA?

 

With regard to the first contention, the Single Judge of the Delhi High Court observed that,

 

“An order of freezing under Section 102 of CrPC cannot be considered to be in aid of order of provisional attachment passed under Section 5(1) of the PMLA or an order of seizure and/or freezing of property under Section 17(1A) of the PMLA.

 

Both the orders under Section 5(1) and under Section 17 of the PMLA are orders of interim nature and are operative for a limited period till pending adjudication under Section 8 of the Act and further confiscation of the property.”

 

Therefore, the contention that officers of the Enforcement Directorate could issue orders of freezing under Section 102 of CrPC was rejected.

 

With regard to the second contention, it was observed thatthe question whether the provisions of the PMLA would apply would depend on the allegation made against the petitioners. But the High Court held that,

 

If it is established that the petitioners hold any property overseas, which is derived or obtained by a scheduled offence, then

the Enforcement Directorate would be well within its right to initiate proceedings against any property held by the petitioners in India to the extent of the value of the proceeds of crime held overseas.

In such a case, it would be irrelevant whether the assets acquired in India were acquired prior to or after the PMLA came into force.

 

The contention that assets acquired prior to enactment of the PMLA could never fall under the scope of the definition of the expression 'proceeds of crime' and consequently are immune from the provisions of the PMLA, is erroneous and is accordingly rejected.”

By:

Vijay Pal Dalmia, Advocate
Supreme Court of India & High Court of Delhi

Mobile: +91 9810081079
Email: vpdalmia@gmail.com

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