THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P.NO.27898 OF 2010 ORDER: The two petitioners herein are the wife and husband, who seek a writ of mandamus for declaring the Provisional attachment Orders dated 21-10-2010 as illegal and violative of Article 20 of Constitution of India and further, the action of the 4th respondent in initiating Adjudication under Section 8 of the Prevention of Money- Laundering Act, 2002 (henceforth referred to as “the PML Act”), as bad in law. It is stated that the 1st petitioner was working, at the material point of time, as Senior Vice President & Global Head of Internal Audit of M/s. Satyam Computer Services Limited (henceforth referred to as ‘the Company’ for brevity). It is stated that the C.B.C.I.D., Hyderabad has registered a case in Crime No.2 of 2009 on 09-01-2009 for offences under Sections 120-B, 406, 420, 467, 471 and 477-A of the Indian Penal Code, 1860, against the then Chairman of the Company, its Directors, Auditors and others. It is further stated that the said complaint has been forwarded to the VI Additional Chief Metropolitan Magistrate, Hyderabad, on 12-01-2009. It is further submitted that pursuant to a notification dated 16-02- 2009, the investigation has been entrusted to C.B.I. and the case was registered as C.C.No.187 of 2009 on the file of the XIV Additional Chief Metropolitan Magistrate, Hyderabad, and upon transfer to Special Court-cum-XXI Additional Chief Metropolitan Magistrate, Hyderabad, is numbered as C.C.Nos.1, 2 and 3 of 2010. The 1st petitioner is arrayed as Accused – 10 in the said criminal case. It is further averred that the Directorate of Enforcement moved Crl.M.P.No.16 of 2010 in C.C.No.1 of 2010 under Section 57 of the PML Act, for recording the statements of the 1st petitioner and others under the said Act. The said petition was ordered on 23-04-2010 allowing recording of the statements in the presence of the counsel for the accused. It is further stated that challenging the correctness and validity of the said order, the 1st petitioner herein filed Crl.R.C.No.907 of 2010 in this Court and while directing not to record further statements, the said Revision is posted for further consideration and it is still pending in this Court. It was further submitted that when Industrial Development Bank of India (IDBI) has issued a letter on 30-04-2010, freezing the shares held by the petitioners in the Company, pursuant to a communication received by the said Bank from the Directorate of Enforcement, the 1st petitioner filed W.P.No.19564 of 2010 and the said case is still pending. At that stage, the present impugned orders have been passed ordering for provisional attachament of movable and immovable properties of the petitioners. Based upon the said provisional attachment order, the adjudicating authority issued notice on 07-12-2010 calling upon the petitioners to participate in the adjudiciation process. Hence, this Writ Petition. Heard Sri Venkateswara Rao Gudapati, learned counsel for the writ petitioners and Sri Rajeev Avasthi, learned special counsel for the respondents appearing on behalf of Sri Ponnam Ashok Goud, learned Assistant Solicitor General. The learned counsel for the petitioners, Sri Venkateswara Rao would contend that under the Schedule to the PML Act, offences under Sections 120-B and 420 IPC are not included at the time when the said offences are alleged to have been committed by the 1st petitioner herein and hence, the question of proceeding against the petitioners under the provisions of the PML Act, would not arise. It is contended by the learned counsel for the petitioners that the crime is registered against the 1st petitioner herein on 09-01-2009 under Section 420 IPC. As on that date, the said offence under Section 420 IPC is not forming part of the Schedule appended to the PML Act and hence, the question of registering a case under the PML Act against the 1st petitioner, would not arise. The learned counsel would further submit that the CBI has filed its charge sheet against the 1st petitioner (arraying him as A-10) on 22-11-2009 and the charge sheet clearly mentioned that the 1st petitioner herein has been charged for the offence said to have been committed by him under Section 120-B r/w Section 420 IPC only and that an amendment of the Schedule appended to the PML Act has been brought into force on 01-06-2009 incorporating offences of Sections 120-B and 420 IPC therein. Therefore, as on the date when the C.B.C.I.D. registered the crime on 09- 01-2009, offences under Sections 120-B and 420 IPC not having been included in the Schedule appended to the PML Act, the amendment brought on 01-06-2009 incorporating those offences would amount to an ex post law and hence, the petitioners cannot be charged under the PML Act at all. The learned counsel for the petitioners has placed reliance, in support of his contentions, upon judgments rendered by the Supreme Court in RAO SHIV BAHADUR SINGH AND ANOTHER v. THE STATE OF VINDHYA PRADESH[1] a n d G.P.NAYYAR v. STATE (DELHI ADMINISTRATION)[2] as well as the judgment of a learned Single Judge of Allahabad High Court rendered i n ABDUL HALEEM v. STATE, OPPOSITE PARTY[3] and another judgment of a learned Single Judge of the Kerala High Court rendered in PAREED LUBBA MUHAMMED LUBBA v. K.K. NEELAMBARAN, EXECUTIVE OFFICER, THODUPUZHA PANCHAYAT[4]. Per contra, Sri Rajeev Avasthi, learned special counsel, would submit that the PML Act has been enacted by the Parliament, as part of international treaty obligation, not only to prevent money laundering, but also to provide for confiscation of property derived from or involved in money laundering and for incidental matter connected thereto. The learned special counsel would submit that the PML Act is a special piece of Legislation that has been made to recognise some of the illegal activities as offences of money laundering and punishment thereof has been provided for. Further, the Statute has also contemplated for attachment and confiscation of the properties, which have a connection with the proceeds of crimes. It is further contended by the learned special counsel that a comprahensive procedure for attachment, adjudication and confiscation has been provided for in the Statute. Further, against the adjudicatory process undertaken by the Primary Tribunal, an Appellate Tribunal has been constituted providing for Appeals thereto. It is further contended that any person, who is aggrieved by any decision or order of the Appellate Tribunal, has been provided with further Appeal to the High Court within 60 days from the date of communication of the decision or order of the Appellate Tribunal on any questions of law or fact arising out of such an order. Therefore, very efficacious remedies have been provided for under the Statute and hence, the Writ Petition is mis-conceived. Before I proceed any further, it would be apt to remind oneself that at this stage of the matter, it would be wholly inappropriate to examine the tenability or otherwise of the proceedings initiated under Section 5 of the PML Act. The only question that can be examined is whether the 1st petitioner can be proceeded under Section 5 of the PML Act, for an offence alleged to have been committed by him prior to 01-06-2009, the date on which the Schedule appended to the PML Act has been amended. The objects and reasons for enacting the PML Act, have been clearly spelt out. It is pointed out that the Political Declaration and Global Programme of Action, annexed to the resolution S-17/2, was adopted by the General Assembly of the United Nations at its seventeenth special session on the 23rd February, 1990. Further, the Political Declaration adopted by the special session of the United Nations General Assembly held between 8th to 10th June, 1998, calls upon the Member States to adopt national money-laundering legislation and programme. As a part of this commitment, this enactment has been made by the Parliament, providing for a completely self- contained code of procedure for recognizing and penalizing the offence of money-laundering and also to tackle the proceeds of crime if they eventually percolate into various financial streams of the country, thus, impacting fiscal and economic agendas set forth by the State for its governance. It would be further appropriate to notice that the Financial Action Task Force on Money Laundering (FATF), an inter- governmental body was established by the G-7 Summit that was held in Paris in 1989 and it was assigned with the task of setting standards and promotion of policies to combat the issues relating to money-laundering and terrorist funding, during 1990 drew up forty recommendations - as initiatives to fight the malice of money-laundering and terrorist funding – important amongst them are: criminalise money laundering and enable authorities to confiscate the proceeds of money laundering implement customer due diligence (e.g. identity verification), record keeping and suspicious transaction reporting requirements for financial institutions and designated non-financial businesses and professions establish a financial intelligence unit to receive and disseminate suspicious transaction reports, and cooperate internationally in investigating and prosecuting money laundering. These recommendations have been updated regularly and periodically. Of late, India has been facing, on a regular periodicity, terrorist attacks. Hence, it needs to arm itself with an appropriate toolkit for a rigorous law enforcement to track and tackle the funding behind such attacks. These efforts led to this enactment. Chapter-II of the PML Act defined the offence of money laundering and provided the punishment therefor in Sections 3 and 4 incorporated in the said Chapter. Section 3 declares that, whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property, shall be guilty of offence of money-laundering. Section 4 declares that whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term, which shall not be less than three years, but which may extend to seven years and shall also be liable to fine, which may extend to five lakh rupees. From the definition of ‘offence of money-laundering’ contained in Section 3 of the PML Act, it becomes clear that, whosoever directly or indirectly attempts to indulge or becomes a party or gets involved in any process or activity or activity connected with the proceeds of crime and projecting it as untainted property, shall be guilty of the offence of money-laundering. The two crucial expressions used in the said Section 3, which are relevant for our inquiry are “proceeds of crime” and “property”. These two expressions have been defined under Section 2(u) and 2(v) of the PML Act, as under: “(u) “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property; (v) “property” means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located.” Since the definition of “proceeds of crime” in turn used the expression “scheduled offence”, it would also be appropriate to notice as to how the said expression has been defined in Section 2(y): “(y) “scheduled offence” means- (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more;” From a conjoint reading of the expressions “proceeds of crime” and “scheduled offence” as defined, the offence must be one that should find a mention either under Part A or Part B of the Schedule appended to the PML Act. Para 1 of Part A of the Schedule listed out the offences under the Indian Penal Code. It is not in dispute that by the Prevention of Money-Laundering (Amendment) Act, 2009 (Act No.21 of 2009), amongst other things, para 1 of Part A of the Schedule has been amended introducing the offence under Section 120-B : criminal conspiracy, and offence under Section 420 : cheating and dishonestly inducing delivery of property, therein. It is further not in dispute that the amending Act No.21 of 2009 has been brought into force with effect from 01-06- 2009. Therefore, it coes not pose any difficulty that post 01-06-2009, any property derived or obtained, by any person, as a result of criminal activity, relating to offences punishable under Sections 120-B and 420 IPC, can be dealt with under the PML Act. It will be appropriate at this stage to notice that Chapter-III of the PML Act dealt with the process of attachment, adjudication and confiscation of the proceeds of the crime. As was noticed supra, the PML Act is not only intended to create and provide for prohibitive measures, but also intended to put in place regulatory mechanism, so as to arrest the impact of ‘proceeds of crime’ denting, in any manner, the fiscal and economic agenda of the State. If I may say so, the Act has provided for two distinct and separate branches of action. Chapter-II dealt with the conduct, which constitutes the offence and provided for the appropriate punishment therefor, while Chapter-III dealt with the regulatory aspects of the ‘proceeds of the crime’, enabling them to be subjected to attachment and adjudication and leading to their ultimate confiscation to the State. Therefore, if Chapter-II can be characterized as dealing with the criminal facets of the conduct, the provisions in Chapter-III are essentially intended to deal with the aspects to deny certain persons from deriving benefits either knowingly or unknowingly, arising from the ‘proceeds of crime’. But, for the provisions contained in Chapter-III, the proceeds of crime could not have been dealt with at the initial stages itself. These two aspects are completely distinct and separate. Chapter-III, therefore, had to deal first with the immediate action that is required to be taken in the matter by ordering for provisional attachment, and then, seeking the process of adjudication, which might lead to ultimate confiscation of such proceeds. Otherwise, the proceeds of the crime continue to impact the financial streams of the society. Before analysing the provisions contained in Section 5 included under Chapter-III of the PML Act, it will be approriate to notice the definition assigned to the word “attachment” under Section 2(1)(d), which is to the following effect: “(d) “attachment” means prohibition of transfer,conversion, disposition or movement of property by an order issued under Chapter-III;” Sub-Section (1) of Section 5 authorises the Director, appointed in terms of Sub-Section (1) of Section 49 of the said Act by the Central Government, if he has reason to believe, on the basis of material in his possession that; (a) any person is in possession of any proceeds of crime; (b) such person has been charged of having committed a scheduled offence; and (c) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter; by order in writing, to provisionally attach such property for a period not exceeding one fifty days from the date of the order. However, the following conditions are required to be satisfied before a provisional attachment order is passed by the Director or any other Officer authorised by him occupying a rank not below that of a Deputy Director; (1) There should be adequate material before such Officer, which makes him believe that if the attachment of the proceeds of crime are not ordered, it might result in frustration of the confiscation. (2) A person must be in possession of the proceeds of crime; (3) Such person must have been charged of having committed one or the other of the scheduled offences under this Act; (4) Such proceeds of crime are likely to be concealed or transferred or dealt with in any manner, which may result in frustrating any proceedings of their ultimate confiscation. In the instant case, with effect from 01-06-2009 Sections 120-B and 420 IPC have been incorporated in para 1 of Part A of the Schedule. Therefore, the proceeds of such crime are capable of being dealt with under Section 5, provided, of course, such person, who is in possession of the proceeds of crime, should have also been charged of having committed the said offence under Sections 120-B and 420 IPC after 01-06-2009. As was already noticed, a charge was laid against the 1st petitioner by the C.B.C.I.D., in C.C.No.187 of 2009 on the file of the XIV Additional Chief Metropolitan Magistrate, Hyderabad, alleging him to have committed offences punishable under Section 120-B r/w Section 420 IPC, on 22-11-2009. Therefore, after 22-11-2009, the proceeds of crime punishable under Sections 120-B and 420 IPC, in the hands of the 1st petitioner herein, are capable of being subjected to action under Section 5 of the PML Act. As was already noticed, the provisional attachment order has been passed only on 21-10-2010, which is long subsequent to 22-11-2009. Sri Rajeev Avasthi, learned special counsel, has pointedly drawn my attention to the findings recorded by the Division Bench of this Court speaking through Justice Goda Raghuram in B. RAMA RAJU AND OTHERS v. UNION OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, REP. BY ITS SECRETARY (REVENUE), NEW DEK\LHI AND OTHERS[5], wherein the learned Judges have held as under: “……………… In our considered view, the provisions of the Act which clearly and unambiguously enable initiation of proceedings for attachment and eventual confiscation of property in possession of a person not accused of having committed an offence under Section 3 as well, do not violate the provisions of the Constitution including Articles 14, 21 and 300-A and are operative proprio vigore. While the offence of money- laundering comprises various degrees of association and activity with knowledge and information connected with the proceeds of crime and projection of the same as untainted p ro p e rty; for the purposes of attachment and confiscation (imposition of civil and economic and not penal sanctions) neither mens rea nor knowledge that a property has a lineage of criminality is either constitutionally necessary or statutorily enjoined. Proceeds of crime [as defined in Section 2 (u)] is property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence or the value of any such property. “Property” is defined in Section 2 (v) to include property of every description corporeal, incorporeal, movable, immovable, tangible, and intangible and includes deeds and instruments evidencing title to or interest in such property or assets wherever located. The matrix of the relevant provisions of the Act compel the inference that the legislation subsumes that property which satisfies the definition of “proceeds of crime”, prima facie is considered as property whose transfer [defined in Section 2(za)] is subject to verification to consider whether the transfer is a stratagem of a money laundering operation and is part of a layering transaction. As the provisions of the Act target malfeasants charged of an offence under Section 3 and the proceeds of crime in the possession of a person so charged and any other person as well, the legislative intent is manifest that attachment and confiscation constitute a critical and clearly intended and specifically enacted strategy to combat the evil of money-laundering. A person though not accused/charged of an offence under Section 3, when in possession of any proceeds of crime, from the provisions of the Act it is clear, has but a defeasible and not a clear title thereto.” Dealing with the same question, which was raised by the learned counsel for the petitioners herein, this is what has been said by the Division Bench in the aforementioned Judgment: “ …………………. On analysis of the provisions of Section 5, 8, 17 and 18, it is clear that provisions of the Second Amendment Act have carefully ironed out the creases and the latent rucks in the texture of the provisions of the Act relating to attachment, adjudication and confiscation in Chapter-III. Attachment or confiscation of proceeds of crime in the possession of a person who is not accused or charged of an offence under Section 3 is thus not an incorporation for the first time by the provisions of the Second Amendment Act, 2009. The contention on behalf of the petitioners that the second proviso to Section 5(1) of the Act, applies only to property acquired/possessed prior to enforcement of this provision or if interpreted as being retrospective, the provision itself must be invalidated for arbitrary retrospective operation is therefore without substance or force. The above contention does not merit acceptance even otherwise. Article 20 of the Constitution enacts an injunction only in respect of ex post facto laws resulting in conviction for offences or imposition of penalties greater than which might have been inflicted under the law enforceable at the time of commission of the offence. No provision of the Constitution has been brought to our notice which prohibits a legislative measure which targets for attachment and confiscation proceeds of crime. On the text and authority of our Constitution while it may perhaps gainfully be contended that conviction for the offence of money-laundering cannot be recorded if the said offence is committed prior to the enforcement of Section 3 of the Act, such a contention cannot be advanced to target proceedings for attachment and confiscation, as these fall outside the pale of the prohibitions of the Constitution, in particular Article 20(1). xxxx……xxxx……xxxx……xxxx…. xxxx……xxxx……xxxx……xxxx…. The observations in Amratlal Prajivandas (supra) are apposite in this context. The definition of “illegally acquired properties” in Section 3(1)(c) of SAFEMA were challenged on the ground of over-breadth and, therefore as arbitrary. Negativing this contention the Constitution Bench of the Supreme Court observed (per B.P. Jeevan Reddy, J): …Even apart from the protection of Article 31(B), we see no substance in the submission that the definition is arbitrary or discriminatory nor do we see any reason for reading down the said definition to confine it to the violation of the acts referred to in Section 2(2)(a) of SAFEMA. We can take note of the fact that persons engaged in smuggling and foreign exchange manipulations do not keep regular and proper accounts with respect to such activity or its income or of the assets acquired therefrom. If such person indulges in other illegal activity, the position would be no different. The violation of foreign exchange laws and laws relating to export and import necessarily involves violation of tax laws. Indeed, it is a well-known fact that over the last few decades, smuggling, foreign exchange violations, tax evasion, drugs and crime have all got mixed-up. Evasion of taxes is integral to such activity. It would be difficult for any authority to say, in the absence of any accounts or other relevant material that among the properties acquired by a smuggler, which of them or which portions of them are attributable to smuggling and foreign exchange violations and which properties or which portions thereof are attributable to violation of other laws (which the Parliament has the power to make). It is probably for this reason that the burden of proving that the properties specified in the show cause notice are not illegally acquired properties is placed upon the person concerned. May be this is a case where a dangerous disease required a radical treatment. Bitter medicine is not bad medicine. In law it is not possible to say that the definition is arbitrary or is couched in unreasonably wide terms. Further, in view of clear and unambiguous language employed in clause (c) of Section 3, it is not possible or permissible to resort to the device of reading down. The said device is usually resorted to save a provision from being declared unconstitutional, incompetent and ultra vires. We are, therefore, of the opinion that neither the constitutional validity of the said definition can be questioned nor is there any warrant for reading down the clear and unambiguous words in the clause. So