Appellant’s Challenge to ED’s Attachment Order Dismissed as SC Ruling Excludes Covid-19 Period From Limitation

Case Details: Shailesh Mulchand Savla v. Deputy Director, Directorate of Enforcement, Mumbai - [2024] 167 taxmann.com 50 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• Munishwar Nath Bhandari, Chairman & Balesh Kumar, Member
• Amitabh Gupta, Authorized Representative for the Appellant.
• Ms Nidhi Raman, Adv. for the Respondent.

Facts of the Case

In the instant case, an FIR was registered against the appellant and based on it, ECIR was recorded. The allegation against the appellant was for criminal conspiracy, cheating and forgery.

It was in reference to irregularities in the allotment of residential rooms/shops under the Slum Rehabilitation Scheme implemented at Garib Mazdoor Sangh Zopadpatti to persons not connected to the said Zopadpatti.

An inquiry revealed that many persons who were not entitled to it were allotted residential rooms/shops under the Scheme based on forged documents, such as affidavits, ration cards, electricity bills, etc. The amount involved in the said case was Rs.101.50 crores. The `Proceeds of crime’ acquired by the appellant were utilized to purchase the subject immovable properties.

Based on the said FIR, an ECIR was registered, and subject properties were provisionally attached by ED. The said order of ED was confirmed by the Adjudicating Authority vide the impugned order.

The appellant challenged the said order on the ground that Section 5(1) of the Prevention of Money Laundering Act, 2002 gives life to an attachment order for 180 days, and it would lapse if it was not confirmed within the period given above. Since the impugned order dated 29.03.2022 was passed after 180 days of the provisional attachment order dated 18.06.2021, it was to be set aside.

It was noted that the Adjudicating Authority indeed needs to pass an order to terminate proceedings within 180 days; otherwise, the attachment would lapse, but there was an extra-ordinary situation during the period of COVID-19 and, the Supreme Court in Cognizance for Extension of Limitation, In re [2022] 134 taxmann.com 307/441 ITR 722 (SC) directed that period from 15-3-2020 till 28-2-2022 would stand excluded for purposes of limitation in respect of all judicial or quasi-judicial proceedings.

Appellate Tribunal Held

The Appellate Tribunal held that in the instant case, if the aforesaid period was excluded, the left-out period was hardly 26 days, i.e. less than 180 days. Therefore, the issue raised by the appellant was not worth acceptance and was to be rejected summarily. Accordingly, an instant appeal was to be dismissed.

List of Cases Reviewed

• Suo Motu Writ Petition No. 3/2020 dated 10th January, 2022
• Hygro Chemicals Pharmtek Pvt. Limited v. Union of India & Ors. reported in MANU/TL/1003/2023 (Para 28)
• Prakash Corporates v. Dee Vee Projects Limited reported in (2022) 5 SCC 112 (Para 29) followed

List of Cases Referred to

• Prakash Corporates v. Dee Vee Projects Limited reported (2022) 5 SCC 112 (para 29).