MP-PMLA-1091/MUM/2014

1. This is an application by Lucian Louis Fonseca and Heather Clarke for intervention in the appeal filed by Shri Ajit Bapu Satam against the order of the Adjudicating Authority dated 16th September, 2013 confirming the provisional attachment order dated 28th March, 2013 passed in O.A. No. 197/13 whereby the order of attachment of the commercial property known as "Fifty-Fifty" built on a plot of about 102 sq. meters, S.V. Road, Khar Gaothan, Khar (W) Mumbai bearing survey No. F/195-A Original Plot No. 118 and Final Plot No. 118 of TPS III, Bandra and bearing corresponding CTS No. F/195-A Taluka Andheri had been attached. The allegation of the Appellant is that he had purchased the said property from Shri Rashmikant Shah on payment of Rs. 2.65 crores and a deed of conveyance dated 1.6.2010 was executed in favor of Shri Ajit Bapu Satam.

2. By the said provisional attachment order which was confirmed by the Impugned Order dated 16th September, 2013, the above noted property where the interveners are claiming rights and other properties as detailed in the provisional attachment order had been attached by the Enforcement Directorate.

3. The applicants/interveners have contended that they have about 50% undivided share, right, title and interest as reflected in the Property Card a copy of which is annexed with the application for intervention. The applicants/interveners have also filed a number of documents, namely:-- the electricity bill in the name of Lucian Louis Fonseca pertaining to the property bearing No. 4B/3, Sangeeta Apartments, Hari Sinu Revdandkar Marg, Juhu, Mumbai; the bill of BSES in respect of Fifty-Fifty Ground Floor, Opposite Janta Motor Training, S.V. Road, Khar; a notice from Enforcement Directorate, Government of India stipulating that since the attachment order has been confirmed, the property is in possession of Directorate of Enforcement; a communication dated 11th July, 2014 from Lucian Fonseca to the Joint Director, Directorate of Enforcement regarding sealing of property bearing S. No. 195A, House No. 50, S.V. Road, Khar West; Conveyance dated 29th October, 1992 between Lewis Felix Fonseca and Lily Agnes Cabral and others and Rashmikant Mansukhlal Shah regarding property bearing survey 195A, Original Plot No. 118 measuring 102 sq. meters for a consideration of 9,60,000/-; a copy of notice dated 16th March, 1992 from Shri Amrit R. Kini, Advocate; Deed of Rectification dated 25th May, 2000 by heirs of Alfred A. Fonseca regarding deed of conveyance dated 19th October, 1992 and copy of General Power of Attorney dated 26th November, 2008 executed by Heather Clarke in favor of Shri Lucian L. Fonseca.

4. The applicants/interveners have contended that they are in uninterrupted and continuous use, occupation, possession and enjoyment of a room on the ground floor in the building in the subject property since 1953.

5. According to the applicants/interveners around 2nd July, 2014 on a visit by interveners to the subject property, they noticed that a notice was affixed on the premise stating that the property has been seized/attached and taken possession of by the respondent, Directorate of Enforcement initiated against Mr. Ajit Satam.

6. According to the applicants/interveners they addressed a letter dated 11th July, 2014 to Joint Director seeking copies of papers and proceedings, however, no copies were given to them and they were orally informed that the present appeal was pending and the information and documents sought for by the applicants will not be provided during the pendency of the appeal.

7. The plea of the applicants/interveners is that they are person interested as contemplated under section 5(4) of the Act and no notice was issued to them under section 8(1) of the Act nor they have been heard as contemplated under section 8(2) of the Act though they are the rightful owners of the part of the property attached and they are affected by the provisional attachment order dated 28th March, 2013, which has subsequently been confirmed by the Adjudicating Authority in the Impugned Order.

8. The applicants/interveners have stated that Rose Monica Fonseca was seized of and possessed the subject property she died on 19th May, 1966 leaving behind five children as her heirs namely Anne Mary Fonseca, Francis Thomas Fonseca, Mary Isabella Cabral, Alfred Anthony Fonseca and Lewis Felix Fonseca.

9. Anne Mary Fonseca joined the religious order and she was duly compensated for her respective share in the subject property and Alfred Anthony Fonseca and Lewis Felix Fonseca became entitled to 1/3rd undivided share, right, title and interest in the subject property.

10. Mary Isabella Cabral one of the legal heir died on 26th November, 1967 leaving behind the following legal heirs, Lily Agnes Cabral, Beryl Cabral, Ruby Fernandes, Trevor Albert Cabral, Archie Cabral, Christopher Cabral and Reynold John Cabral.

11. On 26th December, 1981 Francis Thomas Fonseca also died on 12th February, 1982 survived by his wife Rose Maria Fonseca, his legal heir.

12. Alfred Anthony Fonseca also died intestate leaving behind him the interveners and his wife Charlotte Mary Fonseca. The wife of Alfred Anthony Fonseca died intestate on 5th May, 2003.

13. In the circumstances, the interveners have alleged that they have become entitled to about 25% undivided shares, right, title and interest in the subject property.

14. According to the applicants/interveners the agreement for sale was executed on 9th October, 1992 between Lewis Felix Fonseca and Rashmikant Mansukhlal Shah for sale of subject property and consequent thereto a conveyance deed dated 9th October, 1992 was executed in favour of Rashmikant Mansukhlal Shah.

15. The interveners have contended that on 25th May, 2000 Rashmikant Mansukhlal Shah fraudulently sought to rectify the conveyance deed dated 9th October, 1992 by inserting the names of Charlotte Mary Fonseca, Lucian Louis Fonseca and Heather Clarke in the conveyance deed dated 9th October, 1992 and on 5th January, 2002 the name of Rashmikant Mansukhlal Shah was incorrectly added as the owner of the subject property.

16. The interveners thereafter, challenged the entry in the property card before the Superintendent of Land Records and by an order dated 14th January, 2009 the name of Charlotte Mary, Heather Clarke and Lucian Louis Fonseca were restored in the property card as no authority had given permission for the alleged rectification deed.

17. According to the interveners neither Lucian Louis Fonseca nor Rashmikant Mansukhlal Shah could sell the entire subject property and, therefore, the appellant Ajit Satam does not have right over the entire subject property but at best only over the undivided share, right, title and interest of Lewis Felix Fonseca.

18. The interveners, therefore, contended that they have right in the property and are in uninterrupted and continuous use, occupation, possession and enjoyment of the premises and the impugned orders have been passed in violation of cardinal principles of natural justice. The plea of the applicants/interveners that they are still regularly paying property tax and electricity bills in respect of the subject property and the premises attached under section 5(1) and under section 5(4) of PML Act shall not prevent them for using and enjoyment thereof.

19. According to them they are the necessary parties and, therefore, it is prayed that they be allowed to intervene and be heard in the appeal and be furnished with copies of paper and proceedings in the appeal.

20. The applicant/interveners have also sought that they be made parties in the appeal and the order of provisional attachment and the Impugned Order dated 16th September, 2013 confirming the attachment in respect of property in dispute be set aside.

21. The intervener has given the facts in detail about the alleged ownership of the property and devolution of interest in the property after demise of many persons. The interveners has also alleged that the rectification deed dated 25th May, 2000 which was duly registered with the Sub Registrar of the Documents was not accepted by Superintendent of Land Revenue by order dated 14th January, 2009 and the names of some of the previous owners were restored in the entry card. It was also held that no authority was given to Rashmikant Mansukhlal Shah to make the rectification deed.

22. A document duly executed and got registered under the Registration Act cannot be cancelled by the Superintendent of Land Revenue in the proceedings about Entry Card. A duly registered document cannot be set aside in such a proceeding and if the intervener or any other alleged co-owner wanted to get the Deed of Rectification cancelled, the remedy available with them was to file appropriate suit for cancellation as contemplated under section 31 of the Specific Relief Act. In the circumstances, prima facie it cannot be accepted that the intervener have any rights in the property as no decree of the Competent Court for cancellation of said Deed of rectification has been produced and even alleged by the interveners.

23. It is apparent on the perusal of the averments made by the applicant that he is claiming rights in the said property, which has been attached by the respondent, on the basis of Deed of Conveyance dated 1st June, 2010 for which he had allegedly paid Rs. 2.65 crores to Shri Rashmikant Shah. The interveners have deliberately not disclosed anything about the said conveyance deed executed by Shri Rashmikant Shah in favor of Shri Ajit Bapu Satam.

24. So long as these deeds, rectification deed dated 25th May, 2000 and Deed of Conveyance dated 1st June, 2010 are not cancelled by an appropriate decree under section 31 of the Specific Relief Act, the interveners cannot contend, even prima facie, that they have ownership rights in the said property. The learned counsel for the intervener has failed to show any precedent or provision which will entitle a Superintendent of Land Revenue to cancel the registered deed exercising power under section 31 of Specific Relief Act by the act of mere issue of "Entry Card". Therefore, the interveners have failed to show even prima facie that they have any ownership rights in the said property.

25. Even if assuming that the applicants have any ownership rights as claimed by them and as no notice under section 8(1) of PMLA was given to them before attaching their properties in which they are claiming rights and if they are entitled for a right of hearing as contemplated under proviso to section 8(2) of the Act, the remedy to them shall be to invoke the said provision before the Adjudicating Authority as contemplated in the PMLA Act. If the interveners were not the party in the complaint filed by the respondent, they cannot claim that they should be impleaded as a party to the present appeal and hearing should be given to them at this stage.

26. The learned counsel for the intervener is unable to give any satisfactory reply that even if the interveners have not invoked their right, even then they will have a right to be heard before the Appellate Authority. Therefore, there is no legal and valid ground to allow their application for intervention without the intervener exhausting the remedy available to them under the Act. Section 8 of the PMLA is as under:

"Section 8 - Adjudication

(1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an [offence under section 3 or is in possession of proceeds of crime] it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized [or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government:

Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person:

Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property.

(2) The Adjudicating Authority shall, after--

(a) considering the reply, if any, to the notice issued under sub-section (1);

(b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and

(c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering:

Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering.

(3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or [record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property] or record shall-

(a) continue during the pendency of the proceedings relating to any [offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and]

(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the Adjudicating Authority;]

(4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the[possession of the property attached under section 5 or frozen under sub-section (1A) of section 17, in such manner as may be prescribed:

Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of section 17, the order of confiscation shall have the same effect as if the property had been taken possession of.].

(5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government.

(6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it.

(7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money-laundering after having regard to the material before it."

27. The learned counsel for the interveners have not given any cogent reason as to why they should not first invoke their remedy under section 8 of the Act and how they can approach the appellate Court directly. Under Chapter III of the Act, a duty is cast upon the Adjudicating Authority to give hearing to a party which claims to have a right in the property which is sought to be attached whom notice under section 8(1) has not been given. The Act does not prescribe any limitation for giving hearing to a person who has a right in the property who has to be heard under proviso to section 8(2) and who has not been given any notice u/s. 8(1) of the Act and who is not a party to the complaint filed by the Enforcement Directorate.

28. The words of statute, proviso to section 8(2) of Act are clear and unambiguous and are reasonably susceptible to one meaning only. If that be so it cannot be construed to mean that the person who has not been given notice under section 8(1) of the Act and whose property is sought to be attached or has been attached and attachment order has been confirmed will be entitled for hearing only if he had approached the Adjudicating Authority before the order of attachment is challenged in an appeal and in case an appeal has been filed then the remedy of such a person will be only to approach the Appellate Tribunal for intervention.

29. Entertaining the application of the interveners in the appeal, though they have a statutory right to approach the Adjudicating Authority seeking a right of hearing under proviso to section 8(2) of the Act, provided they are able to show prima facie some right in the property, can have serious consequences for other parties leading to deprivation of their right of first appeal. If this Tribunal allows the application for intervention of the interveners and comes to the conclusion that the interveners have right in the property which cannot be attached, then the appellant and the respondent shall be deprived of their right of first appeal, as contemplated under section 26 of the Act and will be left only with invoking their right of second appeal as contemplated under section 42 of the Act. When an efficacious remedy is available to the interveners, then whether it will be appropriate to entertain their application in the appeal in the facts and circumstances., though they have a right to approach the Adjudicating Authority seeking a right of hearing under proviso to section 8(2) of the Act. When an efficacious remedy is available to the appellant, then it will not be appropriate to entertain their application for intervention in the facts and circumstances.

30. In the circumstances, remedy available to the interveners, if they so desire and opt to do, is to approach the Adjudicating Authority and first establish prima facie that they have independent rights in the property. If they establish their rights, then it will be for the Adjudicating Authority to give them such hearing as may be permissible in the facts and circumstances.

31. Therefore, in the facts and circumstances and for the foregoing reasons, the application for intervention in the appeal is not entertained and it is left to the applicant to invoke the remedy available to them, if any, under the Act, in case the Applicants have any right over the property which had been provisionally attached and which attachment order had been confirmed by the Adjudicating Authority. Anything stated here in above is not the expression of final opinion by this Tribunal on the merits of the alleged claim of the applicants over the property which has been attached by the Respondent. With these observations the application for intervention is disposed off and the parties are left to bear their own costs.

FPA-PMLA-530/MUM/2013

Adjourned at the request of learned counsel for the appellant.

List the appeal on 26th September, 2014.