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Provisional Attachment Order ceases to have effect after 180 Days if no order has been passed: Delhi High Court quashes Authority’s Summons & Notices [Read Judgment]

Provisional Attachment Order - Delhi High Court - Summons- Notices-Taxscan

The Delhi High Court while quashing the summons and notices issued by the Adjudicating Authority held that the Provisional Attachment Order ceases to have effect after 180 Days if no order under Section 8(3) of the Prevention of Money Laundering Act, 2002 has been passed.

The petition raised an interesting question of the effect of the lockdown declared by the Central Government due to the outbreak of the COVID-19 Pandemic on the period of the Provisional Attachment Orders passed under Section 5(1) of the Prevention of Money Laundering Act, 2002.

The Adjudicating Authority, on December 18, 2019, issued a Show Cause Notice under Section 8(1) of the Act to the petitioners. However, before the proceedings could be concluded, on March 23, 2020, the Government of India declared a nationwide lockdown with effect from March 24, 2020, due to the spread of the COVID-19 Pandemic.

The lockdown declared by the Government of India was partially lifted on April 20, 2020 and the Adjudicating Authority, admittedly, began functioning in a restricted manner thereafter.

On May 26, 2020, the Adjudicating Authority issued the Impugned Notice/Summons to the petitioners by way of an email, indicating the next date of hearing in the complaint to be June 16, 2020.

The petitioners filed the petition on June 15, 2020 claiming therein that as the period of 180 days from the date of the Provisional Attachment Orders had expired, in terms of Section 5(3) of the Act, the said order ceased to have effect and therefore, the Adjudicating Authority had become functus officio and the proceedings in the complaint cannot proceed.

The Single judge bench of Justice Navin Chawla while setting Notice/Summons dated May 26, 2020, noted that the 180 days from the date of the Provisional Attachment Order dated November 13, 2019, has expired without any order under Section 8(3) of the Act being passed by the Adjudicating Authority, it is held that the Adjudicating Authority has been rendered functus officio and cannot proceed with the Original Complaint, being pending before it.

“I have intentionally refrained myself from making any comment on whether the period of total lockdown declared by the Central Government, that is from 24.03.2020 to 20.04.2020, can be excluded for computation of the 180 days, as it is not disputed that even on the exclusion of this period, the 180 days would have expired on 16.06.2020, the returnable date of the notice issued by the Adjudicating Authority,” the court said.

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