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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the provisional attachment proceedings under the Prevention of Money Laundering Act, 2002 were without jurisdiction because the charge sheet in the scheduled offences was filed after the amendment adding Sections 420 and 471 of the Indian Penal Code to the Schedule. (ii) Whether non-recording of the complainant's statement by the police in one FIR rendered the proceedings under the Prevention of Money Laundering Act, 2002 invalid.
Issue (i): Whether the provisional attachment proceedings under the Prevention of Money Laundering Act, 2002 were without jurisdiction because the charge sheet in the scheduled offences was filed after the amendment adding Sections 420 and 471 of the Indian Penal Code to the Schedule.
Analysis: The relevant statutory scheme treats property derived from criminal activity relating to a scheduled offence as "proceeds of crime" and permits provisional attachment where the competent authority has reason to believe that such property is in possession of a person charged of having committed a scheduled offence and may be dealt with so as to defeat confiscation. The amendment bringing Sections 420 and 471 of the Indian Penal Code within the Schedule had come into force before the charge sheet and before the provisional attachment order. The decisive date for attachment proceedings is therefore the date when the person stands charged and when attachment is ordered, not the earlier date of the alleged criminal activity. The material on record showed a charge sheet after the amendment and the attachment order was also subsequent to it.
Conclusion: The jurisdictional challenge failed and the attachment proceedings were held to be valid against the appellants.
Issue (ii): Whether non-recording of the complainant's statement by the police in one FIR rendered the proceedings under the Prevention of Money Laundering Act, 2002 invalid.
Analysis: The tribunal treated the PMLA proceedings as proceedings in rem against the property and not as a forum to test the sustainability of the FIR or the charge sheet on every factual dispute raised in the criminal case. The appellants did not produce material establishing that the complainant's statement was never recorded or that such an alleged defect would nullify the FIR and the charge sheet. The existence of another FIR and a combined charge sheet also supported the continuation of proceedings under the Act. On that basis, the alleged omission in police investigation did not extinguish the foundation for action under the PMLA.
Conclusion: The challenge based on non-recording of the complainant's statement was rejected.
Final Conclusion: The confirmed provisional attachment was sustained, and the appeals were dismissed as the properties were found liable to attachment under the Prevention of Money Laundering Act, 2002.
Ratio Decidendi: For provisional attachment under the Prevention of Money Laundering Act, 2002, the controlling considerations are the existence of a scheduled offence at the time the person is charged and the existence of material giving reason to believe that the property constitutes proceeds of crime and may be dealt with to frustrate confiscation.
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