2016 (1) TMI 1349 - AT - Money Laundering

Tribunal upholds provisional attachment of properties under Prevention of Money Laundering Act

Shivans Steel P. Ltd. Versus Dy. Dir., Directorate of Enforcement, Lucknow

The Tribunal upheld the confirmation of the provisional attachment of properties worth Rs. 1.21 crore under the Prevention of Money Laundering Act. The ... Offence under PMLA - attachment of properties provisionally attached - violation of principles of natural justice premised on the plea of not serving the show cause notice in accordance with the provisions of PMLA and Adjudicating Authority Regulations, on account of not supplying the copy of Original Complaint and for not giving fair opportunity i.e. hearing the respondent on 9-3-2011 in his absence Held that:- The appellant has completely failed to demonstrate before us if any prejudice is caused to him on account of these infractions. Whether any purpose would be served in remitting the case to Adjudicating Authority for fresh adjudication after serving show cause notice u/s 8(1) of PMLA and after serving copy of Original Complaint and relied upon documents to the appellant? - Held that:- In the light of the facts of present case as discussed above, we find that such an exercise would be totally futile having regard to the fact that the appellant has totally failed to bring any material on record to refute the allegations of laundering proceeds of crime generated by Shri Madhu Koda, in the form of share capital money and unsecured loans procured by Shri Binod Sinha and his associates through accommodation entries from entry operators, made in the Provisional Attachment Order and in the Original Complaint. Issues Involved:1. Allegations of corruption and disproportionate assets.2. Investigation and findings by the State Vigilance Department.3. Provisional attachment of properties under PMLA.4. Service of notice and principles of natural justice.5. Alleged procedural lapses by the Adjudicating Authority.6. Evidence and material presented by the respondent.7. Legal arguments and precedents cited by both parties.8. Final judgment and reasoning of the Tribunal.Detailed Analysis:1. Allegations of Corruption and Disproportionate Assets:The case originated from Public Interest Litigations (PILs) alleging corrupt practices by certain individuals, including a former Chief Minister, who were accused of amassing wealth disproportionate to their known sources of income. The allegations included acquiring huge properties both immovable and movable through corrupt or illegal means.2. Investigation and Findings by the State Vigilance Department:An FIR was registered against the accused for violations under various sections of the Indian Penal Code and the Prevention of Corruption Act, 1988. The State Vigilance Department carried out an investigation and filed a final report confirming the commission of offenses under these laws. The investigation revealed that the accused had amassed assets in excess of their income from legal sources by abusing public office.3. Provisional Attachment of Properties under PMLA:Based on the investigation, a Provisional Attachment Order was issued, directing the appellant company not to transfer or dispose of certain assets. The respondent filed an Original Complaint seeking confirmation of the provisional attachment, which was confirmed by the Adjudicating Authority for properties worth Rs. 1.21 crore.4. Service of Notice and Principles of Natural Justice:The appellant argued that the Adjudicating Authority violated the principles of natural justice by not properly serving the show cause notice and not providing a fair opportunity for representation. The notice was allegedly served at an old address, and the appellant claimed that they were not given sufficient time to respond effectively.5. Alleged Procedural Lapses by the Adjudicating Authority:The appellant contended that the Adjudicating Authority did not follow proper procedures, including the service of notice by registered post and the requirement for substituted service through newspaper publication. The appellant argued that these lapses invalidated the subsequent confirmation order.6. Evidence and Material Presented by the Respondent:The respondent provided substantial evidence, including statements from various individuals, showing that the accused had laundered proceeds of crime through accommodation entries in the form of share capital and unsecured loans. The respondent alleged that the appellant company received these entries from Kolkata-based paper companies.7. Legal Arguments and Precedents Cited by Both Parties:The appellant cited various legal precedents to argue that the notice was not properly served and that the principles of natural justice were violated. The respondent countered by arguing that the appellant was given sufficient opportunity to defend itself and that no prejudice was caused by the alleged procedural lapses. The Tribunal referred to the Supreme Court judgment in Dharampal Satyapal Limited v. Deputy Commissioner of Central Excise, which emphasized that not all violations of natural justice principles necessitate setting aside an order if no prejudice is caused.8. Final Judgment and Reasoning of the Tribunal:The Tribunal found that the appellant had access to the Original Complaint and relied upon documents during the adjudication proceedings. The Tribunal concluded that the appellant failed to demonstrate any prejudice caused by the alleged procedural lapses. The Tribunal held that the appellant did not provide any material to refute the allegations of laundering proceeds of crime. Consequently, the appeal was dismissed, and the confirmation of the provisional attachment was upheld.Conclusion:The Tribunal dismissed the appeal, finding that the appellant failed to demonstrate any prejudice caused by the alleged procedural lapses and did not provide any material to refute the allegations of laundering proceeds of crime. The confirmation of the provisional attachment was upheld. All pending applications were closed.