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Issues: (i) Whether the predicate allegations disclosed scheduled offences under the PMLA; (ii) Whether the attached properties could be retained as value equivalent to proceeds of crime notwithstanding claimed licit sources or pre-dating acquisition; (iii) Whether the confirmation order was non-speaking; (iv) Whether use of guideline or current market value invalidated the attachment; and (v) Whether valid reasons to believe existed for attachment and adjudication.
Issue (i): Whether the predicate allegations disclosed scheduled offences under the PMLA.
Analysis: The charge sheet included offences under the Indian Penal Code, 1860 and Sections 3 and 4 of the Explosive Substances Act, 1908. These offences fall within the relevant parts of the Schedule to the Prevention of Money Laundering Act, 2002. The fact that alleged mining-law violations were not themselves scheduled offences did not displace the scheduled offences disclosed in the predicate proceedings.
Conclusion: The predicate allegations disclosed scheduled offences and furnished a valid basis for proceedings under the PMLA.
Issue (ii): Whether the attached properties could be retained as value equivalent to proceeds of crime notwithstanding claimed licit sources or pre-dating acquisition.
Analysis: Section 24 of the Prevention of Money Laundering Act, 2002 placed the burden on the appellants to establish licit sources. The claimed granite-quarrying income, agricultural income, interest, cash holdings and real-estate income remained unsupported by reliable documentary material and were not substantiated by the income-tax returns produced. Independently, the attachment was of property representing the value equivalent of proceeds of crime under Section 2(1)(u). For such equivalent-value attachment, the independent source and the date of acquisition of the substitute properties were immaterial.
Conclusion: The attached properties were liable to attachment as value equivalent to proceeds of crime.
Issue (iii): Whether the confirmation order was non-speaking.
Analysis: The confirmation order addressed the rival material concerning the predicate offences, quarrying licences, claimed sources of income, absence of reliable evidence for the acquisitions, recorded reasons to believe, and the applicable standard for attachment. It contained findings responsive to the material objections raised.
Conclusion: The confirmation order was a speaking order and was not vitiated for want of application of mind.
Issue (iv): Whether use of guideline or current market value invalidated the attachment.
Analysis: Section 2(1)(zb) defines value with reference to the fair market value on the date of acquisition, or the date of possession where acquisition date cannot be determined. Guideline value or current market value was therefore not the proper statutory measure. However, the alleged proceeds of crime were quantified from the value of illegally extracted granite rather than from the valuation of the attached properties. The valuation error did not affect the legal basis for attachment, particularly where the attached assets represented only a fraction of the alleged proceeds.
Conclusion: The use of guideline or current values was erroneous but did not invalidate the attachment.
Issue (v): Whether valid reasons to believe existed for attachment and adjudication.
Analysis: The recorded reasons linked the scheduled offences and alleged proceeds of crime to the listed assets, and identified the risk of their transfer, disposal or encumbrance frustrating confiscation proceedings. The reported sale of certain attached properties reinforced the apprehension of alienation. Section 5(1) required material supporting a prima facie belief, not conclusive proof. A separate communication or recording of reasons was not required under Section 8(1) before the adjudicatory process was commenced.
Conclusion: The reasons to believe under Section 5(1) were legally sufficient, and no separate requirement under Section 8(1) was breached.
Final Conclusion: The statutory prerequisites for attachment of assets as value equivalent to alleged proceeds of crime were satisfied, and the confirmed attachment remains legally sustainable notwithstanding the valuation error.
Ratio Decidendi: Property equivalent in value to proceeds of crime may be attached under the PMLA irrespective of its independent source of acquisition or whether it was acquired before the predicate offence.
Equivalent-value attachment under PMLA can reach independently acquired property when scheduled offences and prima facie proceeds are established.
Under the PMLA, allegations involving IPC and Explosive Substances Act offences included in the Schedule can support money-laundering proceedings even where associated mining-law violations are not scheduled offences. Property may be attached as value equivalent to proceeds of crime regardless of its independent source or pre-predicate acquisition, while the affected person bears the burden to substantiate licit sources. Fair market value at acquisition or possession is the statutory valuation measure; use of guideline or current values does not necessarily defeat attachment where alleged proceeds are independently quantified. Reasons to believe require prima facie material linking assets to proceeds and a risk of alienation, not conclusive proof.
Scheduled offence for illegal granite quarrying - Attachment of equivalent value of proceeds of crime - Reasons to believe for provisional attachment - Aggrieved person in attachment appeal - Reasoned order confirming provisional attachment Scheduled offence for illegal granite quarrying - Existence of scheduled offences underlying the attachment arising from allegations of illegal granite quarrying - HELD THAT: - The charge-sheet in one of the predicate cases included offences under the IPC and the Explosive Substances Act which are scheduled offences under the PMLA. The objection that the allegations disclosed no underlying scheduled offence was therefore untenable. [Paras 65] The challenge to the ECIR and attachment on the ground of absence of a scheduled offence was rejected. Attachment of equivalent value of proceeds of crime - Burden to establish licit source of attached property - Attachment of immovable properties as value equivalent to proceeds of crime despite claims of legitimate source and acquisition before the alleged period of crime - HELD THAT: - The asserted sources, including quarrying, agricultural income, interest and cash on hand, remained unsubstantiated even by the returns filed for the limited years. The appellants consequently failed to discharge their burden. Independently, the properties were attached as the value equivalent of proceeds of crime; hence, the source of acquisition and the fact that an alternate property pre-dated the alleged scheduled offence were immaterial. [Paras 68, 70, 71, 72] The attachment as equivalent value of the alleged proceeds of crime was upheld. Aggrieved person in attachment appeal - Maintainability of the appeal against attachment of properties already sold by the appellants - HELD THAT: - If the properties had already been sold, the appellants no longer retained any right, title or interest in them and could not claim to be aggrieved by their attachment. An appeal lies only at the instance of an aggrieved party. [Paras 73] The appeal was held not maintainable insofar as it concerned properties already sold, and their attachment was not adjudicated. Reasoned order confirming provisional attachment - Whether the order confirming attachment was non-speaking and passed without application of mind? - HELD THAT: - The Adjudicating Authority had considered the rival submissions concerning the scheduled offences, quarry licences, asserted sources of income, absence of cogent evidence of such sources, recorded reasons to believe and the legal position governing confirmation of attachment. The order therefore disclosed consideration of the material issues raised. [Paras 74] The objection that the confirmation order was non-speaking or suffered from non-application of mind was rejected. Fair market value of property attached as equivalent value - Legality of adopting guideline or present market value for properties attached as value of proceeds of crime - HELD THAT: - Value under the PMLA means the fair market value of property on the date of acquisition, or, where that date cannot be determined, on the date of possession. Adoption of guideline value or present market value was therefore not correct. However, the alleged proceeds of crime were quantified with reference to the granite illegally extracted and not on the basis of the attached properties' value; the valuation objection did not affect the legality of attachment. [Paras 76] The valuation objection was accepted in principle but held immaterial to the validity of the attachment. Reasons to believe for provisional attachment - Validity of the recorded reasons to believe for provisional attachment of the immovable properties and the apprehension of their alienation - HELD THAT: - The recorded reasons linked the properties to equivalent value of alleged proceeds of crime and identified the risk of transfer, disposal or encumbrance frustrating confiscation. Communication of reasons before provisional attachment is not required, and the Adjudicating Authority may proceed under section 8 on the complaint and its subjective satisfaction. Expert opinion on the scheduled offence was irrelevant to attachment proceedings, particularly when the appellants had not been absolved in the predicate cases. The admitted sale of some properties also furnished a cogent basis to apprehend alienation of the remaining properties. [Paras 79, 81, 82, 83, 84] The objections regarding non-recording, non-supply and absence of reasons to believe were rejected. Final Conclusion: The impugned confirmation of provisional attachment was sustained and the appeal was dismissed. The challenge was also held not maintainable insofar as it concerned properties already sold by the appellants.