PMLA attachment cannot survive when the scheduled offence fails on merits and no independent material supports proceeds of crime.
Provisional attachment under the Prevention of Money Laundering Act, 2002 was examined in light of an acquittal in the scheduled offence, with the Tribunal noting that the attachment rested on the same allegations and no independent material had been properly assessed. It concluded that once the scheduled offence failed on merits and no appeal was shown against the acquittal, the basis for treating the properties as proceeds of crime did not survive. The Tribunal also noted arguments on the amended section 8(3)(b), but treated the acquittal as the decisive factor and held that the amendment did not save the attachment. The attached properties were directed to be released.
Issues: (i) Whether the provisional attachment and its confirmation under the Prevention of Money Laundering Act, 2002 could survive after the appellant's acquittal in the scheduled offence. (ii) Whether the amended section 8(3)(b) of the Prevention of Money Laundering Act, 2002 barred continuation of attachment proceedings in the facts of the case.
Issue (i): Whether the provisional attachment and its confirmation under the Prevention of Money Laundering Act, 2002 could survive after the appellant's acquittal in the scheduled offence.
Analysis: The attachment was founded on the same allegations and charge-sheet that formed the basis of the scheduled offence. The Special Court's acquittal, recorded after trial and evidence, found that the accused had not committed the offence under the Prevention of Corruption Act, 1988 and accepted the explanation of income, assets, and expenditure. The Tribunal held that the Adjudicating Authority had not properly examined the source of funds and had proceeded mechanically on the basis of the criminal allegations. Once the scheduled offence failed on merits and no appeal was stated to have been filed, the foundation for treating the properties as proceeds of crime did not survive.
Conclusion: The attachment could not be sustained and the appellant succeeded on this issue.
Issue (ii): Whether the amended section 8(3)(b) of the Prevention of Money Laundering Act, 2002 barred continuation of attachment proceedings in the facts of the case.
Analysis: The Tribunal noted the argument that the amendment effective from 15.02.2013 was prospective and that the earlier version of section 8(3)(b) governed the matter because the FIR and attachment proceedings originated in 2009. It further proceeded on the footing that, even apart from the amendment question, the acquittal in the scheduled offence and the absence of any appeal against that acquittal entitled the appellant to relief. The amendment issue was therefore not treated as the sole foundation of the decision, but it supported the conclusion that the attachment could not continue on the facts presented.
Conclusion: The amendment did not save the impugned attachment orders in this case.
Final Conclusion: The Tribunal set aside the provisional attachment and its confirmation, held that the attached properties were liable to be released, and allowed the appeals.
Ratio Decidendi: Where the scheduled offence is finally negatived on merits after trial and the PMLA proceedings rest on the same allegations without independent supporting material, the provisional attachment cannot be sustained.
TaxTMI 
AI Drafter ✕
TaxTMI 
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