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of <h1>Tribunal Upholds Decision to Vacate Attachment Order Due to Lack of Evidence</h1> <h3>The Joint Director Directorate of Enforcement, Hyderabad Versus M/s. Embassy Property Developments Pvt. Ltd., Jitendra Virwani</h3> The Joint Director Directorate of Enforcement, Hyderabad Versus M/s. Embassy Property Developments Pvt. Ltd., Jitendra Virwani - TMI Issues Involved:1. Legality of the Provisional Attachment Order (PAO) issued by the Enforcement Directorate (ED).2. Allegations of money laundering and involvement of properties in money laundering.3. Compliance with the Prevention of Money Laundering Act (PMLA), 2002.4. Validity of the attachment of properties of the Respondent.5. Impact of amalgamation on criminal liability.6. Formation of reasonable belief for attachment under Section 5(1) of PMLA.Detailed Analysis:1. Legality of the Provisional Attachment Order (PAO):The Tribunal found that the Provisional Attachment Order dated 03.01.2018 was illegal and could not be continued. The Adjudicating Authority noted that the PAO for the amount of Rs. 25,05,57,469 and Rs. 19 Crore was not justified and thus vacated the attachment. The Tribunal upheld this decision, emphasizing that the attachment lacked reasonable belief and was not supported by sufficient evidence.2. Allegations of Money Laundering:The Tribunal examined the allegations of money laundering against the Respondents. It was argued by the appellant that the respondents were involved in money laundering through various transactions and agreements. However, the Adjudicating Authority found no evidence to support these allegations. The Tribunal concurred, stating that the respondents did not receive any proceeds of crime and that the transactions were legitimate business activities.3. Compliance with PMLA, 2002:The Tribunal highlighted that the appellant failed to meet the essential requirements under Section 5(1) of the PMLA. The Adjudicating Authority noted that the appellant did not form a reasonable belief that the properties of the respondents were proceeds of crime. The Tribunal upheld this finding, emphasizing that the attachment order was not based on a valid and reasonable belief.4. Validity of the Attachment of Properties:The Tribunal found that the attachment of the respondents' properties was unwarranted. The Adjudicating Authority had concluded that the properties were not involved in money laundering and thus could not be attached. The Tribunal agreed, noting that the appellant failed to provide any evidence linking the respondents' properties to money laundering activities.5. Impact of Amalgamation on Criminal Liability:The Tribunal discussed the impact of the amalgamation of ERPL and DDPL into the Respondent Company. It was noted that upon amalgamation, the transferor company dies a civil death, and criminal liability cannot be transferred to the transferee company. The Tribunal upheld the Adjudicating Authority's finding that the Respondent Company could not be held liable for any alleged criminal acts of its predecessors.6. Formation of Reasonable Belief for Attachment under Section 5(1) of PMLA:The Tribunal emphasized that the appellant did not form a valid and reasonable belief for attaching the respondents' properties. The Adjudicating Authority had noted that the appellant's belief was not based on any substantial evidence and was formed in a casual manner. The Tribunal upheld this finding, stating that the attachment order was not sustainable in the absence of a valid reason to believe that the properties were proceeds of crime.Conclusion:The Tribunal dismissed the appeals, upholding the Adjudicating Authority's decision to vacate the Provisional Attachment Order. It was concluded that the attachment of the respondents' properties was not justified and lacked a reasonable belief. The Tribunal emphasized that the transactions in question were legitimate business activities, and the respondents were not involved in money laundering. The amalgamation of the companies did not transfer any criminal liability to the Respondent Company, and the attachment order was not supported by sufficient evidence.
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