2019 (7) TMI 960 - AT - Money Laundering

Appeal allowed: Selling property below guideline value not money laundering. Review petition dismissed.

The Tribunal allowed the appeal, ruling that selling a property below the Guideline Value/Circle Rate, mostly funded by banks, does not constitute money ... Prevention of money laundering - Section 35(2)(f) of the Prevention of Money Laundering Act, 2002 - valid “reasons to believe” present or not - HELD THAT:- The main reason for filing the present review petition is that in the present case, the ED’s ECIR was registered solely on the basis of registration of FIR by the CBI. However, the CBI having now filed a Closure Report, the direction to the Petitioner herein to secure the amount of ₹ 115 crores, alleged to be the proceeds of crime by the ED, is clearly an error apparent on the face of the record. It is submitted that closure report having been filed, the same would constitute a sufficient reason within the meaning of Order 47 Rule 1 CPC for this Tribunal to review its earlier decision. This Tribunal is empowered to confirm, modify or set-aside the order appealed under Section 26(4) of the Act. Issues:Review of judgment under Section 35(2)(f) of the Prevention of Money Laundering Act, 2002.Analysis:1. The appellant filed an application for review of the judgment passed by the Tribunal, setting aside the order of the Adjudicating Authority. The Tribunal allowed the appeal, stating that selling a property below the Guideline Value/Circle Rate, mostly funded by banks, does not constitute an offense of money laundering or proceeds of crime.2. The Tribunal directed the appellant to provide an alternate property to secure the claimed proceeds of crime. The power of review under Section 35(2)(f) of the PMLA is similar to that of a Civil Court under Order XLVII Rule 1.3. Grounds for review include the discovery of new evidence, error apparent on record, or any other sufficient reason. The appellant cited various Supreme Court judgments to support the grounds for review based on new evidence or mistakes in the earlier decision.4. The Tribunal can review its decision based on new facts emerging after the initial review petition. The appellant argued that since the property attachment was set aside due to lack of reasons to believe in money laundering, providing security to the Enforcement Directorate was unnecessary.5. The Supreme Court's rulings emphasize that attachment before judgment is an extraordinary power and should be used sparingly. The appellant contended that no prima facie case was established by the ED, and the property was offered as security to release the Guindy property due to customer issues.6. The review petition was filed after the CBI filed a closure report, challenging the direction to secure the alleged proceeds of crime. The Tribunal has the power to confirm, modify, or set aside the order under Section 26(4) of the Act.7. The Tribunal felt the condition imposed during the interim stage should be maintained to protect the interests of flat purchasers and banks. The appellant did not challenge the order, and the ED challenged it.8. The Tribunal noted that the closure report was not final, and the matter was sub-judice before higher courts. The appellant could seek relief by moving for quashing of PMLA proceedings based on the closure report or by appealing to the High Court.9. The Tribunal concluded that the grounds for review under Section 35(2)(f) were not met, and hence, the review petition was not maintainable. The petition was disposed of without costs.