2019 (8) TMI 131 - AT - Money Laundering

Appeals partly allowed, properties released in PMLA case. Indemnity bonds required.

The appeals were partly allowed, modifying the impugned order and the provisional attachment order. The immovable properties were released as they were ... Money Laundering - Provisional Attachment Order - tripartite agreement - acceptance of Bribe - validity of statements recorded under Section-50 - ex-parte proceedings - HELD THAT:- It is matter of fact that statements recorded under Section-50 before passing the provisional attachment order are ex-parte proceedings. No opportunity is granted to the party concerned for cross-examination or granting any opportunity for hearing. There is nothing on record to show that any ill-gotten money in the acquisition of the above 11 flats was inverted/used by the Appellants and their son in the year 2007. The acquisition was done as per the mandate of law. It is also a settled law that the authority cannot travel beyond the statutory provisions. In the present case, admittedly, officer concerned has not recorded the reason to believe separately prior to passing of attachment. There are twin conditions in Section 5(1) is the sine qua non or the condition precedent for the assumption or acquisition of the jurisdiction to pass the attachment order - The law is a settled law that where a power is given to do a certain thing in a certain way, the thing must be done in that way, or not at all and other methods of performance are necessarily forbidden. Reason to believe - HELD THAT:- In the present case, admittedly, no separate reason to believe are recorded. From the provisional attachment order, it is evident that in the said order, the reason to believe are not recorded as per law laid down by the Supreme Court and High Courts. The authorized officer has mainly recorded the contents of charge-sheet, statement of the witnesses recorded under section-50 of the Act, then reproduced the language of section 5(1). The officer was not sure as to whether proposed attachment of movable and immovable properties were acquired from proceed of crime or not. Whether, the aggrieved party is entitled to receive the copy of reason to believe, if those are recorded before issuance of notice under section 8(1) of the Act? - HELD THAT:- In terms of Section 8(1) of the PMLA, the Adjudicating Authority is required to examine the complaint filed under Section 5(5) of the PMLA or an application made under Section 17(4) of the PMLA. If on receipt of such complaint or application, the adjudicating authority has reason to believe that a person has committed an offence of money laundering or is in possession of the proceeds of crime, he is required to serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets or the means with which he has acquired the property which is provisionally attached under Section 5(1) of the Act or seized or frozen under Section 17 of the PMLA. The appeal allowed in part. Issues Involved:1. Confirmation of Provisional Attachment Order under PMLA.2. Allegations of bribery and money laundering.3. Validity of attachment of properties.4. Compliance with procedural requirements under PMLA.5. Evaluation of evidence and statements.6. Recording and communication of reasons to believe.Issue-wise Detailed Analysis:1. Confirmation of Provisional Attachment Order under PMLA:The judgment addresses the appeals against the order confirming the Provisional Attachment Order dated 30.03.2017, passed under section 5(1) of the PMLA. The Adjudicating Authority had confirmed the attachment under section 8(2) of PMLA.2. Allegations of bribery and money laundering:The case involved allegations that a foreign company, Louis Berger International Inc., paid bribes to some ministers in Goa to secure a consultancy contract for the JICA Project. FIR No. 93/2015 was registered for violations of IPC and PCA against the ministers and Louis Berger. The Enforcement Directorate (ED) alleged that bribes of Rs. 1.20 Crores and Rs. 75 Lakhs were paid to the appellants.3. Validity of attachment of properties:The properties attached included immovable properties and fixed deposits. The appellants contended that these properties were acquired before the alleged offenses and could not be considered proceeds of crime. The Adjudicating Authority concluded that the properties were not proceeds of crime and were not involved in money laundering.4. Compliance with procedural requirements under PMLA:The judgment emphasizes the need for compliance with procedural requirements, including the recording of reasons to believe before passing attachment orders. The judgment notes that the reasons to believe must be cogent, clear, and recorded in writing. The failure to record valid reasons to believe and communicate them to the affected parties was highlighted as a significant procedural lapse.5. Evaluation of evidence and statements:The statements of various witnesses, including the appellants, were recorded under Section 50 of PMLA. The appellants denied receiving any bribes. The ED's findings were based on these statements and other evidence. However, the judgment points out that the statements recorded under Section 50 are ex-parte proceedings without cross-examination or hearing opportunities for the parties concerned.6. Recording and communication of reasons to believe:The judgment underscores the importance of recording reasons to believe as mandated by Section 5(1) of PMLA. It cites various judgments emphasizing that reasons must be based on material evidence and not mere suspicion. The reasons must be communicated to the affected parties to ensure a fair hearing and effective defense.Conclusion:The appeals were partly allowed, modifying the impugned order and the provisional attachment order. The immovable properties were released as they were not acquired from proceeds of crime, and no valid reasons were recorded for their attachment. The appellants were directed to furnish indemnity bonds and undertakings. The judgment clarifies that this decision pertains only to PMLA proceedings and does not affect the merits of the allegations under the CBI investigation.