2024 (7) TMI 1566 - AT - Money Laundering

SAFEMA Tribunal upholds provisional attachment of properties acquired before scheduled offence under money laundering provisions

The Appellate Tribunal under SAFEMA dismissed the appeal challenging provisional attachment orders under money laundering provisions. The appellant argued ... Money Laundering - provisional attachment order - scheduled offence - appellant submitted that the properties attached by the respondent were acquired much prior to the alleged offence in the year 2015, and in July 2016 to January 2017 - whether the property under attachment were acquired prior to the commission of the crime? - HELD THAT:- The issue aforesaid has been dealt with by this Tribunal in the case of Ayush Kejriwal vs. The Deputy Director, Directorate of Enforcement, Kolkata, [2024 (6) TMI 451 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] where it was held that 'The fact is that the property was originally belonging to the accused Nirmal Kumar Kejriwal, the grandfather of the appellant. A gift was made in the year 2020 in favour of the appellant whereas the FIR was registered in the year 2017 followed by the ECIR in the year 2019. The way property was given to the appellant has been noticed and as it was earlier belonging to one of the accused thus, the documents were seized by the respondent and we do not find any illegality in it. The words “the value of such property” does specify it to be earlier to the crime or subsequent and we can insert words “thus value of such property” would mean the property acquired prior or subsequent to the crime.' It is not that only those properties which have been were derived or obtained directly or indirectly out of the crime can be attached rather in case of non-availability of the property derived or obtained directly or indirectly rather when it is vanished or siphoned off, the attachment can be of any property of equivalent value. It is necessary to clarify that the proceeds of crime would not only include the property derived or obtained directly or indirectly out of the criminal activity relating to the scheduled offence but any other property of equivalent value. The word “or” has been placed before “the value of any such property” and is of great significance. Any property of equivalent value can be attached when the proceeds directly or indirectly obtained out of the crime has been vanished or siphoned off. Here,the significance would be to the property acquired even prior to commission of crime - The word “the value of any such property” signifies without any embargo that it should be the property purchased after the commission of crime or prior to it rather it would apply in both the eventuality in the given circumstance. Thus, the counsel for the appellant not agreed upon, who has questioned the attachment in reference to the property acquired prior to commission of crime. Finding no merit in any of the issue raised, the Appeal would fail and is dismissed. Issues Involved:1. Whether the properties attached were acquired prior to the commission of the crime and thus do not qualify as 'proceeds of crime' under the Prevention of Money Laundering Act, 2002.2. Interpretation of 'proceeds of crime' and whether properties of equivalent value can be attached if the actual tainted property is not traceable.Issue-wise Detailed Analysis:1. Acquisition of Properties Prior to Crime:The appellant argued that the properties in question were acquired before the alleged criminal activities took place, specifically in 2015, while the FIR was registered on 08.08.2016, and the Provisional Attachment Order was issued on 29.06.2018. The appellant contended that since the properties were acquired before the commission of the alleged crime, they should not be considered as 'proceeds of crime' under the Act of 2002. The appellant sought to set aside the order of confirmation passed by the Adjudicating Authority on this basis.2. Definition and Scope of 'Proceeds of Crime':The respondent countered that under the Act of 2002, the definition of 'proceeds of crime' is not limited to properties directly or indirectly obtained from the scheduled offence. It also includes properties of equivalent value if the actual proceeds have been siphoned off or are not traceable. The Tribunal emphasized that the definition of 'proceeds of crime' under Section 2(1)(u) of the Act includes any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence, or the value of any such property. This broad definition allows for the attachment of properties of equivalent value even if they were acquired prior to the crime, provided the actual tainted assets are not available.The Tribunal referred to various judgments, including those from the Delhi High Court and the Supreme Court, which have interpreted the definition of 'proceeds of crime' to include properties of equivalent value when the actual tainted property is not available. The Tribunal noted that restricting the definition to only properties obtained directly or indirectly from the crime would undermine the objectives of the Act and allow offenders to evade the law by vanishing or siphoning off the proceeds of crime.Conclusion:The Tribunal concluded that the argument that only properties acquired directly or indirectly from the crime can be attached is not tenable. The Act allows for the attachment of properties of equivalent value when the actual tainted property is not traceable. The Tribunal dismissed the appeal, finding no merit in the issues raised by the appellant, and upheld the order of the Adjudicating Authority confirming the attachment of the properties.