2024 (9) TMI 1687 - AT - Money Laundering

Money laundering provisions allow attachment of crime proceeds even when held by non-accused persons under Section 8(3)(a)

Mr. Irfan Ahmed Siddiqui; Al Mehmood Education Society Versus The Deputy Director Directorate of Enforcement, Delhi

The Appellate Tribunal for SAFEMA at New Delhi dismissed an appeal challenging provisional attachment of property under money laundering provisions. The ... Money Laundering - provisional attachment order - recipient of proceeds of crime - appellant has not been named as an accused either in the FIR or in the ECIR but his property has been attached begin recipient of the proceeds of crime - absence of prosecution complaint within 365 days from the date of the order passed by the Adjudicating Authority - HELD THAT:- The fact is that no evidence exist to show any legal advice to the accused company and in fact the appellant could not produce any evidence to support his claim for receipt of the amount towards the professional charges. It is when the statement of the appellant was recorded u/s 50 of the Act, 2002 on 30.07.2019 and 31.07.2019. As per his statements, he interacted only with accused i.e. Chetan Jayantilal Sandesara and he did not interact with any other person for legal advice which included even any officer of the legal department - The amount received by the appellant was not a small amount rather it was Rs. 2,07,25,500/- even as per the statement of the appellant. The aforesaid amount towards alleged legal advice could not be substantiated and therefore respondents rightly arrived at the conclusion it to be the proceeds of crime transferred to the appellant by none else but the main accused thus, on the facts on record, this is not a case in favour of the appellant. Section 8(3)(a) of the Act provides for thecurrency to the order of attachment during the investigation to be completed within 365 days or the pendency of the proceeding in a court relating to any offences under the Act of 2002. The period of interim order precluded the respondents to file the prosecution complaint cannot be taken to the benefit of the appellant and thereby we are unable to accept the arguments of the appellant regarding lapse of the order of provisional attachment or as to its confirmation. The explanation to Section 8(3) of the Act, 2002 has been ignored by the appellant which excludes the period of an interim order of the court from the period of 365 days. Assuming predicate offence of robbery take place and FIR is registered followed by an ECIR against the accused. The proceeds of crime is parked by the accused with third person who may then purchase the property after that or keep the money parked with him. The respondents would be within their right to attach or seize the property in the hands of third person though he is not an accused. This is to protect the property obtained out of the crime. If the argument of the appellant is accepted, then despite the proceeds of crime in the hands of a person other than the accused, it can not be attached or seized and if at all it is attached or seized,the investigation has to be completed against such person within 365 days. This would be nothing but showing requirement to complete the investigation against a person who is not even an accused and need not to be. The seizure or attachment is because the property or related document may be with a person other than an accused. As per the judgment of the apex court in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] it is not necessary that the attachment can be of the property only of the accused rather it is of the proceeds of crime whether in the hands of the accused or with the other person or it can be for value equivalent. Conclusion - It is not necessary that the attachment can be of the property only of the accused rather it is of the proceeds of crime whether in the hands of the accused or with the other person or it can be for value equivalent. Appeal dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the attachment of properties under the Prevention of Money Laundering Act, 2002, is justified when the appellant is not named as an accused in the FIR or ECIR.Whether the funds received by the appellant can be considered proceeds of crime or legitimate professional fees and donations.Whether the provisional attachment order lapses if the prosecution complaint is not filed within 365 days.Whether the attachment of property is permissible from a person not named as an accused.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Justification of Property AttachmentRelevant Legal Framework and Precedents: The attachment was made under the Prevention of Money Laundering Act, 2002. The appellant argued that the attachment was unjustified as he was not named as an accused in the FIR or ECIR.Court's Interpretation and Reasoning: The tribunal noted that the appellant was a recipient of proceeds of crime, and the attachment was justified even if he was not named as an accused.Key Evidence and Findings: The tribunal found no evidence of professional services provided by the appellant to justify the receipt of funds.Application of Law to Facts: The tribunal applied the Act's provisions, emphasizing that attachment could occur even if the recipient is not an accused.Treatment of Competing Arguments: The appellant's argument of legitimate professional fees was rejected due to lack of evidence.Conclusions: The attachment was upheld as the funds were deemed proceeds of crime.Issue 2: Lapse of Provisional Attachment OrderRelevant Legal Framework and Precedents: Section 8(3)(a) of the Act provides for continuance of attachment during investigation or proceedings.Court's Interpretation and Reasoning: The tribunal held that the period of interim court orders is excluded from the 365-day limit.Key Evidence and Findings: The tribunal noted the existence of interim orders from higher courts.Application of Law to Facts: The tribunal concluded that the attachment did not lapse due to the exclusion of interim order periods.Treatment of Competing Arguments: The appellant's argument for lapse was rejected based on statutory interpretation.Conclusions: The attachment order did not lapse and remained valid.Issue 3: Attachment from Non-Accused PersonsRelevant Legal Framework and Precedents: The tribunal referenced the Supreme Court's judgment in Vijay Madanlal Chaudhary, which allows attachment from non-accused persons.Court's Interpretation and Reasoning: The tribunal emphasized that attachment is focused on proceeds of crime, irrespective of the holder's accused status.Key Evidence and Findings: The tribunal found the appellant in possession of proceeds of crime, justifying attachment.Application of Law to Facts: The tribunal applied the interpretation that attachment can occur from any person holding proceeds of crime.Treatment of Competing Arguments: The appellant's argument was dismissed, as the law allows attachment from non-accused holders of proceeds of crime.Conclusions: The tribunal upheld the attachment from the appellant, a non-accused person.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'The attachment of property from third party can be when the accused involved in predicate offence has parked it with such person or it was arranged in such a manner where proceeds of crime may not remain in the hands of the accused so as to be attached but to be kept with other person not involved in the crime.'Core Principles Established: The tribunal established that attachment under the Act can be justified even if the recipient of proceeds of crime is not named as an accused. The attachment order remains valid beyond 365 days if interim court orders exist.Final Determinations on Each Issue: The tribunal dismissed the appeals, upholding the attachment of properties as proceeds of crime.