Money laundering restraint on immovable property upheld where claimants failed to prove lawful acquisition and rebut statutory presumptions.

Under the Prevention of Money Laundering Act, 2002, restraint over immovable property was maintained where the claimants could not rebut the statutory presumptions attaching to property linked to an alleged laundering trail. The Tribunal found that the appellants did not establish a lawful source of acquisition from untainted funds, and that prior proceedings had already treated the property as belonging to another claimant without disclosure of the appellants' purchase. It also noted that the genuineness of the underlying transactions remained for the trial court and that pending criminal trial and framed charges weighed against release of the property. The challenge to freezing and retention therefore failed.

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Issues: Whether the freezing and retention of the immovable property was liable to be set aside on the ground that the appellants were not parties to the original proceedings and had not been issued the initial notice; and whether the appellants had shown that the property was acquired from untainted funds rather than proceeds of crime.

Analysis: The Tribunal noted that the property had been frozen in proceedings under the Prevention of Money Laundering Act, 2002 arising from a large banking fraud and that the appellants' ownership claim was linked to transactions traced through entities connected with the alleged laundering trail. It held that the earlier assertion made in proceedings by another claimant had resulted in the property being treated as belonging to that claimant, while the present appellants' purchase was not disclosed at that stage. The Tribunal further found that the appellants failed to discharge the statutory burden to establish legitimate sources for the property, and that the presumptions under the Act operated against them. It also observed that the question whether the underlying transactions were genuine was a matter for the trial courts, and that the existence of pending criminal trial and framed charges weighed against release of the property at that stage.

Conclusion: The challenge to the freezing and retention of the property failed, and the property was not directed to be released.

Final Conclusion: The appeals were dismissed, and the impugned restraint on the property was maintained without affecting the merits of the ongoing trial.

Ratio Decidendi: In proceedings under the Prevention of Money Laundering Act, 2002, property may continue to remain under restraint where the claimant fails to prove a lawful source of acquisition and the statutory presumptions as to proceeds of crime are not rebutted.

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