Natural justice and source of funds in money-laundering attachment proceedings: delayed reply rejected and confirmation sustained

Refusal to accept a belated reply did not violate natural justice because the reply was out of time, the authority had to act within the PMLA schedule, and the appellants were still given an opportunity to make written submissions and rely on additional material; no procedural prejudice was shown. The appellants also failed to establish a lawful source of funds for the attached property: the income-tax records and balance sheet did not match the purchase period, the alleged loan or personal funds were unproven, and the record indicated laundering of loan proceeds through fictitious firms. Confirmation of attachment was therefore sustained.

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Issues: (i) Whether refusal to accept the belated reply before the Adjudicating Authority violated principles of natural justice; (ii) Whether the appellants established a lawful source of funds for acquisition of the attached property so as to dislodge confirmation of attachment under the money-laundering proceedings.

Issue (i): Whether refusal to accept the belated reply before the Adjudicating Authority violated principles of natural justice.

Analysis: The reply was not filed within the time granted by the Adjudicating Authority, which had to proceed within the statutory schedule under the Prevention of Money Laundering Act, 2002. The appellants were nevertheless given an to place written submissions, and the Tribunal also afforded them a further opportunity to rely on material not produced below. In these circumstances, no procedural prejudice was shown from non-acceptance of the delayed reply.

Conclusion: The objection based on natural justice failed.

Issue (ii): Whether the appellants established a lawful source of funds for acquisition of the attached property so as to dislodge confirmation of attachment under the money-laundering proceedings.

Analysis: The material placed before the Tribunal did not satisfactorily explain the source of funds for purchase of the attached property. The income-tax records and balance sheet did not correlate to the relevant purchase period, and the asserted loan or personal funds were not substantiated. The record also showed serious allegations of laundering of loan proceeds through fictitious firms, and the property attached was found to be connected with the proceeds of crime to the extent of the appellants' share.

Conclusion: The appellants failed to disprove the basis of attachment, and the confirmation of attachment was sustained.

Final Conclusion: The appeal did not warrant interference, and the confirmed attachment remained undisturbed.

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