Property attachment orders quashed for double attachment of same proceeds in money laundering case

The Appellate Tribunal under SAFEMA at New Delhi allowed an appeal challenging property attachment orders in a money laundering case involving smuggling of narcotics and extortion rackets. The tribunal held that respondents had already attached 14000 sq. ft. property from one party as proceeds of crime, and subsequently attaching the same proceeds from appellant constituted impermissible double attachment. The tribunal found that property acquired through valid consideration under court decree could not be deemed proceeds of crime, especially when original proceeds were already attached elsewhere. Arguments regarding FSI violations were rejected as not being scheduled offences under the 2002 Act. The attachment orders were quashed as legally inappropriate.

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Issues Involved:
1. Legality of the attachment of properties by the Adjudicating Authority.
2. Connection of the appellants with the proceeds of crime.
3. Alleged double attachment of properties.
4. Violation of Floor Space Index (FSI) norms.

Summary:

1. Legality of the attachment of properties by the Adjudicating Authority:
By these batch of three appeals, a challenge is made to the order dated 05.01.2023 passed by the Adjudicating Authority. The Adjudicating Authority has confirmed the provisional attachment order dated 11.07.2022. The properties attached u/s 5(1) of the Act of 2002 are listed in the judgment.

2. Connection of the appellants with the proceeds of crime:
The appellants were not named as accused in the FIR No. 83 of 1994 registered on 24.02.1994 against Iqbal Mohammad Memon for the offences u/s 302/307/34 IPC and Section 3/25 of the Arms Act. The respondents registered the ECIR on 26.09.2019 under the Prevention of Money Laundering Act 2002 (for short `the Act of 2002). The appellants were not named in the ECIR. However, they were summoned by sending a notice on 15.10.2019 to record their statements u/s 50 (2) and (3) of the Act of 2002. The appellants argued that the property was acquired legally through a court decree and consideration.

3. Alleged double attachment of properties:
The appellants argued that the area of 14000 sq. ft. received by Hazra Memon in lieu of the part of Plot F was already attached by the respondents, and attaching the appellant's property constituted double attachment, which is per se illegal. The Tribunal upheld that the attachment of 14000 sq. ft. area of Hazra Memon was confirmed by the Adjudicating Authority and the Tribunal, and there was no reason to attach the property belonging to the appellant, going against the decree of the court.

4. Violation of Floor Space Index (FSI) norms:
The respondents alleged that the appellants raised construction of the building on the land in question by violating FSI norms and thereby raised extra construction than permissible. However, the Tribunal found that the alleged violation of the FSI for construction of the building does not constitute a scheduled offence and thus would not come under the purview of the Enforcement Directorate.

Conclusion:
The Tribunal concluded that the attachment of the appellant's property was not appropriate and legal. The Adjudicating Authority failed to consider that the property taken by the appellants on consideration under a Court decree and the consideration given to Hazra Memon was already attached. The Tribunal quashed the impugned orders of attachment and the order of the Adjudicating Authority, allowing the appeals.

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