SAFEMA seizure of Rs. 33 lakh set aside as cash legitimately withdrawn for COVID medical emergencies

The Appellate Tribunal for SAFEMA at New Delhi set aside the seizure of Rs. 33,00,000/- from the appellant's residential premises. The seizure arose from investigations into DHFL loan misuse and siphoning, where appellant companies were identified as loan beneficiaries. The tribunal found that the seized cash was legitimately withdrawn from personal bank accounts for medical emergencies during COVID-19, supported by bank certificates. The respondent directorate failed to establish any link between the seized amount and proceeds of crime or demonstrate the appellant's nexus with criminal proceeds. The appeal was allowed and the impugned order was set aside.

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Issues Involved:
1. Retention of seized documents/properties under Section 17(4) of PMLA.
2. Alleged misuse of loans by the Appellant companies.
3. Validity of the cash seizure of Rs.33,00,000/-.
4. Linkage of seized documents/digital records to the proceeds of crime.

Issue-wise Detailed Analysis:

1. Retention of Seized Documents/Properties under Section 17(4) of PMLA:
The appeal challenges the order permitting the retention of seized documents, digital records, laptops, and cash amounting to Rs.33,00,000/-. The Respondent Directorate argued that these items were crucial for the ongoing investigation. However, the Appellant contended that most of the documents were not relied upon by the Respondent in the filing of the OA and were unrelated to any scheduled or money laundering offenses. The Tribunal found that the Respondent failed to demonstrate a link between the seized documents/digital records and the suspected proceeds of crime.

2. Alleged Misuse of Loans by the Appellant Companies:
The Respondent alleged that part of the loans disbursed to the Appellant companies by DHFL was not used for the declared purpose and was siphoned off. The Appellant countered that the loans were sanctioned in the ordinary course of business and were adequately secured. The Tribunal noted that a substantial part of the loan was used for purchasing land and repaying another loan, which was not disputed by the Respondent. Furthermore, the loans were no longer due as per the No Due Certificates issued by India Resurgence ARC Pvt. Ltd.

3. Validity of the Cash Seizure of Rs.33,00,000/-:
The Respondent argued that the cash appeared to have been obtained from the proceeds of crime. The Appellant explained that the cash was withdrawn by family members during the COVID-19 period for medical exigencies, supported by bank certificates. The Tribunal observed that the explanation could not be rejected solely based on the modern era of online banking, as cash transactions during emergencies are plausible. The investigation failed to show that the seized cash was diverted from the alleged proceeds of crime.

4. Linkage of Seized Documents/Digital Records to the Proceeds of Crime:
The Respondent failed to establish a link between the seized documents/digital records and the suspected proceeds of crime. The Tribunal noted that the investigation did not demonstrate any nexus between the Appellant and the alleged proceeds of crime. The seizure could not be sustained as the Respondent did not provide sufficient evidence to support their claims.

Conclusion:
The Tribunal set aside the Impugned Order, allowing the appeal. The Respondent failed to demonstrate a link between the seized items and the suspected proceeds of crime. The substantial part of the loan was used for legitimate purposes, and the cash seizure was adequately explained by the Appellant. The appeal was allowed, and the order permitting the retention of seized documents/properties was quashed.

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