2024 (10) TMI 457 - AT - Money Laundering

Appellate Tribunal upholds asset attachment in money laundering case, rules 90-day limit starts from amendment date

The Appellate Tribunal SAFEMA dismissed an appeal challenging provisional attachment of assets under money laundering proceedings. The appellant contended ... Provisional attachment - confirmation of provisional attachment - prosecution complaint time limit under PMLA - retrospective operation of statutory amendment - locus standi to challenge adjudicating authority's orderProsecution complaint time limit under PMLA - retrospective operation of statutory amendment - confirmation of provisional attachment - Whether the failure to file a prosecution complaint within a period prior to the 2018 amendment vitiated the confirmed provisional attachments, and from which date the statutory time limit applies - HELD THAT: - The Tribunal examined the amendments to Section 8 effected by the Finance Act, 2018 and the notification GSR 383(E) which brought the amendment into force on 19.04.2018. It held that Parliament's stated intention in the Finance Bill, 2018 was to 'allow Enforcement Directorate reasonable time to file prosecution' and that this intention cannot be read as automatically nullifying provisional attachments earlier confirmed by the Adjudicating Authority. The Tribunal identified the temporal scheme: prior to 19.04.2018 no statutory time-limit existed; from 19.04.2018 to 19.03.2019 a 90-day limit applies; with effect from 20.03.2019 a 365-day limit applies. Counting from 19.04.2018, the Directorate filed the prosecution complaint on 16.07.2018 which fell within 90 days of the amendment coming into force. The Tribunal rejected the appellants' contention that the amendment should be treated as retrospectively operative so as to vitiate earlier confirmed attachments, finding no ambiguity in the pre-amendment provision that would require the amendment to be read as clarificatory; nor was there any legislative intention to render past confirmations void immediately upon commencement. Reliance placed by the appellants on authorities concerning retrospective application was considered distinguishable or inapplicable. Consequently, there was no illegality in the continued attachment of the properties during pendency of proceedings after the prosecution complaint was filed within the prescribed period from 19.04.2018. [Paras 25, 26, 27, 28, 29]The 90-day period under the 2018 amendment is to be reckoned from 19.04.2018 and the prosecution complaint filed on 16.07.2018 was within that period; therefore the confirmed provisional attachments were not rendered invalid for want of timely filing.Locus standi to challenge adjudicating authority's order - provisional attachment - Whether the appellants had locus to file the appeals against the Adjudicating Authority's order confirming provisional attachments - HELD THAT: - The Tribunal noted that the appellants had been made defendants in the Original Complaint filed before the Adjudicating Authority and that the Adjudicating Authority had recorded prima facie findings against the defendants (the appellants) that they had committed scheduled offences and generated proceeds of crime. Under Section 26 of the PMLA, any person aggrieved by an Adjudicating Authority order may prefer an appeal to the Appellate Tribunal. The Tribunal held that merely because none of the specific properties confirmed in the impugned order belonged to the appellants did not mean they lacked cause of action; the appellants were aggrieved by adverse findings and sought setting aside of the impugned order as a whole. Accordingly the respondents could not, after having included the appellants as defendants and secured adverse prima facie findings, contend that the appellants lacked locus to appeal. [Paras 30, 31, 32]The appellants have locus to challenge the Adjudicating Authority's confirmation order and their appeals are maintainable.Final Conclusion: The appeals are dismissed. The Tribunal held that the 90-day filing period under the 2018 amendment runs from 19.04.2018 and the prosecution complaint in this case was filed within that period; further, the appellants had locus to appeal the Adjudicating Authority's confirmation order. Issues Involved:1. Provisional attachment of assets under the Prevention of Money Laundering Act, 2002.2. Limitation period for filing a prosecution complaint.3. Locus standi of the appellants to file the appeal.Issue-Wise Detailed Analysis:1. Provisional Attachment of Assets:The case involves the confirmation of the provisional attachment of assets by the Directorate of Enforcement against M/s Birla Power Solutions Ltd. and its directors. The provisional attachment was confirmed by the Adjudicating Authority based on allegations of money laundering and diversion of funds collected as fixed deposits and inter-corporate deposits. The funds were allegedly siphoned off to other group companies, creating a web of interconnected transactions to hide the true source and purpose of the funds. The appellants contested the attachment, arguing that there was no 'reason to believe' for the attachment and that the attached property did not constitute 'proceeds of crime.' However, these arguments were not pressed during the final hearing.2. Limitation Period for Filing a Prosecution Complaint:The main issue raised by the appellants was the alleged failure of the Directorate to file a prosecution complaint within the stipulated limitation period. Initially, there was no time limit for filing such complaints under the PMLA. However, amendments in 2018 and 2019 introduced timelines of 90 days and 365 days, respectively, from the date of confirmation of the provisional attachment order. The appellants argued that the amendment should apply retrospectively, thus rendering the attachment invalid due to the delay in filing the prosecution complaint. The Tribunal found that the amendment was not retrospective and that the Directorate filed the complaint within 90 days of the amendment's effective date, thus within the legal timeframe. The Tribunal concluded that the attachment of properties was valid during the pendency of proceedings.3. Locus Standi of the Appellants:The respondents challenged the appellants' locus standi to file the appeal, arguing that the confirmation order did not pertain to any property of the appellants. However, the Tribunal noted that the appellants were listed as defendants in the original complaint and that the Adjudicating Authority had recorded adverse findings against them. Under Section 26 of the PMLA, any person aggrieved by the Adjudicating Authority's order may appeal to the Appellate Tribunal. The Tribunal found that the appellants had the right to contest the adverse findings and thus had the standing to file the appeal.Conclusion:The Tribunal dismissed the appeals, concluding that the Directorate complied with the amended law regarding the filing of the prosecution complaint. The Tribunal also rejected the respondents' challenge to the appellants' locus standi, affirming their right to appeal the adverse findings. The appeals were dismissed on the grounds that the Directorate's actions were within the legal framework, and the appellants' contentions on the limitation period and attachment were without merit. No costs were ordered.