SAFEMA Tribunal upholds provisional attachment in money laundering case despite 90-day limitation challenge under GSR 383(E)

The Appellate Tribunal SAFEMA dismissed an appeal challenging provisional attachment of assets in a money laundering case. The appellant argued that prosecution complaint was filed beyond the 90-day limitation period from the provisional attachment order dated 19.01.2015. The Tribunal held that the amended limitation provision under GSR 383(E) dated 19.04.2018 applied prospectively, not retrospectively. Since the prosecution complaint was filed on 16.07.2018, within 90 days of the amendment's effective date (19.04.2018), the Directorate complied with statutory requirements. The Tribunal distinguished between clarificatory and substantive amendments, ruling this was substantive and applied prospectively. Provisional attachment remained valid during pendency of proceedings.

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Issues Involved:

1. Provisional attachment of assets under the Prevention of Money Laundering Act, 2002 (PMLA).
2. Alleged failure to file a prosecution complaint within the stipulated time period.
3. Retrospective application of amendments to the PMLA.

Detailed Analysis:

1. Provisional Attachment of Assets:

The case involves the confirmation of provisional attachment of assets by the Adjudicating Authority (AA) under the PMLA. The assets were initially attached following investigations by the Directorate of Enforcement, which revealed that funds collected by M/s Birla Power Solutions Ltd. through Fixed Deposits (FDs) and Inter-Corporate Depositors (ICDs) were not utilized as intended. Instead, these funds were allegedly siphoned off to other group companies, thereby creating a web of interconnected transactions to disguise the proceeds of crime from cheating and conspiracy. The appellant challenged the AA's order confirming the attachment, arguing that the deposits were invited in compliance with the Companies Act and that the transactions were regular financial transactions. However, these grounds were not pressed at the final hearing.

2. Alleged Failure to File Prosecution Complaint:

The primary argument presented by the appellant was the alleged failure of the respondent Directorate to file a prosecution complaint within the limitation period, which they claimed resulted in the lapse of the attachments. Initially, there was no timeline for filing such complaints under the PMLA. An amendment in 2018 introduced a 90-day limit, which was later extended to 365 days in 2019. The appellant contended that the amendment should apply retrospectively, arguing that the prosecution complaint filed on 16.07.2018, over three years after the confirmation of the Provisional Attachment Order (PAO), was delayed. They relied on various case laws to support the retrospective application of curative or clarificatory amendments.

3. Retrospective Application of Amendments:

The Tribunal analyzed whether the 2018 amendment to the PMLA, which introduced a timeline for filing prosecution complaints, should apply retrospectively. The Tribunal noted that the amendment was intended to "allow Enforcement Directorate reasonable time to file prosecution" and was not meant to nullify past attachments confirmed by the AA. The Tribunal concluded that the amendment was neither clarificatory nor declaratory, but rather introduced a new time limit. Consequently, the 90-day period for filing the prosecution complaint commenced on the date the amendment came into force, i.e., 19.04.2018. Since the complaint was filed within this period, there was no illegality in the continued attachment of the properties.

Conclusion:

The Tribunal dismissed the appeal, holding that the Directorate of Enforcement complied with the amended requirement of filing the prosecution complaint within the stipulated period following the amendment. The provisional attachment of the properties was deemed lawful, and the appeal was disposed of without any order as to costs.

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