2024 (10) TMI 458 - AT - Money Laundering

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 ... Provisional attachment under PMLA - limitation for filing prosecution complaint under PMLA - commencement of statutory time limit - retrospective operation of statute - clarificatory versus substantive amendmentLimitation for filing prosecution complaint under PMLA - commencement of statutory time limit - retrospective operation of statute - provisional attachment under PMLA - Whether the amendments introducing a time limit for filing the prosecution complaint under Section 8(3)(a) of the PMLA applied so as to release attachments confirmed before the amendment and, if not, whether the Directorate complied with the time limit for filing the prosecution complaint. - HELD THAT: - The Tribunal examined the amendments made by the Finance Act, 2018 and the subsequent amendment in 2019 and noted the legislative purpose as recorded in the Notes on Clauses was to 'allow Enforcement Directorate reasonable time to file prosecution' rather than to nullify past confirmed attachments. The amendment came into effect on publication of notification GSR 383(E) dated 19.04.2018. The Tribunal treated the temporal operation of the newly introduced limitation as commencing from the date the amendment came into force and not as causing automatic lapse of attachments confirmed prior to that date. Applying that position to the facts, the Directorate was required to file the prosecution complaint within 90 days from 19.04.2018. The prosecution complaint was filed on 16.07.2018, which the Tribunal found to be within the 90 day period. The Tribunal rejected the appellant's submission that the amendment was clarificatory and therefore must be read retrospectively to operate from the date of confirmation of attachment in 2015, holding that no pre amendment ambiguity made such a retrospective reading necessary. Reliance placed on authorities cited by the appellant was examined and distinguished: the Tribunal held the amendment was a substantive introduction of a time limit and was intended to provide reasonable time to ED going forward, so the appellant's contention that attachments confirmed earlier had lapsed was not accepted. [Paras 17, 20, 21, 22, 23]The 90 day period under the 2018 amendment commences from 19.04.2018; the prosecution complaint filed on 16.07.2018 was within that period and therefore the provisional attachments as confirmed by the Adjudicating Authority did not lapse.Final Conclusion: The appeal is dismissed. The Tribunal held that the limitation introduced by the 2018 amendment began on 19.04.2018, the Directorate filed the prosecution complaint within 90 days of that date, and there was no illegality in the continued provisional attachment of the properties. 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.