Trust appeal dismissed as property attachment under PMLA Section 5(1) upheld with established nexus

The Appellate Tribunal SAFEMA, New Delhi dismissed the appeal challenging property attachment under PMLA. The appellant trust argued non-joinder of Government of Odisha as necessary party, lack of nexus between attached property and scheduled offence, and procedural violations. The tribunal held that Government of Odisha need not be joined as party since only leasehold rights were transferred to trust. Essential ingredients of section 5(1) PMLA were satisfied as there was recorded reason to believe property was involved in money laundering. The tribunal found nexus established as Rs. 9.01 crores from alleged criminal activity was infused into trust for construction and salary payments when the accused was managing trustee during 2009-2012.

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Issues Involved:

1. Non-joinder of Government of Odisha as a necessary party.
2. Satisfaction of essential ingredients for attachment under Section 5(1) of PMLA.
3. Existence of "reason to believe" for involvement in money laundering.
4. Bona fide receiver status of the Appellant Trust.
5. Filing of prosecution complaint within the stipulated time under Section 8(3)(a) of PMLA.
6. Naming of the Appellant Trust in FIR, ECIR, or prosecution complaint.
7. Compliance with statutory requirements under Sections 8(1) & 8(2) of PMLA.
8. Nexus between the attached property and the alleged criminal activity.

Detailed Analysis:

1. Non-joinder of Government of Odisha as a Necessary Party:

The Appellant Trust argued that the Government of Odisha, from whom the land was leased, was not made a party to the proceedings. The Tribunal found no merit in this argument, stating that the definition of "property" under Section 2(1)(v) of PMLA includes leased property. The title of the land remains with the Government of Odisha, and only the rights under the lease can be transferred. Therefore, non-joinder of the Government of Odisha does not affect the proceedings.

2. Satisfaction of Essential Ingredients for Attachment under Section 5(1) of PMLA:

The Tribunal noted that Shri Dash infused Rs. 9,01,66,000 into the Appellant Trust, allegedly from criminal activities. This amount was used for various purposes, including construction and staff salaries. The Tribunal found that the essential ingredients for attachment under Section 5(1) of PMLA were satisfied, as there was a subjective satisfaction of the Respondent ED that the property was liable to be attached.

3. Existence of "Reason to Believe" for Involvement in Money Laundering:

The Tribunal observed that the infusion of funds by Shri Dash, allegedly from criminal activities, and their utilization by the Trust provided sufficient "reason to believe" for the attachment of the property. The Tribunal found no merit in the Appellant Trust's claim that there was no reason to believe the properties were involved in money laundering.

4. Bona Fide Receiver Status of the Appellant Trust:

The Tribunal rejected the claim of the Appellant Trust being a bona fide receiver. It was noted that Shri Dash, aware of the criminal origin of funds, was in control of the Trust when the funds were utilized. The Trust's claim of bona fide receiver status was not supported by the facts.

5. Filing of Prosecution Complaint within the Stipulated Time under Section 8(3)(a) of PMLA:

The Appellant Trust argued that no prosecution complaint was filed within 365 days as required under Section 8(3)(a) of PMLA. The Tribunal noted that the prosecution complaint was filed on 31-3-2016, before the introduction of the 365-day limitation, and the attached property was part of this complaint. Therefore, the Tribunal found no merit in this argument.

6. Naming of the Appellant Trust in FIR, ECIR, or Prosecution Complaint:

The Tribunal acknowledged that the Appellant Trust was not named in the FIR, ECIR, or prosecution complaint. However, the focus was on the attachment of tainted property, not the involvement of the Trust as an accused. The Tribunal found no merit in the argument that the attachment was invalid due to the Trust not being named.

7. Compliance with Statutory Requirements under Sections 8(1) & 8(2) of PMLA:

The Tribunal examined the order of the Adjudicating Authority and found that it had followed the statutory requirements under Sections 8(1) & 8(2) of PMLA. The Authority had considered both factual and legal issues, and the Tribunal found no merit in the Appellant Trust's claim of non-compliance.

8. Nexus between the Attached Property and the Alleged Criminal Activity:

The Tribunal found a clear nexus between the alleged proceeds of crime and the attached property. The funds infused by Shri Dash, allegedly from criminal activities, were used for construction and other purposes during his tenure as trustee. The Tribunal rejected the argument that there was no link between the attached property and the criminal activity.

Conclusion:

The Tribunal dismissed the appeal, finding no merit in the arguments presented by the Appellant Trust. The attachment of the property was upheld, and the Tribunal concluded that there was no illegality or irregularity in the impugned order.

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