SAFEMA Tribunal upholds property attachment under PMLA despite acquittals when accused fails proving legitimate income sources

The Appellate Tribunal under SAFEMA upheld property attachment orders under PMLA 2002 against an accused with 26 criminal cases. Despite acquittals in majority cases, ECIR and cognizance remained valid. The accused failed to disclose legitimate sources for property acquisition, showing irregular cash deposits not matching any business profile. Though income was declared in ITR, detailed scrutiny revealed cash deposits without proper source disclosure, routing through multiple persons including benami transactions. The Tribunal found the undisclosed cash deposits constituted proceeds of crime, as no business transaction documents were produced for relevant years. Appeal dismissed.

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Issues Involved:

1. Legality of the Provisional Attachment Order under the Prevention of Money Laundering Act, 2002.
2. Validity of the attachment of properties as 'proceeds of crime'.
3. Compliance with procedural requirements under Section 8 of the Act of 2002.
4. Impact of acquittal in criminal cases on the attachment order.
5. Adequacy of evidence regarding the source of income for acquiring properties.
6. Consideration of additional evidence and documents at the appellate stage.
7. Relevance of the judgment in J. Sekar vs. Union of India.

Issue-wise Detailed Analysis:

1. Legality of the Provisional Attachment Order under the Prevention of Money Laundering Act, 2002:

The appeal challenges the order confirming the Provisional Attachment Order dated 31.03.2018, under Section 26 of the Prevention of Money Laundering Act, 2002. The properties, both movable and immovable, were attached following the recording of the Enforcement Case Information Report (ECIR) after multiple FIRs were registered against the main accused. The Tribunal examined whether the attachment was justified given the allegations of money laundering.

2. Validity of the attachment of properties as 'proceeds of crime':

The properties attached were primarily in the names of Bibha Devi and Rajendra Yadav, with some in the names of Ashok Yadav, Birendra Yadav, and Ahilya Devi. The Tribunal evaluated whether these properties constituted 'proceeds of crime' as defined under the Act, considering the lack of evidence provided by the appellants to justify the source of funds used for acquiring these properties.

3. Compliance with procedural requirements under Section 8 of the Act of 2002:

The appellants argued that the 'reasons to believe' were not served on them, violating Section 8 of the Act. The Tribunal scrutinized whether the Adjudicating Authority followed the necessary procedures, including issuing notices to the appellants to disclose the source of income for acquiring the attached properties.

4. Impact of acquittal in criminal cases on the attachment order:

The appellants contended that Ashok Yadav's acquittal in the majority of the cases should negate the attachment, as the properties could not be considered 'proceeds of crime'. The Tribunal noted that despite the acquittals, the ECIR and cognizance of offenses remained, justifying the continuation of the attachment.

5. Adequacy of evidence regarding the source of income for acquiring properties:

The Tribunal examined the appellants' claims about their sources of income, including Ashok Yadav's alleged retail business and Rajendra Yadav's agricultural income. The lack of documentary evidence to substantiate these claims led the Tribunal to conclude that the appellants failed to prove legitimate sources of income for the properties acquired.

6. Consideration of additional evidence and documents at the appellate stage:

Bibha Devi attempted to introduce additional documents at the appellate stage without filing an application for their acceptance. The Tribunal emphasized that such documents could not be considered without giving the respondent an opportunity for rebuttal, highlighting procedural lapses by the appellants.

7. Relevance of the judgment in J. Sekar vs. Union of India:

The appellants referenced the Delhi High Court judgment in J. Sekar vs. Union of India to argue procedural non-compliance. However, the Tribunal noted that the Supreme Court had stayed the operation of that judgment, rendering it inapplicable to the present case.

In conclusion, the Tribunal found no reason to interfere with the order confirming the attachment, except for the property at item No. 17, which was subject to a separate order in a related appeal. The appeals were dismissed, upholding the attachment of the properties as justified under the Act of 2002.

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