SAFEMA Tribunal upholds provisional attachment under Section 5(1) PMLA in money laundering case involving farmer compensation fraud

The Appellate Tribunal under SAFEMA dismissed an appeal challenging provisional attachment under Section 5(1) of PMLA, 2002. The case involved allegations of money laundering through exorbitant compensation distribution to farmers and misappropriation of government funds by granting compensation at non-agricultural rates for agricultural land. The Tribunal rejected arguments regarding non-completion of adjudication within 180 days, absence of scheduled offence, lack of nexus between properties and proceeds of crime, and procedural deficiencies. The Tribunal found sufficient evidence of money laundering offence and upheld the attachment order, noting appellants failed to prove legitimate sources for acquiring properties worth crores despite claiming agricultural income.

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Issues Involved:

1. Non-completion of adjudication proceedings within the prescribed period of 180 days.
2. No scheduled offence and offence of money laundering is made out.
3. No direct nexus found between the scheduled offence and properties in question vis-`a-vis principle of value thereof.
4. Non-satisfaction of basic ingredients of the offence of money laundering.
5. Non-recording of "reasons to believe" as prescribed under Section 5 of PMLA, 2002.
6. Non-consideration of merits and demerits of the case by the Ld. Adjudicating Authority.

Issue-wise Detailed Analysis:

Issue A: Non-completion of adjudication proceedings within the prescribed period of 180 days

The appellant argued that the adjudication proceedings were concluded beyond the statutory period of 180 days, thus rendering the attachment order invalid. The Tribunal considered the impact of the COVID-19 pandemic, which led to the extension of statutory timelines by the Supreme Court. The Tribunal referred to the Telangana High Court's judgment in Hygro Chemicals Pharmtek Pvt. Limited vs. Union of India, which held that the period from 15.03.2020 to 28.02.2022 should be excluded in computing the 180-day period. Consequently, the Tribunal found no merit in the appellant's argument, as the extension due to COVID-19 meant the attachment order did not lapse.

Issue B: No scheduled offence and offence of money laundering is made out

The appellant contended that the offence of money laundering under Section 3 of PMLA cannot stand alone without a predicate offence. The Tribunal referred to the Uttarakhand High Court's judgment in the appellant's own case, where it was held that a prima facie case under the PMLA was made out. The High Court found that the appellant, in connivance with others, manipulated land records to grant excessive compensation, thereby generating "proceeds of crime." The Tribunal noted that the High Court's detailed judgment dismissed the appellant's writ petition and upheld the cognizance of the offence, thereby rejecting the appellant's argument on this issue.

Issue C: No direct nexus found between the scheduled offence and properties in question vis-`a-vis principle of value thereof

The appellant argued that there was no direct nexus between the alleged offence and the attached properties, which were acquired from legitimate sources. The Tribunal referred to the Delhi High Court's judgment in Enforcement Directorate v. Axis Bank, which clarified that even untainted properties could be attached if they were equivalent in value to the proceeds of crime. The Tribunal also referred to the Supreme Court's judgment in Vijay Madanlal Choudhary, which upheld the attachment of properties of equivalent value when the actual proceeds of crime were not traceable. The Tribunal found that the appellant failed to disclose legitimate sources for acquiring the properties and upheld the attachment.

Issue D: Non-satisfaction of basic ingredients of the offence of money laundering

The appellant claimed that the basic ingredients of the offence of money laundering, such as concealment, possession, or use of proceeds of crime, were not satisfied. The Tribunal, relying on the Uttarakhand High Court's judgment, found that the appellant was involved in activities connected with the generation of "proceeds of crime," thereby satisfying the ingredients of the offence under Section 3 of PMLA. The Tribunal dismissed the appellant's argument on this issue.

Issue E: Non-recording of "reasons to believe" as prescribed under Section 5 of PMLA, 2002

The appellant contended that the "reasons to believe" were not recorded as required under Section 5(1) of PMLA. The Tribunal found that the procedure was duly followed, and the reasons were recorded in writing and sent to the Adjudicating Authority in a sealed cover. The Tribunal noted that the Adjudicating Authority proceeded only after finding reasons to believe that an offence under Section 3 was committed. Therefore, the Tribunal rejected the appellant's argument on this ground.

Issue F: Non-consideration of merits and demerits of the case by the Ld. Adjudicating Authority

The appellant argued that the Adjudicating Authority failed to consider the merits and demerits of the case. The Tribunal, having analyzed each issue separately, found that the Adjudicating Authority had duly considered the relevant facts and issues. The Tribunal noted that it had addressed each argument raised by the appellant in detail, thereby rendering this issue inconsequential.

Conclusion:

The Tribunal found no merit in the appeal and dismissed it, upholding the attachment order under PMLA.

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