2024 (12) TMI 1409 - AT - Money Laundering

Company's appeal against asset retention dismissed as PMLA allows proceedings despite not being named in predicate FIR

The Appellate Tribunal under SAFEMA dismissed the appeal challenging retention of seized assets under PMLA. The Tribunal held that the retention order was ... Money Laundering - proceeds of crime - time limitation - Failure to abide by procedural compliance u/s 17 of PMLA - reasons to believe - Seeking retention of records/documents, cash, gold and precious stones, metal jewellery, electronic items/digital devices seized during the search - section 26 of Prevention of Money Laundering Act, 2002 - Whether appellant can be proceeded against under PMLA, 2002, since it is not named as accused in any FIR or chargesheet, also there being no nexus of it with the ECIR case and CBI case? Time limitation - HELD THAT:- The first contention of the appellant is that the OA No. 757 of 2002 was passed on 22.08.2023 which is beyond the period of 180 days from the date of search and seizure, dt. 17.10.2022 and thus, sub section (3) of section 5 of PMLA will not come into play. However, since the period for which stay was granted in CRLP No. 431 of 2023 would be excluded from the period of limitation of 180 days, as is also stated in the Proviso 3 of Sub-section 5 that, “ Provided also that for that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this Section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted.” - Hence, the OA is passed well within time, as is duly explained by the Respondent ED in para 4 and also in the OC and thus, sub-section 3 of section 5 of PMLA will be applicable in the present case and the contention of the appellant holds no ground thereby. Whether appellant can be proceeded against under PMLA, 2002, since it is not named as accused in any FIR or chargesheet, also there being no nexus of it with the ECIR case and CBI case? - HELD THAT:-The offence of money laundering is an independent offence and once a scheduled offence is committed, then the investigation of PMLA offence can be initiated even against the person not named in the scheduled offence, if he is found to be in possession of proceeds of crime and such proceeds of crime are dealt with in any manner which may result in frustration of proceedings under this Act and the same has been cited further in Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT (LB)] and supported by Section 5 of PMLA - in this case at hand, it is evident from the investigation and submissions of the ED in Para 4 that the appellant company, M/s Musaddilal Gems and Jewellers Pvt. Ltd., received its capital from the tainted money of Mr. Anurag Gupta, in fact the sole purpose of establishing the appellant company was to hide that tainted money. The directors of this company are the wife and son of Mr. Anurag Gupta, who claimed to have invested in the company but could not explain the sources of their income and resultant investment. Failure to abide by procedural compliance u/s 17 of PMLA - reasons to believe - HELD THAT:- The respondent has properly recorded the reasons to believe so mandated u/s 17(1) of PMLA and the same has been produced before the Adjudicating Authority, PMLA vide letter dated 21.10.2022. Further, as per sub-section 4 of Section 20 of PMLA, 2002, the Adjudicating Authority before authorizing the retention of such property beyond the period specified in Sub- section 1, shall satisfy itself that the property is prima-facie involved in money laundering and that the property is required for the purposes of adjudication under Section 8, which is aptly made in present case as is evident from the material evidences found in the investigation. Conclusion - The appellant company is nothing, but a sham company of Anurag Gupta to hide the proceeds of crime and present them as untainted money, as the appellant did not explain the source of its capital, unsecured loan and also how it discharged its loan liability. Hence, the order of retention of the properties seized in the present case is rightfully passed and the same does not need to be set aside - the appeal is liable to be dismissed. Issues Involved:1. Whether the order passed in OA No. 757 of 2022 was within the limitation period.2. Whether the appellant can be proceeded against under the Prevention of Money Laundering Act, 2002 (PMLA), despite not being named in any FIR or chargesheet.3. Whether the procedural compliance under Section 17 of PMLA was adhered to in the present case.4. Whether the properties seized from the appellant are proceeds of crime and can be retained.Detailed Analysis:1. Limitation Period for OA No. 757 of 2022:The appellant contended that the order passed on 22.08.2023 was beyond the 180-day limitation period from the date of search and seizure on 17.10.2022. However, the Tribunal noted that the period during which the proceedings were stayed by the High Court should be excluded from the limitation period, as per the proviso to Sub-section 5 of Section 5 of PMLA. The stay was granted on 21.01.2023 and vacated on 21.07.2023. Therefore, the order was passed within the extended limitation period, and the appellant's contention was dismissed.2. Proceeding Against the Appellant Under PMLA:The appellant argued that it cannot be proceeded against under PMLA as it was not named in any FIR or chargesheet. The Tribunal clarified that the offence of money laundering is an independent offence. Once a scheduled offence is committed, PMLA proceedings can be initiated against any person found to be in possession of proceeds of crime, even if not named in the scheduled offence. The investigation revealed that the appellant company, M/s Musaddilal Gems and Jewellers Pvt. Ltd., received its capital from the tainted money of Mr. Anurag Gupta, and the company was established to conceal such tainted money. The directors, being family members of Mr. Anurag Gupta, could not explain the sources of their investments. Thus, the Tribunal upheld the proceedings under PMLA against the appellant.3. Procedural Compliance Under Section 17 of PMLA:The appellant claimed that the procedural requirements under Section 17 of PMLA were not complied with. However, the Tribunal found that the reasons to believe, as mandated under Section 17(1) of PMLA, were properly recorded and forwarded to the Adjudicating Authority. The Tribunal noted that the Adjudicating Authority was satisfied that the property was involved in money laundering and required for adjudication under Section 8. Therefore, the procedural compliance was deemed sufficient.4. Retention of Seized Properties as Proceeds of Crime:The appellant contended that the properties seized were not proceeds of crime. The Tribunal, however, found substantial evidence indicating that the appellant company was a sham entity used to launder proceeds of crime. The capital and unsecured loans in the appellant company were not adequately explained and were linked to the tainted money of Mr. Anurag Gupta. The Tribunal emphasized that the entire capital of the appellant company was generated from tainted money, making it proceeds of crime. Consequently, the retention of seized properties was justified.Conclusion:The Tribunal dismissed the appeal, finding it devoid of merit. The order of retention of the properties seized was upheld, as the appellant company was found to be involved in money laundering activities, and the procedural requirements under PMLA were duly followed. The Tribunal affirmed that the proceedings against the appellant under PMLA were valid, despite the appellant not being named in any FIR or chargesheet.