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 passed within the statutory 180-day period, excluding the stay period as per statutory provisions. The appellant company, though not named in the predicate FIR, could be proceeded against under PMLA as money laundering is an independent offense. The Tribunal found the company was a sham entity created to hide proceeds of crime from the principal accused, with directors being his family members who failed to explain their income sources. The ED properly recorded reasons to believe under Section 17 PMLA, and the retention order was justified for adjudication purposes.

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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.

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