Provisional property attachment under PMLA upheld despite 190-day confirmation period excluding Covid duration

The Appellate Tribunal under SAFEMA dismissed an appeal challenging provisional attachment of property under money laundering charges. The Tribunal held that the 180-day confirmation period excludes Covid-19 affected duration (15.03.2020 to 28.02.2022) per SC order, making the 190-day confirmation valid. Property attachment under PMLA applies to any person possessing proceeds of crime, not just accused individuals. The appellant failed to prove legitimate source for Rs. 14,00,000 payment, with evidence showing money laundering through layering of tainted funds via the appellant's account from the main accused.

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ISSUES PRESENTED and CONSIDERED

The Tribunal considered the following core legal issues:

1. Whether the Provisional Attachment Order (PAO) was confirmed within the statutory period of 180 days as required by Section 5(3) of the Prevention of Money Laundering Act, 2002 (PMLA), considering the exclusion of time due to the Covid-19 pandemic.

2. Whether the property of an individual not named as an accused can be attached under the PMLA if it is deemed to be "proceeds of crime."

3. Whether the property in question, Villa No. 60, was acquired using proceeds of crime, thereby justifying its attachment under the PMLA.

ISSUE-WISE DETAILED ANALYSIS

Issue 1:

The appellant argued that the PAO was confirmed beyond the 180-day period, thus ceasing to exist by operation of law under Section 5(3) of the PMLA. The Tribunal examined the impact of the Covid-19 pandemic on the computation of this period. The Supreme Court, in Suo Moto Writ Petition No. 3 of 2020, had extended the period of limitation from 15.03.2020 to 28.02.2022 due to the pandemic. The Tribunal referred to several judgments, including Bhuneshwar Prasad Verma v. The Deputy Director, Directorate of Enforcement and Prakash Corporates v. Dee Vee Projects Limited, to affirm that the period affected by Covid-19 should be excluded in computing the 180 days. Consequently, the confirmation of the PAO was deemed timely.

Issue 2:

The appellant contended that his property could not be attached since he was not named as an accused. The Tribunal referred to Section 5 of the PMLA, which allows attachment of property in possession of any person, not necessarily an accused, if it is believed to be proceeds of crime. The Tribunal cited the case of Sant Singh v. The Deputy Director, Directorate of Enforcement and the Supreme Court judgment in Vijay Madanlal Choudhary v. Union of India, which clarified that attachment could extend to property held by individuals not named as accused if they possess proceeds of crime.

Issue 3:

The appellant argued that the property was not acquired through proceeds of crime, claiming it was purchased with disclosed sources. However, the Tribunal found that the appellant admitted in a statement under Section 50 of the PMLA that Rs. 14,00,000/- of the purchase amount was received from Shankar Lal Khandelwal, an accused, and was thus proceeds of crime. The appellant failed to substantiate the claim of receiving Rs. 14,00,000/- as a loan repayment. The Tribunal concluded that the property was acquired using proceeds of crime, as the funds were transferred from an accused and used to purchase the property, thus laundering the proceeds of crime.

SIGNIFICANT HOLDINGS

The Tribunal upheld the attachment of the property, finding the appellant in possession of proceeds of crime. It emphasized that:

• The 180-day period for confirming a PAO can exclude time affected by the Covid-19 pandemic, as per the Supreme Court's orders.
• Attachment under the PMLA is not limited to properties held by accused individuals; it extends to any person in possession of proceeds of crime.
• The property in question was acquired using funds that were proceeds of crime, justifying its attachment.

In conclusion, the Tribunal dismissed the appeal, affirming the attachment of the property as compliant with the legal framework and supported by evidence of money laundering activities.

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