2025 (6) TMI 194 - AT - Money Laundering

Appellate Tribunal upholds provisional attachment orders in money laundering case involving illegal coal excavation from leasehold areas

The Appellate Tribunal under SAFEMA dismissed an appeal challenging provisional attachment orders in a money laundering case involving illegal coal ... Money Laundering - predicate offence - Challenge to provisional attachment order - illegal excavations and theft of the coal from lease hold area of ECL in active connivance with the official of the ECL, CISF, Indian railways and other concerned departments and committed the offence alleged - demand based on statement u/s 50 of the Act of PMLA 2002 - HELD THAT:- The argument of the counsel for the appellants that merely based on the statement under section 50 of the Act of 2002, a finding regarding involvement of the appellant in commission of offence and acquisition of the proceed out of money laundering could not have been determined. It is in ignorance of the fact that the statement of the witnesses under section 50 of the Act of 2002 are admissible in law and the respondents have not relied merely on the statement of the witnesses but when vigilance along with task force conducted a joint inspection, the equipments and vehicles were found in the leasehold area of ECL to prove illegal excavation of coal and otherwise coal was recovered and found at the railway siding. The appellant otherwise failed to disclose the source to acquire the property because the amount transferred in the account of the shell company was without involvement of any business in their hands to generate the income. The Companies were not even traceable and did not exist on the address of the website of MCA. In fact, money was transacted through the shell companies to channelize the proceeds of crime through the banking channel. The material collected by the respondents make out a prima facie case of money laundering. Conclusion - There are no illegality in the action of the respondents to provisionally attach the properties in the hands of the appellants and therefore no reason to cause interference in the impugned orders. Appeal dismissed. The core legal questions considered by the Tribunal in this batch of appeals include:1. Whether the provisional attachment order dated 11/07/2022, confirmed by the Adjudicating Authority on 5/01/2023, was justified under the Prevention of Money Laundering Act (PMLA) based on the predicate offence and evidence collected.2. Whether the appellants were involved in the commission of the predicate offences under sections 120B and 409 of the IPC and section 13(2) read with section 13(1)(A) of the Prevention of Corruption Act, 1988, specifically relating to illegal excavation and theft of coal from Eastern Coalfield Ltd. (ECL) leasehold areas.3. Whether the statements recorded under section 50 of the PMLA Act, 2002, particularly those of the main accused and the appellants, could be relied upon as sufficient evidence to confirm involvement in money laundering and acquisition of proceeds of crime.4. Whether the attachment of properties held in the name of companies associated with the appellants, including those owned by family members, was lawful, considering the source of acquisition and involvement in money laundering.5. Whether the appellants' challenge to the attachment on the ground of lack of evidence beyond statements under section 50 of the PMLA, and denial of involvement in illegal activities, was sustainable.Issue-wise Detailed Analysis:Issue 1: Justification of Provisional Attachment under PMLAThe legal framework governing provisional attachment is contained in the Prevention of Money Laundering Act, 2002, which permits attachment of properties believed to be proceeds of crime, subject to confirmation by the Adjudicating Authority. The predicate offence here involved criminal conspiracy, criminal breach of trust, and corruption-related offences under IPC and the Prevention of Corruption Act, 1988.The Court noted that the provisional attachment was based on an FIR registered by the CBI against multiple accused, including the appellants, for illegal coal excavation and theft involving collusion with public officials. Joint inspections by vigilance and task force units corroborated the existence of illegal mining activities, including seizure of stolen coal and excavation equipment.The Tribunal observed that the attachment was not solely premised on statements but supported by physical evidence of illegal mining operations and recovery of stolen coal. The Adjudicating Authority's confirmation of attachment was thus consistent with statutory requirements and supported by prima facie material.Issue 2: Involvement in Predicate OffencesThe investigation revealed that the appellants, particularly Gurupada Maji, were partners to the extent of 25% in the illegal coal mining and transportation business, as admitted by Anup Majee, a key accused, in his statement under section 50 of the PMLA. The appellants' own statements also acknowledged involvement in acquiring shell companies through payments to chartered accountants for accommodation entries.The Court relied on the corroborated statements of Anup Majee and the appellants, as well as documentary and digital evidence seized from premises linked to the accused. The presence of illegal mining equipment and recovered stolen coal further substantiated the involvement.The Tribunal rejected the appellants' denial of involvement, noting their failure to explain admissions made under section 50 and the source of funds used for acquiring shell companies and immovable properties. The Court emphasized that the statements under section 50 are admissible and form a crucial part of the evidence.Issue 3: Reliance on Section 50 StatementsSection 50 of the PMLA permits recording of statements of accused persons, which are admissible in evidence. The appellants contended that reliance solely on such statements was insufficient to confirm involvement in money laundering.The Tribunal held that the statements were not the sole basis for attachment; they were corroborated by physical evidence, seizure of documents, digital records, and the results of joint inspections. The statements of chartered accountants who admitted receipt of large sums for acquiring shell companies further strengthened the case.The Court found that the evidence collectively established a prima facie case of money laundering and involvement in the predicate offences, justifying attachment.Issue 4: Attachment of Properties Held by Family Members and Shell CompaniesThe appellants challenged attachment of properties held in the name of companies associated with Gurupada Maji's wife, arguing she was a housewife and not involved in the offence or acquisition of proceeds of crime.The Tribunal analyzed the ownership and control of the companies, noting that the companies had no legitimate business activities but were used for layering proceeds of crime through accommodation entries facilitated by chartered accountants. The appellant admitted the use of shell companies to create assets through unquoted shares and bank advances.The Court held that the lack of legitimate source of income and the admitted use of these companies for money laundering justified attachment, even if held in the name of family members, as the properties were acquired from proceeds of crime.Issue 5: Sufficiency of Evidence Beyond Section 50 StatementsThe appellants argued that no evidence other than statements under section 50 was available against them. The Tribunal rejected this contention, highlighting the joint inspection findings, seizure of stolen coal and machinery, digital and documentary evidence, and admissions by multiple accused, including chartered accountants.The Court emphasized that the cumulative evidence demonstrated the generation and layering of proceeds of crime, with the appellants playing a significant role. The failure to disclose legitimate sources for large payments and acquisition of shell companies further supported the findings.Significant Holdings:The Tribunal held: 'The statement of witnesses under section 50 of the Act of 2002 are admissible in law and the respondents have not relied merely on the statement of the witnesses but when vigilance along with task force conducted a joint inspection, the equipments and vehicles were found in the leasehold area of ECL to prove illegal excavation of coal and otherwise coal was recovered and found at the railway siding.'It was further held that: 'The material collected by the respondents make out a prima facie case of money laundering.'The Tribunal concluded that the appellants were involved in the commission of offences under IPC and the Prevention of Corruption Act, and had laundered proceeds of crime through shell companies and accommodation entries facilitated by chartered accountants.The attachment of properties, including those held by companies linked to the appellants and their family members, was lawful and justified on the basis of the evidence.Accordingly, the appeals were dismissed, affirming the confirmation of the provisional attachment order.