2025 (7) TMI 800 - AT - Money Laundering

Appellate Tribunal dismisses money laundering appeals involving property attachment due to lack of standing under cultivation rights law

The Appellate Tribunal under SAFEMA dismissed appeals in a money laundering case involving property attachment and cultivation rights. The Tribunal held ... Money Laundering - attachment of properties - right to determine the cultivation rights of the parties - HELD THAT:- The Civil Courts (including this Tribunal) has no right to determine the cultivation rights of the parties and only the revenue courts have jurisdiction to adjudicate on this issue. It is clear that there is no bar to sub- lease the cultivation rights in favour of sub-tenant. Since, the appellants themselves have transferred their cultivation rights through the chain of sub-lessees in favour of Shri P.K.M. Selvan and S. Sankaranarayanan, they have no right to repossess the said cultivation rights. Moreover, being not the recorded owners in the revenue records, the present appellants even do not have any right to evict the said sub-lessees for violation of any condition under The Tamil Nadu Cultivating Tenants (Payment of Fair Rent) Act, 1956. Hence, the present appeals also need to be dismissed for want of locus standi with the appellants. Appeal dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Appellate Tribunal under SAFEMA pertain to:(a) Whether the appellants are the rightful owners of the two agricultural properties attached by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002 (PMLA), and whether the attachment order (PAO No. 23/2016) and subsequent confirmation order dated 31.05.2017 passed by the Adjudicating Authority were valid in respect of these properties.(b) Whether the appellants had locus standi to challenge the attachment and confirmation orders, given that they were not arrayed as defendants in the original complaint and were not given notice during the investigation or adjudication process.(c) The legal effect of the appellants' alleged transfer of cultivation rights to the accused persons through sub-lessees, and whether such transfer extinguished their rights over the properties under the relevant tenancy protection statutes.(d) The jurisdictional competence of civil courts and tribunals, including the Appellate Tribunal, to adjudicate on cultivation tenancy rights vis-`a-vis the exclusive jurisdiction of revenue authorities under the Tamil Nadu Cultivating Tenants Protection Act, 1955 and Tamil Nadu Cultivating Tenants (Payment of Fair Rent) Act, 1956.2. ISSUE-WISE DETAILED ANALYSISIssue (a) - Ownership and Validity of Attachment OrderRelevant legal framework and precedents: The Prevention of Money Laundering Act, 2002 permits the Directorate of Enforcement to provisionally attach properties believed to be involved in money laundering activities. The Adjudicating Authority confirms such attachments after due process. The appellants challenged the confirmation of attachment of two agricultural lands, claiming ownership and asserting that the attachment prejudiced their rights.Court's interpretation and reasoning: The Tribunal noted that the appellants claimed ownership based on ancestral settlement deeds and subsequent partition deeds. However, the appellants admitted that the cultivation tenancy rights over the properties had been transferred to others (accused persons) through sub-leases without their knowledge. The Tribunal observed that the appellants were not recorded owners in the revenue records, and their status was that of cultivating tenants.Key evidence and findings: The appellants submitted a flow chart and documents showing the chain of tenancy transfers and partition deeds. The ED relied on transfer deeds dated 24.11.2006 and 26.06.2008, evidencing transfer of cultivation rights to the accused persons. The appellants were not made parties during investigation or adjudication, nor were they given notice before attachment or confirmation orders.Application of law to facts: The Tribunal held that the appellants' rights were limited to cultivation tenancy and not ownership in the revenue sense. The transfer of cultivation rights to the accused persons extinguished appellants' tenancy rights. Hence, the attachment of properties in question was valid as they were linked to the accused persons' alleged illegal activities.Treatment of competing arguments: The appellants argued non-inclusion in proceedings and lack of notice violated their rights. The ED contended that appellants had no locus standi as their tenancy rights were transferred. The Tribunal gave weight to the statutory framework governing cultivating tenants and tenancy transfers, concluding appellants' claims were untenable.Conclusion: The appellants were not owners in the statutory or revenue sense and had no right to claim protection against attachment. The confirmation of attachment order was valid.Issue (b) - Locus Standi of Appellants to Challenge AttachmentRelevant legal framework and precedents: Under PMLA and procedural norms, notice is required to be given to persons whose properties are attached. However, locus standi depends on legal ownership or interest recognized under law.Court's interpretation and reasoning: The Tribunal observed that appellants were neither recorded owners nor parties to the original complaint. Their tenancy rights had been transferred. Therefore, they lacked legal standing to challenge the attachment and confirmation orders.Key evidence and findings: Absence of appellants' names in the original complaint and no notice during investigation or adjudication. The tenancy transfer deeds further diminished appellants' interest.Application of law to facts: Since appellants had no recognized legal interest in the properties at the relevant time, their locus standi was absent.Treatment of competing arguments: Appellants' plea of prejudice due to non-notice was rejected on the ground that they had no legal right to be heard as they were not owners.Conclusion: Appellants lacked locus standi to challenge the attachment and confirmation orders.Issue (c) - Effect of Transfer of Cultivation Rights under Tamil Nadu Cultivating Tenants ActsRelevant legal framework and precedents: The Tamil Nadu Cultivating Tenants Protection Act, 1955 and the Tamil Nadu Cultivating Tenants (Payment of Fair Rent) Act, 1956 define 'cultivating tenant' and provide protection against eviction. Section 2(aa) of the 1955 Act includes sub-tenants who continue possession. Section 6 bars civil courts from adjudicating cultivation tenancy disputes, vesting jurisdiction in revenue authorities.Court's interpretation and reasoning: The Tribunal emphasized that cultivating tenants may sub-lease cultivation rights and that such transfers are valid. The appellants had transferred cultivation rights through a chain of sub-lessees to the accused persons. Consequently, appellants' tenancy rights were extinguished.Key evidence and findings: Registered deeds dated 24.11.2006 and 26.06.2008 showed transfer of cultivation tenancy rights by appellants' sub-lessees to accused persons. The appellants' own submissions confirmed these transfers.Application of law to facts: Given the statutory definitions and protections, the appellants' tenancy rights had ceased upon transfer. The appellants were not recorded owners and had no right to evict sub-lessees or challenge the attachment based on tenancy rights.Treatment of competing arguments: The appellants contended that transfers were illegal and without their consent. The Tribunal held that tenancy rights can be transferred and that civil courts lack jurisdiction to decide such tenancy disputes, which fall within revenue courts' domain.Conclusion: Transfer of cultivation rights was valid, extinguishing appellants' tenancy rights. The Tribunal had no jurisdiction to entertain tenancy disputes in the present proceedings.Issue (d) - Jurisdiction of Civil Courts and Tribunals over Cultivation Tenancy RightsRelevant legal framework and precedents: Section 6 of the Tamil Nadu Cultivating Tenants Protection Act, 1955 expressly bars civil courts from jurisdiction over matters within the Revenue Divisional Officer's authority, including cultivation tenancy disputes.Court's interpretation and reasoning: The Tribunal reiterated that cultivation tenancy disputes are exclusively within revenue courts' jurisdiction. Civil courts and the Appellate Tribunal under SAFEMA cannot adjudicate on such tenancy rights or evictions.Key evidence and findings: The statutory bar on civil courts' jurisdiction was noted. The appellants' claims involved tenancy rights, which are non-justiciable before this Tribunal.Application of law to facts: The Tribunal declined to entertain appellants' claims regarding cultivation tenancy rights, directing that such matters be pursued before revenue authorities.Treatment of competing arguments: The appellants sought adjudication of their tenancy rights before the Tribunal, which was rejected as beyond its jurisdiction.Conclusion: The Tribunal lacks jurisdiction to decide cultivation tenancy disputes; such issues must be addressed by revenue courts.3. SIGNIFICANT HOLDINGS'No civil Court shall, except to the extent specified in section 3(3), have jurisdiction in respect of any matter which the Revenue Divisional Officer is empowered by or under this Act to determine and no injunction shall be granted by any Court in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.' (Section 6, Tamil Nadu Cultivating Tenants Protection Act, 1955)'It is clear that there is no bar to sub-lease the cultivation rights in favour of sub-tenant. Since, the appellants themselves have transferred their cultivation rights through the chain of sub-lessees in favour of Shri P.K.M. Selvan and S. Sankaranarayanan, they have no right to repossess the said cultivation rights.''Being not the recorded owners in the revenue records, the present appellants even do not have any right to evict the said sub-lessees for violation of any condition under The Tamil Nadu Cultivating Tenants (Payment of Fair Rent) Act, 1956.''The present appeals are hereby dismissed on merits, as well as for want of locus standi.'The Tribunal established the principle that cultivating tenants who have transferred their tenancy rights lose locus standi to challenge attachment of properties under PMLA, especially where they are not recorded owners. It also underscored the exclusive jurisdiction of revenue authorities over cultivation tenancy disputes, precluding civil courts and tribunals from adjudicating such matters.Final determinations:- The attachment and confirmation orders under PMLA with respect to the two agricultural properties were valid.- The appellants lacked locus standi to challenge the attachment and confirmation orders as they were not owners in the revenue records and had transferred cultivation rights.- The cultivation tenancy rights were validly transferred to accused persons, extinguishing appellants' rights.- The Tribunal has no jurisdiction to adjudicate cultivation tenancy disputes, which fall within the exclusive domain of revenue courts.- Accordingly, the appeals were dismissed both on merits and for want of locus standi.