2025 (8) TMI 12 - AT - Money Laundering

Provisional Attachment of Rs. 9.5 Crores Upheld Under SAFEMA Section for Money Laundering Involving Fake Bills

Shri Abdul Karim Ibrahim Jaka, M/s I.B. Trading Pvt. Ltd., Smt. Naima Abdul Karim Jaka and M/s I.B. Buildcon Pvt. Ltd. Versus The Deputy Director, Directorate of Enforcement, Surat

The AT under SAFEMA upheld the provisional attachment of property worth Rs. 9.5 crores as proceeds of crime linked to money laundering involving fake ... Money Laundering - proceeds of crime - preparation of 17 fake bills of entry and presenting the same before the ICICI Bank for foreign outward remittances - commission of crime under sections 120 B, 420, 465, 467, 468, 471, 477 A IPC - HELD THAT:- There is an admission on the part of the appellant for receipt of the crime proceed from the accused to the extent of Rs. 9.5 crores, thus the property was liable to be provisionally attached to secure the proceeds of crime till conclusion of the Trial. The interference in the order provisionally attaching the property cannot be made only for the reason that the amount was received by the appellant bonafidely without knowing about the involvement of the accused in commission of crime. The appellant in his statement under section 50 of the Act of 2002 had stated that he was a Director of M/s I.B. Commercial Pvt. Ltd. who is also an appellant along with Abdul Karim Ibrahim whose statement was recorded by the respondent. The entity owned by the appellant was in business of ship breaking and purchased and sale of distress assets. He was knowing Sh Afroz Mohamed Hasanfatta since long and had taken Rs. 9.5 crores from him in the month of March 2014. However, the facts on record does not show the payment of loan amount and thus the respondent would justify attachment of proceeds of crime in the hands of the appellants. The statement of the appellant Abdul Karim Ibrahim was recorded even on 10.01.2019 under the Act of 2002 where again he has admitted about the receipt of 9.5 crores from the accused and his family members. The appellant has admitted the receipt of proceeds of crime to the extent of 9.5 crores said to have been transferred as a loan but no loan document has been placed on record and otherwise it does not involve even repayment, thus what remain in the hands of the appellant is the proceeds of crime - there are no reason to cause interference in the impugned order where the appellants more so when the counsel for the appellant did not raise any argument other than what has been dealt with by us and there is also a literal admission for receipt of proceeds of crime to extent of Rs. 9.5 crores. Appeal dismissed. ISSUES: 1. Whether the provisional attachment of properties belonging to recipients of proceeds of crime is justified under the Prevention of Money Laundering Act, 2002 (PMLA) when such recipients are not named as accused in the FIR. 2. Whether bona fide receipt of proceeds of crime without knowledge of the criminal origin exempts the recipient from attachment of property under the PMLA. 3. Whether the absence of formal loan documentation and repayment affects the validity of provisional attachment of properties acquired from proceeds of crime. RULINGS / HOLDINGS: 1. The provisional attachment of properties is justified as the recipients admitted receipt of proceeds of crime amounting to Rs. 9.5 crores, thus the property is liable to be attached 'to secure the proceeds of crime till conclusion of the Trial.' 2. The Court held that 'interference in the order provisionally attaching the property cannot be made only for the reason that the amount was received by the appellant bonafidely without knowing about the involvement of the accused in commission of crime.' 3. The absence of loan documents and non-repayment of the amount received as loan does not prevent attachment; the property remains 'proceeds of crime' and is subject to attachment under the Act. RATIONALE: The Court applied the statutory framework of the Prevention of Money Laundering Act, 2002, particularly provisions relating to provisional attachment of property under Section 26. The Court relied on admissions made under Section 50 statements acknowledging receipt of proceeds of crime, which justified attachment to prevent dissipation of tainted property. The Court rejected the argument that bona fide receipt without knowledge of criminal origin protects the recipient from attachment, emphasizing the purpose of securing proceeds of crime until trial conclusion. No dissenting or concurring opinions were noted. The Court clarified that even in absence of formal loan documentation or repayment, the property derived from proceeds of crime remains liable for attachment.