2025 (8) TMI 502 - AT - Money Laundering

Provisional Attachment of Gold Under PMLA Upheld Despite Appellant Not Named in FIR, Section 50(2) Statements Key

The AT under SAFEMA upheld the provisional attachment of gold linked to money laundering under the PMLA Act, 2002. The appellant was found involved in ... Money Laundering - proceeds of crime - provisional attachment order - reasons to beileve - scheduled offences - HELD THAT:- During the investigation under the Act of 2002, the appellants were found involved in criminal activity of gold smuggling and had generated proceeds of crime. It has been corroborated by the statement under section 50(2) of PMLA Act of 2002. Sh. Aboobacker Pazhedath in his statement admitted that out of 30 kg gold smuggled through diplomatic baggage of UAE Consulate, 3 kg smuggled gold was belonging to him. The appellant further admitted that he had earlier smuggled 09 kg gold in the similar manner using diplomatic baggage of UAE Consulate. The earlier smuggled gold was consumed in his regular business. The appellant further stated that the amount for buying the smuggled gold was raised from his business firm M/s Malabar Jewellery and M/s Fine Gold. Although, the appellant was not an accused in FIR No. 2 dated 10.07.2020 registered by NIA, Kochi, it is incorrect to state that no FIR was registered in the matter and otherwise the offence under section 3 of the Act of 2002 is an independent offence. In this case, Sh. Aboobacker Pazhedath has been implicated as accused no. 10 in the prosecution complaint filed by the ED. Thus, the argument that the attachment of the property in the hands of the appellant is illegal, cannot be accepted. It may be added that the attachment of the property need not to be in the hands of accused in all the cases rather it can be other than the accused. It would be in a given case where proceeds of crime has been passed on to a person who may not be directly involved in commission of crime. The attachment of the property in the hands of such a person can take place. It has been clarified by the Apex Court in the case of Vijay Madan Lal Choudhary Vs. UOI [2022 (7) TMI 1316 - SUPREME COURT (LB)]. It is found that if the respondents have failed to release the gold over and above the value of the gold attached finally, remedy lies separately and cannot be addressed in this appeal because it is in pursuant to the provisional attachment of the gold ornament of Rs. 2,00,10,824 only. The appellant would thus be at liberty to take proper remedy for the aforesaid. Appeal dismissed. ISSUES: Whether the attachment of properties under the Prevention of Money Laundering Act, 2002 ('PMLA') is justified in the absence of a predicate offence.Whether the appellant's involvement in the scheduled offence of gold smuggling and consequent money laundering is established.Whether attachment of property can be made in the hands of persons other than those accused in the scheduled offence.Whether the attachment of properties beyond the amount invested by the appellant in the smuggling operation is lawful.Whether the appellant was entitled to a prior opportunity of hearing before attachment and whether the statements recorded under PMLA were voluntary.Whether the seizure and attachment of gold and currency from the appellant's business premises are justified.Whether the offence under Section 3 of PMLA, 2002 is an independent offence distinct from the scheduled offence. RULINGS / HOLDINGS: The Court held that the offence under Section 3 of the PMLA, 2002 is an independent offence regarding 'the process or activity connected with the proceeds of crime' derived from a scheduled offence, and does not depend on the date or existence of a predicate offence at the time of money laundering activity.The appellant was found to have admitted smuggling 9 kg of gold through diplomatic baggage and involvement in the rotation of proceeds, establishing his participation in the scheduled offence and consequent money laundering under the PMLA.The attachment of property need not be limited to accused persons in the scheduled offence; it can extend to any person involved in any process or activity connected with proceeds of crime, as clarified by the Apex Court.The attachment of properties beyond the initial investment amount by the appellant is lawful, as the appellant admitted smuggling multiple consignments of gold, and attachment was limited to the value of gold smuggled in his hands.The appellant's contention regarding lack of opportunity of hearing and coercion in recording statements was not accepted, given the statutory provisions and evidence on record.The seizure and attachment of gold jewellery and currency from the appellant's business premises were justified as 'equivalent value' of proceeds of crime under Section 5(1) of the PMLA, 2002.The Court dismissed the argument that absence of FIR or charge-sheet against the appellant invalidates the attachment, holding that the offence under Section 3 of PMLA is independent and attachment can be made on material indicative of involvement in proceeds of crime. RATIONALE: The Court applied the statutory framework under the Prevention of Money Laundering Act, 2002, particularly Sections 2(1)(u), 3, 4, 5(1), 8(1), and 50, along with relevant provisions of the Customs Act, 1962, IPC, and Unlawful Activities (Prevention) Act, 1967.The Court relied on the authoritative interpretation from the Apex Court's judgment clarifying that the offence of money laundering under Section 3 of the PMLA is 'an independent offence' concerning activities connected with proceeds of crime, irrespective of the timing or existence of the predicate offence.The Court recognized that proceeds of crime include both property directly derived from the scheduled offence and the 'value' of such property, permitting attachment of equivalent value properties when direct proceeds are untraceable.The Court noted the admitted statements under Sections 50(2) and (3) of the PMLA by the appellant acknowledging involvement in smuggling and rotation of proceeds, which formed the basis for the 'reasons to believe' required for provisional attachment under Section 5(1).The Court emphasized that attachment can be extended to persons involved in the laundering process, even if they are not named accused in the scheduled offence, consistent with the legislative intent to prevent dissipation of proceeds of crime.The Court declined to entertain challenges regarding non-release of gold jewellery beyond the attached value in the present appeal, indicating such issues require separate remedy.No dissent or doctrinal shift was noted; the Court adhered strictly to established statutory provisions and precedent interpretations.