2025 (8) TMI 717 - AT - Money Laundering

Provisional attachment of bank accounts upheld under SAFEMA; future orders must specify attached properties clearly

Sukhminder Singh Sodhi @ Om Sodhi Versus The Deputy Director, Directorate of Enforcement, Ahmedabad

Sukhminder Singh Sodhi @ Om Sodhi Versus The Deputy Director, Directorate of Enforcement, Ahmedabad - TMI 1. ISSUES PRESENTED and CONSIDERED Whether the Provisional Attachment Order (PAO) passed under Section 26 of the Prevention of Money Laundering Act, 2002 (PMLA) against the appellant is justified in the absence of a disclosed predicate offence. Whether gambling constitutes a predicate offence under the PMLA to justify attachment of properties. Whether the appellant's alleged involvement in offences under the Indian Penal Code (IPC) and other statutes suffices to confirm the PAO. Whether the attachment of movable and immovable properties of entities controlled by the appellant without specific description amounts to non-application of mind and renders the PAO invalid. Whether the attachment of three specified bank accounts belonging to the appellant is sustainable. Whether the appellant's failure to respond to summons and issuance of non-bailable warrant impacts the validity of attachment proceedings. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Existence of Predicate Offence and Justification for PAO Relevant legal framework and precedents: Under the PMLA, attachment of properties is permissible only if a predicate offence is established or disclosed. Predicate offences are those crimes listed in the schedule appended to the Act, including offences under IPC and other laws. Court's interpretation and reasoning: The Court observed that the investigation revealed offences under IPC sections 465, 466, 468, 471, 479, 420, and 34 read with 120(B), all scheduled offences under PMLA. The FIR and charge-sheet were filed accordingly. The appellant was named in the ECIR and implicated based on witness testimony. The Court clarified that a person need not be named in the FIR to be subject to attachment if implicated in the ECIR and found in possession of proceeds of crime. Key evidence and findings: The ECIR, witness statements, and financial transactions indicated the appellant's involvement in the predicate offences. Application of law to facts: Since the predicate offences were established through investigation and evidence, the attachment under PMLA was justified. Treatment of competing arguments: The appellant's contention that no predicate offence was disclosed and that gambling is not a predicate offence was rejected. The Court emphasized that the offences under IPC and related laws suffice as predicate offences. Conclusions: The PAO was validly issued as predicate offences under IPC were disclosed and the appellant was implicated in money laundering. Issue 2: Whether Gambling Constitutes Predicate Offence under PMLA Relevant legal framework and precedents: Gambling per se is not a scheduled offence under PMLA, but offences under IPC and other laws related to gambling activities can be predicate offences. Court's interpretation and reasoning: The Court noted that the appellant's role was not limited to gambling but extended to offences under IPC and other statutes. The charge-sheet included offences beyond gambling, thus qualifying as predicate offences. Key evidence and findings: Investigation revealed large-scale betting activities linked to offences under IPC. Application of law to facts: The appellant's involvement in offences under IPC related to betting and fraud justified attachment under PMLA. Treatment of competing arguments: The appellant's argument that gambling alone is not a predicate offence was considered incomplete as the composite charges included scheduled offences. Conclusions: Gambling-related activities forming part of larger offences under IPC justify attachment under PMLA. Issue 3: Attachment of Properties of Entities Controlled by the Appellant Without Specific Description Relevant legal framework and precedents: Provisional attachment orders must specify the properties to be attached with clarity and particularity; vague or non-specific attachment orders are impermissible. Court's interpretation and reasoning: The Court agreed with the appellant that the PAO attaching movable and immovable properties of entities (M/s Fair Bet Sports Limited, M/s Sports Target BV, M/s Mountbet Holdings Limited) lacked specific description of the properties. The Court decried the practice of vague PAOs and emphasized the need for specificity. Key evidence and findings: The appellant admitted that the entities did not hold any movable or immovable properties, corroborating the absence of specific properties to attach. Application of law to facts: Since no specific properties existed or were described, the attachment of such properties was held to be without application of mind and invalid. Treatment of competing arguments: The respondent did not effectively counter the absence of specific property description. Conclusions: The vague attachment of properties of the entities was set aside; no order was made affecting the entities' properties due to non-existence and non-specificity. Issue 4: Attachment of Three Bank Accounts Belonging to the Appellant Relevant legal framework and precedents: Attachment of bank accounts containing proceeds of crime is permissible under PMLA if supported by evidence and proper description. Court's interpretation and reasoning: The Court found that the three bank accounts were attached with complete and specific descriptions, and the accounts were linked to proceeds of crime derived from betting activities. Key evidence and findings: Investigation showed large transactions, including GBP 1,50,000 transferred from Cayman National Bank account to entities managed by the appellant. The turnover from betting activities was substantial and linked to these accounts. Application of law to facts: The attachment of these bank accounts was justified and supported by evidence of proceeds of crime. Treatment of competing arguments: The appellant did not dispute the existence or description of these accounts but challenged the validity of attaching other properties. Conclusions: The attachment of the three bank accounts was upheld without interference. Issue 5: Effect of Appellant's Non-Compliance with Summons and Issuance of Non-Bailable Warrant Relevant legal framework and precedents: Failure to comply with summons and issuance of non-bailable warrants indicate non-cooperation with investigation but do not per se invalidate attachment proceedings. Court's interpretation and reasoning: The appellant's failure to attend investigation despite summons and warrants was noted but not a ground to invalidate attachment. The appellant was implicated through investigation and witness statements regardless. Key evidence and findings: Non-bailable warrant was issued due to non-compliance; investigation continued and revealed involvement in predicate offences. Application of law to facts: Non-attendance did not affect the validity of the PAO. Treatment of competing arguments: The appellant did not raise this as a primary ground for interference. Conclusions: Non-compliance with summons and warrants did not affect the legality of attachment. Additional Observations The Court emphasized the necessity for authorities to avoid vague PAOs and to specify the properties subject to attachment clearly. The Court clarified that attachment can be made even against persons not named in the FIR if implicated in the ECIR and found in possession of proceeds of crime. The appeal was disposed of with a direction that future PAOs must be specific and not vague, while upholding the attachment of the three bank accounts.