2025 (8) TMI 1298 - AT - Money Laundering

Appeals dismissed; properties upheld as proceeds of crime after admissions, witness evidence showed conspiracy and siphoning of bank funds

Shri Chander Singh Bheel, Shri Bheru Singh Dabar, Shri Ganpat Singh Bheel, Shri Dev Kishan Acharya and Smt. Kiran Acharya Versus The Deputy Director, Directorate of Enforcement, Jaipur

AT dismissed all appeals, upholding attachment of properties as proceeds of crime. The tribunal found appellants' admissions and witness statements ... Money Laundering - attachment of properties - proceeds of crime - erroneus valuation for attachment of proceeds of crime - property in the hands of the appellants have been valued for Rs. 5.40 Crores which according to the appellant is worth of Rs. 10.21 Crores - Purchase of property - Acquisition pf property through the registered Sale Deed. Property in the hands of the appellants have been valued for Rs. 5.40 Crores which according to the appellant is worth of Rs. 10.21 Crores - HELD THAT:- The appellant admitted about the fraudulent transaction by Shri Ravindra Kumar Bordia and dragged him in it where Rs. 1.55 Crores was shown to be personal gain of Shri Ravindra Kumar Bordia leaving appellant with Rs. 3.64 Crores only out of Rs. 5.19 Crores. This is virtual admission of the appellant to be in possession of the proceeds of crime and at this stage it may be clarified if the property is attached for the value thereof to the proceeds of crime, it happens when the proceeds of crime acquired or obtained directly or indirectly is not available in the hands of the person. The statement of the witnesses recorded under Section 50(2) of the Act of 2002 and more specifically associated with Shri Ravindra Kumar Bordia has been referred by the appellant. The statement of aforesaid was sufficient to show that Shri Ravindra Kumar Bordia and Shri Dev Kishan Acharya had siphoned off bank funds for which a categorical statement was made by the witnesses. The statement of Shri Karan Sharma revealed withdrawal of Rs. 5.67 Crores from the loan account of the Co-operative Bank on the instructions of Shri Ravindra Kumar Bordia and Shri Dev Kishan Acharya. In the statement of Shri Jaakir Hussain Pathan, Shri Gotu Singh Rajput, Shri Chander Singh apart from Shri Ganpat Singh and other loanees had also implicated Shri Dev Kishan Acharya in conspiracy and in association with Shri Ravindra Kumar Bordia - the plea of Shri Dev Kishan Acharya cannot be accepted for causing interference in the impugned order. This is a fit case of money laundering in the hands of the appellants. Purchase of property - HELD THAT:- There is an admission by the appellants in their written arguments that they had agreed to sale properties to Shri Dev Kishan Acharya and execution of Sale Deed was made in the name of the persons assigned by him. In any case, the appellants could not show the reason for filing appeal because the properties attached by the respondent are not claimed by them so as to save it by challenge to impugned order and therefore all the issues raised in the written arguments other than oral are for the sake of it and without showing as to how the appellants have been affected by the attachment of the property and certain arguments have been raised going contrary to their own admission about the association with Shri Dev Kishan Acharya. Thus, the arguments raised by two appellants are summarily rejected when they alleged to have not been named in the FIR or ECIR. Acquisition pf property through the registered Sale Deed - appellant Shri Bheru Singh Dabar has challenged the order of attachment alleging that he acquired the property from Shri Chander Singh Bheel on 12.03.2016 through the registered Sale Deed - HELD THAT:- The appellant has failed to disclose the source to acquire the property even while filing the appeal. He has not produced any document to prove his earning from any of the legal sources to enable him to pass on consideration of Rs. 17,11,000/- for purchase of the property. The appellant in his written argument raised the issue that the property in question is not proceeds of crime while material on record indicates it to be nothing but the proceeds of crime and therefore appellant failed to disclose the source to pass on consideration of Rs. 17,11,000/- to purchase the property - The allegation about non-application of mind is also for the sake of it and without realizing that appellant himself failed to disclose the source for purchase of the property which was used by Shri Dev Kishan Acharya firstly getting it in the name of Shri Chander Singh Bheel and others and then to use it for obtaining the loan. If the property in question was under mortgage, how it was sold to the appellant is another question. In the light of aforesaid and in the absence of source to purchase the property in question, there are no substance in the appeal and accordingly it fails. There are no substance in any of the appeals - appeals dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Adjudicating Authority rightly confirmed the Provisional Attachment Order (PAO) under the Prevention of Money Laundering Act, 2002 by treating specified immovable properties as proceeds of crime. 2. Whether the valuation of attached immovable properties for the purpose of attachment (valuation fixed at Rs. 5.40 Crores vs. claimed market value Rs. 10.21 Crores) was legally correct and consistent with the definition of 'value' under the Act. 3. Whether limned admissions and statements (including statements recorded under Section 50(2) of the Act) and documentary material were sufficient to infer possession of proceeds of crime by the persons whose properties were attached. 4. Whether properties alleged to belong to certain appellants were mis-identified or otherwise incorrectly attached (including claims of prior sale/registered title and transfers after alleged fraud). 5. Whether failure by a claimant to disclose source of consideration in response to a notice under Section 8(1) of the Act disentitles the claimant to challenge attachment or supports confirmation of PAO. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of confirmation of PAO treating immovable properties as proceeds of crime Legal framework: The Adjudicating Authority may confirm provisional attachment where property is shown to be proceeds of crime or of equivalent value; attachment may follow investigation under the Act where predicate offences and laundering are alleged. Precedent Treatment: The Tribunal considered standard principles of the Act (definition of proceeds, attachment for equivalent value) as applied by the Adjudicating Authority; no contrary precedent was invoked or overruled in the text. Interpretation and reasoning: The Tribunal assessed the investigation material (ECIR, statements, charge-sheet and admitted facts) showing large-scale fraudulent loan sanctioning and siphoning of bank funds. The investigation linked specified loans and transfers to firms/partners controlled by the accused and showed amounts transferred to entities associated with the appellants. The Tribunal found that the appellants (notably those who had arranged land and entities receiving funds) were implicated sufficiently to justify attachment. The Tribunal emphasized that where proceeds of crime in cash/other forms are not available in the hands of the person, properties of equivalent value can be attached. Ratio vs. Obiter: Ratio - confirmation of PAO justified where investigation and statements link person to receipt/possession of proceeds and equivalent-value attachment is permissible when proceeds are not available. Obiter - factual observations about conduct of specific co-accused and bank officers beyond what was strictly necessary to the legal conclusion. Conclusions: The Tribunal upheld the Adjudicating Authority's confirmation of PAO as lawful on the basis of the material showing involvement of the appellants in laundering and receipt/possession of proceeds of crime. Issue 2: Correctness of valuation of attached immovable properties Legal framework: 'Value' for attachment under the Act is determined in accordance with the statutory definition (valuation linked to consideration/price paid as per section defining 'value'). Precedent Treatment: The Tribunal applied the statutory definition of 'value' under the Act to determine valuation for attachment; no contrary authority was relied upon. Interpretation and reasoning: The appellants challenged valuation (claimed market value higher than value adopted). The Tribunal held that valuation was to be determined based on the amount of consideration on which property was purchased in view of the statutory definition of 'value.' The appellant's own written arguments admitted proceeds received and disputed only higher market valuation; the Tribunal treated the admitted amounts and record as determinative for the purpose of attachment valuation. Ratio vs. Obiter: Ratio - valuation for attachment is to be determined by the statutory meaning of 'value' (consideration), not by a broader asserted market valuation; admissions in pleadings/written arguments are material to valuation assessment. Obiter - commentary on other orders (bank account freezes, gold loan) not part of the present challenge. Conclusions: The Tribunal found no fault with the Adjudicating Authority's valuation method and upheld the adopted valuation for attachment purposes. Issue 3: Reliance on statements under Section 50(2) and other investigative material to establish possession/receipt of proceeds of crime Legal framework: Investigative statements and admissions made under the Act, together with transaction records and other documents, form part of material to infer involvement in money-laundering and possession/receipt of proceeds. Precedent Treatment: The Tribunal accepted the probative value of statements made under Section 50(2) as part of the investigative matrix corroborating transactions and conspiracy, without treating them as sole determinative evidence. Interpretation and reasoning: The Tribunal reviewed multiple co-accused statements, banking transaction records, charge-sheet facts and admitted portions of appellants' written arguments. It concluded that statements by various loanees and participants implicated the appellants in a scheme to obtain loans by misusing documents, arranging land in others' names, and transferring funds to firms associated with the appellants. Where the appellant had effectively admitted receipt of specified amounts in written submissions, those admissions further supported the finding of proceeds in their hands. Ratio vs. Obiter: Ratio - statements under Section 50(2), when part of a larger framework of corroborative documentary/investigative material, can legitimately be relied upon to uphold an attachment. Obiter - observations critiquing attempts to expand appellate arguments beyond oral submissions. Conclusions: The Tribunal held that reliance on these statements and the totality of material was sufficient to conclude involvement in money laundering and possession of proceeds of crime by the appellants whose properties were attached. Issue 4: Claims of mis-identification, prior sale and registered title - whether attachment was erroneous Legal framework: Attachment may be set aside if the attached property demonstrably belongs to third parties and is not proceeds of crime; claimants must show title and, where required, sources of consideration. Precedent Treatment: The Tribunal required claimants asserting independent title or mis-identification to produce documentary proof and, where a notice under the Act was issued, to comply with disclosure obligations. Interpretation and reasoning: The Tribunal examined claims of registered sale deeds and asserted prior purchases. It found that several claimants had admitted associations or had failed to substantiate independent sources of consideration. In at least one instance, the Tribunal found evidence of a deliberate transfer scheme to place property in others' names to avoid attachment. Where claimants failed to disclose sources in response to statutory notice, their title claims were weakened. The Tribunal treated isolated claims of mis-identification or subsequent registered sale as insufficient where the investigative material suggested the transfers were part of a device to conceal proceeds. Ratio vs. Obiter: Ratio - bona fide third-party ownership and documentation can defeat attachment only when supported by credible documentary proof and disclosure of lawful source; mere registered deeds are insufficient if the transaction is shown to be a device to evade enforcement and the claimant cannot explain source of funds. Obiter - detailed factual findings about individual transfers. Conclusions: The Tribunal rejected mis-identification and prior-title challenges where unsupported by source-disclosure or where transfers appeared to be part of a scheme to defeat attachment; such appeals failed. Issue 5: Effect of failure to disclose source under Section 8(1) of the Act Legal framework: A notice under Section 8(1) seeks disclosure of source of property acquisition; failure to disclose may be treated adversely in assessing whether property is proceeds of crime. Precedent Treatment: The Tribunal applied the statutory scheme that places an onus on those claiming the property to show legitimate source when required by notice. Interpretation and reasoning: Where a claimant failed to satisfactorily disclose source of consideration for acquisition (notably the claimant who relied on a registered sale deed but failed to explain how he could furnish consideration), Tribunal treated non-disclosure as material against the claimant. The Tribunal noted that the notice serves to elicit proof of legitimate acquisition; absence of such proof supported the inference that the transfer was to save property from attachment. Ratio vs. Obiter: Ratio - failure to disclose source in response to a statutory notice is a valid ground for denying relief from attachment and supports confirmation of PAO. Obiter - factual inferences about the claimant's means and the timing of transfers. Conclusions: The Tribunal held that non-disclosure under Section 8(1) fatally undermined the appellant's challenge and justified continuation of the attachment. Overall Conclusion The Tribunal concluded that the Adjudicating Authority rightly confirmed the PAO: investigative material, admissions and statements sufficiently linked the appellants to receipt/possession of proceeds of crime; valuation for attachment was in accordance with the statutory definition; claims of mis-identification or prior title failed for want of corroborative proof and source-disclosure; and failure to comply with statutory disclosure obligations further supported confirmation. All appeals were dismissed.