2025 (11) TMI 521 - AT - Money Laundering

Appeal dismissed; provisional attachment under PMLA upheld, proceedings not quashed; factual disputes reserved for trial

Shri Shiwanand Singh, Smt. Ram Piyari Singh (through LRs), Shri Santosh Singh, Shri Sunil Kumar Singh and Smt. Gitanjali Singh Versus The Deputy Director, Directorate of Enforcement, Kolkata

AT dismissed the appeal and upheld the provisional attachment order under PMLA, finding no occasion to quash proceedings despite disputed investigative ... Money Laundering - Provisional Attachment Order - no Scheduled offence which has been registered - impugned Order is based on the premise that the attached properties are proceeds of crime derived from the illegal activities committed - HELD THAT:- The Judgment dated 03.10.2024 of the Hon’ble High Court at Calcutta in the matter of Ramesh Chandra Singh vs. Assistant Director, Enforcement Directorate [2024 (10) TMI 389 - CALCUTTA HIGH COURT], has dismissed the Application for quashing of proceeding in respect of ECIR No.KLZ/16/2017 dated 17.08.2017 where it was held that 'there is a clear inkling that the racket was organised by such provident fund employees as the petitioner. Without being guided by recommendations as required, illegal inspections were carried out, protection money demanded and taken. In fact, the prime accused in the first case allegedly acted under instructions of the petitioner who was a superior officer. The minutest details about the roles played by each are best left for the trial Court to deliberate upon.' It is noted from the record that the Respondent Directorate has filed the Prosecution Complaint No. 10 of 2020, under PMLA before the Court of Ld. Special Court, CBI Court-1 at City Sessions Court at Kolkata and Ld. Special Court under the PMLA. In the said Prosecution Complaint Shri Ramesh Chandra Singh and Smt. Sangita Singh are Accused No. 2 and Accused No. 3 respectively, besides Shri Samiran Kumar Mondal being Accused No. 1. It is also noted that certain findings were made during the course of investigation, which have been mentioned in the Impugned Order - These details which of course have been disputed by the Appellants cannot be gone into at this stage and would require appreciation of the evidence at the stage of the trial before the Court of Ld. Special Judge, Kolkata. Appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether provisional attachment and its confirmation under the Prevention of Money Laundering Act (PMLA) can be sustained as to properties of persons who are not accused in the predicate (scheduled) offence. 2. Whether the dropping/closure of a separate CBI prosecution (alleging disproportionate assets) affects the viability of PMLA proceedings initiated in relation to a different predicate offence. 3. The extent to which findings of fact alleged in investigation (statements, seized assets, account management) can be examined at the interlocutory/appeal stage vis-à-vis confirmation of provisional attachment under PMLA. 4. Whether earlier judicial decisions (High Court and Tribunal) and a pending Special Leave Petition before the Supreme Court constrain interference with the impugned attachment order. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of attachment as to persons not accused in the predicate offence Legal framework: PMLA permits proceedings against persons alleged to be involved in money-laundering even if they are not formally accused in the predicate offence; the ingredients of the predicate offence and the PMLA offence are distinct. Precedent Treatment: The Court relied on higher-court authority establishing that an accused under PMLA need not be an accused in the predicate offence, and that acquittal or quashing in the predicate case benefits persons in the PMLA case where the predicate is finally disposed in their favour. Interpretation and reasoning: The Tribunal observed that the PMLA proceeding under challenge emanates from a specific predicate FIR distinct from another later CBI proceeding which was dropped. Since the PMLA proceeding traces to the first predicate FIR (still pending), the fact that a separate disproportionate-assets prosecution was closed does not negate the connection between the impugned properties and the predicate facts alleged in the live PMLA matter. Ratio vs. Obiter: Ratio - A person need not be an accused in the predicate offence to be proceeded against under PMLA; however, where the predicate offence is quashed/dropped as to an accused, that accused obtains similar benefit in the PMLA proceedings. Obiter - Observations as to the interplay of supervisory roles within the alleged racket and the distribution of responsibilities were left as matters for trial. Conclusion: Attachment could not be set aside at this interlocutory stage solely on the ground that the appellants are not accused in the predicate offence; the PMLA attachment stands in light of the established principle that being not an accused in the predicate case is not fatal to PMLA proceedings. Issue 2 - Effect of closure of a separate CBI prosecution (disproportionate assets) on PMLA proceedings Legal framework: Where predicate proceedings are quashed or dropped fully or as to particular accused, that outcome carries consequential benefit in PMLA proceedings; but benefit flows only from the predicate offence(s) that give rise to the specific PMLA prosecution. Precedent Treatment: The Tribunal applied the High Court's analysis distinguishing between the first predicate FIR (basis for the PMLA case) and a subsequent independent CBI proceeding which was closed; precedent indicates dropping of a separate prosecution does not necessarily negate PMLA proceedings founded on a different predicate FIR. Interpretation and reasoning: The Court held that the PMLA matter does not originate from the closed disproportionate-assets proceeding; therefore the closure of that separate case has limited bearing on the validity of attachment made in the PMLA proceedings that are founded on the earlier predicate FIR which remains extant. Ratio vs. Obiter: Ratio - Closure of an independent subsequent proceeding does not automatically invalidate a PMLA prosecution founded on an earlier predicate FIR; benefit of closure/quashing is limited to the predicate proceedings it affects. Obiter - The observation that appellants named as witnesses in one proceeding cannot be insulated from PMLA action if other predicate material implicates them. Conclusion: The closure of the disproportionate-assets CBI case does not warrant interference with the attachment confirmed under the PMLA that arises from a different, ongoing predicate FIR. Issue 3 - Admissibility of disputed investigative findings at interlocutory stage Legal framework: Confirmation of provisional attachment involves prima facie satisfaction; disputed questions of fact and credibility of evidence are ordinarily matters for trial before the Special Court; interlocutory appellate interference is limited where material raises triable issues. Precedent Treatment: The Tribunal followed the principle that detailed appraisal of evidentiary disputes is inappropriate at the attachment-confirmation stage; prior judicial authority cited emphasizes leaving minute factual disputes for trial. Interpretation and reasoning: The Tribunal summarized investigative findings (false income declarations, lack of knowledge of alleged income sources, control of account details by the principal alleged operator, unexplained assets) but held these entail disputed factual questions that cannot be conclusively resolved on appeal from an attachment order; such matters require trial-level appreciation. Ratio vs. Obiter: Ratio - Where investigative material discloses sufficient prima facie linkages between alleged proceeds and accused conduct, the question of factual disputes is for trial and not for resolving attachment confirmation on appeal. Obiter - Specific factual inferences about organization of the racket and details of how funds were parked were noted as matters better left to trial courts. Conclusion: The impugned attachment was not set aside on the basis of contested factual allegations; the contested evidentiary inferences require trial-stage examination and do not justify appellate interference with the confirmed attachment at this stage. Issue 4 - Effect of prior orders and a pending higher-court petition on appellate interference Legal framework: Prior judicial determinations on substantially similar questions may constrain subsequent tribunals; where a higher court's decision adverse to appellants exists and an appeal is pending before the Supreme Court, tribunals may refrain from altering orders pending the outcome of the higher forum. Precedent Treatment: The Tribunal placed weight on its own recent Final Order dismissing related appeals and on the High Court's order refusing quashing in a cognate matter, and acknowledged the existence of a pending Special Leave Petition before the Supreme Court. Interpretation and reasoning: Given the High Court's reasoning sustaining the PMLA proceedings (and distinguishing closed proceedings that are not the basis of the PMLA complaint) and this Tribunal's prior dispositions in related appeals, the Tribunal declined to disturb the impugned confirmation of attachment; it granted liberty to seek recall if the pending SLP is allowed. Ratio vs. Obiter: Ratio - Where parallel judicial decisions adverse to the appellants exist and appellate challenges are pending at a superior forum, a tribunal may defer substantive interference while preserving liberty to act if the higher forum rules otherwise. Obiter - Directions as to recall procedure and interlocutory consequences were procedural adjuncts rather than determinative law. Conclusion: In view of precedent and the pending higher-court petition, the Tribunal dismissed the appeals and left appellants free to seek recall should the Supreme Court grant relief; the impugned attachment therefore remains unimpaired by this order.