2025 (11) TMI 776 - AT - Money Laundering

Appeal dismissed; provisional attachment upheld where appellant received proceeds of crime, s.50(2) statement and bank records corroborated

M/s Anmol Mines Pvt. Ltd., M/s Anmol Resources Pvt. Ltd. And Shakti Ranjan Dash Versus The Deputy Director, Directorate of Enforcement, Shimla

AT dismissed the appeal and upheld the provisional attachment order, finding the appellant received proceeds of crime rather than legitimate payment. The ... Money Laundering - proceeds of crime - Provisional Attachment Order - involvement in fraudulent activities by raising and submitting fake and forged Real-Time Gross Settlement (RTGS) - HELD THAT:- It is found that the appellant has received the money out of the proceeds of crime. If it could have been out of rightful business deal then the position would have been different but in this case, effort of the accused company was to park the proceeds of crime with the appellants. It is born out from the fact that the appellant received advance for supply of mineral but was never supplied. It is said to be in absence of trade licence with the accused without referring any of the provisions which provides for trade licence to receive the mineral. The appellant company was not holding any mining lease area in its name for supply of manganese or iron ores, rather, it said to have entered into in MoU for excavation of minerals. It is said to have excavated the minerals but remained stocked in the mining area in absence of trade licence to receive the minerals. The appellant has failed to refer the payment of royalty on excavation of minerals because it cannot be moved outside the mining area without issuance of Ravana which has not been placed on record by the appellant. It is stated that the appellant company was not named as an accused by the CBI in its charge-sheet without realizing that for provisional attachment of the property, one need not to be an accused, rather, if one is recipient of the proceeds or it has been parked with him, the PAO can be passed against the person. In the instant case, the statement of Shri Gautam Seth recorded under Section 50(2) of the Act of 2002 was sufficient to corroborate the bank statement and other documents to show transfer of money out of the proceeds of crime by the accused and no material was ever supplied by it. It is submitted that the impugned order is solely based on the statement of Shri Gautam Seth without realizing the availability of corroborative evidence and otherwise admission about receipt of money from the accused company. It is said to be towards advance for supply of iron and Manganese ores but its supply could not be shown and the period intervening is of more than 2 years. It is not found that the PAO or its confirmation has been caused solely based on the statement of Shri Gautam Seth, rather, it is after considering all the materials on record. There are no case to cause interference in the impugned order - appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether provisional attachment under the Prevention of Money Laundering Act, 2002 (PMLA) can be ordered against persons who are not named as accused in underlying criminal proceedings when they are alleged recipients of proceeds of crime. 2. Whether receipt of advances purportedly for supply of minerals, without actual supply, can constitute receipt/parking of proceeds of crime justifying provisional attachment of immovable property to the extent of proceeds of crime. 3. Whether a Provisional Attachment Order (PAO) can be sustained on the basis of investigative statements (including statements under Section 50(2) of PMLA) corroborated by transactional records and other materials, absent direct criminal charge against the recipient. 4. Whether mere absence of mining lease, trade licence or production/transportation documentation (e.g., Ravana) undermines the finding that monies received were proceeds of crime. 5. Whether the Adjudicating Authority erred in quantifying and attaching properties to the extent of proceeds of crime when layering and inter-company transfers were established. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Provisional attachment against non-accused recipients of proceeds of crime Legal framework: PMLA permits provisional attachment of property believed to be proceeds of crime to prevent frustration of confiscation proceedings; attachment does not require the person holding property to be an accused in underlying criminal proceedings. Precedent Treatment: No contrary precedent was invoked by the appellants; the Tribunal applied the statutory principle that status as accused is not a prerequisite to PAO. Interpretation and reasoning: The Tribunal reasoned that the statutory scheme targets proceeds of crime wherever found. If a person is shown to have received proceeds or had proceeds parked with them, provisional attachment of equivalent value is permissible notwithstanding absence of criminal accusation in related FIRs or charge-sheets. The Tribunal relied on the distinction between being an accused for substantive criminal liability and being a recipient of tainted property for the purposes of attachment. Ratio vs. Obiter: Ratio - A person need not be an accused in the underlying criminal case for a PAO to be passed if the person is shown to be in possession of proceeds of crime. Conclusion: The Tribunal upheld the principle and found no error in attaching properties of entities not named as accused where receipt of proceeds was established. Issue 2 - Characterisation of advances for supply of minerals as proceeds of crime when supply did not occur Legal framework: Proceeds of crime include any property derived or obtained, directly or indirectly, from criminal activity; layering or movement of such funds to third parties may render those funds subject to attachment. Precedent Treatment: The Tribunal treated documentary and testimonial evidence (statements, bank records, MOUs) to assess whether advances were genuine business transactions or transfers to park illicit funds; no precedent was overruled or distinguished. Interpretation and reasoning: The Tribunal examined the sequence: repeated advance payments over time, absence of actual supply despite the appellants' assertion of readiness to supply, lack of supporting statutory documentation (e.g., Ravana, royalty payment, transport documentation), and absence of commercial rationale for repeated advances without offtake. These factors led to the inference that the transfers were intended to park proceeds with the appellants. Corroboration by bank statements and interconnected transfers strengthened the inference that the advances were proceeds of crime. Ratio vs. Obiter: Ratio - Repeated advance payments without subsequent delivery, coupled with absence of statutory/transportation documentation and corroborative transactional records, can indicate that funds are proceeds of crime and justify attachment. Conclusion: The Tribunal concluded that advances received by the appellant entities were proceeds of crime or represented parking of illicit funds, warranting attachment of their immovable property to the extent of proceeds identified. Issue 3 - Sufficiency of investigative statements and corroborative material to sustain PAO Legal framework: Under PMLA investigation material, including recorded statements under Section 50(2), bank records and documentary evidence, may be relied upon by the Enforcement Agency and Adjudicating Authority for confidential provisional attachment where prima facie satisfaction exists. Precedent Treatment: The Tribunal rejected the submission that reliance on a single statement was fatal where transactional and documentary corroboration existed; no express precedent was cited to the contrary. Interpretation and reasoning: The Tribunal found the PAO was not based solely on one statement; it considered the statement of an investigator/witness together with bank statements, MOUs and transfer patterns, and evidence of layering across related entities. The availability of corroborative financial records made the investigative statements admissible and probative for provisional attachment purposes. The Tribunal also noted admissions recorded from other involved persons corroborating receipt and usage of funds. Ratio vs. Obiter: Ratio - Investigative statements, when corroborated by bank records and other documentary evidence indicating transfer and non-supply, constitute sufficient material to support a PAO; reliance on one statement alone is not fatal if adequate corroboration exists. Conclusion: The Tribunal held the material on record (statements plus transactional/documentary evidence) sufficiently supported provisional attachment; the PAO was therefore sustainable. Issue 4 - Role of absence of mining lease, trade licence and transport documentation in determining genuineness of transactions Legal framework: Commercial legality and statutory compliance (licenses, royalty payments, transport permits) are relevant indicia to assess genuineness of transactions involving minerals; absence of such documentation may indicate impropriety or that goods were not actually supplied. Precedent Treatment: The Tribunal treated documentary non-production (trade licence, Ravana, royalty records) as probative of non-supply and as undermining the appellants' claim of lawful business receipts. Interpretation and reasoning: The Tribunal observed that without proof of excavation compliance and transport/dispatch documents, advances purportedly for supply could not be accepted at face value. The appellants' failure to produce Ravana, royalty payments or other statutory documents required for removal of mined material was critical. The Tribunal found the lack of such documentation supported the finding that the payments were not legitimate business receipts but transfers to park proceeds of crime. Ratio vs. Obiter: Ratio - Absence of required statutory and commercial documentation for mineral extraction and transport is a material factor that can support inference that funds received were not for legitimate supply but are proceeds of crime. Conclusion: The Tribunal treated the absence of mining-related statutory documents as corroborative of the view that no genuine supply occurred and therefore upheld attachment. Issue 5 - Quantification and attachment where layering and inter-company transfers are established Legal framework: Where proceeds of crime have been diverted or layered through multiple entities, PMLA permits attachment of property to the extent of proceeds located with recipient entities, commensurate to established transfers and value. Precedent Treatment: The Tribunal applied the statutory principle of tracing and quantifying proceeds through transactional links, accepting attachment to the quantum established by the Enforcement Directorate and confirmed by the Adjudicating Authority. Interpretation and reasoning: The Tribunal noted evidence of layering among sister concerns and newly incorporated entities, timing of transfers immediately after establishment of certain companies, and large inter-company movements consistent with siphoning. The Tribunal accepted the Adjudicating Authority's valuation and attachment to the extent of proceeds identified against the appellants' properties as necessary to preserve assets for confiscation proceedings. Ratio vs. Obiter: Ratio - When layering and direct transfers establishing movement of proceeds are demonstrated, attachment of properties up to the equivalent value of proceeds in the hands of recipient entities is appropriate. Conclusion: The Tribunal found no error in the quantification and confirmation of the PAO to the extent of proceeds of crime attributable to the appellants and dismissed the appeals.