PMLA attachment sustained on valid service, sufficient material for satisfaction, and failure to prove lawful property sources.
Service of notice by speed post under the procedure then applicable was treated as valid, and the appellants' plea of non-service and ex parte proceedings failed because delivery was confirmed and they had actual awareness of the matter. In attachment proceedings under the Prevention of Money Laundering Act, the Adjudicating Authority could act on the Enforcement Directorate's material and complaint; independent recording of reasons in the manner required for provisional attachment was not necessary, so the challenge to the reason to believe failed. The appellants also failed to prove legitimate sources for the property, and the attachment was sustained because continued dealing with proceeds of crime attracts liability even where the scheduled offences were added later.
Issues: (i) Whether the appellants were denied valid service of notice and were consequently proceeded against ex parte; (ii) Whether the Adjudicating Authority had a valid reason to believe for confirmation of attachment; (iii) Whether the appellants established legitimate sources for purchase of the attached property and whether the attachment could be sustained in view of the plea that the scheduled offences were added later and the money-laundering charge was retrospective.
Issue (i): Whether the appellants were denied valid service of notice and were consequently proceeded against ex parte
Analysis: The record showed that notice and the accompanying complaint were sent by speed post and delivery was confirmed. The file of the Adjudicating Authority also reflected prior intimation of service and later confirmation of delivery. The applicable procedure then in force permitted service in the manner prescribed under Order 5 of Schedule I of the Code of Civil Procedure, 1908, and service by speed post was held to be valid. The appellants had actual awareness of the proceedings but chose not to appear.
Conclusion: The objection regarding non-service and ex parte disposal was rejected.
Issue (ii): Whether the Adjudicating Authority had a valid reason to believe for confirmation of attachment
Analysis: The order and the surrounding record showed that the Adjudicating Authority acted on the materials placed by the Enforcement Directorate and the complaint accompanying the provisional attachment proceedings. In proceedings under section 8(1) of the Prevention of Money Laundering Act, 2002, the Authority was not required to record reasons in the same manner as under section 5(1), and subjective satisfaction on the basis of the material before it was sufficient. The attachment proceedings were therefore not invalid merely because the reasons were drawn from the complaint and supporting materials.
Conclusion: The challenge based on absence of independent reason to believe failed.
Issue (iii): Whether the appellants established legitimate sources for purchase of the attached property and whether the attachment could be sustained in view of the plea that the scheduled offences were added later and the money-laundering charge was retrospective
Analysis: The documentary support for the claimed lawful sources was found inadequate and unreliable, including unregistered and unsupported transactions and an unproved bank loan narrative. The appellants did not satisfactorily discharge the burden of showing that the flat was acquired from untainted funds. On the retrospectivity plea, the governing principle applied was that money laundering is assessed with reference to the act of dealing with proceeds of crime, and continued possession or use of such proceeds after the relevant offence is scheduled attracts liability. The fact that the predicate offences were committed earlier did not defeat the proceedings where the alleged laundering continued thereafter.
Conclusion: The attachment of the property was upheld and the plea of retrospectivity was rejected.
Final Conclusion: The attachment order was confirmed, the appellate challenge failed, and the attached property was allowed to remain under restraint pending completion of the prosecution and confiscation process.
Ratio Decidendi: In proceedings under the Prevention of Money Laundering Act, 2002, valid service by the prescribed mode, subjective satisfaction of the Adjudicating Authority under section 8(1), and continued possession or dealing with proceeds of crime are sufficient to sustain attachment even if the predicate offences were scheduled later.