Cash deposits, sham-firm transfers and concealed property purchases found proceeds of crime; provisional attachments largely confirmed, two account freezes lifted
Whether funds/properties constituted "proceeds of crime": tribunal found cash deposits, transfers to a non-existent firm and concealment amounted to laundering under s.3 of the PMLA; property purchased with or substituted for such tainted funds thus fell within the definition of proceeds of crime - outcome: assets were properly treated as proceeds of crime. Validity of provisional attachment of immovable and movable property: because proceeds were laundered and not directly recoverable, equivalent-value properties could be provisionally attached - outcome: confirmation of provisional attachments. Validity of freezing bank accounts: where frozen accounts were later provisionally attached, freezing was superseded; two frozen accounts not provisionally attached lacked justification - outcome: partial interference to unfreeze those two accounts.
Issues: (i) Whether the Adjudicating Authority was justified in confirming provisional attachment of immovable and movable properties (including properties acquired prior to the scheduled offence) as proceeds of crime or property of equivalent value; (ii) Whether retention/seizure of documents and digital devices ought to be continued; (iii) Whether freezing of bank accounts not subsequently provisionally attached was justified.
Issue (i): Whether provisional attachment of properties (including those acquired prior to the scheduled offence) could be sustained as proceeds of crime or as property of equivalent value under the Prevention of Money Laundering Act, 2002.
Analysis: Evidence from investigation included statements and transaction tracing showing large cash deposits and transfers into accounts of non-existent entities and attribution of instructions for deposits to the appellant. The definition of "proceeds of crime" under section 2(1)(u) PMLA includes (a) property derived from criminal activity and (b) the value of such property where proceeds are not traceable, thereby permitting attachment of property of equivalent value. Authorities and precedent interpreting the definition to permit attachment of property of equivalent value where proceeds have been laundered or are not traceable were applied.
Conclusion: The confirmation of provisional attachment of the properties is justified and is upheld; attachment of properties acquired prior to the scheduled offence is permissible as property of equivalent value where proceeds are not traceable.
Issue (ii): Whether continued retention of seized documents and digital devices was warranted.
Analysis: Seized documentary material in part was already released after taking copies; the investigative record and subsequent provisional attachments addressed the evidentiary need for many seized items. No continuing justification remained for retention of items already released or for those superseded by provisional attachment.
Conclusion: The earlier detention/retention of seized documents and digital devices does not survive to the extent already released; no interference is required for matters already dealt with by release and by subsequent provisional attachment.
Issue (iii): Whether freezing of bank accounts that were not provisionally attached should be sustained.
Analysis: The majority of frozen accounts were subsequently provisionally attached; two specified bank accounts were not provisionally attached and no further justification for their continued freezing was shown. Where provisional attachment was not effected, freezing cannot be sustained absent specific grounds or subsequent attachment.
Conclusion: Freezing of the two bank accounts not subsequently provisionally attached is unjustified and interference is warranted to lift the freezing in respect of those accounts; freezing upheld for accounts that were subsequently provisionally attached.
Final Conclusion: The Adjudicating Authority's confirmation of provisional attachment is sustained based on the act of laundering and the availability of authority to attach property of equivalent value where proceeds are not traceable; retention of seized documents has been rendered largely moot by release of copies and by provisional attachments; limited relief is granted by directing release/unfreezing of specific bank accounts that were not provisionally attached.
Ratio Decidendi: The definition of "proceeds of crime" in section 2(1)(u) PMLA encompasses both property derived from scheduled offences and the value of such property, permitting provisional attachment of property of equivalent value where the actual proceeds are laundered or not traceable, and provisional attachment of properties acquired prior to the offence is permissible under the second limb when proceeds are not available.