2026 (2) TMI 533 - AT - Money Laundering

PMLA provisional attachment of undivided share in immovable property for laundered proceeds upheld; confirmation sustained.

Conversion of demonetized currency into bullion and sale of precious metals through intermediaries was held to prima facie constitute proceeds of crime, ... Provisional attachment - confirmation of attachment under PMLA - prima facie nexus with proceeds of crime - attachment of an undivided share in immovable property - proceeds of crime includes value equivalent - collection of demonetized currency, and its conversion into gold through intermediaries - burden to prove attached portion untainted - non-requirement of recording statements of all co-owners - mere payment of EMIs does not confer title for PMLA purposes - Whether the provisional attachment and its confirmation in respect of the residential property bearing No. B-20, Moonlight Apartments, 70 IP Extension, Patparganj, Delhi-110092, to the extent of 50%, is sustainable in law under the provisions of the PMLA. HELD THAT:- The alleged conversion of demonetized currency into bullion through fictitious entities and banking channels, followed by sale at a premium of gold and diamond, prima facie discloses a process or activity connected with the proceeds of crime, which squarely attracts the provisions of Section 3 of the PMLA. The existence of the Scheduled Offences and the investigations conducted by the Respondent Directorate provided the reasons to believe for action under Section 5(1) of PMLA, as has been found by the Ld. AA. The PMLA recognizes attachment of an undivided share in immovable property, and there is no requirement under the Act that the property must be physically divisible or that other occupants must be evicted at the stage of attachment. The plea of indivisibility of the flat or hardship to family members, cannot override the statutory scheme. It is pertinent to state that the commission which is found to have been earned by the Appellant Shri Prateek Bansal, during the course of investigations is Rs. 37,00,000/-. This amount is estimated to be the proceeds of crime qua the Appellant Shri Prateek Bansal because the said amount has been earned by him by indulging in procuring demonetized currency and thereafter laundering it through transactions in gold and diamonds. The property which has thus been attached as value thereof of the proceeds of crime is only to the extent of Rs. 27,70,157/- (i.e. 50% of the value). It is therefore obvious that the attached property is much less than the proceeds of crime. It is an admitted fact that the attached property is registered jointly in the name of Sh. Prateek Bansal and Smt. Anita Bansal. We therefore do not find that any impropriety has been indulged in the attachment order. The burden to establish that the attached portion is untainted lies upon the person claiming such exemption, which burden has not been discharged in the present case. We also find no merit in the contention that the impugned proceedings are vitiated on account of non-recording of statements of every co- owner. The Act does not mandate recording of statements of all persons claiming interest in the property as a condition precedent for confirmation of attachment. Adequate opportunity of hearing was afforded, and no material prejudice has been demonstrated. With regard to the rejection of the impleadment application filed by Shri Ravinder Nath Bansal, we find that the Ld. Adjudicating Authority has correctly held that mere financial contribution, in the absence of title or registered interest, does not entitle a person to be treated as an owner for the purpose of attachment proceedings under the PMLA. We are of the considered opinion that the Ld. Adjudicating Authority has correctly exercised its jurisdiction under Section 8 of the PMLA and has passed the Impugned Order upon due consideration of the material available on record. We do not find any illegality, perversity or infirmity in the confirmation of the provisional attachment. We dismiss the Appeal Nos. FPA-PMLA-2315/DLI/2018 filed by Smt. Anita Bansal, FPA-PMLA-2316/DLI/2018 filed by Shri Ravinder Nath Bansal and FPA-PMLA-2306/DLI/2018 filed by Shri Prateek Bansal. The Applications pending, if any, are disposed of accordingly. Issues: Whether the provisional attachment and its confirmation of 50% undivided share in the residential property bearing No. B-20, Moonlight Apartments, Patparganj, Delhi-110092 is sustainable in law under the Prevention of Money Laundering Act, 2002.Analysis: The appeal arises after registration of an ECIR based on FIR No. 416/2016 under Sections 420 and 120B of the Indian Penal Code, 1860, which are scheduled offences under the Prevention of Money Laundering Act, 2002. Investigation material including statements recorded under Section 50 of the PMLA and documentary evidence disclosed a prima facie case of collection of demonetized currency and its conversion into gold/diamonds, generating illegal gains. Section 5(1) and Section 3 of the PMLA permit action where material in possession gives reasons to believe a person is in possession of proceeds of crime. The attachment was limited to 50% corresponding to the registered share reflected in title documents; the law recognises attachment of an undivided share in immovable property and does not require physical division or eviction at the provisional attachment stage. The burden to establish that the attached portion is untainted lies on the person claiming exemption, and mere payment of EMIs or residence does not, without title, negate attachment. Recording statements of every co-owner is not a statutory prerequisite for confirmation of attachment under Section 8 of the PMLA. The Adjudicating Authority examined the available material and confirmed attachment to the extent of the tainted share; the confirmed attached value was less than the proceeds of crime estimated from the investigative material.Conclusion: The provisional attachment and its confirmation to the extent of 50% of the subject property is sustainable in law and the appeals are dismissed; result in favour of Respondent.