2026 (2) TMI 1282 - AT - Money Laundering

Provisional Attachment under PMLA upheld where admissions, witness statements and banking records establish proceeds and beneficial ownership.

Whether provisional attachment under the Prevention of Money Laundering Act related to property equivalent to identified proceeds was valid: the tribunal ... Provisional attachment - proceeds of crime - beneficial ownership / benami transactions - camouflage of proceeds by repayment through cash deposits - statement recorded u/s 50(2) - HELD THAT:- The case was considered in reference to the statements of the witnesses who disclosed the involvement of Shri Praveen Kumar Kommineni and his entities to accommodate LC credit facility of the accused company. The statement of Praveen Kumar was also recorded, where he was asked about the names of his major clients for the LC facility. It was disclosed, but he failed to provide details of the LC beneficiaries. The LC beneficiaries are considered to be those who, in the normal course, availed discounting facilities on an urgent need basis. The appellant Praveen Kumar, however, gave the name of the LC applicant as his client, which demonstrated bogus and accommodative nature of the LC transaction for both the applicant as well as for the beneficiaries. M/s RE Cables and Conductors Pvt. Limited had availed the credit facility from the banks on accommodated transactions without underlying business activity. It was facilitated by Shri Praveen Kumar Kommineni, resulting in devolvement of the LC, which put the financial institution in loss. Beneficial ownership / benami transactions - HELD THAT:- The facts now remain about the provisional attachment of the property acquired after obtaining a loan of Rs. 59.90 lakhs from the bank. The property stands in the name of Shri P. Eswar Reddy; however, it is occupied by Shri Praveen Kumar Kommineni as a tenant. No rent note or payment of rent has been shown by the appellant to fortify the statement aforesaid. The fact further remains that the loan was obtained by Shri Praveen Kumar Kommineni, and in fact, the statement of Shri P. Eswar Reddy revealed that he was not inclined to purchase the property in his name rather, being an employee of Shri Praveen Kumar Kommineni, he was forced to get the property registered in his name. The demand draft of Rs. 59.90 lakhs bearing No. 383240 dated 24.10.2016 was issued by Shri Praveen Kumar Kommineni because the bank loan was disbursed by the bank in the name of Shri Praveen Kumar Kommineni, and the payment of EMI is paid accordingly. It is coupled with the fact that the payment of EMIs was made by cash deposited in the bank account to be transferred to the bank loan account without disclosing the source of the cash, and therefore, Shri P. Eswar Reddy finally admitted that the property belongs to Shri Praveen Kumar Kommineni but exists in his name. The facts aforesaid are relevant because, even after analysis of the bank loan statement, the respondents found that repayments were made by the sources of Shri Praveen Kumar Kommineni by depositing cash on different dates. The appellant could not explain the source of the cash used for repayment of the loan amount. It was tabulated in the impugned order referring to 14 such transactions starting from 20.07.2017 till 24.06.2021. The deposits were made in the bank account with Punjab National Bank and thereafter used to pay the EMIs. Shri P. Eswar Reddy admitted that the funds were arranged by Shri Praveen Kumar Kommineni, which resulted in the finding that Shri P. Eswar Reddy is the owner of the property for name sake, whereas the beneficial owner is Shri Praveen Kumar Kommineni, who received the commission out of accommodated LC entry. The loan from the bank was taken to camouflage the use of proceeds of crime, and in fact, it was repaid gradually by depositing cash in the bank account out of the proceeds of crime. Thus, the Adjudicating Authority confirmed the provisional attachment order, and we do not find any error in the impugned order so as to cause interference therein. Accordingly, the appeal fails and is dismissed. Issues: Whether the provisional attachment of property equivalent to the proceeds received by the appellant and its confirmation by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 was legally valid.Analysis: The matter was decided under Section 26 of the Prevention of Money Laundering Act, 2002 with material including statements recorded under Section 50(2) of the Prevention of Money Laundering Act, 2002 and contemporaneous banking and transaction records. The evidence accepted by the Adjudicating Authority comprised admissions and corroborative witness statements indicating that the appellant facilitated accommodated letter of credit transactions, charged commission and received sums identified as proceeds of those transactions. Documentary material showed loan disbursal, demand draft payments, and repeated cash deposits used to repay the loan EMIs without credible explanation of source; testimony indicated that the property was held in another's name but the funds and repayments were arranged by the appellant, supporting a finding of beneficial ownership and camouflage of proceeds.Conclusion: The provisional attachment was properly connected to proceeds of crime and its confirmation by the Adjudicating Authority was legally justified; the appeal is dismissed and the confirmation of provisional attachment is upheld in favour of the respondent.