2026 (3) TMI 307 - AT - Money Laundering

Provisional attachment under PMLA sustained where property derived from commissions in an illicit scheme; attachments confirmed.

Provisional attachment under the Prevention of Money Laundering Act was upheld because investigative records, ECIR and admissions showed appellants acted ... Provisional attachment of proceeds of crime - agents/directors involved in promotion and collection of deposits for illicit schemes - failed to demonstrate independent legitimate sources for the acquisition of properties - salary and commission as proceeds of crime - FIR registered mainly against the Directors/Officials of M/s Rose Valley Group of Companies involved in the commission of crime under IPC and the Act of 1978. Provisional attachment of proceeds of crime - Provisional attachment of the appellants' properties was justified on the material before the Adjudicating Authority and requires no interference. - HELD THAT: - The Tribunal examined the role attributed to the appellants in promoting and collecting deposits for the illicit schemes of M/s Rose Valley Group of companies and noted that the ECIR recorded a case of money laundering. The Provisional Attachment Order specified the role of individual appellants and relied on statements and investigative material. Admissions recorded in the statements established that certain appellants collected deposits and acquired properties from the proceeds so derived. In that factual matrix, the Tribunal held that the provisional attachment was not in ignorance of record and that the Adjudicating Authority was justified in confirming the attachment. [Paras 17, 18, 19, 23] Provisional attachment confirmed as justified on the evidence and admissions recorded. Salary and commission as proceeds of crime - HELD THAT: - The Tribunal rejected the appellants' contention that commission or salary paid to them could not be regarded as proceeds of crime. It found that where persons act as instruments to promote and collect funds for illicit, unlicensed and fraudulent schemes, amounts earned by them are not from legitimate sources. The Tribunal therefore accepted the Adjudicating Authority's approach to treat such earnings as proceeds of crime for the purpose of provisional attachment. [Paras 20, 22] Earnings by appellants from participation in the illicit schemes were treated as proceeds of crime and supported attachment. Attachment of assets held by recipients - Assets held in the names of spouses or other recipients can be provisionally attached even if those persons are not formally accused, where material shows they are recipients of proceeds of crime. - HELD THAT: - The Tribunal observed that the wives of two appellants could not demonstrate independent sources for acquisition of the properties and their statements admitted that funds were provided by their husbands. The Adjudicating Authority properly treated them as recipients of proceeds of crime and subjected the properties to provisional attachment. The Tribunal held that naming as an accused is not a prerequisite to attachment where the person is a recipient of proceeds. [Paras 21, 22] Properties held by recipients whose acquisition is shown to be from proceeds of crime are liable to provisional attachment. Final Conclusion: The Tribunal upheld the Adjudicating Authority's confirmation of provisional attachment: the materials and admissions established the appellants' involvement in the proceeds-generating activity, remuneration/commissions were treated as proceeds of crime, and assets held by recipients were properly attached; the appeals are dismissed. Issues: Whether the provisional attachment of immovable properties belonging to the appellants under the Prevention of Money Laundering Act, 2002 is sustainable on the grounds that the properties were acquired out of proceeds of crime and whether the Adjudicating Authority rightly confirmed the provisional attachment.Analysis: The Tribunal examined the investigative record, ECIR and statements recorded under Section 50 of the Act of 2002 and found that three appellants acted as agents/directors involved in promotion and collection of deposits for illicit schemes of the accused company, and that two other appellants (their wives) failed to demonstrate independent legitimate sources for the acquisition of properties. Admissions in statements indicated that consideration for properties derived from commissions connected to the illegal schemes. The Tribunal applied the statutory framework of the Prevention of Money Laundering Act, 2002 regarding attachment of proceeds of crime and adoptive findings that a recipient of proceeds may be subject to attachment even if not separately named as an accused, and that earnings derived from involvement in the illicit scheme cannot be treated as legitimate source.Conclusion: The provisional attachment of the appellants' properties was validated and the confirmation of the Provisional Attachment Order by the Adjudicating Authority was upheld; the appeals are dismissed and no interference is warranted.