2026 (3) TMI 596 - AT - Money Laundering

Provisional attachment confirmed where charge sheet plus corroborative investigative material establish a prima facie link to proceeds of crime.

Provisional attachment of seized cash may be confirmed where a filed charge sheet together with corroborative investigative material and voluntary ... Provisional attachment - interim measure to protect property - reason to believe presumption of interconnected transactions - illegal gratification - Cash recovered and seized by the Central Bureau of Investigation from the possession - scheduled offences - confirmation of attachment notwithstanding custody of property by trial court. Provisional attachment as an interim protective measure - Whether the provisional attachment could be confirmed though the seized currency/FDR was in the custody of the trial court - HELD THAT:- The Tribunal held that attachment under the PMLA is an interim protective measure to preserve property for possible eventual confiscation and may be confirmed even if the property is in custody of a court in related criminal proceedings. The possibility that the property may be confiscated on conviction and that a legally entitled person can claim return if there is no conviction meant that mere custody by the trial court did not preclude confirmation of the Provisional Attachment Order. [Paras 6] Provisional Attachment Order confirmed despite the property being in custody of the trial court Reason to believe based on charge-sheet - claim of untainted sale proceeds as defence to be tested at trial - Whether the registration of FIR, filing of charge-sheet and other materials furnished a sufficient reason to believe to justify confirmation, and whether the respondents' claim that the amount was sale proceeds precluded attachment - HELD THAT:- The Tribunal concluded that the registration of FIR and filing of a charge-sheet which resulted in framing of charges provided strong prima facie material constituting a reason to believe for attachment under the PMLA. The respondents' plea that the seized cash represented sale proceeds was treated as an after thought defence which must be proved at trial; voluntary disclosures to CBI and recorded conversations were held to corroborate the prosecution case and to support continuation of attachment pending adjudication. [Paras 6] The grounds relied upon by ED justified confirmation of the provisional attachment; the defence claim as to sale proceeds must be determined at trial Final Conclusion: The appeal is allowed; the adjudicating authority's order refusing confirmation is set aside and the provisional attachment is confirmed, without prejudice to the rights of parties in the ongoing criminal trials. Issues: Whether Provisional Attachment Order No. 07/2018 dated 31.03.2018 relating to cash of Rs. 50 lakhs should be confirmed as proceeds of crime under the Prevention of Money Laundering Act, 2002.Analysis: The attachment proceedings arose after CBI investigations, arrest and filing of charge-sheet for scheduled offences; trial and framing of charges in the predicate criminal proceedings were on record. The evidentiary record includes recovery of cash in a trap, voluntary statements by the persons in possession, and recorded telephone communications corroborating the chain of delivery. The defence that the cash represented sale proceeds was recorded as a later explanation supported by a sale deed executed much later; the explanation involved payment in cash and raised credibility concerns. Section 23 of the Prevention of Money Laundering Act, 2002 creates a presumption in inter connected transactions, which coupled with the predicate charge sheet and investigative material, supports a reason to believe for attachment. The proviso and procedural requirements to Section 5(1) and Rule 7 of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 do not preclude provisional attachment where there is reason to believe and the property is at risk; attachment under the Act is an interim protective measure pending conclusion of trial, and the availability of the property in custody of a criminal court does not automatically bar confirmation of attachment. The Adjudicating Authority's conclusion rejecting confirmation as lacking prima facie material was inconsistent with the existence of a charge sheet, voluntary disclosures and corroborative investigative material.Conclusion: Provisional Attachment Order No. 07/2018 dated 31.03.2018 is confirmed; appeal allowed in favour of the appellant Directorate of Enforcement.Ratio Decidendi: Where there is a filed charge sheet and corroborative investigative material creating a prima facie case that seized property is proceeds of crime, provisional attachment under the Prevention of Money Laundering Act, 2002 may be confirmed as an interim protective measure to preserve property for possible confiscation upon conviction.