AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1028
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....on of Money Laundering Act, 2002 (hereinafter PMLA) are filed by the appellants against the order dated 17.04.2018 passed by the Adjudicating Authority in Original Complaint No. 852/2017 (OC), whereby the properties attached by ED vide Provisional Attachment Order No. 21/2017 (PAO) dated 30.10.2017 were confirmed. The details of the said properties are mentioned at internal page no. 67 to 139 of the Provisional Attachment Order in Schedule I to Schedule III and the said details is not reproduced herein for the sake of brevity. However, the total properties of the Appellants along with registration value and the guidelines value prescribed by Govt. of Tamil Nadu are tabulated as under: Sl. No. Name of the person No. of documents Total Registration Value (in crores) Guideline value as per Govt. of Tamil Nadu 1 C. Panneer Mohamed 105 1.45 13.23 2 C. Rabeek Raja 108 4.11 36.36 3 R. Kasaniya Begum 138 1.79 19.57 4 R. Yasar Arabat, S/o C. Rabeek Raja 30 6.87 9.49 5 R. Rahuman, S/o Ch. Rabeek Raja 27 2.24 6.83 6 C. Nagoor Hanifa 11 0.08 3.41 7 K. Heeralal 30 0.39 3.71 ....
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.... appointed as Special Officer/Legal Commissioner by the Hon'ble High Court to probe into the Granite Mining Activities. He was earlier the District Collector of Madurai District and during his tenure as District Collector, he had received various Complaints and Petitions on illegal mining of granite stones and he had conducted enquiry and submitted a report to the Principal Secretary, Industries Department, Government of Tamil Nadu, Chennai, vide Report dated 19.05.2012, wherein he had detailed the enquiries conducted by him and also made various recommendations to curb the illegal mining scam. Shri Anshul Mishra, District Collector, Madurai, the Successor to Shri U. Sagayam, constituted 18 District Level Teams vide Proceedings No.318/2012/Kanimam dated 1.8.2012 with each Team comprising officials from the Revenue Department, Geology & Mining, Rural Development Department etc. for the purpose of conducting initial survey and assessment of mining in all granite quarries located in Madurai District. Shri Atul Anand, Commissioner of Geology and Mining, Chennai, vide Order dated 4.8.2012 & 13.8.2012, provided the technical strength to the inspection team by ordering Deputation of....
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....he said violation report have specified about the methodology of the above-mentioned quantification including adoption of the values, quantification of stock in hand, dependents of data of District Mines Office on transport permit etc. The evaluation report also states that the evaluation works carried out, ascertained that the lessee M/s Madurai Granite Exports, has indulged in illicit quarrying of granite to the tune of 69358.14 M^3. Similarly, Inspection Team inspected the quarry of M/s MR Granites, a partnership firm of Shri C Rabeek Raja and Shri P Senthil Kumar, at Survey No. 245(P), 246(P), 247(P) & 167(P) of Keelavalavu where they quantified the value of illegally extracted granite to the tune of Rs. 97.27 crores for illicit quarrying of granite to the extent of 24317.26 M^3. Inspection Team inspected the quarry of M/s RR Granites, a partnership firm of Shri P Rajasekaran & Shri C Rabeek Raja, where they quantified the value of illegally extracted granite to the tune of Rs. 46.53 crores for illicit quarrying of granite to the extent of 23262.59 M^3. Inspection Team inspected the other quarries of Shri C Panneer Mohammad and others, where they quantified the value o....
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....rate appeals on the following common grounds: i) The attached properties were not purchased out of any proceeds of crime and are untainted properties. ii) The PMLA proceedings were initiated on the basis of FIRs filed against granite quarry operators in and around Madurai district. The investigation was initiated, on the basis of Survey Report and District Collector was appointed to investigate and file a report. There were two stages of investigation carried out and report submitted to Government of Tamil Nadu. However, Government of Tamil Nadu has not accepted such reports and contemplating to appoint a fresh committee for conducting investigation scientifically. In the circumstances, there is no Crime involved or established. Such crime is not even crystallized so as to entertain a reasonable belief that there is proceeds of Crime in the present case so as to invoke Provisions of PMLA. iii) Section 3 of PMLA is not at all applicable to the present case, in as much as the Appellants have neither directly, nor indirectly attempted to indulge or knowingly assist or actually got involved in the activity connected with the proceeds of crime and also, they a....
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....ase value of the properties attached was Rs. 1.48 Crores only. Thus, there is no money laundering involved in the present case, and therefore, the attachment order is not sustainable since purchase of properties were only out of amounts received from the sale of the Granite Blocks accounted in the statutory records. vii) Attachment of Properties purchased prior to the Quarrying Permit dated 20.04.2006 in any case is not sustainable. The Complainant/ Respondent has attached the properties purchased during the year 2002, 2003, 2004 and 2005 as well which is beyond the scope of the present proceedings. The present proceeding has been Initiated on the basis of the FIRs filed regarding the Quarry started on the basis of the document dated, 20.04.2006 by which the Govt of Tamil Nadu has permitted the Appellant to start quarrying. Therefore, the properties purchased prior to 20.04.2006 cannot be brought under the purview of PMLA and hence the attachment of properties from Serial No.1 to 55 under Schedule III of Complaint is not sustainable. When the value of such properties is removed from the total value arrived at by the Complainant, the value of properties purchased after the ....
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....ent order was passed after the period of more than 3 years and hence the order of attachment under Section 5(1) of PMLA is barred by limitation. However, during the arguments, Ld. Counsel for the appellants instead of arguing on the merits of the appeals confined their arguments to the extent that the impugned order runs into 116 pages and bare perusal of the same reveals that pages upto 108 is a complete reproduction of the contents of the original complaint no. 852/2017 filed before the Adjudicating Authority for confirmation of PAO No. 21/2017 dated 30.10.2017. He pointed out that pages 108 to 116 of the impugned order are again the summary of the contents reproduced in pages 1 to 108. He stressed that the Adjudicating Authority concluded for confirmation of PAO pertaining to large number of properties and many factual and legal issues in just 10 lines spread over from pages 115 to 116, which is absolutely a non-application of mind by the Adjudicating Authority, and hence, the impugned order needs to be set aside. In support of his contention, he relied upon the judgement of Hon'ble High Court of Delhi, in case Kankipati Rajesh v. Adjudicating Authority, PMLA & Ors., 2023 SCC....
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....ack all the Appeals to the Adjudicating Authority for passing the fresh order on the merits of the case. He was directed to also argue the appeals on the merits of the case, however, he refused for the same, in view of the aforesaid contention. 4. Ld. Counsel for the Appellant K. Murugesan argued that he is neither charge-sheeted in predicate offence, nor he is arrayed as an accused in prosecution complaint under PMLA. No role is assigned to him by Respondent ED. He pointed out that he purchased one property vide sale deed dated 15.12.2006 for sum of Rs. 3,23,700/- measuring 1.98 Hectares along with C. Panner Mohammad. He pointed out that by ignoring the joint ownership his share is also attached by the Respondent ED, without appreciating the fact that he has not received any proceeds of crime and the 50% of the payment was made by him from his licit source of income. Prayer is accordingly made to set aside the attachment qua the share of his property. 5. Ld. counsel for the appellant P. Senthil Kumar argued that the appellant is merely a dormant partner in M/s M.R. Granites and that he has never carried out any day-to-day activities of administration of the business on be....
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....abeek Raja xv. Shri P. Senthil Kumar, partner xvi. Shri P. Rajasekaran, partner" He pointed out that the said persons/appellants have filed ITRs in order to project the part of proceeds of crime derived out of the commission of the scheduled offences as untainted properties, and thereby, laundering the proceeds of crime which is apparent for the following reasons - a) All of them have chosen to show only a part of immovable properties held in their respective names during the relevant periods and have not shown/declared all the immovable properties in their respective names. b) The value of the immovable properties as declared in the respective Income Tax Returns, by the above individuals is different from that of the registered documented value. c) Shri C. Panneer Mohamed, Proprietor of M/s Madurai Granite Exports, Shri C. Rabeek Raja, Proprietor of M/s M.R. Granites, Smt. R. Kasaniya and Shri C. Nagoor Hanifa had not filed any Income Tax Returns since 2013-2014 and Shri C. Azad Mohamed, Shri C. Rajkapoor and Shri C. Anwar Ali had not filed their Income Tax Returns since 2012-2013. d) The Gross income declared by all the abo....
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....r Mohamed, Shri C. Rabeek Raja, Smt. R. Kasaniya, Shri C. Nagoor Hanifa, Shri C. Azad Mohamed, Shri C. Rajkapoor, Shri C. Anwar Ali, Shri K. Heeralal and Smt. Sheela Begaum @ H. Asma Begam have all purchased and sold large number of immovable properties, apart from possessing huge numbers of immovable properties in their respective names and have earned income out of such transactions, during the period of crime committed in the said FIRs/Final Reports filed by the Madurai District Police of Tamil Nadu. Shri K. Heeralal and his wife Smt. Sheela Begaum @ H. Asma Begam had neither produced any Income Tax Returns filed by them, nor evidenced their legal sources of income to acquire such huge immovable properties in their respective names. Shri P. Rajasekaran and Shri P. Senthilkumar, never produced any records or documents as required in the summons issued to them under the provisions of Section 50(2) & (3) of PMLA, 2002. Accordingly, Ld. counsel for the respondent ED stressed that from the investigation as set out above, it is clearly evident that the persons accused in the FIRs/Charge Sheets, viz., Shri C. Panneer Mohamed, Proprietor of M/s Madurai Granite Exports, Shri C. ....
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....ancelled and another power attorney was issued to Shri P. Bilal Mohamed. In order to keep the transaction under control Shri C. Paneer Mohamed made a sale agreement with Shri P. Bilal Mohamed in the name of his (Panneer) wife, Smt. P. Phyrose Begam, which was subsequently cancelled only after the sale of the property to Shri S. Siddique Raja. The sale consideration shown on the Document was only Rs. 10,50,000/-, whereas the Guideline value is Rs. 1,02,00,000/- and the Fair Market Value would be much higher. All the transactions were made only in cash, and hence, the quantum of cash transacted among themselves is not known. Shri C. Panneer Mohamed in conspiracy with Smt. S. Manimegalai and others had transferred the landed property of 35 Cents at Melur into the name of Shri S. Siddique Raja in order to escape the clutches of law, which is nothing but an act of laundering the proceeds of crime derived by him out of the commission of the said scheduled offences. Therefore, it stands to reason that the subject landed property is nothing but property involved in Money laundering. Ld. counsel for the respondent ED submitted that it is evident that the persons as named above, used the ....
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....fresh order in OC No. 852/2017? ii) Whether the attachment order passed by the ED and the confirmation order passed by the Adjudicating Authority are without any reason, seeing the fact that the appellants have purchased most of the properties out of income earned and declared in ITRs? iii) Whether properties purchased prior to the enactment and coming into force of PMLA Act i.e. 01.07.2005 are not covered under PMLA? iv) Whether the property purchased prior to the quarrying permit dated 20.04.2006 are not covered under PMLA, being untainted properties? v) Whether the impugned order is liable to be set-aside, qua the properties at Serial no 1 to 55 under Schedule III of complaint, as the alleged predicate offences under Section 420, 467, 471, 120-B of IPC and Section 3 & 4 of Explosive Substances Act were inserted in the list Schedule Offences under PMLA, w.e.f. 01.06.2009? vi) Whether the impugned order needs to be set-aside on the ground that the illegal mining is not a Scheduled Offence? vii) Whether the appellants are not directly or indirectly attempted to have indulged in or knowingly not assisted or actually not involved ....
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.... ED is not required to conduct any investigation for the predicate offence. However, ED cannot arrive at different conclusion qua the predicate offence, while conducting investigation for PMLA, as it is not a supervisory investigating agency qua the predicate offence. The above six points are sufficient to form 'Reason to Believe' for passing Provisional Attachment Order for attaching the properties by ED and filing the Original Complaint before the Adjudicating Authority for confirmation of the PAO. The Adjudicating Authority after perusal of OC and relied upon documents, if satisfied with the same can issue SCN to the defendants to lead their defence by filing reply. In the present case, many FIRs were registered against the accused persons, including the appellants for carrying out illegal excavation of granite stones from the unleased State Government land or the land reserved for common use of the community, which was adjoining to their lease lands. Final Reports are already filed by the police in the said FIRs, wherein they were arrayed as accused persons. The reason to believe for passing the PAO is recorded by the Deputy Director, ED, from para 14 to 18 of the Provisiona....
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....and realised the sale proceeds. The Quarry lands available in the names of Shri C. Panneer Mohamed, Shri C. Rajkapoor, Shri P. Rajasekaran and Shri C. Anwar Ali, which were used to generate and launder the crime proceeds and as such the same are properties involved in money laundering, and are rightly confirmed for attachment and further adjudication and confiscation in terms of Section 8 of PMLA. Further, the experts from the Department of Geology and Mining, based on the scientific and systematic study using "Total Station Survey" had furnished a report named as "Evaluation Report" for each quarry they have inspected and verified. It is revealed in the investigation that the pecuniary benefits obtained illegally by the aforesaid persons were re- invested in acquisition of the immovable properties in their own names and in the names of their family members as well as in mining lease licenses in the name of the proprietary concerns owned by them and thereby resulting in additional accruals. Moreover, as pointed out by the Ld. counsel for ED, after the investigation was initiated under the provisions of PMLA, 2002, Shri C. Panneer Mohamed had decided to dispose of the property witho....
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....we will decide issue no. iii) & iv) being inter-connected. The contention of the appellants that properties purchased by the appellants prior to the enactment and coming into force of PMLA are not covered within the definition of proceeds of crime, as the PMLA cannot be applied retrospectively, is devoid of any merits. To analyze this issue, it would be gainful to refer to the definition of "proceeds of crime" given under Section 2(1) (u) of the Act of 2002 and is quoted thus- 2. Definitions -(1) In this Act, unless the context otherwise requires, -xx xx xx xx xx xx xx xx xx xx xx (u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property' [or where such property is taken or held outside the country, then the property equivalent in value held within the country] [or abroad]; [Explanation.- For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a....
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....to the commission of the predicate offense would stand saved." Further, this Tribunal has also given an elaborate judgment on the issue in the case of Sadananda Nayak v. The Deputy Director, Directorate of Enforcement, Bhubaneswar in FPA-PMLA-5612/BBS/ 2023 on 14.10.2024, where all the judgments on the issue have been considered and thereby this issue was decided in favour of ED. Further, in view of the para 68 of the judgment of Hon'ble Supreme Court of India in the case of Vijay Madanlal Chaudhary v. Union of India, 2022 SCC OnLine SC 929, wherein, it is held that- "68. It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of "proceeds of crime" is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The d....
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....he time of commission of scheduled offences would not be relevant in the context of the prosecution under the PML Act. What would be relevant in the context of prosecution is the time of commission of the act of money laundering. The question would be, whether a person involved in money laundering as provided under Section 3 of the PML Act has indulged in the said act or not has to be decided by the competent authority. What is the date of laundering of money will have to be decided on facts of each case and there cannot be any prescribed straight jacket formula. This is an important fact which the authority will have to examine and it is a mixed question of law and fact. 78. A person acquiring assets through illegal means who comes before the society and claims that said money was acquired by proper means, then he would be guilty of the offence of money laundering. A person might have committed an offence long back and the proceeds of it is being placed, layered or sought to be integrated to the main stream of economy, then also, he is said to have committed the offence of money laundering. Incorporation of certain offences in the Schedule is to bring it within the net of....
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.... would be an offence of money-laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act -- for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money-laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of cr....
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....aside of the order under Section 5(1) of PMLA on that ground does not hold good in the present case, because the mandate of time period for passing the PAO has not been provided under Section 5(1), rather the time period is provided for confirmation of the PAO. Hence, this is no ground for setting aside the impugned order. Hence, issue no. 8 is accordingly hereby decided against the appellants and in favour of respondent ED. 13. Now, coming to issue no. 9, the appellant K. Murugesan jointly owned one property with appellant/accused C. Panneer Mohmad vide Sale Deed dated 15.12.2006. The fact that whether Sh. K. Murugesan in fact purchased the said property out of investment from his own pocket or whole property was purchased by Sh. Paneer Mohammad cannot be ascertained by this Appellate Tribunal as appellant has not filed his saving bank statements to show that he was having sufficient savings to purchase the property. Moreover, ED has contended that the actual value of the property was much more than the value recorded in the Sale Deed and even the Circle Rate of the property was much higher than the sale consideration mentioned therein. Therefore, this issue needs to be decided....