2015 (12) TMI 1744 - AT - Money Laundering

Provisional attachment - offence under PMLA - Held that - The appellant has failed to show that the advance of ₹ 33 lakhs received by him from Salve Regina Charitable Trust out of proceeds of crime was returned by him to Smt. Regina Seelan and failed to show that the subject property do not confirm to the definition of proceeds of crime in accordance with the provisions of Section 2(u) of the PMLA and therefore the same is not liable to attachment under PMLA. Therefore, for the foregoing reasons, the appeal of the appellant fails and it is therefore, dismissed. Considering the facts and circumstances, the parties are however, left to bear their own costs.

Issues Involved:
1. Legitimacy of the transactions conducted by the Trust.
2. Involvement of the Trust in fraudulent activities.
3. Utilization of funds received by the Trust.
4. Return of advance payment by the appellant.
5. Attachment of the appellant's property under PMLA.

Detailed Analysis:

1. Legitimacy of the Transactions Conducted by the Trust:
The Trust approached ICICI Merchant Services Pvt. Ltd. for setting up a payment gateway to receive payments and donations electronically. Between July 1, 2010, and August 13, 2010, the Trust conducted 995 transactions totaling Rs. 15,68,53,627/-. Complaints were received regarding many of these transactions being fraudulent and unauthorized, leading to an investigation by the Cyber Crime Police.

2. Involvement of the Trust in Fraudulent Activities:
The investigation revealed that the Trust, along with its trustees, indulged in fraudulent transactions using compromised credit card data. The Cyber Crime Police filed a charge sheet against the Trust and its trustees for offenses under the Indian Penal Code and Information Technology Act, 2000, including Section 420 of IPC. The respondent registered an ECIR and initiated investigations under PMLA.

3. Utilization of Funds Received by the Trust:
Smt. Regina Seelan, President Trustee of the Trust, stated that the Trust received Rs. 13,91,00,293/- into its ICICI Bank account between July 1, 2010, and August 13, 2010. Out of this, Rs. 2,36,11,042/- was recovered by ICICI Bank, and the remaining Rs. 11,54,89,251/- was utilized for purchasing properties and other expenses. She disclosed that Rs. 9,04,00,000/- was given as an advance for purchasing/lease of several properties, and the rest was used for Trust expenses.

4. Return of Advance Payment by the Appellant:
The appellant claimed to have entered into an agreement to sell properties to Shri J. Jayaseelan, husband of Smt. Regina Seelan, for Rs. 43,20,000/- and received Rs. 33 lakhs as advance through RTGS and cheques. He contended that the advance amount was returned in cash in September 2010. However, Smt. Regina Seelan later stated that the advance was not returned, corroborated by statements from other trustees and the appellant's inability to provide documentary evidence of the return.

5. Attachment of the Appellant's Property under PMLA:
The property in question was provisionally attached by the respondent, and the attachment was confirmed by the Adjudicating Authority. The appellant argued that the property was acquired before the alleged offense and from legitimate sources. However, the Tribunal found that the appellant failed to prove the return of the advance and the legitimate acquisition of the property. The Tribunal concluded that the property was liable for attachment under PMLA as it was acquired from the proceeds of crime.

Conclusion:
The appeal was dismissed as the appellant failed to show that the advance of Rs. 33 lakhs received from the Trust was returned and that the property was not proceeds of crime. The Tribunal upheld the attachment of the property under PMLA. All pending applications were closed, and parties were left to bear their own costs.

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