2015 (6) TMI 1150 - AT - Money Laundering

Offence under PMLA - provisional attachment orders - Held that - The scheduled offences have been committed and the appellant has connived with others in opening various loans and bank accounts using forged papers and documents and in the process the bank has been defrauded of considerable amount. It was also observed that Shishir P. Dharkar is apparently in control of affairs of the Bank. He has issued certain instructions to the CEO, the appellant, in connection with certain matters and it is not reasonable to believe that he was not in control of things in Pen Bank. He, Shishir P. Dharkar was either Director or Chairman during the period and was in control of the affairs of the Bank. It was also not believed that the acts done by the appellant were not in the knowledge of other and without their approval. The charge sheet has already been filed in the court of law against various persons including the Appellant. In these circumstances the Adjudicating Authority has confirmed Provisional Attachment of the properties. From the tenor of the reply filed by the appellant and the stand taken before the Adjudicating Authority, it appears that the appellant is not claiming any right in the properties which have been attached. The appellant has admitted that none of the properties of the said appellant has been attached nor he has any interest in any of the properties which have been provisionally attached and in respect of which the attachment order has been confirmed. On the allegation and the pleas of the appellant that he acted bona fide and in the interest of the bank, the alleged offences of opening the bogus accounts and purchasing the properties from the money of the bank in the name of one of the customers, appellant cannot be absolved of by this Tribunal of his acts. The prima facie observations made by the Adjudicating Authority cannot be challenged successfully by the appellant under Section 26 of the PMLA, 2002. The prima facie observations made by the Adjudicating Authority will not impact the criminal trial in the criminal cases. In the circumstances, even prima facie no inference can be drawn in favour of the appellant on the allegations made by him. In any case in the present proceedings, this Tribunal is concerned with whether the attachment of the properties confirmed by the Adjudicating Authority is entitled to be sustained or not. Merely on the allegations of the appellant that he cannot be held liable for the illegalities committed, the properties which are the proceeds of crime cannot be released from attachment on this ground raised by the appellant. The thrust of Section 5 is to attach every property involved in money laundering irrespective of whether it is in possession of the person charged of having committed a scheduled offence or any other person - provided however, it must be shown to have proceeds of crime and further, the proceeds of crime are likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under the Act. The action of attachment is not in relation to a person as such but essentially to freeze the proceeds of the crime. Any observation made by the Adjudicating Authority in the order impugned by the appellant before this Tribunal will not entitle the appellant to have the order of confirmation set aside. Prima facie, from the material as detailed even hereinbefore, it cannot be said that there is no evidence against the appellant. In the present facts and circumstances the appellant is not entitled for findings from this Tribunal on the pleas whether the appellant is guilty of the offence alleged against him or not and whether he opened the bogus accounts and due money from them to purchase the land in the interest of the business of the bank . The properties which have been attached are not in the name of the appellant. The appellant himself has claimed that the properties attached are the properties of the bank though in the name of other persons and those persons are ready to transfer those properties in the name of the bank. Whether this will absolve the appellant of his acts or not is not to be decided by this Tribunal while considering whether the confirmation order of the properties is sustainable in the facts and circumstances and in law. The Appellant in the facts and circumstances is not entitled to seek quashing of order of confirmation, impugned by the appellant before this Tribunal on any of the grounds as raised by him. No illegality or infirmity in the order challenged before us has been pointed out or canvassed successfully before this Tribunal. There are no grounds to set aside the order of confirmation of the properties which were acquired from the funds of the bank by opening the bogus bank accounts and drawing the money from the same and purchasing the properties in the name of a customer and not in the name of the bank. The properties involved are the proceeds of crime as contemplated under the Act.

Summary

Issues Involved:
1. Legitimacy of Provisional Attachment Order under PMLA.
2. Allegations of Money Laundering and Fraudulent Activities.
3. Appellant's Role and Responsibilities as CEO.
4. Admissibility and Impact of Statements and Evidence.
5. Validity of Property Transactions and Attachments.

Detailed Analysis:

1. Legitimacy of Provisional Attachment Order under PMLA:
The appellant challenged the order dated 9-10-2014 confirming the provisional attachment order of the respondent under the Prevention of Money Laundering Act, 2002 (PMLA). The Adjudicating Authority confirmed the attachment of properties valued at Rs. 21,16,00,171/- based on an authenticated money trail provided by the bank. The Tribunal upheld the provisional attachment, emphasizing the necessity to protect and preserve the proceeds of crime until final confiscation under Section 8(3) of PMLA.

2. Allegations of Money Laundering and Fraudulent Activities:
The case stemmed from an FIR alleging cheating and fraud committed on Pen Co-op Urban Bank Ltd. by its officials and auditors. The allegations included manipulation of books, creation of bogus loan accounts, and diversion of funds to acquire immovable properties. The investigations revealed that the officials misused KYC documents to open fake loan accounts and siphoned off funds for personal gain. The Tribunal noted that the proceeds of crime were systematically diverted, layered, and integrated to acquire properties, thereby laundering the proceeds of crime.

3. Appellant's Role and Responsibilities as CEO:
The appellant, as CEO, was responsible for supervising banking activities and was involved in the fraudulent transactions. His statements admitted the diversion of funds and opening of bogus accounts. The Tribunal observed that the appellant's actions, even if claimed to be in good faith, were not in accordance with the law and contributed to the fraudulent activities. His plea that he acted in the bank's interest was deemed an attempt to dilute the gravity of the offence.

4. Admissibility and Impact of Statements and Evidence:
The appellant's statements recorded under Section 50 of PMLA and other evidence were scrutinized. The Tribunal found discrepancies between his statements before PMLA officers and police authorities. The Adjudicating Authority's observations were deemed interlocutory and not binding in criminal trials. The Tribunal emphasized that the criminal courts would independently assess the evidence without being influenced by the PMLA proceedings.

5. Validity of Property Transactions and Attachments:
The properties acquired using diverted bank funds were provisionally attached. The appellant admitted that the properties were purchased in the name of a customer but belonged to the bank. The Tribunal upheld the attachment, stating that the properties were proceeds of crime. The appellant's claim that the properties were intended for the bank's benefit did not absolve him of liability for the fraudulent transactions.

Conclusion:
The Tribunal dismissed the appeal, concluding that the appellant was not entitled to quashing the order of confirmation of attachment. The properties involved were proceeds of crime, and the appellant's actions contributed to the fraudulent activities. The Tribunal emphasized the need to preserve the attached properties pending final adjudication.