2022 (10) TMI 1167 - HC - Money Laundering

Seeking release of attached property - Continuation of attachment of the properties even after closer of C.C. No. 319 of 2010 on which action was initiated under PMLA - HELD THAT - The only ground on which they have filed present writ petition is that the proceedings in C.C. No. 319 of 2010 basing on which the respondent has initiated proceedings which was ended in acquittal by virtue of compromise. Therefore, there are no 'proceeds of crime' and the allegation of respondent that the 1st petitioner has purchased the property derived out of the proceeds of crime is false and baseless. Therefore, the petitioner is entitled for release of the aforesaid property. Both the criminal proceedings and proceedings under the Act are different and distinct. Enforcement Directorate had filed a complaint before the designated court and the same was also taken cognizance by the Designated Court proceedings in S.C. No. 342 of 2018 are pending. If at all, the petitioner is having any grievance, they have to file an appeal under Rule 3-a of the aforesaid rules seeking release of the aforesaid properties. The Hon'ble Apex Court in Jai Shanker v. Directorate of Enforcement 2022 (5) TMI 309 - SUPREME COURT has held that Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law which attracts provisions of Article 20(2) of the Constitution of India or section 300 of the Criminal Procedure Code. If the exoneration in adjudication proceedings is on technical grounds and not on merits, the prosecution may continue and in case of exoneration, however, on merits where the allegation found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and the circumstances cannot be allowed to continue, to the underlying principle being the highest standard of proof in criminal cases. The petitioner herein have to approach Designated Court for release of property by way of an application under Rule 3-a of the Prevention of Money Laundering (registration for confiscated properties rules 2016). It is for the said court to decide the said matter. Therefore, this Court is not inclined to grant any relief by raising the attachment order. Viewed from any angle this writ petition is liable to be dismissed. Petition dismissed.

Summary

Issues:
1. Continuation of property attachment after closure of criminal case under PMLA.
2. Allegations of money laundering and attachment of properties under PMLA.
3. Failure to file appeal challenging attachment orders under PMLA.
4. Distinction between criminal proceedings and proceedings under PMLA.
5. Applicability of legal principles regarding exoneration in adjudication proceedings.

Issue 1: Continuation of property attachment after closure of criminal case under PMLA
The writ petition was filed to challenge the respondent's action of continuing the attachment of properties even after the closure of Criminal Case (C.C.) No. 319 of 2010, initiated under the Prevention of Money Laundering Act (PMLA). The petitioner sought a direction to lift the attachment order following the closure of the criminal case.

Issue 2: Allegations of money laundering and attachment of properties under PMLA
The Enforcement Directorate alleged that the petitioner, accused in a criminal case, had purchased properties using proceeds of crime, leading to attachment under PMLA. The adjudicating authority confirmed the attachment, citing involvement in money laundering. The petitioners failed to challenge the attachment orders through the prescribed appeal process under the PMLA.

Issue 3: Failure to file appeal challenging attachment orders under PMLA
The petitioners did not appeal the attachment orders under the PMLA, which had attained finality. The court emphasized the need to follow the procedures outlined in the Act for releasing attached properties, such as approaching the Special Court under the relevant rules.

Issue 4: Distinction between criminal proceedings and proceedings under PMLA
The judgment highlighted the distinction between criminal proceedings and those under the PMLA, emphasizing that acquittal in the predicate offence did not affect proceedings under the PMLA. The court stressed the need to address grievances regarding property release through the designated court or appellate tribunal as per the Act's provisions.

Issue 5: Applicability of legal principles regarding exoneration in adjudication proceedings
The judgment referenced legal principles from the Hon'ble Apex Court regarding adjudication and criminal proceedings, emphasizing that exoneration in adjudication proceedings on technical grounds did not preclude criminal prosecution. The court noted that the acquittal in the criminal case based on compromise did not amount to exoneration on merits, requiring the petitioners to seek property release through the designated court.

In conclusion, the court dismissed the writ petition, emphasizing the need for the petitioners to follow the prescribed legal procedures for challenging property attachment under the PMLA. The judgment underscored the importance of distinguishing between criminal proceedings and proceedings under the PMLA, and the necessity of adhering to the Act's provisions for property release.