2015 (3) TMI 1437 - AT - Money Laundering

Provisional attachment order - Money Laundering - scheduled offences - untainted source - proceeds of crime - Reasons to believe - burden of proving that property was untainted was on the Appellants - HELD THAT - A person charged of committing a scheduled offence and having proceeds of crime is liable for attachment of his properties acquired from proceeds of crime and another person who is not charged of committing a scheduled offense but having the proceeds of crime is also liable for attachment of properties acquired from the proceeds of crime. The Appellant Jeevan Kumar belongs to both the categories. He was charged with scheduled offence and to have acquired from the proceeds of crime generated by him and also having the proceeds of crime of his brother which have been laundered by his brother Amit Kumar through the Appellant Jeevan Kumar. On his acquittal from the scheduled crime though it cannot be held that he generated proceeds of crime by committing schedule offence himself but in the peculiar facts and circumstances Jeevan Kumar who had no source of his own income earning or assets and who admitted in the statement recorded to have co-operated with his brother Amit Kumar who was involved in scheduled crime and his brother Amit Kumar had also admitted in the statement that Jeevan Kumar assisted him will be liable for attachment of properties acquired with the proceeds of crime generated by Amit Kumar who has been convicted in the scheduled offence. The Statements under section 50 of the PMLA given by Amit Kumar brother of the Appellant and Appellant Jeevan Kumar were not retracted by them. Jeevan Kumar admitted that he had no source of income except from the business of kidney transplant which was carried on by his brother. Though the criminal Court has acquitted the Appellant and its consequence will be only that he did not carry out the kidney transplant himself and did not earn on his own any amount; but he had also given the statement that he had no source of income and he cooperated with his brother Amit Kumar who is accused of scheduled offences - No relevant documents showing sufficient income from the export business of the wife has also been produced by the Appellant Jeevan Kumar. In these facts and circumstances it is apparent that the proceeds of crime came from his brother Amit Kumar and he allegedly prima facie laundered the proceeds of crime generated by his brother Amit Kumar. This Tribunal need not decide whether the amendment to the Act notified on 15.2.2013 are retrospective or not because under the unamended Act also the properties of all the appellants are liable to be attached and are not liable to be released on acquittal of the Jeevan Kumar as detailed hereinbefore. Assuming that the provision of amended Act carried out in the PMLA on 15.2.2013 are retrospective then in view of amended section 8(5) of PMLA mere acquittal of Shri Jeevan Kumar in the scheduled offence is not sufficient for releasing the properties and there should be acquittal in the case filed against the said appellants under section 3 4 of the PMLA also. Appeal dismissed.

Summary

Issues Involved:
1. Legality of the Provisional Attachment Order.
2. Applicability of the Prevention of Money Laundering Act (PMLA) to properties acquired before its enactment.
3. Validity of the attachment of properties claimed to be acquired from proceeds of crime.
4. Impact of the acquittal of the accused on the attachment of properties.
5. Retrospective application of the 2013 amendments to the PMLA.

Summary:

1. Legality of the Provisional Attachment Order:
The Tribunal examined the provisional attachment order No. 6/2010 dated 9th September 2010, which attached several properties under ECIR/07/DZ/2008. The properties were alleged to be proceeds of crime derived from illegal kidney transplants conducted by the appellant and his associates.

2. Applicability of PMLA to Properties Acquired Before Its Enactment:
The appellant argued that the property at EC-II, C-102 Essel Tower Complex, Gurgaon, was purchased in 2003, prior to the enactment of PMLA on 01.07.2005. The Tribunal held that the sale deed executed on 30.03.2007, after PMLA came into effect, was the material date for determining the applicability of PMLA. Payments made after 01.07.2005 were considered proceeds of crime.

3. Validity of the Attachment of Properties Claimed to be Acquired from Proceeds of Crime:
The Tribunal assessed various properties, including the residential premises at EC-II, C-102 Essel Tower Complex, Gurgaon, and the industrial plot at Greater Noida. It was concluded that the properties were acquired using proceeds of crime, as the appellant had no legitimate source of income. The Tribunal also noted that the investment in the property at E-86, South Extension, New Delhi, was linked to proceeds of crime, making the subsequent investment in the property at B-153, East of Kailash, New Delhi, tainted.

4. Impact of the Acquittal of the Accused on the Attachment of Properties:
The appellant contended that the acquittal of Jeevan Kumar in the scheduled offense should result in the release of the attached properties. The Tribunal held that the acquittal did not negate the existence of proceeds of crime, especially since Jeevan Kumar admitted to having no legitimate source of income and cooperating with his brother Amit Kumar, who was convicted of scheduled offenses.

5. Retrospective Application of the 2013 Amendments to PMLA:
The Tribunal considered the arguments regarding the retrospective application of the 2013 amendments to PMLA. It held that the amendments were procedural and could be applied retrospectively. The Tribunal emphasized that the attachment of properties was not dependent on the conviction of the accused in the scheduled offense but on the existence of proceeds of crime.

Conclusion:
The Tribunal dismissed the appeals and upheld the provisional attachment order confirmed by the Adjudicating Authority on 4th February 2011. The properties of the appellants were not released from attachment, and the Tribunal emphasized that the attachment was justified based on the existence of proceeds of crime.