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2017 (8) TMI 1011 - AT - Money LaunderingProvisional attachment of property under PMLA - eligible connections - Held that - The appellant did not have any nexus with the accused Saradha Group of Companies, that they did not know about the criminality attached to the subject payments received in terms of the co-sponsorship agreement between the parties and that the appellant is a bona fide receiver of the payments in good faith and for valuable consideration provided. It is accordingly held that the subject property in the hands of the appellant i.e amount of ₹ 32,11,797/- lying in the appellants Bank Account as on 25.09.2014, which was attached in this case and confirmed under the impugned order is not the proceeds of crime and is therefore, not liable to provisions of attachment and confirmation under PMLA. Consequently, the appeal is allowed and provisional attachment order dated 29.10.2014 to the extent of provisional attachment of subject property and the impugned order dated 03.03.2015 to the extent of confirming the attachment of the said amount are set aside with consequential relief to the appellant.
Issues Involved:
1. Legality of the Provisional Attachment Order (PAO) dated 29.10.2014. 2. Whether the amount of ?32,11,797/- in the appellant's bank account constitutes "proceeds of crime" under the Prevention of Money Laundering Act, 2002 (PMLA). 3. The validity of the co-sponsorship agreement between the appellant and M/s Saradha Agro Development Ltd (SADL). 4. The appellant's knowledge and involvement in the alleged money laundering activities of the Saradha Group. 5. The applicability of judgments cited by the appellant in support of their case. Detailed Analysis: 1. Legality of the Provisional Attachment Order (PAO) dated 29.10.2014: The appellant, United Mohun Bagan Football Team Pvt. Ltd., challenged the PAO dated 29.10.2014, which provisionally attached ?32,11,797/- in their bank account. The attachment was confirmed by the Adjudicating Authority based on the involvement of the Saradha Group in mobilizing money from the public under false promises and failing to return it, thereby committing offenses under Section 402 of IPC, a scheduled offense under PMLA. 2. Whether the amount of ?32,11,797/- in the appellant's bank account constitutes "proceeds of crime" under PMLA: The appellant argued that the amount in question was not proceeds of crime as defined under PMLA. They contended that the funds received from SADL were used for legitimate business purposes, such as paying football players, coaches, and administrative expenses. The appellant maintained that all transactions were transparent and duly disclosed to relevant authorities, including the Income Tax Department. 3. The validity of the co-sponsorship agreement between the appellant and M/s Saradha Agro Development Ltd (SADL): The agreement dated 20.09.2010 between the appellant and SADL stipulated a payment of ?2 Crore per football season for three seasons. However, only ?1,94,50,000/- was paid by SADL. The appellant terminated the agreement beyond the 2010-11 season due to financial stringency on SADL's part. The respondent questioned the authenticity of this agreement and the termination letter dated 02.06.2010, arguing that the letter's date preceded the agreement date, which the appellant claimed was a typographical error. 4. The appellant's knowledge and involvement in the alleged money laundering activities of the Saradha Group: The appellant contended that they had no knowledge of the illegal activities of the Saradha Group at the time of entering into the sponsorship agreement. They argued that they could not be held responsible for the source of funds provided by SADL. The respondent, however, pointed out the involvement of a director of the appellant company with entities related to the Saradha Group, suggesting a possible nexus. 5. The applicability of judgments cited by the appellant in support of their case: The appellant relied on several judgments, including the Hon’ble Madras High Court in M. Saraswathy & Anr. Vs. The Registrar, Adjudicating Authority and Anr., and the Supreme Court's judgment in Koppula Venkat Rao vs. State of A.P., to argue that the conditions for provisional attachment under Section 5(1) of PMLA were not met. They also cited the Andhra Pradesh High Court's judgment in B. Rama Raju vs. Union of India, which clarified that bona fide purchasers/transferees of property without knowledge of criminality cannot be considered in possession of proceeds of crime. Conclusion: The Tribunal concluded that the appellant did not have any direct or indirect involvement in the money laundering activities of the Saradha Group. The funds received from SADL were used for legitimate business purposes, and there was no evidence to suggest that the appellant was aware of the illegal nature of the funds. The Tribunal held that the amount of ?32,11,797/- in the appellant's bank account did not constitute proceeds of crime and was not liable for attachment under PMLA. Consequently, the appeal was allowed, and the provisional attachment order dated 29.10.2014 and the impugned order dated 03.03.2015 were set aside, with consequential relief to the appellant.
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