2018 (6) TMI 484 - AT - Money Laundering

Offence under PMLA - Provisional Attachment Order - Order of acquittal - Held that - From the Impugned Order that the reply/documents/materials and evidence filed by the appellant have not been considered nor the statement made by Shri Shankar Kollur Smt. Parvati Shankar Kollur Shri AvinashKollur and Shri Rakesh Kollur which would show the salary income / rental income /agriculture income /tailoring income/ business income/hiring of vehicles /income from civil work/acquisition of movable and immovable property and details of sources for acquisition /loans from bank and others/ salary and retirement benefits of Smt. IravvaMareppa mother of Parvati Kollur. Provisional Attachment Order has not discussed the source of funds available with the accused. It was merely assumed that the accused/appellant had not any savings despite of submitting the material and documents and also from his spouse son Rakesh and Avinash. Adjudicating Authority ought to have complied with all the principles of duly conducting a judicial proceeding where rights of the parties are to be based on the cogent findings based on the evidence led in the case as every proceedings under the PMLA 2002 is a judicial proceeding within the meaning of section 50 of PMLA Act 2002. No appeal has been filed against the acquittal order and quashing of charge sheet ( as informed by the parties). The complaint was decided on merit. The respondent was aware about the said trial. No steps were taken to have the consolidated-trial under schedule offence and prosecution complaint. The prosecution has examined large number of witnesses and documents were marked. The statement of the accused u/s 313 of Cr.P.C. was also recorded. The case of the accused is of total denial. Once the acquittal order is passed against the appellant holding that he was not involved in the Prevention of Corruption Act and he has purchased/ acquired the properties in legal resources the question of money laundering does not arise. Allegations are same and ECIR was registered on the basis of charge sheet. There were only two options left after acquittal either to file the appeal against the judgement and the trial under PMLA ought to have been conducted along with the trial with the case registered under schedule offence. The respondent apparently did not make efforts in this regard. Thus the present appeal is allowed

Summary

Issues Involved:
1. Legality of the Provisional Attachment Order.
2. Consideration of income sources by the Adjudicating Authority.
3. Validity of the Impugned Order based on the acquittal in the Prevention of Corruption Act case.
4. Double Jeopardy and applicability of amended provisions of PMLA.

Detailed Analysis:

Issue 1: Legality of the Provisional Attachment Order
The appeals were filed against the Order dated 26.07.2016 by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA), which confirmed the Provisional Attachment Order dated 24.03.2016. The attachment was based on the FIR No. 20/2009 and subsequent charge sheet filed by the Karnataka Lokayukta for disproportionate assets against the accused. The immovable properties were attached as they were suspected to be proceeds of crime.

Issue 2: Consideration of Income Sources by the Adjudicating Authority
The appellants argued that the Adjudicating Authority failed to consider various legitimate income sources, including rental income, agricultural income, business income, and tailoring income. Detailed submissions were made regarding the sources of funds for the acquisition of properties, including salary savings, loans, and contributions from family members. The appellants provided extensive documentation to substantiate their claims, but these were not adequately considered by the Adjudicating Authority.

Issue 3: Validity of the Impugned Order Based on Acquittal in the Prevention of Corruption Act Case
The Special Judge (Lokayukta) and Principal Sessions Judge, Kalaburagi, acquitted the accused of charges under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988. The court found that the prosecution failed to produce sufficient evidence to prove the charges. The acquittal order noted that the accused's income and assets were satisfactorily explained through legitimate sources, including agricultural income and rental income. Given the acquittal, the basis for the Provisional Attachment Order under PMLA was undermined, as the allegations of disproportionate assets were not proven.

Issue 4: Double Jeopardy and Applicability of Amended Provisions of PMLA
The appellants contended that the amended provisions of Section 8(3)(b) of PMLA, which came into effect on 15 February 2013, should not apply retrospectively to their case, which originated in 2009. They argued that once acquitted in the schedule offence, the attached properties should be released, as the same allegations cannot be tried twice. The Tribunal agreed, noting that the prosecution under PMLA did not present any new allegations or evidence beyond what was already considered in the Prevention of Corruption Act case.

Conclusion:
The Tribunal concluded that the Provisional Attachment Order and the Impugned Order were invalid due to the acquittal of the accused in the Prevention of Corruption Act case. It was determined that the attached properties were acquired through legitimate sources, and no appeal was filed against the acquittal. Consequently, the appeal was allowed, and both the Provisional Attachment Order and the Impugned Order were set aside. The attached properties were ordered to be released to the appellants.