2018 (8) TMI 36 - AT - Money Laundering

Offence under PMLA - Held that - The presumption under section 5(1)(a) cannot be drawn ipso facto that they have in their possession the proceed of crime received as professional charges and on the basis of presumption, their movable and immovable properties can be attached unless link and nexus directly or indirectly towards crime with the accused is established within the meaning of section 2(1)(u) of the Act. In the absence as mentioned above, they are to be treated as innocent persons. If the argument of the respondent is accepted that a mere possession of money paid by the accused as service charges to the professionals without any link and nexus, then the movable and immovable properties of most of the professionals may be attached and after confirmation, the same is vested with the State. The same is not intention and scheme of the Act. Mechanical orders of such nature by the respondent and adjudicating authority cannot be passed blindly. They have to apply their mind and consulting well established law. Section 5 and 2(u) of PML Act, 2002 have to be read together when any order of attachment is passed. Unless link and nexus of proceed of crime is established under section 2(1)(u), the proceedings under PML Act, 2002 can not be initiated. No case is made out on merit. The impugned order against the appellant is totally perverse and against the law. The respondent has not prima facie established that the appellant has any link in the nexus in the crime. The prosecution complaint against the appellant has already been dismissed. The appellant has merely received the consultation fee from the accused party at the time of receiving the said fee. The appellant was not aware that he is receiving the consultation fee which may be part of proceed of crime.

Summary

Issues involved:
1. Appeal under Section 26 of the Prevention of Money Laundering Act, 2002 against the Order dated 22.02.2013 in Original Complaint No. 160/2012.
2. Provisional attachment order under section 5(1) of the PMLA.
3. Criminal offences alleged against Dr. Kewal Krishan Sood and others.
4. Chargesheet filed by CBI against accused persons.
5. Allegations of money laundering through fraudulent practices.
6. Registration of ECIR under PMLA.
7. Statements recorded by investigating authorities.
8. Allegations against the appellant regarding funds received and property purchase.
9. Detailed reply and documents submitted by the appellant.
10. Discharge of the appellant by the Special Judge.
11. Examination of funds and property acquisition by the appellant.
12. Lack of evidence linking the appellant to the alleged crimes.
13. Legal interpretation of PMLA provisions and attachment orders.
14. Conclusion and release of attached properties.

Analysis:
1. The appellant filed an appeal against the Order dated 22.02.2013, challenging the provisional attachment order issued under the PMLA. The appeal raised issues regarding the alleged contravention of PMLA provisions and the attachment of specific properties belonging to the appellant.
2. The criminal offences alleged against Dr. Kewal Krishan Sood and others formed the basis of the investigation, leading to the registration of ECIR under PMLA. The appellant's involvement in assisting Dr. Sood in obtaining a loan and receiving funds was a key focus of the case.
3. Statements recorded by investigating authorities, including bank officials and the appellant, provided insights into the financial transactions and property purchases under scrutiny. The appellant's explanations regarding fund sources and property acquisition were crucial in determining the legality of the transactions.
4. The Special Judge's judgment discharged the appellant due to insufficient evidence linking him to the alleged crimes. The lack of corroborative evidence and material to frame charges under PMLA led to the appellant's discharge from the case.
5. The detailed examination of the funds available in the appellant's bank account and the sources of income used for property purchase played a significant role in disproving the allegations of money laundering. The appellant's submission of relevant documents and lack of rebuttal by the respondent strengthened his case.
6. The legal interpretation of PMLA provisions, particularly regarding the presumption of guilt and the necessity of establishing a direct nexus to the crime, was crucial in determining the validity of the attachment orders and the appellant's involvement.
7. Ultimately, the appellate tribunal found no merit in the case against the appellant, concluding that the impugned order was unjust and lacked a prima facie establishment of the appellant's link to the alleged crimes. The release of the attached properties and the dismissal of the prosecution complaint marked the resolution of the legal dispute.