2018 (12) TMI 1303 - AT - Money Laundering

Offence under PMLA - attachment orders - reason to believe - Held that - The predicate FIR and Charge Sheet, from which the subject PAO arises, were filed in May 2011 and August 2012, respectively. The ECIR was registered in May 2012. The investigation carried by the Respondent was also way back in the year 2015. The respondent has passed the PAO in the year 2017. There is no justification whatsoever on behalf of ED for such a long delay once even the alleged POC at the part the total proceed of crime can be attributable to the Appellant is ₹ 3.97 Lakhs. The Appellant is a steel trader with good financial standing in the market and society. The Appellant is ready to secure an amount of ₹ 3.97 Lakhs, but the respondent is not agreeable. The entire computation is illegal manner because as per the Respondent s own case, the alleged value of the material purportedly obtained by fraudulent means is ₹ 18,97,090/- which has been rounded to ₹ 19 lakhs by the Respondent. However, while effecting the attachment, the attachment was made for an amount of ₹ 21,20,000/- as per the value ascribed by the Complainant himself. The Respondent at the best could have directed the Appellant to secure ₹ 3.97 lakhs for the purpose of trial. The Respondent s pursuit to only attach immovable property, admittedly unconnected to the alleged offence, demonstrates the mala fide intention behind the attachment, which is to harass the Appellant. The Complainant in its own showing has denoted the market value of the property as more than 60 lakhs. The appeal is allowed, the impugned order against the appellant is set-aside so as the PAO. However, without prejudice, the appellant is directed to secure the alleged amount being attributed as POC in the hands of Appellant to the tune of ₹ 3.97 lakhs to be deposited in the form of FDR in favour of the respondent for the period of five years so that trial is over by that time, otherwise the appellant shall renew the FDR for further period of five years. Once the said amount is deposited, the attachment shall be lifted forthwith.

Summary

Issues involved:
1. Appeal under Section 26 of Prevention of Money Laundering Act, 2002 against the order of Adjudicating Authority.
2. Provisional attachment of properties under the Prevention of Money Laundering Act.
3. Allegation of money laundering and fraud against the Appellant.
4. Legal validity of the provisional attachment order.
5. Compliance with the provisions of the Prevention of Money Laundering Act.
6. Delay in passing the provisional attachment order.
7. Calculation of proceeds of crime and attachment value.
8. Justifiability of attaching immovable property unconnected to the alleged offence.

Detailed Analysis:

1. The Appellant filed an appeal against the Adjudicating Authority's order under Section 26 of the Prevention of Money Laundering Act, 2002, challenging the Provisional Attachment Order issued by the Respondent in relation to various properties, including a specific land parcel.

2. The Respondent passed the Provisional Attachment Order concerning the Appellant's properties, alleging that the attached properties were equivalent to the proceeds of crime, specifically related to a steel transaction involving alleged fraud.

3. The Appellant, a trader in Iron and Steel, faced accusations of being involved in a fraudulent steel transaction, leading to the declaration of a certain amount as proceeds of crime by the Respondent.

4. The legality of the provisional attachment order was questioned based on the lack of proper reasoning provided by the Respondent, failing to meet the requirements of the Act.

5. The judgment highlighted the importance of compliance with the provisions of the Prevention of Money Laundering Act, emphasizing the necessity of stating reasons to believe in writing for attaching proceeds of crime.

6. Concerns were raised regarding the delay in passing the provisional attachment order, especially when the alleged proceeds of crime attributable to the Appellant were relatively low, indicating unjustified delays in the process.

7. The calculation of the proceeds of crime and the value of the attached property were scrutinized, pointing out discrepancies and lack of proper assessment in determining the attachment value.

8. The judgment questioned the justifiability of attaching immovable property not directly linked to the alleged offence, suggesting mala fide intentions behind such actions and emphasizing the need for a fair and proportionate approach.

In conclusion, the appeal was allowed, setting aside the impugned order and the provisional attachment order. However, the Appellant was directed to secure the alleged amount attributed as proceeds of crime and deposit it in favor of the respondent to ensure compliance with the Act, with the provision for lifting the attachment upon deposit.