2019 (5) TMI 816 - AT - Money Laundering

Offence under PMLA - attachment of Appellant's residential property - . Procedure prescribed under Section 5 of the PMLA was not followed by the Adjudicating Authority - HELD THAT - Copy of reason to believe were not produced before this tribunal nor any copy was served. The same were not re-produced in the notice issued under section 8(1) of the Act nor those are either mentioned in the counter-affidavit or annexed therewith. Counsel of respondent submits that there is no requirement to record the reasons to believe separately. The same are to be mentioned in the provisional attachment order only. PMLA is a preventive measure and not a punitive measure. In the present case inspite of admitted fact that the amount in far excess of the alleged POC is secured with the CBI Court, the appellant cannot be compelled to again secure the amount. The attachment of appellant premises was not called for. The immovable worth more than 50 crores could not have been attached against the alleged proceed of crime.

Issues Involved:
1. Legality of the attachment of the appellant's residential property.
2. Allegations of financial loss to AAI and the subsequent FIR/ECIR.
3. Appellant's involvement and charges in the alleged crime.
4. Arbitration findings and their impact on the case.
5. Appellant's burden of proof under the PML Act.
6. Discrimination and non-application of mind by the respondent.
7. Compliance with procedural requirements under the PML Act.

Detailed Analysis:

1. Legality of the attachment of the appellant's residential property:
The appellant challenged the order dated 13.08.2018 by the Adjudicating Authority confirming the Provisional Attachment Order (PAO) dated 28.03.2018, attaching the appellant's residential property at 144, Golf Links, New Delhi. The property was attached to secure the alleged Proceeds of Crime (POC) amounting to ?93,63,712/-. The tribunal found that attaching a property worth ?50 crores for a POC of ?93,63,712/- was disproportionate and amounted to abuse of process and harassment.

2. Allegations of financial loss to AAI and the subsequent FIR/ECIR:
The work contract for the Varanasi Airport expansion was awarded to M/s. Brite-Aricon (Consortium). An FIR was registered by the CBI, alleging a loss of ?25,74,865/- to AAI due to fake bills and lesser quantity of materials used. This figure was later changed to ?93,63,712.60/-. Based on this FIR, the Enforcement Directorate registered an ECIR for suspected POC.

3. Appellant's involvement and charges in the alleged crime:
The FIR/ECIR did not name the appellant as an accused. The CBI Court discharged the appellant from most charges, retaining only the charge under Section 420 IPC. The CBI Court framed charges against six other accused for forgery, cheating, criminal conspiracy, and offenses under the Prevention of Corruption Act.

4. Arbitration findings and their impact on the case:
Disputes from the work contract were referred to arbitration. The Sole Arbitrator found that the work was completed satisfactorily, with no significant defects, and awarded compensation to the contractor. The Arbitrator's findings and the Performance Certificate issued by AAI supported the appellant's case that there was no loss to AAI.

5. Appellant's burden of proof under the PML Act:
The appellant argued that payments were made based on measurements, not vouchers, and provided evidence that the alleged POC was baseless. The tribunal agreed, noting the absence of contrary evidence from the respondent and the appellant's compliance with the burden of proof under Section 24 of the PML Act.

6. Discrimination and non-application of mind by the respondent:
The tribunal noted that the appellant was singled out for property attachment despite being discharged from most charges, while the other accused were not similarly treated. The tribunal criticized the respondent for a lack of proper investigation and arbitrary action in attaching the appellant's property.

7. Compliance with procedural requirements under the PML Act:
The tribunal found that the Adjudicating Authority did not follow the prescribed procedure under Section 5 of the PML Act, as no reasons to believe were produced or served. The tribunal emphasized that PMLA is preventive, not punitive, and the appellant should not be compelled to secure the same amount of alleged POC with multiple agencies.

Conclusion:
The tribunal quashed the impugned order dated 13.08.2018 and the PAO dated 28.03.2018, lifting the attachment of the appellant's property. The tribunal clarified that this order would not affect the pending complaints before the Special Court. No costs were awarded.

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