2019 (8) TMI 11 - AT - Money Laundering

Money Laundering - Attachment of immovable properties - proceeds of Crime - remuneration paid to appellants as a director of M/s Bharathi Cement Corporation Private Limited, in the year 2009 after the commissioning of the plant - validity of remuneration paid. HELD THAT - There is no evidence on record that the sale consideration paid for the purchase of the aforesaid Immovable Properties was obtained from illegal sources - There are no findings against the majority shareholder of M/s Bharathi Cement Corporation Private Limited concerning any apprehended involvement in any of the alleged illegal activities either in the present proceedings or in the proceedings of the CBI . The bona fides of the purchase of shares by PARFICIM, France, has not been questioned or challenged either by the CBI in the charge sheet filed by them or in the PAO itself, and further that there is not even a single averment on the source of the money used by the Appellant to purchase the shares of M/s Bharathi Cement Corporation Private Limited - In absence of any question on the source of funds used for purchase of the shares by the Appellant and in absence of any question on the bona fides of the purchase made by PARFICIM, France to whom the Appellant sold his shares, the money earned by the Appellant cannot be classified as proceeds of crime . No case of continuation of attachment of properties of the appellant is made out - As far as allegations of CBI are concerned, this tribunal does not wish to express any opinion on merit. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Legality of the attachment of immovable properties.
2. Allegations against the appellant regarding proceeds of crime.
3. Appellant's qualifications and remuneration.
4. Legality of mining lease granted to M/s Bharathi Cement Corporation Private Limited.
5. Compliance with the Prevention of Money Laundering Act, 2002 (PMLA) amendments.
6. Timeliness and validity of the prosecution complaint.

Issue-wise Detailed Analysis:

1. Legality of the attachment of immovable properties:
The impugned order dated November 23, 2016, confirmed the attachment of properties owned by the appellant, including a 27-acre property in Kadapa District and a residential unit in Hyderabad. The attachment was based on the purported proceeds of crime amounting to INR 1,45,45,799.

2. Allegations against the appellant regarding proceeds of crime:
The appellant was not initially accused in the FIR or ECIR but was later included in the charge-sheet. The main allegations were that the appellant, a director in M/s Bharathi Cement Corporation Private Limited, received remuneration linked to an allegedly illegal mining lease granted by conspiring with Mr. Y.S. Jagan Mohan Reddy and others. The respondent argued that the remuneration paid to the appellant was proceeds of crime.

3. Appellant's qualifications and remuneration:
The appellant had over 20 years of experience in the industry, and the remuneration paid was commensurate with his skills and experience. The Adjudicating Authority's findings that the appellant did not possess the necessary qualifications were deemed erroneous. The remuneration was in line with other directors' pay and was legally sanctioned by company resolutions.

4. Legality of mining lease granted to M/s Bharathi Cement Corporation Private Limited:
The mining lease granted on March 29, 2006, was alleged to be illegal. However, a Commission of Inquiry headed by a retired High Court judge concluded that the lease was granted following established norms and procedures. Despite changes in the political dispensation, no attempts were made to cancel the lease or challenge the inquiry report.

5. Compliance with the Prevention of Money Laundering Act, 2002 (PMLA) amendments:
The appellant argued that the attachment of properties exceeded the ninety-day period contemplated by the amended Section 8(3) of the PMLA, which came into effect on April 19, 2018. The prosecution complaint was filed after substantial delay, and the re-filing without a condonation of delay application should be considered a fresh filing.

6. Timeliness and validity of the prosecution complaint:
The prosecution complaint was filed on July 16, 2018, and re-filed on December 14, 2018, after being returned for irregularities. The appellant argued that the delay in re-filing exceeded the statutory limit, making the attachment invalid. The tribunal noted that the prosecution complaint must be filed in time, and objections should be removed within thirty days after the ninety-day period.

Conclusion:
The tribunal found no case for the continuation of the attachment of the appellant's properties. The properties were not acquired from the proceeds of crime and were ordered to be released. The appeal was allowed, and no costs were imposed. The tribunal did not express an opinion on the CBI allegations, leaving it for the Special Court to consider.

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