2020 (11) TMI 667 - AT - Money Laundering

Money Laundering - proceeds of crime -reasons to believe - It is alleged that the appellant no.1 Mr. Bharat Yadav has acquired properties in his name as well as in the name of his family members from the proceeds of above mentioned crimes including the alleged crime of robbery, dacoity, extortion and offences relating to arms under Arms Act, 1959, since 1988 onwards. It is also alleged that appellant no.1 Mr. Bharat Yadav has acquired aforesaid immovable properties after 01.07.2005 (i.e. after PMLA came into force), from his criminal activities, in his name or in the name of his family members. HELD THAT - The Ld. Adjudicating Authority has not examined whether the satisfaction of the Complainant regarding reasons to believe is in accordance with law - On perusal of the PAO, it is seen that the Deputy Director has only mention the verbatim of Section 5(1)(b) of the PMLA, 2002. The impugned order dated 31.05.2018 is set aside and remanded to the Adjudicating Authority for re-adjudication of the case against the appellants within 180 days from the date of receipt of this order or from the date of the order when either of the parties brings it to the knowledge of this order. The appellants are directed to file appropriate application within thirty (30) days from today raising all the legal issues raised in these appeals, before the Adjudicating Authority, who shall after giving due opportunity to both the parties decides all the legal issues including the issue of reasons to believe - The Adjudicating Authority shall decide all the issues raised in the case, except the issues decided above, in accordance with provisions of sub-section 2 of Section 8 of PMLA,2002 and also record findings whether all or any of the properties attached are involved in money laundering under Section 8(3) of PMLA, 2002. This Tribunal has not expressed any opinion on merits of the source of income, earnings out of which or by means of which the appellants have acquired attached properties. However, during the course of proceedings before the Adjudicating Authority the attachments shall continue and both the parties shall maintain status quo in respect of the attached properties - Application disposed off.

Issues Involved:
1. Delay in hearing the appeals.
2. Attachment of properties under the Prevention of Money Laundering Act (PMLA), 2002.
3. Acquittal in scheduled offences and its impact on PMLA proceedings.
4. Validity of "reasons to believe" for attachment under PMLA.

Analysis of Judgment:

1. Delay in Hearing the Appeals
The appeals were delayed due to various adjournments requested by the appellants' counsel. The Tribunal received a directive from the Hon'ble Patna High Court to decide the pending appeals within three months, which was not communicated by the appellants. The Tribunal was informed via email by the Enforcement Directorate (ED) and subsequently issued notices for hearings.

2. Attachment of Properties under PMLA
The appeals challenge the order confirming the Provisional Attachment Order (PAO) issued under Section 5(1) of PMLA, 2002. The properties attached include various immovable properties in the names of the appellants and movable assets, including LIC policies and bank account balances. The total value of attached assets is ?4,23,61,990/-.

3. Acquittal in Scheduled Offences and Its Impact on PMLA Proceedings
The appellants argued that since appellant no.1 was acquitted in the scheduled offences, proceedings under PMLA should not survive. They relied on various judgments, including M/s. Mahanivesh Oils & Foods Pvt. Ltd. vs. Directorate of Enforcement, which held that no proceedings under PMLA would lie once the accused is acquitted. However, the Tribunal noted that the judgment in M/s. Mahanivesh Oils is under challenge, and the Hon'ble Madras High Court in "M/s. VGN Developers P. Ltd. & Anr. vs. Deputy Director, Directorate of Enforcement" clarified that acquittal in scheduled offences does not impact PMLA proceedings, as they are distinct and independent.

4. Validity of "Reasons to Believe" for Attachment under PMLA
The appellants contended that the "reasons to believe" for the attachment were not properly recorded and were mechanical. The Tribunal referred to judgments, including J. Sekar vs. Union of India, which emphasized that "reasons to believe" must be recorded in writing and based on material evidence. The Tribunal found that the Adjudicating Authority did not adequately examine the satisfaction of the complainant regarding "reasons to believe" and merely restated the statutory language without proper justification.

Conclusion:
The Tribunal allowed the appeals, set aside the impugned order, and remanded the case to the Adjudicating Authority for re-adjudication within 180 days. The Adjudicating Authority is directed to provide a detailed examination of the "reasons to believe" and other legal issues raised by the appellants. The attachments will continue, and both parties are to maintain the status quo of the attached properties during the proceedings.

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