2020 (12) TMI 1019 - AT - Money Laundering

Money Laundering - Attachment of properties - Agricultural Land - right of the appellants to the properties in question - SCN not issued to appellant - whether there is any violation of the provisions of law as enunciated in Prevention of Money Laundering Act (PMLA), 2002? - HELD THAT - On perusal of the plain copies of the chain of documents, copy of the impugned order, reply made by the respondent it is prima facie that the appellants are the owners having interest in the properties in question as they had only made-over agreements to different persons for cultivation. A decision cannot be made on assumption presumption that as the appellants have leased out the aforesaid properties for cultivation purposes for a long period amounts to lose of the ownership. It can only be decided by Competent Civil Court. Nothing has been submitted during the course of hearing that Shri P.K.M. Selvam or Shri S. Sankaranarayanan or the transferors of cultivation rights to these two persons have ever raised any dispute that the present appellants are not the owners of the aforesaid properties in question. There is a clear violation of principle of natural justice. The appellants ought to have noticed by the respondent (ED) and Adjudicating Authority before deciding on attachment of the aforesaid properties - The Adjudicating Authority shall, in accordance with the provisions of sub-section(2) of Section 8 of the PMLA, 2002, record finding whether all or any of the properties mentioned above are involved in money laundering and pass appropriate orders in accordance with law. Matter remanded to the Adjudicating Authority for re-adjudication of the case qua the appellants within 150 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, before the Adjudicating Authority - appeal allowed by way of remand.

Summary

Issues Involved:
1. Whether the Enforcement Directorate (ED) could attach the properties without giving notice to the appellants.
2. Whether the ED can attach properties owned by the appellants prior to the alleged commission of the offense.

Issue-wise Detailed Analysis:

1. Notice Requirement for Property Attachment by ED:
The appellants contended that they were not made parties in the Provisional Attachment Order (PAO) or the Original Complaint (O.C.) by the ED, nor were they issued any notice by the Adjudicating Authority, despite being the owners of the attached properties. The appellants argued that there were sufficient materials available to the ED and the Adjudicating Authority to notify them during the investigations and subsequent proceedings. The Tribunal acknowledged that the appellants were not summoned or examined by the ED, despite the presence of sufficient information and documents indicating their ownership. The Tribunal emphasized that the ED has a duty to examine all persons with an interest in the property to conclude regarding the commission of an offense under the PMLA, 2002. The Tribunal found that the ED's failure to notify the appellants constituted a violation of the principle of natural justice.

2. Attachment of Properties Owned Prior to Alleged Offense:
The appellants argued that the properties in question were owned by them prior to the alleged commission of the offense. They provided a detailed history of the ownership and transfer of the properties, including settlement deeds and partition deeds. The appellants contended that the cultivation rights were transferred to various individuals without their knowledge and that these transfers did not affect their ownership. The ED's justification for not issuing notices was based on the assumption that the long-term cultivation rights amounted to ownership transfer, which the Tribunal found to be an assumption and presumption. The Tribunal held that the decision regarding ownership and cultivation rights should be made by a competent civil court and not assumed by the ED.

Conclusion:
The Tribunal allowed the appeal, set aside the impugned order dated 31.05.2017, and remanded the case to the Adjudicating Authority for re-adjudication within 150 days. The Tribunal directed the appellants to file an appropriate application within thirty days, raising all legal and factual issues before the Adjudicating Authority. The Tribunal did not express any opinion on the merits of the source of income or earnings used to acquire the attached properties. The attachments will continue until the completion of the proceedings before the Adjudicating Authority, and both parties are to maintain the status quo concerning the attached properties. No order as to costs was made, and any pending applications were disposed of. The Registry was directed to forward a copy of the order to the office of the Adjudicating Authority under PMLA, 2002 for further necessary action.