2023 (8) TMI 1539 - AT - Money Laundering

Money Laundering - scheduled offences - Provisional attachment order - assets disproportionate of known sources of income - HELD THAT - The first issue is in reference to the application of the Act of 2002. It is in reference to the offence under the Prevention of Corruption Act, 1988. It was not a scheduled offence in the year 2002 but was added by the notification issued in the year 2009 followed by further amendment in the year, 2013. According to the appellant, the check period to find out disproportionate property to the known-sources of income is of the period prior to the amendment and therefore the Act of 2002 could not have been enforced to attach the property. It is for the reason that amendment of year 2009 and 2013 has not been given retrospective effect - The relevant date to find out the scheduled offence is the date when one projects tainted property to be untainted or involves oneself in money laundering and not the date of actual commission of predicate offence. The check period of income may be from the year 2004 to 2014 but the FIR was registered in the year 2014 and thereupon, ECIR was recorded on 12.02.2015. It is much subsequent to the amendment in the Act of 2002 to make an offence under the Prevention of Corruption Act to be a scheduled offence. In view of the above, it is not found that amendment under the Act by the notification of year 2009 or 2013 have been given retrospective effect in this case. It is to show that no offence under Section 13 (1) (d) or 13 (2) of the Act of 1988 is made out. The appellant is not having disproportionate property to the known-sources. It is found that facts available record prima facie shows a case of disproportionate property in the hands of the appellant to his known-sources. An order of attachment pre supposes the conditions referred to above and given under Clause (a) and (b) of sub Section (1) of Section 5. In the instant case, the respondents have failed to show any likelihood of concealment or transfer of the properties so as to frustrate the proceeding of confiscation rather the property in question was attached by the Special Court much prior to the order for provisional attachment - The property can be attached by the respondent department under Section 5 of the Act of 2002 but it can be when they possess material to show that property may be concealed, transfer or be dealt with in any manner to frustrate the proceeding of confiscation. When the property was already attached by the Special Court, how it could have been transferred or concealed - reasons to believe were recorded without application of mind. It is however with clarity that if, the Special Court withdraws the attachment order or the trial pursuant to the FIR is completed, the respondents would be at liberty to exercise their authority under Section 5 (1) of the Act of 2002 in case of an apprehension of concealment or transfer of property. The appeal disposed off.

Summary

Issues:
Challenge to provisional attachment order under Prevention of Corruption Act, 1988.
Interpretation of amendments under the PMLA Act of 2002.
Validity of provisional attachment order under Section 5(1) of the Act of 2002.

Analysis:
The appellant challenged the provisional attachment order issued under the Prevention of Corruption Act, 1988, following the registration of FIR and charge-sheet against him. The appellant argued that the offence was added to the schedule by amendments in 2009 and 2013, and the check period for disproportionate assets predates the amendments, thus the property could not be attached retrospectively. However, the Tribunal held that the relevant date for determining the scheduled offence is when money laundering is detected, not the date of the predicate offence, and found no retrospective application of the amendments in this case.

The appellant contended that he did not possess disproportionate assets, but the Tribunal found prima facie evidence of disproportionate property, deferring a final decision to the Special Court after trial completion. The Tribunal rejected this argument as well, upholding the provisional attachment order.

Regarding the validity of the provisional attachment under Section 5(1) of the Act of 2002, the appellant argued that the attachment lacked basis as the property was already attached by the Special Court, negating the likelihood of concealment or transfer. The Tribunal agreed, finding that the reasons to believe were not supported by evidence of potential concealment or transfer, setting aside the provisional attachment order and the Adjudicating Authority's decision. The Tribunal clarified that the respondents could reapply Section 5(1) if the Special Court withdraws the attachment or after completion of the trial.