2021 (1) TMI 1330 - AT - Money Laundering

Seeking ad-interim stay on the operation of impugned order - Legality of the eviction notices issued under section 8(4) of the PMLA, 2002 - HELD THAT - The orders of ad-interim 'status quo', with respect to the mentioned properties except Agriculture Land - share in Khasra No. 782, Rakba 0.50 Hectare at Village - Katkad, Tehsil - Hindon City, Dist. - Karuali and 22 plots bearing Plot nos. 29 to 38, 69 to 80 at Aryan City, Phase - I Scheme, Muhana, developed by the Rajhans Society Each Area, is granted subject to the following conditions - i. Attachments shall continue. ii. The appellants are prohibited to create any third party right, transfer, mortgage or otherwise dispose of the properties in question in any manner. iii. Neither party is allowed to alter the nature and character of the properties in question, as on today. iv. No encumbrance shall be created by the appellants in respect of the properties in question. List the appeals on 27th April, 2021.

Issues Involved:

1. Legality of the eviction notices issued under section 8(4) of the PMLA, 2002.
2. Ownership and attachment of properties alleged to be proceeds of crime.
3. Validity of the probated Will as a source of funds for property acquisition.
4. Status quo regarding the properties pending appeal.

Issue-wise Detailed Analysis:

1. Legality of the Eviction Notices:

The appellants received eviction notices dated 9-1-2021, requiring them to vacate properties within ten days. These notices were issued under section 8(4) of the PMLA, 2002, read with Rule 5(2) of the Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties confirmed by the Adjudicating Authority) Rules, 2013. The appellants sought an ad-interim stay on the operation of the impugned order dated 14-12-2020, arguing that the eviction notices were premature as the appeals were still pending.

2. Ownership and Attachment of Properties:

The properties in question include various plots, agricultural lands, and buildings. The appellants argued that properties at serial no. (i) to (iv) are owned by M/s. Safe Infracon Pvt. Ltd., a separate legal entity, and not by the appellants personally. The respondent (ED) contended that the company is a shell entity used to launder proceeds of crime. For properties at serial no. (v), the appellants claimed it was purchased with funds from a probated Will, which the respondent disputed as forged. Properties at serial no. (vi) were allegedly bought with unsubstantiated funds, and the respondent argued they were part of disproportionate assets. For properties at serial no. (ix) to (xi), the appellants stated they belong to Saket Nursing College, acquired through legitimate means, while the respondent highlighted suspicious cash transactions. The property at serial no. (xiii) is a functioning hospital under RAG Memorial Trust, which the appellants claimed is a legitimate entity.

3. Validity of the Probated Will:

The appellants presented a probated Will as the source of funds for acquiring certain properties. The respondent challenged the authenticity of the Will, suggesting it was forged. The tribunal noted that the Will had been decreed by a competent court, and at this stage, there was no contrary evidence to dismiss its validity.

4. Status Quo Regarding the Properties Pending Appeal:

The tribunal granted an ad-interim order of status quo for several properties, including those owned by M/s. Safe Infracon Pvt. Ltd. and the RAG Memorial Trust, recognizing the need to prevent disruption pending the appeal's outcome. However, no relief was granted for properties at serial no. (vi) due to insufficient evidence of legitimate funding. The tribunal emphasized maintaining the status quo to protect public interest, especially concerning educational and healthcare institutions.

Conclusion:

The tribunal directed both parties to maintain the status quo for most properties, except those where no prima facie case was established. The attachments would continue, and appellants were prohibited from altering or disposing of the properties. The respondent was granted six weeks to file replies to the appeals, with the next hearing scheduled for 27th April 2021.

← Previous Next →