2024 (4) TMI 687 - AT - Money Laundering

Money Laundering - Proceeds of crime - attachment of moveable property of the appellant - HELD THAT - The perusal of the provision of Section 5 of PMLA reveal that the attachment of the property is warranted when it is involved in money laundering and the person is in possession of the proceeds of crime and such proceeds of crime are likely to be concealed transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation. The attachment of the property thus pre-supposes not only it to be proceeds of crime but apprehension of its concealment or transfer etc. In the instant case it is not in dispute that Bund Garden Police Station has frozen the bank account No.920020062949058 of TIET on 29.08.2021. It is for the amount of proceeds of crime to the tune of Rs.7.96 crores and additional amount is of Rs.1.5 crores for which a property of the appellant in the connected appeal has been attached. Till the order of Competent Authority of police remains in force there cannot be any likelihood of transfer or alienation of the said amount by the appellant. In view of the above there was no reason for the respondent to attach the TIET Bank account and accordingly we find that attachment was caused by the respondent without there being an element of any apprehension or alienation or to deal with the property in a manner to frustrate the confiscation. The proceeds of crime involved in this case is for a sum of Rs.8, 67, 98, 250/- and the amount available in the TIET account is of Rs.7.96 crore however attachment was to bemade to the extent of Rs.8, 67, 98, 250/-and accordingly a property worth of Rs.1.50 crores of the appellant in the connected appeal was attached. The attachment of the amount in this case is of Rs.7, 17, 98, 250/- - Since we have caused interference in the order of attachment and its confirmation in reference to Section 5(1) of the Act of 2002 as a greater amount than attached has been frozen by the Bund Garden Police Station Pune our order in favour of the appellant would operate till amount of Rs.7.96 crores remains frozen with the Bund Garden Police Station and is not interfered or withdrawn. Appeal disposed off.

Summary

Issues Involved:
The appeal challenges the order confirming the attachment of moveable property of the appellant under Sections 420, 406, 464, 467, 471, 34, 120-B, 181, 201, 419, 465, and 468 of the Indian Penal Code, based on a complaint regarding the affairs of a Trust.

Summary of Judgment:

Allegations and Defense:
The FIR was registered based on the complaint regarding the affairs of Taboot Inam Endowment Trust. The appellant was alleged to have received compensation for a land owned by the Trust under false pretenses. The appellant defended against the allegation, stating that the issue would be tried separately. The appellant argued that the attachment of moveable property was illegal as a larger amount was already with the police, making transfer or alienation unnecessary to frustrate confiscation.

Legal Interpretation - Money Laundering:
The Tribunal analyzed Section 5(1) of the Prevention of Money Laundering Act, 2002, which allows attachment of property involved in money laundering when there is a risk of concealment or transfer to frustrate confiscation proceedings. The definition of "proceeds of crime" was clarified, including direct proceeds or their equivalent value. The Tribunal found that the attachment lacked justification as the frozen amount with the police prevented any transfer or alienation by the appellant.

Decision and Directions:
The Tribunal interfered with the order of attachment and its confirmation, noting that a larger amount than attached was already frozen by the police. The attachment was ordered to the extent of the actual proceeds of crime involved. The appellant's appeal was disposed of with the direction that the attachment would remain in force until the frozen amount was released. Any defreezing by the police or court would automatically restore the attachment. The appellant was granted the option to file an application for further adjudication after the resolution of related legal proceedings.

This judgment highlights the importance of legal justifications for property attachment in money laundering cases and ensures that attachment orders are proportionate to the actual proceeds of crime involved.