2024 (6) TMI 194 - AT - Money Laundering

Money Laundering - provisional attachment order - scheduled offences - Validity of the proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) in the absence of a scheduled offence - HELD THAT - It is a settled position of law by now that in the absence of a scheduled offence, the charges of money laundering under the PMLA, 2002 cannot be sustained and if the person in question has been finally discharged or acquitted of the scheduled/predicate offence, there can be no charge of money laundering against the said person. In the present case, the respondents are not in a position to dispute fact that the appellant Shri Makhru Singh @ Anil Singh now stands acquitted in all the seven FIRs filed against him in offences which constitute scheduled offences under PMLA, 2002. The other appellant, namely, Mrs. Pammi Devi, is the wife of Shri Makhru Singh and did not stand accused of any scheduled offence as per the filings and submissions from either side. Thus, the acquittal of Shri Makhru Singh @ Anil Singh in the scheduled offences has removed the bedrock upon which the edifice of the PMLA case leading to the attachment of the properties in question in these cases was built. The Provisional Attachment Order passed by the respondent Directorate and the impugned order passed by the Ld. AA confirming the same, have no legs to stand on. In the absence of any scheduled offence, there cannot be any proceeds of crime , i.e., property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property . Appeal disposed off.

Summary

Issues Involved:
1. Legality of the Provisional Attachment Order (PAO) and the subsequent confirmation by the Adjudicating Authority (AA).
2. Validity of the proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) in the absence of a scheduled offence.
3. Examination of the evidence and arguments presented by both appellants and respondents.

Summary of Judgment:

1. Legality of the Provisional Attachment Order (PAO) and the subsequent confirmation by the Adjudicating Authority (AA):

The appeals were filed against the order of the Ld. Adjudicating Authority dated 19.08.2015, which confirmed the provisional attachment of assets made by the respondent Directorate vide PAO No. 02/2015 dated 30.03.2015. The Directorate had attached properties valued at Rs. 87,50,922/- based on investigations revealing that the appellant had acquired properties from the proceeds of crimes listed as scheduled offences under PMLA, 2002.

2. Validity of the proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) in the absence of a scheduled offence:

The appellant argued that he had been acquitted in four out of the seven FIRs, and the prosecution had not appealed those acquittals. In the remaining three FIRs, the evidence had concluded without implicating the appellant. The Tribunal noted that the appellant had been acquitted in all seven FIRs, which were the basis for the ECIR recorded by the respondent Directorate. The Tribunal emphasized that "in the absence of a scheduled offence, the charges of money laundering under the PMLA, 2002 cannot be sustained."

3. Examination of the evidence and arguments presented by both appellants and respondents:

The respondents contended that the appellant had no licit sources of income to explain the assets and that the income declared was not genuine. They argued that the appellant had engaged in "layering" of tainted funds and invested in properties to project them as untainted. However, the Tribunal found that the acquittal of the appellant in all scheduled offences removed the basis for the PMLA case. The Tribunal cited the Supreme Court's decision in Vijay Madanlal Choudhary and Ors. v/s. Union of India and Ors., which held that "if the person is finally discharged/acquitted of the scheduled offence, there can be no offence of money-laundering against him."

Conclusion:

The Tribunal set aside the impugned order of the Ld. AA confirming the attachment of the subject properties. The properties were ordered to be released from attachment under PMLA, 2002. The Tribunal also clarified that if the orders of acquittal/discharge are overturned by a superior judicial forum, the respondent Directorate would be entitled to take permissible steps under the law. The appeals were allowed, and no order as to costs was made.