2024 (6) TMI 469 - AT - Money Laundering

Money laundering - proceeds of crime - offence of smuggling of narcotics and running extortion rackets - double attachment of properties - fugitive economic offenders under Section 12 of the Fugitive Economic Offenders Act 2018 - HELD THAT - The proceeds of crime was shifted on the area of 14000 Sq. Ft. taken by HazraMemonin consideration of the plot of land of M.K. Mohammad and it is for that reason alone that the respondents attached the said property of HazraMemon. The respondents failed to consider that on shifting of the proceeds of crime and its attachment by attaching the property of 14000 Sq. Ft. they could not have made further attachment of alleged proceeds in the hands of the appellant. In fact with exchange of the property and that too under the decree of the Court the area came to the appellant no more remain to be proceeds of crime otherwise it would be a case of double attachment going against the principles of law. The respondents have tried to divert the fact in reference to the alleged violation of FSI to justify the action of attachment. The arguments were made in ignorance of the fact that violation of alleged FSI is not subject matter of FIR and ECIR and it could not have been under the ECIR being not a schedule offence under the Act of 2002. The arguments in this regard shows an exercise not appropriate to the facts of the case and under the provisions of law. The position of facts could have been different if the appellants would have occupied the area taken by M.K. Mohammad and given to HazraMemon under the assignment without consideration and a decree. The attachment of the above area at 12 to 15 floors of Ceejay House cannot be considered to be appropriate and legal. As per Section 8(2) the Adjudicating Authority is required to record its finding that property is involved in money laundering and only on recording of such an opinion the order of attachment can be confirmed. It cannot be concluded that a property taken on consideration and the Court decree can be said to be involved in the money laundering rather for that respondents have already taken recourse to attach 14000 sq. ft. area in the hands of HazraMemon. The impugned orders of attachment are quashed - appeal allowed.

Summary

Issues Involved:
1. Legality of the attachment of properties by the Adjudicating Authority.
2. Connection of the appellants with the proceeds of crime.
3. Alleged double attachment of properties.
4. Violation of Floor Space Index (FSI) norms.

Summary:

1. Legality of the attachment of properties by the Adjudicating Authority:
By these batch of three appeals, a challenge is made to the order dated 05.01.2023 passed by the Adjudicating Authority. The Adjudicating Authority has confirmed the provisional attachment order dated 11.07.2022. The properties attached u/s 5(1) of the Act of 2002 are listed in the judgment.

2. Connection of the appellants with the proceeds of crime:
The appellants were not named as accused in the FIR No. 83 of 1994 registered on 24.02.1994 against Iqbal Mohammad Memon for the offences u/s 302/307/34 IPC and Section 3/25 of the Arms Act. The respondents registered the ECIR on 26.09.2019 under the Prevention of Money Laundering Act 2002 (for short `the Act of 2002). The appellants were not named in the ECIR. However, they were summoned by sending a notice on 15.10.2019 to record their statements u/s 50 (2) and (3) of the Act of 2002. The appellants argued that the property was acquired legally through a court decree and consideration.

3. Alleged double attachment of properties:
The appellants argued that the area of 14000 sq. ft. received by Hazra Memon in lieu of the part of Plot F was already attached by the respondents, and attaching the appellant's property constituted double attachment, which is per se illegal. The Tribunal upheld that the attachment of 14000 sq. ft. area of Hazra Memon was confirmed by the Adjudicating Authority and the Tribunal, and there was no reason to attach the property belonging to the appellant, going against the decree of the court.

4. Violation of Floor Space Index (FSI) norms:
The respondents alleged that the appellants raised construction of the building on the land in question by violating FSI norms and thereby raised extra construction than permissible. However, the Tribunal found that the alleged violation of the FSI for construction of the building does not constitute a scheduled offence and thus would not come under the purview of the Enforcement Directorate.

Conclusion:
The Tribunal concluded that the attachment of the appellant's property was not appropriate and legal. The Adjudicating Authority failed to consider that the property taken by the appellants on consideration under a Court decree and the consideration given to Hazra Memon was already attached. The Tribunal quashed the impugned orders of attachment and the order of the Adjudicating Authority, allowing the appeals.