2024 (7) TMI 866 - HC - Money Laundering

Money Laundering - proceeds of crime - sale of seized vehicle - Interplay between Section 17 8 of PMLA and Rule 3 4 of PMLA Rules of 2013 - Whether the proceedings carried out in this case by the Directorate of Enforcement are as per law? - HELD THAT - This Court is of the opinion that in the present case, in order to collect the records relating to the money laundering and to trace proceeds of crime involved in money laundering, the Directorate of Enforcement had carried out search under Section 17 of PMLA at several locations and premises. In this process, a total of 26 luxury and high-end cars were found and seized by the respondent, which were prima facie found to have been purchased out of the proceeds of crime generated out of the criminal activities of Mr. Sukash Channdersekhar. A bare perusal of the record leads to only one conclusion that the procedure followed by the respondent was in accordance with the provisions of PMLA and the Rules of 2013. Even the petitioner, neither through the contents of the petition nor during the course of arguments, has been able to point out any infirmity in the above-mentioned process followed by the respondent. Further, the validity of the relevant rule(s) of Rules of 2013, as referred hereinabove, has also not been assailed before this Court by the petitioner herein. Whether Vehicles are subject to natural decay? - HELD THAT - The depreciation of vehicles is a well-recognized phenomenon in the automobile industry. From the moment a car is driven out of the showroom, its value begins to decrease. This depreciation accelerates with each passing year, and the resale value drops substantially. After some years, most vehicles lose a significant part of their original value, making them less economically viable to maintain or sell. By converting the sale proceeds of a movable property subject to natural decay, such as a vehicle, into an interest-bearing fixed deposit, the Rule ensures that the value of seized properties is preserved and potentially increased, thereby ensuring equal justice to either of the party, regardless of the trial s duration. In this manner, both the right of an accused as well as the right of the investigating agency is protected, since a piece of junk or scrap is of no use to either of them. In the present case, the petitioner herein has not made any request whatsoever in terms of proviso to Rule 4 (2) that in exchange of any fixed deposit receipt equivalent to the value of cars furnished by her, the cars in question be not sold by the Directorate of Enforcement. There is no merit in the argument that the sale of seized vehicles in this case is against the mandate of Section 8(6) of PMLA. Needless to say, as per Section 8(6), if the accused persons in this case are found not guilty of offence of money laundering, they would be entitled to receive the amount generated from selling the movable property i.e. cars in the present case, which the Directorate of Enforcement is obliged to keep deposited in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit. This Court finds no infirmity with the orders impugned by way of this petition - Petition dismissed.

Issues Involved:
1. Legality of the seizure and retention of 26 luxury vehicles.
2. Compliance with the Prevention of Money Laundering Act (PMLA) and related rules.
3. The petitioner's objections to the sale of seized vehicles.
4. The petitioner's claims of emotional and business-related connections to the vehicles.
5. The impact of the petitioner's personal circumstances on the case.

Issue-wise Detailed Analysis:

1. Legality of the Seizure and Retention of 26 Luxury Vehicles:
The Directorate of Enforcement (ED) conducted searches under Section 17 of PMLA, leading to the seizure of 26 luxury vehicles suspected to be purchased using proceeds from criminal activities. The ED filed applications under Section 17(4) for retention of these vehicles, which were confirmed by the Adjudicating Authority. The petitioner did not challenge these orders, indicating the legality of the seizure and retention process.

2. Compliance with PMLA and Related Rules:
The ED followed the procedure outlined in PMLA and the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicatory Authority) Rules, 2013. Rule 4(2) allows the sale of movable properties subject to natural decay or high maintenance costs, with proceeds to be deposited in a fixed deposit. The Additional Sessions Judge granted permission for the sale of the vehicles, confirming compliance with the legal framework.

3. The Petitioner's Objections to the Sale of Seized Vehicles:
The petitioner argued that some vehicles were purchased before the alleged offenses and others were rented. She claimed that the seizure was illegal and arbitrary. However, the court found that the ED's actions were in accordance with the law, and the petitioner had not provided sufficient evidence to support her claims. The court also noted that the vehicles were subject to natural decay, justifying their sale.

4. The Petitioner's Claims of Emotional and Business-Related Connections to the Vehicles:
The petitioner claimed that the vehicles were essential for her business and that she had an emotional connection with some of them. However, the court found inconsistencies in her statements and noted that she did not remember details about the vehicles or her business. The court concluded that the petitioner's claims lacked credibility and were not supported by evidence.

5. The Impact of the Petitioner's Personal Circumstances on the Case:
The petitioner stated that she was suffering from depression and memory loss due to prolonged incarceration. However, the court found no medical evidence to support these claims. The court also noted contradictions in her statements regarding her business activities and her compliance with her husband's directives. The court concluded that the petitioner's personal circumstances did not affect the legality of the ED's actions.

Conclusion:
The court found no infirmity in the orders allowing the ED to sell the seized vehicles. The court directed the ED to keep the proceeds in an interest-bearing fixed deposit, ensuring that the petitioner's rights would be protected if she were acquitted. The petition was dismissed, with the court emphasizing that the decision did not reflect on the merits of the case.

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