2024 (8) TMI 523 - AT - Money Laundering

Provisional Attachment Order - circular transaction - land property of the appellant was provisionally attached treating it to be proceeds of crime - time limitation of 180 days. Proceeds of crime - HELD THAT - Even if the appellant is not named as an accused but he is holding the proceeds of crime and even if the property if not directly or indirectly obtained out of the crime but is of the value thereof, it would fall in the definition of proceeds of crime and such property or document can be subjected to seizure/attachment. Provisional attachment should lapse on completion of 180 days - HELD THAT - Reliance placed in the judgement of Telangana High Court in the case of Hygro Chemicals PharmtekPvt. Limited Vs. Union of India Ors. 2023 (3) TMI 1367 - TELANGANA HIGH COURT where the period of 180 days was counted after excluding the period between 15.03.2020 till 28.02.2022. The Government had also notified for the exclusion of period of Covid and elaborate discussion has been made in the case of Hygro Chemicals PharmtekPvt. Limited. Thus, the aforesaid need not be reiterated, but it also supports the respondent and thereby a challenge to the order on the ground that it was passed beyond the period of 180 days given under Section 8 (3) of the Act of 2002 is not made out. Coming back to the factual issue, it is necessary to refer to main allegation which exists against M/s Seabird International Pvt. Ltd. and its two Directors Gurinder Singh and Jagmohan Singh and prior to that Pirtpal Singh who had extracted money from 51 students for arranging visa and admission in different colleges in Australia. The amount of Rs.7.56 crores was taken to be proceeds of crime derived as a result of criminal activity. The detailed investigation has revealed deep involvement of Pirtpal Singh, Jagmohan Singh and Gurinder Singh for generating money to the tune of Rs.7.56 crores from 51 students - The facts on record reveal that the sole purpose of creating circular transaction is to project proceeds of crime as untainted. In fact, Gurinder Singh and Pirtpal Singh tried to show the amount generated by them out of scheduled offence as bonafide transaction by creating channel of circular transaction with Sant Singh and many others. In the light of the facts referred to above, we do not find a case in favour of the appellant. Appeal dismissed.

Summary

Issues Involved:
1. Legality of the attachment of the appellant's property.
2. Lapse of the Provisional Attachment Order due to the delay in confirmation.
3. Whether the appellant's property constitutes "proceeds of crime."

Issue-Wise Detailed Analysis:

1. Legality of the attachment of the appellant's property:

The appellant challenged the attachment of his property on the grounds that he was not named as an accused in the FIR or ECIR. The counsel argued that the receipt of the amount was in the course of business relations with the accused persons and not a result of any criminal activity. However, the Tribunal found that the appellant received Rs.78,96,700/- directly from students, which was used to repay a loan for the purchase of land. The Tribunal referred to Sections 2(1)(u), 3, and 5 of the Prevention of Money Laundering Act, 2002, which define "proceeds of crime" and the conditions for attachment. The Tribunal concluded that the property could be attached even if it was in the possession of a person not named as an accused, as long as it constituted "proceeds of crime." The Tribunal cited the Supreme Court judgment in Vijay Madanlal Choudhary and Others v. Union of India & Ors., which supported this interpretation. Thus, the first issue was decided against the appellant.

2. Lapse of the Provisional Attachment Order due to the delay in confirmation:

The appellant argued that the Provisional Attachment Order, passed on 12.11.2021, was confirmed beyond the 180-day period mandated by Section 5 of the Act, as the confirmation order was passed on 18.08.2022. The Tribunal acknowledged that the confirmation should be within 180 days but noted the Supreme Court's order in Suo Motu Writ Petition No. 3/2020, which excluded the period from 15.03.2020 to 28.02.2022 due to the COVID-19 pandemic for the purpose of limitation. The Tribunal also referred to the Telangana High Court's judgment in Hygro Chemicals Pharmtek Pvt. Limited Vs. Union of India & Ors., which supported the exclusion of the COVID-19 period in computing the 180 days. Consequently, the Tribunal concluded that the confirmation order was within the permissible period after excluding the COVID-19 period. The second issue was also decided against the appellant.

3. Whether the appellant's property constitutes "proceeds of crime":

The Tribunal examined the factual background, noting that M/s Seabird International Pvt. Ltd. and its directors were involved in extracting money from students under false pretenses. The appellant received Rs.78,96,700/- directly from students, which was part of the Rs.7.56 crores collected by the main accused. The Tribunal found that the appellant's transactions with the accused and the receipt of money from students indicated his involvement in layering and laundering the "proceeds of crime." The Tribunal emphasized that even if the appellant was not directly involved in the crime, his possession of the "proceeds of crime" justified the attachment of his property. The Tribunal rejected the appellant's argument that the property was not "proceeds of crime" and concluded that the property could be attached even if it was of equivalent value to the "proceeds of crime." The Tribunal found no merit in the appellant's arguments and dismissed the appeal.

Conclusion:

The Tribunal dismissed the appeal, upholding the attachment of the appellant's property as "proceeds of crime" and confirming that the Provisional Attachment Order did not lapse due to the delay in confirmation, considering the exclusion of the COVID-19 period. The Tribunal's findings were based on the legal provisions of the Prevention of Money Laundering Act, 2002, and relevant judicial precedents.