2024 (10) TMI 226 - AT - Money Laundering

Money Laundering - Challenge to Provisional Attachment Order - offence under Section 120-B IPC read with Section 7, 8 and 10 of the Prevention of Corruption Act, 1988 - HELD THAT - It is a case where an FIR was registered for the offence under Section 7,8 and 10 of the PC Act along with Section 120-B IPC. It is not in dispute that a sum of Rs.89,68,000/- was seized by the CBI and the amount now remains under seizure pursuant to the order of the CBI Court. In those circumstances, it could not be clarified by the respondent as to whether there were likely of transfer or alienation of the said amount to frustrate the proceedings for confiscation. The perusal of Section 5(1)(b) would reveal that the attachment of the property can be made when the proceeds of crime is likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to the confiscation of such proceeds of crime. In the instant case, proceeds of crime is said to be a sum of Rs.89,68,000/- and was seized by the CBI. An order for it was passed by the CBI Court and thereby the amount is lying with it. Therefore, it could not be clarified how the said amount was likely to be concealed, transferred or dealt with in any manner to frustrate the proceedings of confiscation. The counsel for the respondent has referred to the judgment in the case of Om Prakash Daulat Ram Nagoj 2011 (9) TMI 1143 - BOMBAY HIGH COURT which permits attachment of the property - In that case, the argument considering Section 5(1)(b) of the Act of 2002 was not raised. The attachment of the property is permitted when it is likely to be concealed, transferred or alienated to frustrate the proceedings of confiscation. Section 5(1)(b) thus puts an embargo on the attachment. Considering the rider of Section 5(1)(b), attachment of the amount in the present case would not be permissible otherwise it is nothing but to offend Section 5(1)(b) of the Act of 2002. It is found that the attachment of the amount is in ignorance of the mandate of Section 5(1)(b) of the Act of 2002 and are set aside - appeal disposed off.

Summary

Issues:
Challenge to order confirming Provisional Attachment Order under Prevention of Money Laundering Act, 2002.

Analysis:
The appeal challenged an order confirming a Provisional Attachment Order dated 04.05.2019 under the Prevention of Money Laundering Act, 2002. The appellants argued that the attachment of Rs.89,68,000 was made in ignorance of Section 5(1) of the Act, as the amount had been seized by the CBI and an order for it was passed by the CBI Court, leaving no chance of transfer or alienation to frustrate confiscation proceedings. They sought interference in the impugned order.

The respondent contended that the attachment was permissible unless barred by statute, citing the Bombay High Court judgment in support. They argued that the CBI Court had seized the amount involved in money laundering, justifying the attachment. The Tribunal considered both submissions and examined the case.

The Tribunal noted that an FIR was registered for offenses under the Prevention of Corruption Act and IPC, with Rs.89,68,000 seized by the CBI and remaining under seizure. The Tribunal analyzed Section 5(1)(b) of the Act, which allows attachment when proceeds of crime are likely to be concealed, transferred, or dealt with to frustrate confiscation proceedings. It found no evidence that the seized amount was at risk of being concealed or transferred, as it was already under CBI Court's control.

Referring to a previous judgment, the Tribunal emphasized the necessity of reasons to believe in writing for attachment based on possession of proceeds of crime likely to be concealed or transferred. It concluded that the attachment in this case disregarded Section 5(1)(b) of the Act, setting aside the orders but allowing re-attachment if the amount is released by the CBI Court. The Tribunal highlighted that attachment should not offend Section 5(1)(b) and disposed of the appeal accordingly.