2024 (12) TMI 289 - AT - Money Laundering

Provisional Attachment Order (PAO) under the Prevention of Money Laundering Act (PMLA) - proceeds of crime - compliance with the statutory timeline for filing a Prosecution Complaint under Section 8(3) of PMLA - Impact of supplementary prosecution complaints on the validity of the PAO - HELD THAT - It is not disputed that the first Prosecution Complaint under PMLA was filed by the Respondent Directorate on 18.07.2018 that is even before the impugned Order dated 20.07.2018 which confirmed the PAO dated 01.02.2018 was passed. It is also not disputed that the Appellant was made an accused in the Supplementary Prosecution Complaint under PMLA which was filed on 17.12.2018. The provision of the statute viz. Section 8(3)(a) of PMLA required investigation to be completed within 90 days of the confirmation of the Provisional Attachment Order. It is therefore on record that the Prosecution Complaint was filed even before the confirmation of Provisional Attachment Order. On reading of the provisions of Section 8(3) of PMLA, it is obvious that while the investigations had to be completed within 90 days of the confirmation of the Provisional Order, there is no such requirement as to the investigations per se the person whose property has been attached was to be completed within the said 90 days. In fact, it is on record that the investigations were completed and the Prosecution Complaint under PMLA was lodged on 18.07.2018, even before the passing of the impugned Order on 20.07.2018. Perusal of the judgment of the Apex Court in Vijay Madanlal Chaudhary 2022 (7) TMI 1316 - SUPREME COURT clearly brings out that the objective of the Act is to immobilize the proceed of crime, irrespective of it being in the hands of the accused or any other person, till it s confiscation. The provisions of Section 8(3) (a) while providing for confirmation of either the attachment or seizure of the proceed of crime till the completion of investigation within the period stipulated therein, does not have the requirement of filing the Prosecution Complaint under PMLA against every person whose property has been either attached or seized. In the facts of the present Appeal the Prosecution Complaint was filed even before the passing of the impugned Order confirming the attachment. The bank accounts of the Appellant and of his proprietorship firm provided for the parking place for the proceed of crime. The filing of the Supplementary Prosecution Complaint on 17.12.2018 in which the Appellant came to be named for the first time, does not impinge in any manner on the requirement of the provisions of Section 8 (3) (a) of PMLA to complete the investigation and file the Prosecution Complaint within the stipulated period of time, since the Prosecution Complaint in the matter had already been filed on 18.07.2018. Thus, in the present appeal that requirement was met with the filing of the Prosecution Complaint before the passing of the impugned Order. The argument of the Appellant has no merit - the Appeal accordingly fails and is dismissed.

Summary

Issues Involved:

1. Validity of the Provisional Attachment Order (PAO) under the Prevention of Money Laundering Act (PMLA).
2. Compliance with the statutory timeline for filing a Prosecution Complaint under Section 8(3) of PMLA.
3. Interpretation of Section 8(3)(a) of PMLA regarding the continuation of attachment during the investigation.
4. Impact of supplementary prosecution complaints on the validity of the PAO.

Detailed Analysis:

1. Validity of the Provisional Attachment Order (PAO):

The appeal challenged the confirmation of the Provisional Attachment Order (PAO) No.02/2018 dated 01.02.2018, which attached various properties and bank accounts associated with the appellant. The PAO was issued based on FIRs alleging misuse of bank accounts in connection with demonetization, leading to the attachment of assets under suspicion of money laundering activities. The tribunal examined whether the PAO was validly confirmed by the Adjudicating Authority on 20.07.2018, considering the circumstances under which the assets were attached.

2. Compliance with the Statutory Timeline for Filing a Prosecution Complaint:

The appellant contended that the Prosecution Complaint was not filed within the 90-day period stipulated by Section 8(3) of PMLA, as amended on 19.04.2018. The appellant argued that the PAO should lapse because the supplementary complaint naming him as an accused was filed only on 17.12.2018, beyond the 90-day timeline from the confirmation order dated 20.07.2018. The tribunal noted that the initial Prosecution Complaint was filed on 18.07.2018, before the confirmation of the PAO, thus meeting the statutory requirement. The tribunal emphasized that the law at the time required the investigation to be completed within 90 days, not necessarily naming the appellant in the initial complaint.

3. Interpretation of Section 8(3)(a) of PMLA:

The tribunal analyzed Section 8(3)(a) of PMLA, which mandates that the attachment of property continues during the investigation for a period not exceeding 90 days, or until the proceedings related to the offence are pending. The tribunal clarified that the requirement was for the investigation to be completed within 90 days of the confirmation of the PAO, and not specifically against the person whose property was attached. The tribunal referred to previous judgments and the legislative intent to emphasize that the attachment could continue irrespective of whether the person was named as an accused within the 90-day period.

4. Impact of Supplementary Prosecution Complaints:

The appellant argued that the attachment order should lapse because he was named as an accused only in the supplementary complaint filed on 17.12.2018. The tribunal rejected this argument, stating that the filing of the supplementary complaint did not affect the validity of the PAO, as the initial complaint was filed within the required timeframe. The tribunal highlighted that the objective of the PMLA is to immobilize proceeds of crime, regardless of whether they are in the hands of the accused or another person, until confiscation.

Conclusion:

The tribunal concluded that the appeal lacked merit and dismissed it, affirming the validity of the PAO and the compliance with the statutory requirements under PMLA. The tribunal reinforced the interpretation that the attachment and prosecution processes under PMLA are designed to address the broader objective of preventing money laundering, without being constrained by the specific timeline for naming individuals in prosecution complaints.