2024 (12) TMI 470 - AT - Money Laundering

Money Laundering - criminal conspiracy - scheduled offences - Legality of retention of the seized properties and jewellery items seized under Prevention of Money Laundering Act, 2002 - appellant argued that no criminal activity is attributed to the appellant or his business nor the appellant is an FIR named accused nor named in the chargesheet and supplementary chargesheet filed by CBI. Since, no criminal activity has been alleged therefore, the proceeding under section 17(4) of the PMLA, 2002, is nonest and illegal. HELD THAT - It is seen from the record that the respondent ED has seized the cash and jewellery on the basis of the oral and documentary evidences so far available with them. From the contents of OA, it is prima facie seen that the appellant has allegedly earned illegal commission as an intermediary in the import of DAP by the IFFCO and IPL from M/s JPMC when there was no requirement for an intermediary to import the DAP. Even though, the appellant is not named in the FIR, chargesheet and supplementary chargesheet, the investigating authority under PMLA, 2002, can go ahead with search seizure to arrive at a conclusion whether the retention of the seized items is required for the purposes of further investigation. The respondent ED, in the OA, has categorically reflected the reasons of making further investigation in the matter. It is alleged in the OA that the appellant has made illegal earnings arising out of the criminal acts (illegal commission) and generated funds, which were Proceeds of Crime and that were required to be traced out and that the appellant could not explain the source of acquiring the cash and jewellery during search proceedings. Since, the proceedings before the ED are at the investigation stage, it would not be proper to release the cash and jewellery which are highly liquid in nature. The appeal has no merit. Hence, dismissed.

Issues Involved:

1. Legality of the retention order under section 17(4) of the PMLA, 2002.
2. Allegations of criminal conspiracy and money laundering.
3. Procedural compliance under PMLA, 2002 and FEMA, 1999.
4. Validity of seizure of cash and jewellery.
5. Whether the appellant's actions constitute money laundering.
6. Applicability of cited judgments and legal precedents.

Detailed Analysis:

1. Legality of the Retention Order:

The appeal challenges the order of the Adjudicating Authority (AA) dated 01.03.2024, which allowed the Enforcement Directorate (ED) to retain seized properties under section 17(4) of the PMLA, 2002. The appellant argued that the retention was unjustified as there was no criminal activity or crime alleged against him or his family members. The appellant claimed that the jewellery was family-owned and had already been seized under FEMA, 1999, making the subsequent seizure under PMLA, 2002, redundant and without legal basis. However, the Tribunal found that the ED had valid reasons for retention, as the seized items were required for further investigation into alleged money laundering activities.

2. Allegations of Criminal Conspiracy and Money Laundering:

The ED's original application (O.A) alleged that the appellant was involved in a criminal conspiracy to defraud Indian Farmer Fertilizers Cooperative Ltd. (IFFCO) and Indian Potash Ltd. (IPL) by importing fertilizers at inflated prices and claiming higher subsidies from the Government of India. The appellant, through a Dubai-based company, Astra Global DMCC, allegedly acted as an intermediary, pocketing illegal commissions. The Tribunal noted that the ED had gathered substantial evidence, including statements and agreements, indicating the appellant's involvement in money laundering activities, justifying the retention of seized assets for further investigation.

3. Procedural Compliance under PMLA, 2002 and FEMA, 1999:

The appellant contended that the ED violated procedural safeguards by not adhering to the 30-day timeframe for filing the retention application and by conducting a seizure when the assets were already under ED's control due to a freeze order under FEMA, 1999. The Tribunal clarified that the 30-day period should be counted from the date of seizure under PMLA, 2002, which was complied with. Furthermore, the Tribunal found that the ED's actions were consistent with the objectives of PMLA, 2002, and the procedural requirements were met, including the filing of necessary complaints and supplementary complaints.

4. Validity of Seizure of Cash and Jewellery:

The appellant argued that the seizure of cash and jewellery was illegal as these items were already in ED's possession due to prior actions under FEMA, 1999. The Tribunal dismissed this argument, stating that the ED had the authority to seize the assets under PMLA, 2002, for the purpose of investigating money laundering activities. The Tribunal emphasized that the ED's actions were based on a "reason to believe" that the seized items were proceeds of crime, which justified their retention for further investigation.

5. Whether the Appellant's Actions Constitute Money Laundering:

The Tribunal examined the evidence presented by the ED, which suggested that the appellant was involved in money laundering activities by acting as an intermediary in fertilizer imports and earning illegal commissions. The Tribunal noted that the appellant's alleged actions, though not directly named in the FIR or chargesheet, were subject to investigation under PMLA, 2002. The Tribunal concluded that the ED had sufficient grounds to continue its investigation and retain the seized assets.

6. Applicability of Cited Judgments and Legal Precedents:

The appellant relied on several judgments to support his contentions, arguing that the retention order was unsustainable. However, the Tribunal found that the cited judgments were not applicable to the specific facts and circumstances of the case. Similarly, the judgments relied upon by the ED were deemed irrelevant to the legal questions raised in the appeal. The Tribunal concluded that the appeal lacked merit and dismissed it, affirming the retention order under PMLA, 2002.

In conclusion, the Tribunal upheld the ED's retention of seized assets, finding that the procedural requirements were met and that the allegations of money laundering warranted further investigation. The appeal was dismissed, and the Tribunal directed the Registry to send copies of the order to both parties.

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