2025 (2) TMI 107 - AT - Money Laundering

Money Laundering - proceeds of crime - challenge to Provisional Attachment Order - selection process of Assistant Teachers of primary schools said to have been conducted in an unfair manner to give appointment to the ineligible candidates - offence under Sections 7 7A and 8 of the Prevention of Corruption Act 1988 and Section 120-B 420 467 468 471 and 34 of IPC 1860 - HELD THAT - The analysis of the bank account would show receipt of huge money from different sources without giving description or the basis to disclose the source. The appellant has failed to disclose his business with required details so as to justify transactions shown in the bank account which otherwise remain unexplained even during the course of arguments. The Directors other than Prabir Das were dummy in view of their statement. They were not knowing about the business of the firm if it was existing. All those facts are relevant in the light of the allegation against the appellant and unusual practice by which Prabir Das having share of 10% transferred huge sum in favour of the firm. Conclusion - i) The attachment of the bank accounts of M/s SKP Enterprises was justified under the Prevention of Money Laundering Act 2002. ii) The appellant failed to provide sufficient evidence of legitimate sources for the funds leading to the dismissal of the appeal. Appeal dismissed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the attachment of the bank accounts of M/s SKP Enterprises under the Prevention of Money Laundering Act, 2002, was justified.
• Whether the funds in the bank accounts of M/s SKP Enterprises were "proceeds of crime" as defined under the Act.
• Whether the appellant, M/s SKP Enterprises, could provide a legitimate source for the funds in the attached bank accounts.
• Whether the procedural and substantive requirements for confirming the Provisional Attachment Order were met by the Adjudicating Authority.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The Prevention of Money Laundering Act, 2002, particularly Section 26, provides the framework for appealing against orders of the Adjudicating Authority confirming Provisional Attachment Orders. The Act defines "proceeds of crime" and outlines the procedure for attachment and adjudication of properties suspected to be involved in money laundering.

Court's Interpretation and Reasoning

The Tribunal interpreted the legal provisions to determine whether the funds in the appellant's bank accounts were linked to criminal activities, specifically the alleged corruption in the selection process for Assistant Teachers in West Bengal. The Tribunal considered the involvement of Partha Chatterjee and his associates in creating entities to launder money obtained through illegal means.

Key Evidence and Findings

The evidence presented included the bank statements of M/s SKP Enterprises, the roles of dummy directors, and the lack of legitimate business activities. The Tribunal noted the involvement of Partha Chatterjee and his associates in creating entities to launder money. The Tribunal found that the funds in the appellant's bank accounts were not justified by legitimate business activities or sources.

Application of Law to Facts

The Tribunal applied the provisions of the Prevention of Money Laundering Act to the facts, focusing on the unexplained and disproportionate transfers of funds into the appellant's bank accounts. The Tribunal found that the funds were likely "proceeds of crime" as they were linked to the corruption in the teacher selection process.

Treatment of Competing Arguments

The appellant argued that the funds in the bank accounts were legitimate and provided some explanations for the sources of the funds, such as transfers from family members and sales of land. However, the Tribunal found these explanations insufficient and noted the lack of documentation and clarity regarding the sources of other significant funds.

The respondent argued that the appellant's firm had no legitimate business activities and was used to launder money for Partha Chatterjee. The Tribunal agreed with the respondent's position, emphasizing the lack of transparency and legitimate sources for the funds.

Conclusions

The Tribunal concluded that the funds in the appellant's bank accounts were indeed "proceeds of crime" and upheld the attachment of the bank accounts. The Tribunal found no merit in the appellant's arguments and dismissed the appeal.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning

The Tribunal stated, "The appellant has failed to disclose his business with required details so as to justify transactions shown in the bank account which otherwise remain unexplained even during the course of arguments."

Core Principles Established

• The necessity of providing clear and legitimate sources for funds in cases of suspected money laundering.
• The importance of transparency and documentation in financial transactions to refute allegations of money laundering.
• The role of the Prevention of Money Laundering Act in addressing and adjudicating cases involving suspected proceeds of crime.

Final Determinations on Each Issue

• The attachment of the bank accounts of M/s SKP Enterprises was justified under the Prevention of Money Laundering Act, 2002.
• The funds in the bank accounts were determined to be "proceeds of crime" linked to the corruption in the teacher selection process.
• The appellant failed to provide sufficient evidence of legitimate sources for the funds, leading to the dismissal of the appeal.