2015 (8) TMI 1112 - AT - FEMA

Money laundering - res judicata in the criminal complaint - Attachment of property - appellant admitted that property is not owned by her but by the company - Held that - The action of attachment is not in relation to a person as such but essentially to freeze the proceeds of the crime. The fact that the respondents could have acted only if there was reason to believe that a person is in possession of proceeds of crime does not mean that the authorities at this stage are obliged to prove the fact beyond reasonable doubt that the property in possession in fact was proceeds of crime. All that the authority is required to show is that there was substantially probable cause to form an opinion that the property under attachment is proceeds of crime. Perusal of Chapter III of PMLA also reveals that the orders passed under it are interlocutory in nature and such order do not decide finally whether an offence has been committed by an accused under Section 3 of the Act for Money Laundering nor such orders passed under said chapter decide what punishment is to be imposed on such accused for money laundering. Any observation made while passing orders under said chapter are not the findings for the purpose of alleged offense committed under Section 3 nor observations are the findings in the Criminal matters pending against such accused. It is also well settled that the principle of res judicata does not apply to interlocutory orders like order of stay, injunction or appointment of receiver which are designed to preserve the status quo pending litigation to ensure that the parties may not be prejudiced but the normal delay which the proceedings before the Court usually take. On the basis of the observation made in the impugned order, the appellant cannot be convicted and sentenced in the criminal cases. - Appeal disposed of.

Summary

Issues:
1. Attachment of properties under the impugned order.
2. Allegations against the appellant regarding money laundering and predicate offenses.
3. Impact of adjudicating authority's observations on criminal cases.
4. Provisional attachment of properties under the Prevention of Money Laundering Act, 2002.

Issue 1: Attachment of properties under the impugned order
The appellant challenged the order that attached properties, claiming he paid money on behalf of a company for property purchase, but no rights were created in his favor. The properties were alleged proceeds of crime related to trademark infringement.

Issue 2: Allegations against the appellant
The Tribunal clarified it was not deciding if the appellant committed money laundering or predicate offenses. The observations made were not determinative for criminal cases, and the appellant's lack of rights in a specific property was acknowledged.

Issue 3: Impact of adjudicating authority's observations on criminal cases
The Tribunal emphasized that the adjudicating authority's observations did not affect criminal trials. The appellant's concerns about conviction based on the order's observations were deemed legally unfounded.

Issue 4: Provisional attachment of properties under the Prevention of Money Laundering Act, 2002
The Act allows for two parallel proceedings: attachment of properties suspected to be proceeds of crime and prosecution for offenses. Provisional attachment is an emergent measure to prevent concealment or transfer of proceeds of crime. The attachment is to freeze crime proceeds, and authorities need to show a probable cause, not prove beyond reasonable doubt, that the property is linked to crime.

The Tribunal highlighted that orders under the Act are interlocutory and do not determine guilt or punishment for money laundering offenses. Such orders are to preserve the status quo during proceedings and do not impact criminal cases. The principle of res judicata does not apply to such orders, ensuring parties are not prejudiced by delays in legal proceedings.

Ultimately, the appeal was disposed of as not pressed, with the appellant reserving rights for criminal cases. The Tribunal emphasized that its observations did not impact criminal proceedings, and courts would independently assess evidence in pending cases.