2017 (8) TMI 860 - AT - Money Laundering

Prevention of Money Laundering - denial of natural justice - no opportunity granted to the appellant to defend his case in connection with the property for 35% of the property attached - Held that - No doubt normally as per the statute he was supposed to give 30 days time to defend this case. We have not been able to understand when the Adjudicating Authority was having 74 days left before the statutory deadline under section 5 of the Act, atleast one final opportunity ought to have been granted to the appellant to defend his case. It is also not in dispute that on 12th January, 2015, the appellant was in judicial custody. Even the order was passed on the next date i.e. 13th January, 2015. As per the settled law, the accused person is entitled to raise his defence within the reasonable time. We are of the view that the order passed by the Adjudicating Authority is in haste and without following the principles of natural justice particularly when 74 days was still left before the statutory deadline. The impugned order is set aside the appellant is allowed to file the reply before the Adjudicating Authority within three weeks from today irrespective of the fact that he is in judicial custody. He could given the instructions as already given in the fresh matter to his counsel so that both the matters may be decided together. We also agree that the submissions of the learned counsel for the respondent that in ground (B) that the appellant has not made the correct statement that during the entire tenure of the proceedings before the Adjudicating Authority he was in judicial custody. As a matter of fact he was on bail between 1st January, 2015 to 5th January, 2015. It might have happened due to oversight as alleged by the counsel but all the appeal, papers were signed by him. He is warned to be careful in future. To balance the case of the two sides, cost of ₹ 10,000/- is imposed on the appellant

Issues Involved:
1. Allegations of misuse of power and acceptance of illegal gratification.
2. Provisional attachment of property under PMLA.
3. Violation of principles of natural justice.
4. Validity of evidence and statements recorded under duress.
5. Requirement of "proceeds of crime" for attachment under PMLA.

Issue-wise Detailed Analysis:

1. Allegations of Misuse of Power and Acceptance of Illegal Gratification:
The appellant, an IAS officer, faced multiple FIRs, including FIR No. 9 of 2010 and FIR No. 3 of 2010, alleging misuse of power by allotting land to Welspun group at rates significantly lower than the market rate, causing a loss of ?1.20 crores to the public exchequer. Additionally, it was alleged that the appellant accepted illegal gratification in the form of payment of mobile bills amounting to ?2.20 lakhs.

2. Provisional Attachment of Property Under PMLA:
The Enforcement Directorate registered ECIR/01/AZO/2012 based on the FIRs and initiated investigations under the Prevention of Money Laundering Act, 2002. The appellant's property, specifically 35% of a house in Gandhinagar, was provisionally attached under PAO No. 11/2014. The Adjudicating Authority confirmed the attachment order in the absence of the appellant's reply, leading to the current appeal.

3. Violation of Principles of Natural Justice:
The appellant argued that the impugned order was passed in violation of natural justice principles, as he was in judicial custody during the proceedings and unable to present his case. Despite writing to the Adjudicating Authority seeking time, the order was passed ex-parte. The appellant contended that there was sufficient time for the Adjudicating Authority to decide on the provisional attachment order and that the matter was decided without giving him an opportunity to defend himself.

4. Validity of Evidence and Statements Recorded Under Duress:
The appellant challenged the validity of evidence, specifically the statements of Mr. Sunil Milak, claiming they were recorded under duress. The respondent countered that the statements were corroborated by bank statements and other documents, and there was no force in the allegation of duress. The appellant also argued that the prosecution misused witnesses to create evidence, highlighting inconsistencies in Mr. Milak's statements.

5. Requirement of "Proceeds of Crime" for Attachment Under PMLA:
The appellant argued that the property in question could not be termed as "proceeds of crime" as defined under Section 2(1)(u) of PMLA. He asserted that the amount transferred to his wife's account was a legitimate share of profit from a partnership firm and not the outcome of any criminal activity. The appellant contended that the Adjudicating Authority erred in confirming the provisional attachment order without sufficient evidence of the property being "proceeds of crime."

Judgment:
The Tribunal found that the principles of natural justice were not followed, as the appellant was in judicial custody and unable to defend himself. The Adjudicating Authority had 74 days left before the statutory deadline and could have granted the appellant an opportunity to file a reply. The Tribunal set aside the impugned order and remanded the matter back to the Adjudicating Authority, allowing the appellant to file a reply within three weeks. The Tribunal also imposed a cost of ?10,000 on the appellant for an incorrect statement in the appeal.

The Tribunal emphasized the importance of granting an opportunity to the appellant to defend his case, particularly when the proceedings related to the remaining 65% of the same property were pending. The Tribunal directed that both matters be decided together by the Adjudicating Authority.

← Previous Next →