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2018 (11) TMI 309 - AT - Money LaunderingOffence under PMLA - Provisional Attachment Order - Held that - As regard to plea as to whether right of the appellant would prevail over the rights of the other secured creditors, no opinion is being expressed. The said aspect would be considered by the Court where the prayer of execution of sale deed is pending or before the Special Court who is also empowered to pass such order under the proviso of amended provision of section 8(8) of the Act (Act of 2018). All secured creditors including DRT and banks are at liberty to raise the objection as per law as admittedly this tribunal is not deciding the fate of title of the flat in question. From the entire gamut of the matter, it is evident that the appellant was the claimant in the flats. By making the entire payment, the appellant is become stake-holder as the amount paid by the appellant was not proceed of crime. The appellant is also not involved in the money laundering. The question of link and nexus in the criminal activities directly or indirectly does not arise. As far as the impugned order dated 1.12.2016 is concerned, the same is not sustainable in law and the facts of the present case. The same is set-aside against the appellant with regard to flats in question. The provisional order is also quashed accordingly by allowing the appeal. As clarified that this tribunal has decided the appeal pertaining to the order passed on the attachment of flats allegedly purchased by the appellant. The finding shall have no bearing with regard to merit of other proceedings pending against the accused parties including extradition proceedings. It is alleged that the flats in question is one of the assets in which the Official Liquidator is appointed, therefore, the appellant, the respondent nos. 3, 5 and 8, unless the final order is passed in his favour, shall not create third party interest directly or indirectly.
Issues Involved:
1. Validity of the attachment order concerning Apartment No. 9A in Kingfisher Towers. 2. Whether the appellant has committed any offense under Section 3 of the Prevention of Money Laundering Act, 2002. 3. Whether the subject property is proceeds of crime and if the appellant is in possession of proceeds of crime. 4. Compliance with mandatory provisions under Section 8(2) of the PMLA. 5. The impact of other legal proceedings on the current appeal. Detailed Analysis: 1. Validity of the Attachment Order: The appeal was filed against the order dated 01.12.2016, confirming the provisional attachment of Apartment No. 9A in Kingfisher Towers. The appellant, a non-resident Indian, claimed ownership of the property through bona fide purchase, having paid the full consideration through legal banking channels. The Enforcement Directorate (ED) attached the property alleging it was part of proceeds of crime involving Vijay Mallya and Kingfisher Airlines Ltd. 2. Appellant's Involvement in Money Laundering: The appellant was not named in the FIR or charge sheet and had no prosecution complaint pending against him. The appellant argued that he was not involved in any scheduled offenses and that the source of money used for purchasing the property was clean, paid through the banking system. 3. Proceeds of Crime: The ED claimed that the property was attached as "value thereof" of proceeds of crime. However, the appellant had vested rights in the property before the attachment. The tribunal noted that the appellant had no link or association with the accused Vijay Mallya and the payment for the property was made through legal channels. The ED failed to establish that the appellant's funds were proceeds of crime. 4. Compliance with Section 8(2) of PMLA: The appellant was not issued a notice nor given an opportunity to be heard as mandated under Section 8(2) of the PMLA. The tribunal found that the ED and Adjudicating Authority failed to comply with the mandatory statutory requirement, as the appellant was a bona fide purchaser and should have been given a chance to prove that the property was not involved in money laundering. 5. Impact of Other Legal Proceedings: The tribunal noted that the appellant had initiated proceedings before the Karnataka High Court for the execution of the sale deed and possession of the property. The tribunal clarified that its decision was limited to the attachment order and did not affect other proceedings, including those before the Debt Recovery Tribunal or the Special Court. Conclusion: The tribunal concluded that the appellant was a bona fide purchaser who had paid the full consideration for the property through legal means. The attachment order dated 01.12.2016 was set aside, and the provisional attachment was quashed. The tribunal emphasized that its findings were specific to the attachment order and did not impact other pending legal proceedings.
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