2024 (11) TMI 793 - AT - Money Laundering

Attachment of immovable properties under Prevention of Money Laundering Act, 2002 (PMLA) due to non-compliance with Section 8(1) requirements - reasons to believe - HELD THAT - In the instant case, reasons to believe were not conveyed to the appellant along with the notice issued by the Adjudicating Authority despite judgment of the various High Courts and even by this Tribunal holding that whenever a notice is caused by the Adjudicating Authority under Section 8(1) of the Act of 2002, reasons to believe recorded in writing have to be given to the defendants. However, the appellant was not given copy of the reasons to believe while issuing notice. Thus, on the aforesaid ground, the impugned order deserves to be set aside. This Tribunal while holding that the reasons to believe recorded in writing may not be required to be served under Section 5(1) of the Act of 2002 but notice under Section 8(1) of the Act of 2002 should be with reasons to believe of the Adjudicating Authority. It is for the reason that after the attachment, if it is confirmed by the Adjudicating Authority, it may ultimately affect the party and that cannot be without an opportunity to know the reasons to believe of the Adjudicating Authority - the reason to cause interference in the impugned order passed by the Adjudicating Authority and it is accordingly set aside. The matter is remanded back to the Adjudicating Authority to take de novo proceedings and that too from the stage of submitting notice to the appellant along with the reasons to believe so that appellant may file a proper reply. Appeal disposed off.

Summary

Issues:
Challenge to order confirming attachment of properties under Prevention of Money Laundering Act, 2002 (PMLA) due to non-compliance with Section 8(1) requirements.

Analysis:
1. The appellant challenged the order confirming attachment of properties under PMLA, citing non-compliance with Section 8(1) of the Act. The Adjudicating Authority is mandated to have "reasons to believe" that a person has committed an offense under Section 3 or possesses proceeds of crime, and issue a notice to indicate the sources of income within thirty days.

2. The appellant argued that "reasons to believe" were not conveyed along with the notice issued by the Adjudicating Authority, contrary to legal requirements. The absence of providing the "reasons to believe" to the appellant while issuing the notice was deemed a ground for setting aside the impugned order.

3. The appellant's counsel contended that if the non-compliance with Section 8(1) is established, there is no need to raise further issues at this stage. The focus was on quashing the Adjudicating Authority's order based on this primary ground of non-compliance.

4. The respondent countered the appeal by asserting that while "reasons to believe" are essential, there is no explicit requirement to serve a copy of it along with the notice. The respondent suggested that if the Tribunal finds the Adjudicating Authority should provide "reasons to believe," the matter could be remanded for compliance.

5. The Tribunal noted that the "reasons to believe" were not conveyed to the appellant by the Adjudicating Authority, despite serving relevant documents. Citing a previous judgment, the Tribunal highlighted the necessity of providing "reasons to believe" under Section 8(1) of the Act for fairness in proceedings.

6. The Tribunal decided to set aside the impugned order due to non-compliance with Section 8(1) and remand the matter to the Adjudicating Authority for fresh proceedings. The appellant was to be provided with the "reasons to believe," and the proceedings were to be completed within 180 days as per statutory requirements.

7. The judgment referenced previous cases and legal provisions to emphasize the significance of complying with procedural requirements, particularly regarding the provision of "reasons to believe" under Section 8(1) of the PMLA. The decision aimed to ensure fairness and adherence to legal standards in attachment proceedings under the Act.

8. The appeal was disposed of by setting aside the Adjudicating Authority's order and remanding the matter for further proceedings in compliance with Section 8(1) of the PMLA. The parties were directed to appear for proceedings on a specified date, and the statutory timeline for completing the proceedings was emphasized.