2024 (12) TMI 1147 - HC - Money Laundering

Money Laundering - organized crime - proclaimed offender - whether the captioned Appeals challenging the impugned order should be entertained on the civil side or the criminal side? - HELD THAT - The power of attachment of the property is therefore, conferred upon the Adjudicating Authority against whose order an Appeal is maintainable before the Appellate Tribunal, but this is a provision which is supplementary to the offence of money laundering created under the statute and with a specific provision prescribing that the confiscation or release of the property upon conclusion of trial, will depend upon whether the offence of money laundering has been made out or not. Upon a finding to that effect being finally rendered in a trial of an offence under PMLA, on conclusion of the trial, it can be rightly assumed that the power to attach the property and its adjudication is in the aid of the Special Court, who shall ultimately pronounce upon the aspect of commission of offence of money laundering. Since the proceedings for attachment and its adjudication by the Adjudicating Authority, are in aid of the trial of the offence, an Appeal being preferred against an order passed by the Authority before the Appellate Tribunal, is definitely liable to be entertained on the criminal side. By reading Section 9 of the Act, it was inferred that the proceedings taken therein, following the procedure of Code of Civil Procedure, results either in confirmation of ad-interim order of attachment passed by the Government or varying the same, and sale of property, leading to equitable distribution among depositors of money realised out of such sale, and it was concluded that it would be in form of Civil Appeal. Reliance placed upon the decision of the Delhi High Court in case of Deputy Director, Directorate of Enforcement, Vs. Axis Bank and Ors. 2019 (4) TMI 250 - DELHI HIGH COURT where the learned Judge has summarized the conclusion to the effect that the process of attachment (leading to confiscation) of proceeds of crime under PMLA is in the nature of civil sanction which runs parallel to investigation and criminal action vis- -vis the offence of money laundering, do not determine the issue as to whether the Appeal should be entertained on criminal side or civil side. There can be no difference of opinion that while the proceedings of attachment are conducted by the Adjudicating Authority, in adjudicating the rights of the contesting parties, the Adjudicating Authority shall have the powers vested in a civil court under Code of Civil Procedure and the proceedings shall be deemed to be civil proceedings. The ultimate test to be applied is, whether the attachment of property was on account of the registration of offence under PMLA, and what has to be done with the property on culmination of the trial, and in this case, since the result of attachment would depend upon the result of the trial of an offence. Necessarily, the proceedings having criminal element involved, would lie on the criminal side of the High Court - the Appeal is directed to be listed after Christmas Vacation.

Summary

Issues Involved:

1. Whether the appeals challenging the impugned order should be entertained on the civil side or the criminal side of the High Court.
2. Interpretation and applicability of the Prevention of Money Laundering Act, 2002 (PMLA) provisions concerning attachment and confiscation of property.
3. The nature of proceedings under PMLA and their classification as civil or criminal.

Issue-wise Detailed Analysis:

1. Jurisdiction of Appeals: Civil or Criminal Side

The primary issue addressed in the judgment is whether the appeals challenging the impugned order under the PMLA should be entertained on the civil or criminal side of the High Court. The appellant argued that the appeals should lie on the criminal side, while the respondent contended otherwise. The court analyzed various provisions of the PMLA and related precedents to determine the nature of proceedings. It concluded that since the proceedings for attachment and adjudication by the Adjudicating Authority are in aid of the trial of the offence, the appeal against such orders should be entertained on the criminal side. The court emphasized that the proceedings under PMLA, which ultimately result in the imposition of sentences or confiscation of property, inherently possess a criminal character.

2. Interpretation of PMLA Provisions

The court examined the provisions of the PMLA, highlighting its objective to prevent money laundering and provide for the confiscation of property involved in such activities. The Act is criminal in nature, as it prescribes punishment for money laundering under Sections 3 and 4. The court noted that the attachment of property is a supplementary provision to the offence of money laundering, with the ultimate determination of confiscation or release of property depending on the outcome of the trial. The court also discussed the role of the Adjudicating Authority and Appellate Tribunal, which, despite having powers akin to a civil court, function within the framework of the criminal proceedings under the PMLA.

3. Nature of Proceedings: Civil or Criminal

The court addressed the nature of proceedings under the PMLA, considering the legislative intent and statutory provisions. It highlighted that the attachment of property under PMLA is governed by the Code of Criminal Procedure, reinforcing the criminal nature of such proceedings. The court referenced various legal precedents and statutory provisions, including Section 65 of the PMLA, which applies the Code of Criminal Procedure to proceedings under the Act. The court concluded that the proceedings under PMLA, being criminal in nature, necessitate that appeals be filed and heard on the criminal side of the High Court.

In conclusion, the court determined that the appeals challenging the impugned order under the PMLA should be entertained on the criminal side, given the criminal nature of the proceedings and the legislative framework governing them. The court directed the appeal to be listed after the Christmas vacation, reinforcing its decision on the jurisdictional aspect of the appeals.