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2025 (4) TMI 453 - AT - Money LaunderingMoney Laundering - confirmation of provisional attachment order - siphoning off of huge amount from the bank by opening fake staff over draft account in Maliga on branch of ICBL - no predicate offence - property attached by the respondents were acquired before the commission of offence - proceeds of crime or not - Failure to pass confirmation order within a period of 180 days from the date of provisional attachment of the properties - Predicate offence was existing not only at the time of recording of the ECIR - HELD THAT - The facts on record show that another FIR number 10/22 was registered on 29.06.2022 by the Bureau of Investigation Economic Offence Guwahati for the offence under section 120 B 420 409 468 471 IPC against the accused Subhra Jyoti Bharali and other accused. It was towards the loan amounting to Rs. 3.69 crores from Industrial Cooperative Bank Limited in the name of 09 individuals. Even if we ignore the second FIR the facts on the record shows that at the time of the provisional attachment and recording of the ECIR the FIR was for the predicate offence. The subsequent chargesheet for the offence undersection 120 B 408 409 IPC would not nullify the proceeding initiated at the time of existence of the predicate offence and otherwise the chargesheet is not taken to be the final word about the commission of offence rather it is submitted before and the Trial Court alone is competent to consider it and take cognizance of the offence as is made out which can be other than given in the charge sheet. The charge sheet is filed by the police and thereby it cannot be considered to the final word on commission of offence rather it remains in the hands of Special Court. The subsequent filing of the charge sheet would not nullify the provisional attachment order passed earlier so as the recording of the ECIR. It is more so when the investigation reveal a predicate offence and the offence under section 3 of the Act of 2002 by the appellants - The material on record even shows a prima facie case of offence under section 420 IPC. It is submitted that the property attached by the respondents were acquired before the commission of offence thus could not have been taken to be the proceeds of crime - HELD THAT - If the details of the property attached by the respondent is taken note of properties were acquired subsequent to the commission of crime. Thus it is not that the properties attached by the respondents were acquired by the appellant prior to the commission of crime rather the appellant had acquired the properties subsequent to period of crime. The period of crime is not to be taken from the date of registration of the FIR but it can be prior to the FIR. In this case mis- appropriation of fund was much prior to the registration of the FIR. It is also that proceeds fall in the hand of the appellant would fall in the definition of proceeds of crime when the proceeds directly or indirectly acquired or derived out of criminal activity of a schedule offence is not available. The attachment of the property can be even for equivalent value and is permissible under the law. Failure to pass confirmation order within a period of 180 days from the date of provisional attachment of the properties - HELD THAT - The provisional attachment order was issued on18.08.2022 while the confirmation order was passed by the Adjudicating Authority on 08.02.2023 i.e. within the period of 180 days. The fact however remain that while passing the order on 08.02.2023 a clerical/typographical error remain in the order and therefore a corrigendum was issued on 21.02.2023 which is taken to be an order beyond the period of 180 days. Section 68 of the Act of 2002 provides that no notice summon order document or other proceeding made or issued shall be invalid or deemed to be invalid merely for the reason of any mistake defect or omission in the notice summon order etc. if such summon/order etc. in substance and effect is in conformity with or according to intent and purpose of the Act. The Adjudicating Authority confirmed the provisional attachment order within a period of 180 days. However reference of the properties given were different than the attached due to typographical and clerical error thus has been corrected by the corrigendum. Whenever a typographical or clerical error is corrected by way of corrigendum it would relate back to the original order and would not be taken to be a substantive order. The nature of the order has not been changed rather the details of the property was wrongly mentioned out of typographical error and has been described in the corrigendum. In fact the Adjudicating Authority was not required to give description of the properties attached when provisional attachment order was sent for confirmation containing description of the properties. The Adjudicating Authority was required to consider rival submission to confirm or to deny it. The description of the property was not required to be reiterated as it is given in provisional attachment order. Thus description of the property is not in any manner to cure the defect of the nature which may change the substance of the order thus in the factual background aforesaid the corrigendum would relate back to the date of the main order. As per the Judgement in the case of Jubilant Organosys Limited Vs. Assistant Commissioner of Central Excise and Ors. 2011 (6) TMI 631 - KARNATAKA HIGH COURT the corrigendum be relate back to the date of the original order and having been passed within 180 days thus we are unable to accept even the third issue raised by the appellant. Conclusion - i) The existence of a predicate offense at the time of the provisional attachment order suffices for PMLA proceedings. ii) The validity of the PMLA proceedings the attachment of properties affirmed. Appeal dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are: a) Whether the absence of a predicate offense in the chargesheet nullifies the proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). b) Whether the properties attached by the respondents were acquired prior to the commission of the alleged crime and therefore cannot be considered "proceeds of crime." c) Whether the confirmation of the provisional attachment order was validly made within the statutory period of 180 days, considering a corrigendum was issued after the period had lapsed. 2. ISSUE-WISE DETAILED ANALYSIS First Issue: Predicate Offense Requirement - Relevant Legal Framework and Precedents: The PMLA proceedings require a predicate offense, as established by the FIR and chargesheet. The appellants argued that the chargesheet did not include offenses under sections 468 and 471 IPC, which were initially part of the FIR, thus questioning the validity of the PMLA proceedings. - Court's Interpretation and Reasoning: The Court noted that the predicate offense existed at the time of the FIR and the provisional attachment order. The subsequent chargesheet, even if limited to sections 120B, 408, and 409 IPC, does not nullify the proceedings initiated when the predicate offense was recorded. The filing of the chargesheet is not the final determination of the offense, which is within the jurisdiction of the trial court. - Key Evidence and Findings: The Court found that another FIR was registered, which included offenses under sections 120B, 420, 409, 468, and 471 IPC, supporting the existence of a predicate offense. - Application of Law to Facts: The Court applied the legal principle that the existence of a predicate offense at the time of the provisional attachment order suffices for PMLA proceedings. - Treatment of Competing Arguments: The appellants' argument that the absence of certain offenses in the chargesheet nullifies the proceedings was rejected based on the existence of a predicate offense at the relevant time. - Conclusions: The Court rejected the appellants' challenge on the grounds of the absence of a predicate offense. Second Issue: Attachment of Properties as Proceeds of Crime - Relevant Legal Framework and Precedents: Under PMLA, "proceeds of crime" include properties derived from criminal activity or equivalent value properties if the direct proceeds are unavailable. - Court's Interpretation and Reasoning: The Court referred to the definition of "proceeds of crime," which includes properties of equivalent value when direct proceeds are not traceable. The judgment in Sadanand Nayak and Pavana Dibur was considered, emphasizing that properties acquired prior to the crime can still be attached if they represent equivalent value. - Key Evidence and Findings: The Court examined the timeline of property acquisitions and found that the properties were acquired during or after the period of alleged criminal activity. - Application of Law to Facts: The Court applied the principle that even if properties were acquired before the crime, they could be attached if they represent equivalent value to the proceeds of crime. - Treatment of Competing Arguments: The appellants' argument that properties acquired prior to the crime cannot be attached was dismissed based on the legal framework allowing attachment of equivalent value properties. - Conclusions: The Court upheld the attachment of properties as valid under the PMLA. Third Issue: Validity of Confirmation Order within 180 Days - Relevant Legal Framework and Precedents: Section 5(1) of the PMLA requires confirmation of a provisional attachment order within 180 days. Section 68 addresses the validity of orders despite mistakes or omissions. - Court's Interpretation and Reasoning: The Court found that the provisional attachment order was confirmed within 180 days, and the subsequent corrigendum was a correction of clerical errors, not a substantive change. - Key Evidence and Findings: The corrigendum corrected typographical errors and did not alter the substance of the original order. - Application of Law to Facts: The Court applied the principle that a corrigendum relates back to the original order date if it corrects clerical errors. - Treatment of Competing Arguments: The appellants' reliance on the Madras High Court judgment was distinguished based on the nature of the corrigendum in this case. - Conclusions: The Court upheld the validity of the confirmation order, dismissing the appellants' challenge. 3. SIGNIFICANT HOLDINGS - Core Principles Established: The judgment reinforces that the existence of a predicate offense at the time of the provisional attachment order suffices for PMLA proceedings. It also clarifies that properties acquired prior to the crime can be attached if they represent equivalent value to the proceeds of crime. Additionally, a corrigendum correcting clerical errors relates back to the original order date. - Final Determinations on Each Issue: The appeals were dismissed, affirming the validity of the PMLA proceedings, the attachment of properties, and the confirmation order.
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