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TMI Blog2022 (6) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... th I-Core Group. The order also records that the proceeds of crime have been identified and are therefore liable to be attached. The finding is also that the petitioners have acquired property by indirect payment out of the proceeds of crime . The impugned order in the present case falls short on several counts. Besides the lack of a factual nexus between the acquisition of the immovable property and the identification of the property as proceeds of crime , there is also no reference to the property being derived from any direct or indirect criminal activity relating to a scheduled offence. There is also a stark absence of the basis of any apprehension of risk that the property may be wasted or dealt with in a manner so as to render the proceedings under 5(1)(b) infructuous. The general conclusion in paragraph 11 of the impugned order is that the petitioners will frustrate further proceedings. The factual narration containing random statements of facts cannot satisfy the requirement of reasons to believe being recorded in writing - Having regard to all the facets of the impugned order of attachment which have been challenged in this writ petition, this Court is accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f I-Core. Counsel opposes the grant of relief as prayed for. 4. The impugned order of provisional attachment dated 29.03.2022 is directed against four immovable properties and five bank accounts of the petitioners. The immovable properties can be divided into i) Flat Nos. 9M and 11H both of Merlin Residency, 26, Prince Anwar Shah Road, Kolkata; ii) Flat Nos. 9F and 9G of Merlin Residency of the same address; and iii) A two-storied house in Santiniketan. The grouping of the properties follows the sequence of the impugned order. 5. With regard to Flat Nos. 9M and 11H, the facts as mentioned are that the petitioner no. 1 received funds from the I-Core Group and entered into an agreement with I-Core on 29.07.2009. DPMPL and Ekdin (run by DPMPL) were in a poor financial condition and defaulted on the loan taken from UCO Bank. The petitioners mortgaged Flat No. 9M at this time. I-Core undertook to pay all the financial obligations for running DPMPL on condition that DPMPL transferred 50% of its shares to the promoters of I-Core which did not take place. I-Core also did not receive any benefit from the investment made in DPMPL. The conclusion arrived at is that:- It appears th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sh. Suman Chattopadhyay and Smt. Kasturi Chattopadhyay, as mentioned in the schedule-I II below, have been identified as liable to be attached . 9. The general conclusion in respect of the immovable properties is that proceeds of crime have been siphoned off from the I-Core Group to the 1st petitioner and DPMPL for over a decade and has been concealed/changed in form. The order records that now it is barely possible to track down the trail of the whole POC from the complex web of account transactions . 10. There are no independent factual findings for the five bank accounts which have been provisionally attached. 11. The narration of facts and the conclusions arrived at with regard to the proceeds of crime acquired by the petitioners show a singular absence of a causal connection between the two. The findings under each head of immovable property (except Flat Nos. 9F and 9G where there is no finding) is that the petitioners acquired proceeds of crime from their association with I-Core Group. The order also records that the proceeds of crime have been identified and are therefore liable to be attached. The finding is also that the petitioners have acquired pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alt with in a manner which may frustrate the proceedings relating to confiscation of the property, subject to the property being proceeds of crime . 15. Notably, both the requirements of reason to believe in respect of the person in possession of proceeds of crime and the likelihood of the proceeds of crime being transferred are required to be fulfilled independent of and in conjunction since 5(1)(a) and (b) are non-disjunctive. The requirement is also of the writing of reasons making out a case, in fact and evidence, that there is a real likelihood of the person who is in possession of the proceeds of crime taking steps to frustrate the proceedings by dealing with the property or transferring the same. This is further reinforced by the 2nd proviso to 5(1)(b) which requires that any property of any person may be attached under section 5 if the designated officer has reason to believe and records the same in writing on the basis of the materials in his possession that the property involved in money laundering needs to be immediately attached. 16. The impugned order in the present case falls short on several counts including those stated above. Besides the lack of a fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 deals with a case under section 17 of the PMLA, with regard to freezing of property the Supreme Court places emphasis on the safeguards built into the PMLA for protecting the rights of persons who are at the receving end of the proceedings. Tofan Singh vs State of Tamil Nadu; (2021) 4 SCC 1 also dwelt on the significance of the reason to believe requirement before conducting any search and seizure by the authority. The Supreme Court relied on A.S. Krishnan vs State of Kerala; (2004) 11 SCC 576 and placed the expression reason to believe between suspicion or doubt and knowledge in the hierarchy of the possibilities of the state of mind. Reason to believe was explained when a person has sufficient cause to believe that thing but not otherwise . 20. Having regard to all the facets of the impugned order of attachment which have been challenged in this writ petition, this Court is accordingly of the considered view that the impugned order of attachment fails to fulfill the requirements of the relevant provision of the PMLA and should hence be quashed. 21. WPA 10984 of 2022 is disposed of in terms of the above. Urgent Photostat certified copies of this order, if ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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