2015 (12) TMI 1733 - AT - Money Laundering

Offence under PMLA - provisional attachment orders - Held that - The charge Sheet No. 1/2013 was filed on 25-2-2013 before the Additional Metropolitan Magistrate Banglore which inter alia include offences under Sections 420 and 471 of Indian Penal Code against Shri John Micheal and others and provisional attachment Order No. 9/2014 was passed on 6-8-2014 which event is subsequent to 1-6-2009 therefore following the principle laid by the Andhra Pradesh High Court in the case of V. Suryanarayan Prabhakara Gupta (2011 (8) TMI 1245 - ANDHRA PRADESH HIGH COUR) and Alive Hospitality and Food Pvt. Ltd. v. Union of India & Others (2013 (8) TMI 474 - GUJARAT HIGH COURT) and for the above stated reasons we are of the considered view that the appellants are covered by the provisions of PMLA and as the respondent had jurisdiction under the provisions of PMLA therefore attachment proceedings initiated by him u/s 5 of the PMLA are valid proceedings and the appeals filed by the appellants cannot be allowed on this ground. In view of the foregoing the challenge of the appellants to the impugned order dated 12th November 2014 passed by the Adjudicating Authority in Original Complaint confirming provisional attachment Order fails and the appeals are dismissed.

Summary

Issues Involved:
1. Jurisdiction of the respondent to initiate proceedings under PMLA.
2. Validity of FIRs and charge sheets as a basis for PMLA proceedings.
3. Applicability of PMLA provisions to offences committed before they were included in the Schedule of PMLA.
4. Legitimacy of provisional attachment orders and confirmation by the Adjudicating Authority.

Detailed Analysis:

Jurisdiction of the Respondent to Initiate Proceedings under PMLA:
The appellants argued that the respondent lacked jurisdiction to initiate proceedings for provisional attachment of properties under PMLA because no charge sheet had been filed in FIR No. 239/2010, and FIR No. 61/2011 was based on a complaint by Shri Tapan Bhandari, whose statement was allegedly not recorded by the police. The respondent countered that a combined charge sheet covering both FIRs had been filed, and the absence of Shri Tapan Bhandari's statement was inconsequential as the FIR and charge sheet were valid.

The Tribunal held that the plea regarding the absence of a charge sheet in FIR No. 239/2010 was unsustainable and noted that a combined charge sheet had been filed. The Tribunal also dismissed the argument about the non-recording of Shri Tapan Bhandari's statement, stating that the proceedings under PMLA were based on property and not on the sustainability of allegations in the FIR and charge sheet.

Validity of FIRs and Charge Sheets as a Basis for PMLA Proceedings:
The appellants contended that the FIRs and charge sheets could not form the basis for PMLA proceedings due to procedural issues. The Tribunal found that the combined charge sheet filed in respect of both FIRs was valid and that proceedings under PMLA could be initiated based on these FIRs.

Applicability of PMLA Provisions to Offences Committed Before Inclusion in the Schedule:
The appellants argued that the offences under Sections 420 and 471 of IPC were committed before these offences were included in the Schedule of PMLA on 1st June 2009, and thus, PMLA provisions could not be applied retrospectively. The respondent cited judgments from the Andhra Pradesh High Court and the Gujarat High Court, which held that the relevant date for PMLA applicability is the date on which the proceeds of crime are processed, not the date of the offence.

The Tribunal agreed with the respondent, referencing the Andhra Pradesh High Court's judgment in V. Suryanarayana Prabhakara Gupta v. Union of India and the Gujarat High Court's judgment in Alive Hospitality and Food Pvt. Ltd. v. Union of India. The Tribunal concluded that since the charge sheet and provisional attachment order were issued after the inclusion of the offences in the Schedule, the proceedings were valid.

Legitimacy of Provisional Attachment Orders and Confirmation by the Adjudicating Authority:
The appellants challenged the provisional attachment orders and their confirmation by the Adjudicating Authority, arguing that the properties were not acquired from proceeds of crime. The respondent maintained that the appellants failed to provide evidence of legitimate sources of income for acquiring the properties.

The Tribunal found that the appellants did not produce any evidence to indicate that the properties were acquired from legitimate sources. The Tribunal upheld the Adjudicating Authority's order confirming the provisional attachment, stating that the properties were involved in money laundering.

Conclusion:
The Tribunal dismissed the appeals, affirming the respondent's jurisdiction under PMLA, the validity of the FIRs and charge sheets, the applicability of PMLA provisions to the offences in question, and the legitimacy of the provisional attachment orders. All pending applications were also dismissed.