2025 (6) TMI 1600 - AT - Money Laundering

Money Laundering - provisional attachment order - absence of any prosecution complaint under PMLA - non-filing of the prosecution complaint within 90 days from the date of passing of the order by the Adjudicating Authority - appellants are not named as accused in the predicate offence. Whether the attachment needs to be set aside in absence of any prosecution complaint under PMLA? - Whether the attachment needs to be set aside for not filing the prosecution complaint within 90 days from the date of passing of the order by the Adjudicating Authority on 12.03.2018? - HELD THAT - After going through the pre-amended and post-amended provision of Section 8(3)(a) (w.e.f. 19.04.2018) it is opined that before amendment there was no time limit for filing the prosecution complaint and the provision of filing the prosecution complaint within 90 days was inserted only after amendment w.e.f. 19.04.2018 which was again amended to file prosecution complaint within 365 days w.e.f. 20.03.2019. The restriction of completing the investigation and filing the prosecution complaint within 90 days was inserted in Section 8(3)(a) w.e.f. 19.04.2018. Thus the time starts running for filing the prosecution complaint from 19.04.2018 and not from the date of passing of the impugned order dated 12.03.2018. In the present case the prosecution complaint is filed by ED on 13.06.2019 i.e. on 55th day from 19.04.2018. Accordingly attachment does not lapse. Even otherwise after the filing of the prosecution complaint the properties relied upon by Respondent ED for the purpose of confiscation in case of conviction becomes case property of the said case and hence after the filing of prosecution complaint it is the prerogative of the Ld. Special Judge of PMLA Court to dispose of the property after conclusion of trial in the prosecution complaint as per law - issued decided in favour of Respondent ED and against the Appellants. Whether the attachment needs to be set aside as the appellants are not named as accused in the predicate offence? - HELD THAT - The law on this issue now stands settled by the landmark judgment of the Hon ble Supreme Court in the case of Vijay Madanlal Choudhary and Ors. v. Union of India 2022 (7) TMI 1316 - SUPREME COURT (LB) where it was held that We find force in the stand taken by the Union of India that the objectives of enacting the 2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence so as to combat the evil of money-laundering. The second proviso therefore addresses the broad objectives of the 2002 Act to reach the proceeds of crime in whosoever s name they are kept or by whosoever they are held. Therefore the property in the hands of any person in possession of proceeds of crime can be attached even if he is not accused of the offence of money-laundering - the issue is accordingly decided in favour of the Respondent ED and against the Appellants. Conclusion - i) The attachment was valid despite no prosecution complaint pending at the time of confirmation. ii) The prosecution complaint was filed within the statutory timeline post-amendment; hence attachment did not lapse. iii) Attachment of properties held by persons not named as accused in the predicate offence is permissible under PMLA. Appeal dismissed.

Summary

The core legal questions considered by the Appellate Tribunal under the Prevention of Money Laundering Act (PMLA) in the present appeals are as follows:

(i) Whether the attachment of properties under PMLA can be confirmed or must be set aside in the absence of any prosecution complaint filed under the Act at the time of confirmation;

(ii) Whether the attachment should be set aside for non-filing of the prosecution complaint within 90 days from the date of the order confirming the attachment;

(iii) Whether the attachment should be set aside on the ground that the appellants are not named as accused in the predicate offence under which the money laundering investigation is based.

Issues (i) and (ii) are interrelated and pertain to the procedural requirements and timelines for confirming attachment orders and filing prosecution complaints under Section 8(3)(a) of the PMLA, as well as the effect of amendments to this provision. Issue (iii) concerns the scope of attachment powers vis-`a-vis the identity of the person holding the property and their status as accused in the predicate offence.

Issue-wise detailed analysis:

Issue (i) & (ii): Attachment in absence of prosecution complaint and timeline for filing complaint

The Tribunal examined the provisions of Section 8(3)(a) of the PMLA, both prior to and after the amendment effective from 19.04.2018. The pre-amendment provision did not prescribe any time limit for filing the prosecution complaint after confirmation of attachment by the Adjudicating Authority. The 2018 amendment introduced a requirement to file the prosecution complaint within 90 days, subsequently extended to 365 days by a later amendment effective 20.03.2019.

The appellants argued that since no prosecution complaint was pending at the time of confirmation of the attachment order dated 12.03.2018, the attachment was invalid under the pre-amended law. They contended that the absence of a prosecution complaint meant the attachment could not be sustained.

The Tribunal rejected this contention, reasoning that the absence of a time limit for filing the prosecution complaint prior to the amendment cannot be interpreted as a requirement that the complaint must be pending before confirmation of attachment. Such an interpretation would defeat the object of the PMLA, which is to prevent transfer or alienation of properties suspected to be proceeds of crime during investigation. The Tribunal emphasized that immediate attachment is necessary to preserve the properties for eventual confiscation if conviction occurs.

Further, the Tribunal noted that the 90-day timeline for filing prosecution complaints commenced only from the date of the amendment (19.04.2018). In the present case, the prosecution complaint was filed on 13.06.2019, well within the extended timeline. Therefore, the attachment did not lapse.

The Tribunal also observed that once the prosecution complaint is filed, the properties attached become case properties under the control of the Special Judge, who can dispose of them as per law after trial conclusion.

Thus, the Tribunal concluded that the attachment was valid despite the absence of a prosecution complaint at the time of confirmation, and that the complaint was filed within the statutory timeline post-amendment. Accordingly, issues (i) and (ii) were decided against the appellants and in favor of the Enforcement Directorate (ED).

Issue (iii): Attachment of property held by persons not named as accused in the predicate offence

The appellants contended that since they were not named as accused in the predicate offence charge sheet filed by the Central Bureau of Investigation (CBI) on 29.08.2014, the attachment of properties held by them was impermissible.

The Tribunal referred to the authoritative Supreme Court judgment in Vijay Madanlal Choudhary and Ors. v. Union of India and Ors., which clarified the scope of attachment under PMLA. The Court held that Section 5(1) of the PMLA is not limited to accused persons named in the predicate offence. It applies broadly to any person involved in any process or activity connected with the proceeds of crime. The Court emphasized that the objective of the PMLA is to attach and confiscate proceeds of crime regardless of who holds them.

The Tribunal quoted the Supreme Court's reasoning: "The sweep of Section 5(1) is not limited to the Accused named in the criminal activity relating to a scheduled offence. It would apply to any person (not necessarily being Accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime." Further, "The objectives of enacting the 2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence so as to combat the evil of money-laundering."

Applying this legal principle, the Tribunal held that attachment of property in the hands of any person possessing proceeds of crime is permissible even if that person is not an accused in the predicate offence. Therefore, the appellants' argument on this ground was rejected.

Significant holdings include the following verbatim excerpts of crucial legal reasoning:

"The sweep of Section 5(1) is not limited to the Accused named in the criminal activity relating to a scheduled offence. It would apply to any person (not necessarily being Accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime."

"The objectives of enacting the 2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence so as to combat the evil of money-laundering. The second proviso, therefore, addresses the broad objectives of the 2002 Act to reach the proceeds of crime in whosoever's name they are kept or by whosoever they are held."

Core principles established:

• Attachment under PMLA can be confirmed even if no prosecution complaint is pending at the time of confirmation, particularly under the pre-amended law.
• The time limit for filing prosecution complaints introduced by amendment applies prospectively and does not invalidate prior attachments.
• The scope of attachment is not confined to accused persons in the predicate offence; it extends to any person holding proceeds of crime.
• The purpose of PMLA is to prevent dissipation of proceeds of crime and ensure their availability for confiscation upon conviction.

Final determinations on each issue:

• Issue (i): The attachment was valid despite no prosecution complaint pending at the time of confirmation. The appeal on this ground was dismissed.
• Issue (ii): The prosecution complaint was filed within the statutory timeline post-amendment; hence, attachment did not lapse. The appeal was dismissed.
• Issue (iii): Attachment of properties held by persons not named as accused in the predicate offence is permissible under PMLA. The appeal was dismissed.

The appeals were dismissed as devoid of merit, with a clarification that the decision does not prejudice the rights of any party during the criminal trial. The Tribunal's order preserves the integrity of attachment proceedings under PMLA, reinforcing the legislative intent to effectively combat money laundering by securing proceeds of crime irrespective of procedural stages or the identity of the property holder vis-`a-vis the predicate offence.