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2025 (5) TMI 78 - AT - Money LaunderingMoney Laundering - validity of attachment of properties under the PMLA when the same properties are already seized and under custody of the State Police in a disproportionate assets case - overriding provisions of PMLA over Cr.P.C. - HELD THAT - The properties were initially seized by ACB of Rajasthan Police Distt. Ajmer in the disproportionate asset case against the appellants. However respondent ED pressed for attachment of the properties as per the provisions of PMLA Act 2002. In my view the provisions of PMLA will override the provisions of Cr.P.C. for the purpose of seizure/attachment/confiscation of the properties. However seeing the fact that the order of confiscation was already passed by Ld. Special Judge Designated Court Ajmer the Respondent ED is at liberty to challenge the same before the Hon ble High Court of Rajasthan being an inter-se dispute between the two investigation agencies on the issue that whether the said properties will stand confiscated to the State Government or the Central Government. However the present appellants have no right to challenge the impugned orders of confirmation of the attachment as it is matter of record that appellants have generated the proceeds of crime/ disproportionate assets by criminal misconduct in acquiring the disproportionate assets to the knowns sources of the income committed by Sh. Surendra Kumar Sharma the then public servant along with his family members who abetted him to purchase the properties in their names after considering the fact that they are already convicted in the trial for commission of predicate offence. Conclusion - The provisions of PMLA will override the provisions of Cr.P.C. for the purpose of seizure/attachment/confiscation of the properties. The Respondent ED is at liberty to challenge the order of confiscation passed by the Special Judge before the Hon ble High Court of Rajasthan being an inter-se dispute between the two investigation agencies. Appeal dismissed.
The core legal questions considered by the Appellate Tribunal under the Prevention of Money Laundering Act, 2002 (PMLA) in these appeals are:
Issue-wise Detailed Analysis: 1. Validity of Attachment under PMLA when Properties are Already Seized by State Police Legal Framework and Precedents: The PMLA, 2002, provides for attachment, seizure, and confiscation of properties derived from proceeds of crime. Section 26 of the PMLA empowers the Adjudicating Authority to confirm attachment orders. The Cr.P.C., particularly Section 452, allows confiscation of property seized during trial. The conflict arises when properties are seized by State Police under Cr.P.C. and simultaneously sought to be attached by ED under PMLA. Court's Interpretation and Reasoning: The Tribunal observed that while the properties were initially seized by the Anti-Corruption Bureau (ACB), Rajasthan Police, the ED pressed for attachment under the PMLA. The Tribunal held that the provisions of the PMLA override the Cr.P.C. provisions in matters of attachment, seizure, and confiscation of proceeds of crime. However, since the Special Judge had already passed an order of confiscation under Cr.P.C., the ED was allowed liberty to challenge that order before the High Court, as it involved an inter-se dispute between two investigation agencies. Key Evidence and Findings: The properties attached included substantial cash amounts in Fixed Deposit Receipts (FDRs), gold and silver ornaments, and other valuables seized during investigation and trial. The appellants were convicted for offences involving disproportionate assets acquired through criminal misconduct. Application of Law to Facts: The Tribunal applied the overriding effect of PMLA provisions over Cr.P.C. to uphold the attachment confirmation. It recognized the existing confiscation order under Cr.P.C. but clarified that the ED could seek appropriate remedy against it. Treatment of Competing Arguments: The appellants argued that since the properties were already under seizure by the State Police, the ED's attachment order was not maintainable. The ED contended that PMLA provisions prevail and the confiscation should be in favour of the Central Government. The Tribunal sided with the ED's position on the primacy of PMLA provisions but allowed the ED to resolve the inter-agency dispute judicially. Conclusion: Attachment under PMLA is valid and overrides the Cr.P.C. seizure, but inter-agency disputes on confiscation ownership are to be resolved separately. 2. Right of Appellants to Challenge Confirmation of Attachment Legal Framework and Precedents: Section 26 of PMLA allows appeals against attachment confirmation orders. However, once conviction for predicate offences is established, the scope for challenging attachment on grounds of ownership or legality narrows significantly. Court's Interpretation and Reasoning: The Tribunal noted that the appellants were convicted for criminal misconduct resulting in disproportionate assets. Since the properties are proceeds of crime, the appellants have no right to challenge the confirmation of attachment orders under PMLA. Key Evidence and Findings: The appellants were convicted by the Special Judge for offences under the Prevention of Corruption Act and IPC. The properties attached were shown to be disproportionate and acquired through criminal misconduct. Application of Law to Facts: The Tribunal applied the principle that proceeds of crime cannot be claimed by convicted persons and upheld the attachment confirmation. Treatment of Competing Arguments: The appellants sought relief on the basis of custody and seizure by State Police and absence of apprehension for further attachment. The ED relied on conviction and PMLA provisions to sustain attachment. The Tribunal rejected the appellants' challenge. Conclusion: Convicted persons cannot challenge attachment confirmation of proceeds of crime under PMLA. 3. Conflict Between State Government and Central Government Regarding Confiscation Legal Framework and Precedents: The PMLA vests power with the Central Government and its agencies like the ED to attach and confiscate proceeds of crime. The Cr.P.C. empowers State Governments to confiscate seized properties during trial. Jurisdictional conflicts may arise. Court's Interpretation and Reasoning: The Tribunal acknowledged the conflict between the State Police's confiscation order and the ED's attachment under PMLA. It held that the ED is at liberty to challenge the State Government's confiscation order before the High Court, thereby recognizing the need for judicial resolution of inter-agency disputes. Key Evidence and Findings: The Special Judge's order confiscated properties in favour of the State Government, while the ED sought confiscation in favour of the Central Government under PMLA. Application of Law to Facts: The Tribunal refrained from deciding the dispute itself but allowed the ED to pursue legal remedy, ensuring that the conflict is resolved through appropriate judicial channels. Treatment of Competing Arguments: The ED argued for primacy of PMLA and central confiscation; the appellants and State Police relied on Cr.P.C. confiscation. The Tribunal maintained neutrality on ownership but upheld attachment confirmation. Conclusion: Inter-agency confiscation disputes are to be adjudicated by competent High Court; attachment confirmation under PMLA remains unaffected. 4. Consequences of Acquittal in Predicate Offence Appeal Legal Framework and Precedents: The PMLA contemplates that attachment and confiscation consequences depend on the finality of conviction in predicate offences. Acquittal would impact the status of attached properties. Court's Interpretation and Reasoning: The Tribunal clarified that in case of acquittal of the public servant in appeal against conviction, the consequences regarding attachment and confiscation will follow as per law. This indicates a conditionality on the attachment based on the outcome of the predicate offence appeal. Key Evidence and Findings: The appellants were convicted; however, the Tribunal recognized the possibility of acquittal on appeal and its legal ramifications. Application of Law to Facts: The Tribunal preserved the principle that attachment under PMLA is linked to the predicate offence conviction and is subject to change upon acquittal. Treatment of Competing Arguments: No specific competing arguments were addressed on this point, but the Tribunal's observation serves as a safeguard for appellants. Conclusion: Attachment consequences are dependent on the final outcome of predicate offence appeals. Significant Holdings: "The provisions of PMLA will override the provisions of Cr.P.C. for the purpose of seizure/attachment/confiscation of the properties." "The Respondent ED is at liberty to challenge the order of confiscation passed by the Special Judge before the Hon'ble High Court of Rajasthan being an inter-se dispute between the two investigation agencies." "The present appellants have no right to challenge the impugned orders of confirmation of the attachment, as it is matter of record that appellants have generated the proceeds of crime/disproportionate assets by criminal misconduct." "It is made clear that in case of acquittal of the public servant, in appeal filed by him against the judgment of conviction in the predicate offence, then the consequences will follow accordingly, as per law." The Tribunal finally dismissed the appeals, confirming the attachment of properties under PMLA, while granting liberty to the ED to pursue legal remedies regarding inter-agency confiscation disputes. The decision establishes the primacy of PMLA provisions over Cr.P.C. in matters of attachment and confiscation of proceeds of crime and restricts convicted persons from challenging such attachments, subject to the outcome of predicate offence appeals.
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