Allowed

FPA-PMLA-1513/KOL/2016 of Arjun Kumar Santhalia v. Joint Director, Directorate of Enforcement, Kolkata & Ors.

ATFP10 Oct 2024FPA-PMLA-1513/KOL/2016

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed appeals against an order confirming the attachment of bank accounts under the PMLA. The court held that the attachment lapsed because the prosecution complaint was filed beyond the 90-day period mandated by the Finance Act, 2018 amendment, rendering the attachment legally inoperative.

What did the court decide?

The property held under attachment is to be released as the attachment has lapsed due to the non-filing of prosecution complaint within the statutory limitation period.

FPA-PMLA-1513/KOL/2016 of Arjun Kumar Santhalia Vs. Joint… — Banking and Recovery | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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1. FPA-PMLA-1512/KOL/2016 Bipin Kumar Vohra … Appellant

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2. FPA-PMLA-1513/KOL/2016 Arjun Kumar Santhalia … Appellant

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3. FPA-PMLA-1514/KOL/2016 Sanjukta Vohra … Appellant

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4. FPA-PMLA-1517/KOL/2016 Darks Housekeeping & Maintenance Services … Appellant

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5. FPA-PMLA-1521/KOL/2016 M/s Chaitanya Alloys Pvt. Ltd. … Appellant

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Versus

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Joint Director, … Respondent Directorate of Enforcement, Kolkata & Ors.

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Advocates/Authorized Representatives who appeared

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For the Appellant

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: Mr. Nitin Sangra, Ms. Sonia Dube in 1 to 4 Mr. Tanishq Sharma, Mr. Prasenjit Keswani, Mr. Upmanyu Tewari, Advocates in 5 & 6

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For the Respondent : Ms. Nidhi Raman, Advocate

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CORAM

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SHRI V. ANANDARAJAN : MEMBER

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FINAL ORDER

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10.10.2024

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The instant appeals have been preferred against the order dated 16.09.2016 passed by the Ld. Adjudicating Authority (AA) In Original Complaint (OC) No. 603/2016, whereby the Ld. AA confirmed the Provisional Attachment Order(PAO) dated 03.05.2016,passed in ECIR NO. KLZO/06/2014 dated 24.10.2014 vide which the Bank Account of the Appellant was attached by Respondent No.1, Enforcement Directorate.

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 1 of 12

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The brief facts of the case are that an FIR No. RCBSK2014E0007 dated 14.08.2014 was registered by CBI, BS&FC, Kolkata on the basis of the written complaint made by Sh. H.S Garsa,Deputy General Manager ,Central Bank of India, Kolkata vide letter ref.no. CFB/CMD/20114-15/08/801 dated 14/08/2014, which revealed that –

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(i) The directors of M/s Bengal India Global Infrastructure Ltd.(BIGIL) and others furnished false and fabricated financial figures in the audited balance sheet for financial year 2011-12 for fraudulentavailmentofcreditfacilities with dishonest intention to cheat and defraud the bank;

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(ii) The directors of BIGIL in criminal conspiracy with the directors of M/s Bholanath Ingots(P) Ltd. , M/sGouri Iron & Steel (P) Ltd. And M/sSubhlabh Steel(P) Ltd. Opened Letters of Credit (LCs) on the basis of false tax invoices cum challans,proforma invoices inorder to cheat & defraud the Central Bank of India, Corporate Finance Branch,Kolkata and diverted the sanctioned funds for unrelated purpose.

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As the offence under section 120B r/w section 420,467 and 471 of IPC comes under the purview of the scheduled offence in term of section 2(1)(y) of PMLA,2002, an ECIR No. KLZO/06/2014 dated 24/10/2014 was registered by ED against M/s Bengal India Global Infrastructure Ltd.(BIGIL) and others for the purpose of investigation under the provisions of PMLA.

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In consequence of the investigation conducted, the following movable properties, being balances along with accrued interest thereon valued in all at Rs. 43,04,308.15 were attached:

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S.No. Bank & Branch A/c Holder A/c No. As on

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 2 of 12

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					LastBalance (Rs.)
01.	Axis Bank, Lansdowne	BIGIL		913020005796 150	3,31,149.32	19/04/2016
02.	Towers,1^st Floor,2-1A, Sarat	Arjun Santhal	Kumar ia	411010100004 251	1,26,862.45	19/04/16
03.	Bose Road, Kolkata- 700020	Mrs. Vohra	Sanjukta	914010054984 180	42,718.82	19/04/2016
04.	Yes Bank Ltd., Gr. &Mazzanine Floor, Stephen House,Dalhousei	Bengal Global Infrastr Ltd.	India ucture	001781400000 293	2,39,652.22	17/04/2016
05.	Square(East), Kolkata-700001	Bipin Vohra	Kumar	001790700034 04	582517.28	17/04/16
06.	HDFC Bank, Bhowanipore Branch, 1^stFloor , 88 Chowringhee Road, Kolkata- 700020	Bengal Global Infrastr Ltd.	India ucture	046984700000 52	62,512.00	22/04/16
07	UCO Bank Flagship Corporate	Bengal Global Infrastr Ltd.	India ucture	178402000031 92	11.116.75	18/04/16
08	Branch, 2 India Exchange Place,	Bholan Pvt. Ltd	ath Ingots .	178402100006 01	1,28,613.76	18/04/16
09	Kolkata- 700001	Gauri Steel Pv	Iron & t. Ltd.	178402100005 95	1,49,696.58	18/04/16

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 3 of 12

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10		Subhlabh Steels Ltd.	178402100006 18	84.821.04	18/04/16
11	Dena Bank , Corporate business branch, 238-B, A.J.C.	Bengal India Global Infrastructure Ltd.	124711031043	8,364.92	19/04/16
12	Bose Road, 3^rd Floor, Kolkata – 700020	SPS Steels Rolling Mills Ltd.	124711031049	8,858.00	19/04/16
13	ICICI Bank Ltd., Rasoi Court, 20 , Sir R.N. Mukherjee Road, Kolkata- 700001	Bengal India Global Infrastructure Ltd.	000605022479	1,78,086.00	18/04/16
14		Chaitanya Alloys Pvt. Ltd.	001502000042 100	31,998.53	18/04/16
15	Indian Overseas Bank, P-35 ,	Shyama Iron & Alloys Pvt. Ltd.	004202000042 099	15,031.00	18/04/16
16	India Exchange Place, Kolkata–	Y.R. Traders Pvt Ltd.	001502000042 1	87,222.00	18/04/16
17	700001	SPS Metal Cast & Alloys Ltd.	001502000041 000	57,251.54	18/04/16
18		SPS Steels Rolling Mills Ltd.	001502000041 002	2,48,395.42	18/04/16
19		SPS Steels Rolling Mills Ltd.	001502000023 198	48,335.14	18/04/16
20	Royal Bank of Scotland,IB	Bipin Vohra	430258	161168.25	19/04/16

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 4 of 12

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21	Service&Operatio ns, Kolkata, Azimganj House, Gr. Floor, 7 Camac Street, Kolkata- 700017	Sanjukta Vohra	432930	1,898,.43	19/04/16
22	IndusInd Bank Ltd., Dhandhania House, 1^stFloor , 203 , Chittranjan Avenue, Kolkata – 700006	Bipin Kumar Vohra	100027175487	2,88,316.37	17/04/16
23	Standard Chartered Bank, Liability Operations, 19,	Ms. Sanjukta Vohra	32410267574	3,38,523.87	27/04/16
24	Netaji Subhash Road, Kolkata- 700001	M/s Darks Housekeeping & Maintenance Services	32405053952	6,14,640.46	27/04/16
25	Citi Bank, 41 ,Chowringhee Road, Knak Building, Kolkata- 700071	Bipin Kumar Vohra	5299998338	6,56,557.09	29/06/15

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Notably, no immovable properties were attached in the instant case.

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 5 of 12

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The attachment of the above movable properties was confirmed vide the impugned order of the Ld. AA dated16.09.2016.

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Aggrieved by the said order of the Ld. AA, the appellants have filed these appeals challenging the impugned order on various factual and legal grounds.

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It is firstly contended on behalf of the appellants as a preliminary legal issue that in this case the respondent (ED) filed the prosecution complaint under PMLA, 2002 before the City Sessions Court at Kolkata, only on 16.01.2020. Resultantly, by virtue of section 8(3)(a) of PMLA, the PAO passed by the respondent Directorate in this case has lapsed and ceased to have any effect by operation of law. It is argued that at the time of passing the aforesaid impugned order on 16.09.2016, admittedly, no proceedings relating to any offence under the PMLA was pending before any court. In any event of matter, w.e.f. 19.04.2018, the prosecution complaint under PMLA, 2002 ought to have been filed within a period of 90 days from the order of the Adjudicating Authority.

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Reliance with respect to the above contention is placed on the following judgments:

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(i) Dayanand Narvekar v. Dy. Director, Directorate of Enforcement, 2019 SCC ONLINE ATPMLA 44

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(ii) Ashok Patel and Anr. V. Asstt. Director, Directorate of Enforcement 2019 SCC ONLINE ATSAFEMA 5

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(iii) Santiagu Martin v. Dy. Director, Directorate of Enforcement 2019 SCC ONLINE ATPMLA 54

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The respondents, in their submission have confirmed the aforesaid date, i.e., 16.01.2020 as the date on which prosecution complaint was filed in the case. It is informed that the Ld. Court has taken cognisance of the case and proceedings for trial are going on. The following entities have been made accused in the said prosecution complaint.

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 6 of 12

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Sh. Bipin Kr. Vohra S/o Sh. J.L Vohra, Director of M/s BIGIL,13-G,S.p Mukherjee Road, 3^rd Floor , Kolkata-700026

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Sh. Arjun Kumar Santhalia S/o Late Ram Niranjan Santhalia, Director of M/s BIGIL,Flat No. 5A,5^th Floor,10, Sunny park,Kolkata-700019

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M/s BIGIL, Elegant Towers,224A,A.J.C. Bose Road,Kolkata-700017, represented by its Directors Sh. Bipin Kumar Vohra and Sh. Arjun Kumar Santhalia.

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M/s SPS Steels Rolling Mills Pvt. Ltd. Elegant towers,2 24-A, A.J.C Bose Road,Kolkata-700017, represented by its earlier Directors Sh. Bipin Kumar Vohra and Sh. Arjun Kumar Santhalia.

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With regard to limitation, it is submitted by the respondents that when the PAO was confirmed by Ld. AA in this case, at that time no time limit was specified for filing of prosecution complaint. It is contended that the amendment made to the Act to lay down the 90-day period was effective only prospectively. So, the confirmation order or 2016 cannot be covered under the amendment made after the date of confirmation.

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I have considered the rival submissions of the parties on this issue. Since a preliminary legal issue going to the root of the matter has been raised, the same needs to beconsidered and disposed of first.

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In this regard, it would be pertinent first to refer to Section 8(3)(a) as it stood at the relevant time when the adjudication order was passed:

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“ S.8(3). Where the Adjudicating Authority decides under subsection (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized property or record shall-

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 7 of 12

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(a) continue during pendency of the proceedings relating to any offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and

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(b) …………………………………………… .”

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From the above, it is evident that at the time when the order of the Ld. AA was passed, no specific time period was specified under Section 8(3)(a).

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Subsequently, an amendment to the aforesaid Section (3)(a) of PMLA, 2002 was made vide Act 13 of 2018, w.e.f. 19.04.2018 (vide Notn. No. G.S.R. 383I dt. 19.04.2018), to provide that “the attachment or retention or freezing of the seized or frozen property or record shall continue during investigation for a period not exceeding 90 days or the pendency of proceedings relating to any offence under this Act before a court or under the corresponding law of any other country, before the competent court of jurisdiction outside India, as the case may be” .

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Thus, by the amendment of 2018, the ninety-day timeline was introduced into the section. Subsequently, vide Act 7 of 2019 (w.e.f. 20-3-2019), the ninety day period was amended to 365 days.

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The legal position emerging from the above amendments has been discussed in detail in this Appellate Tribunal’s judgment dated 15.04.24 in the case of M/s Nirved Traders Pvt. Ltd. [FPA-PMLA-1394/MUM/2016] ]The relevant part of the said order is extracted below:

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“23. Insofar as the issue of limitation period for filing of prosecution complaint u/s 8(3)(a) is concerned, we find the legal position to be as follows:

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Upto 18.04.2018	No time limit
19.04.2018 to 19.03.2019	90 days from the date of

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 8 of 12

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	Adjudicating Authority’s order
W.e.f. 20.03.2019	365 days from the date of
	Adjudicating Authority’s order

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24. We have taken note of the fact that the relevant amendment to Section 8(1)(a) was made through the Finance Act, 2018. The “Notes on Clauses‟ accompanying the Finance Bill, 2018 reads as below:

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“Clauses 204 and 205 of the Bill seeks to amend certain provisions of the Prevention of Money-laundering Act, 2002, which include the following, namely:-

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(25) ……………….

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(ii) ……………….

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(iii) to amend section 8 of the said Act relating to adjudication so as to allow Enforcement Directorate reasonable time to file prosecution and also to provide for the Special Court to consider the claim of the claimant for the purpose of restoration of such properties even during trial in such manner as may be prescribed.” (Relevant text emboldened)

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25. It is seen from the above that the intention of the legislature in bringing about the said amendment was to “allow Enforcement Directorate reasonable time to file prosecution”. The same cannot, in our view, be used to nullify provisional attachment of properties already made by them in the past and duly confirmed by the Ld. Adjudicating Authority. Further, with regard to the date of the effectivity of Part-XIV of the Finance Bill, 2018 which contained the

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 9 of 12

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proposed amendments to the Prevention of Money-Laundering Act, 2002, Clause 204 said Bill provided as follows:

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“204. The provisions of this Part shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.”

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The relevant notification in this regard is GSR 383I dated 19.04.2018 and the amended clause came into effect on the date of publication of the notification, i.e., 19.04.2018. Accordingly, we

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are of the view that the respondent Directorate had 90 days from 19.04.2018 to file the prosecution complaint. As per appellants’ own admission, the prosecution complaint in this case was filed on 16.07.2018. We find that counted from 19.04.2018, the said date was within the limitation period of 90 days.” [Emphasis added]

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It will be noticed that in the above case of Nirved Traders, the respondent directorate had filed the prosecution complaint within 90 days from the date the amendment came into effect and accordingly, it was held that the requirement of the amended Section 8(3)(a) had been met. In the present case, the order of the Ld. AA was passed on 16.09.2016. Once the amendment brought in vide Finance Act, 2018 came into force19.04.2018, the respondent directorate had 90 days from that date to file the prosecution complaint, failing which the attachment of properties would cease to have effect. The said period of 90 days from 19.04.2018 ended on 18.07.2018, well before even the extended timeline of 365 days came into effect on 20.03.2019. Furthermore, even if the extended time limit of 360 days were to apply, the prosecution complaint in the present case was filed much beyond the period of 365 days from the date of the Ld. AA’s order confirming the attachment.

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 10 of 12

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The factual position being as above, I find myself in agreement with the submission made from the appellants” side that the attachment of properties made in the present case by the respondent Directorate has lapsed and ceased to have any effect by operation of law.

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At this stage, it may be useful to also refer to two of the case laws cited by the appellants in support of their case. In Dayanand Narvekar v. Deputy Director, Directorate of Enforcement FPA-PMLA-2700/GOA/2018 (order date 20.09.2019), this Appellate Tribunal had held as below:

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“10. In the present case, the impugned order was passed on 13.09.2018, the prosecution complaint has been filed on 03.05.2019. The 90 days period for filing prosecution complaint from the date of impugned order has expired in the month of December, 2018 which is before the amendment of extending the period for filing the prosecution complaint to 365 days. A legal right has accrued to the appellant in view of the section 8(3)(a) of PMLA-2002 when the prosecution complaint was not filed within 90 days.”

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In Santiagu Martin v. Deputy Director, Directorate of Enforcement, Cochin, FPAPMLA-1529/COCHIN/2016 (order dated 18.09.2019) provisional attachment order was dated 31.03.2016, the order confirming the provisional attachment was passed by the Adjudicating Authority on 22.09.2016 and the prosecution complaint under PMLA, 2002 was filed against the appellant and others before the Principal Sessions Court, Ernakulam on 11.06.2018, which was more than one year, eight months and twenty days after the date of passing the confirmation order. This Appellate Tribunal in that case held as below:

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“48. Since the charge-sheet/prosecution complaint has not been filed under the provision of Section 8(3)(a) of the Act within the prescribed period of time, the attachments stand lapsed, thus, the same are released. Therefore, there is no need to go into the merit of the case.”

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FPA-PMLA-1512-1514, 1517, 1521/KOL/2016

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Page 11 of 12

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In view of the finding as above on the preliminary legal issue, it is not considered necessary to adjudicate upon the issues raised on the merits of the individual grounds of appeal.

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Accordingly, the appeals shall stand allowed to the extent that the subject properties are held to be no longer under attachment, the order of attachment having lapsed due to operation of law.

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Nothing contained in this order shall be construed as an expression of opinion on the prosecution proceedings pending before the designated Special Court.

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With the above order, the present appeals are hereby disposed of along with pending applications, if any.

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No order as to costs.

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(V. Anandarajan) Member

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New Delhi,

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10^th October, 2024

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‘ASH’