Dismissed

FPA-PMLA-1922/COCHIN/2017 of Smt. Sandhya Pr v. The Deputy Director, Directorate of Enforcement, Cochin

ATFP3 Apr 2024FPA-PMLA-1922/COCHIN/2017

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed appeals against a Provisional Attachment Order in a money laundering case, holding that other assets can be attached as proceeds of crime even without direct evidence of transfer, and rejecting retrospective defence arguments.

What did the court decide?

The appeals were dismissed and the provisional attachment order regarding the immovable property and fixed deposits was confirmed.

FPA-PMLA-1922/COCHIN/2017 of Smt. Sandhya Pr Vs. The Deputy… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

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1. MP-PMLA-3778/COCHIN/2017 (Stay) FPA-PMLA-1914/COCHIN/2017

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Shri Lenin MR … Appellant Versus

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The Deputy Director, Directorate of Enforcement, Cochin …. Respondent

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MP-PMLA-3886/COCHIN/2017 (Stay) FPA-PMLA-1922/COCHIN/2017

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Smt. Sandhya PR … Appellant Versus The Deputy Director, Directorate of Enforcement, Cochin …. Respondent

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Advocates/Authorized Representatives who argued

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For the Appellants : Mr.Ajit G. Anjarlekar, Advocate(in Serial No.1) Mr. Naveen A. Varkey, Advocate(in Serial No.2)

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For the Respondent-ED : Mr. Priyank Khattar, Advocate

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CORAM:

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SHRI GOPAL CHANDRA MISHRA : MEMBER SHRI RAJESH MALHOTRA : MEMBER

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FINAL ORDER 03.04.2024

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By Rajesh Malhotra

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The present appeals are filed by the appellants against the impugned order dated 14.07.2017 passed by the Adjudicating Authority in Original Complaint No. 706/2017 whereby Provisional Attachment Order (PAO) No.03/2017 dated 28.02.2017 was confirmed with respect to the following properties:

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S.No.	Description of Properties	Nature of Property
1.	Immovable property extending to 25 cents and 237 square links situated at Re-survey No.2364/7-1 at Andoorkonam Villagein Thiruvananthapuram Taluk	Landed property held in the name of Smt.P.R. Sandhya
2.	AccountNo. (FIXED DEPOSIT)	In the name of Lenin
i)	50300157365832Rs.1,50,000	MR
ii)	50300157688775Rs.3,00,000
iii)	50300157852691 Rs.2,00,000

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FPA-PMLA-1914 & 1922/COCHIN/2017

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iv) 50300157964614 Rs.1,50,000 Total Rs. 8,00,000

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It is pertinent to mention here that during the proceedings before this Appellate Tribunal, Appellant No.1 P.K. Sanalkumar in Appeal No.1922/2017 expired and accordingly amended memo on behalf of Appellant No.2 Smt. Sandhya PR was taken on record to pursue Appeal No.1922/2017.

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As per facts of the case, CBI Thiruvananthapuram registered FIR against Shri P.K. Sanalkumar, Shri Lenin MR and others for commission of offence under Section 120-B IPC read with Section 420 IPC and also read with Sections 7,12 and 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988 (for short PC Act’). After investigation, charge sheet was filed before Learned Special Judge-I, CBI, Ernakulam on 30.09.2010. ECIR was registered by respondent-ED vide No. KCZO/17/2009 dated 15.02.2010 against the said accused persons and conducted investigation. Statements of the accused persons were recorded under Section 50 of the Prevention of Money Laundering Act, 2002 (for short PMLA, 2002’). As per police case, the accused persons, who were working in Railway Divisional Office during the period 2005 to 2007, entered into criminal conspiracy with the other accused persons to cheat the Railways by abusing their official position and thereby they dishonestly inflated the estimates for supply and installation of LED Display Boards in five tenders. They ignored the fact that the said Display Boards were available at a much lower rate with M/s Apt Micro Solutions Ltd., Trivendrum. Accordingly, they caused wrongful loss of Rs.43,31,000/- to the Indian Railways. Investigation revealed that an amount of Rs.5 lakhs was transferred from the account of Accused No.3 and Shri Pradeep Rajan to the joint account of accused P.K. Sanalkumar and his wife Smt. Sandhya. After the Provisional Attachment Order

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FPA-PMLA-1914 & 1922/COCHIN/2017

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No.03/2007 passed by Deputy Director, Directorate of Enforcement dated 28.02.2017, Original Complaint No.706/2017 was filed before the Adjudicating Authority under Section 8(1) of PMLA, 2002 to confirm the PAO under Section 8(2) of PMLA, 2002. On notice, appellants filed reply before the Adjudicating Authority. However, the properties mentioned in Para No.1 above were confirmed for attachment vide impugned order. Aggrieved by the same, appellants filed the present appeals.

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The appeals were filed challenging the impugned order on the ground that the alleged offence was committed during the period 2005 to 2007, whereas at that time Section 420 of IPC and Prevention of Corruption Act were not mentioned in the schedule of the PMLA, 2002. Section 420 IPC was incorporated in the schedule w.e.f. 01.06.2009 and Section 12 of the PC Act, 1988 is still not mentioned in paragraph 8 of the schedule pertaining to PC Act, 1988 with respect to the appellants. Appellants never admitted the fact that the attached assets were generated out of proceeds of crime. The Railway Department duly invited the tenders for the purpose of supply of digital display boards and after scrutiny by the concerned officials of Railways, the work was assigned to the lower bidder. The amendment to PMLA, 2002 is prospective in nature and it would not apply retrospectively after the amendment in the schedule. Appellant Smt. Sandhya PR purchased the property in question on 06.12.2006 out of her own savings. There is nothing on record that the properties were purchased from and out of the proceeds of crime, in absence of any direct evidence in this regard. The fixed deposits in the name of Shri Lenin MR are hard earned monies from his salary and it has no connection with the alleged proceeds of crime. Prayer was accordingly made to allow the present appeals. 5. On the other hand, respondent-ED in its reply denied the submissions made in the appeals. It is submitted that the issue of

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FPA-PMLA-1914 & 1922/COCHIN/2017

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retrospective application of criminal liability has been duly considered by the Adjudicating Authority in Para 22 of the impugned order. In the cases where proceeds of crime are transferred, converted, assigned or mortgaged into distinct assets so as to disguise the original character of the proceeds of crime, then in such cases the other assets of the person can be attached treating it as proceeds of crime. The charge against the defendant No.2 Shri Lenin MR was that in pursuance of the criminal conspiracy, he gave Rs.15 lakhs to defendant No.1 PR Sanalkumar as gratification other than legal remuneration as a motive for doing the official act/misconduct. Defendant No.1 Pradeep Rajan in pursuance of the said conspiracy committed the offence punishable under Section 7 of the PC Act. Defendant No.2 Shri Lenin MR while he was a Director of M/s Thanina Technocrats committed fraud by dishonestly quoting higher rates for the supply of Coach Guidance Display Boards and Outdoor Weatherproof LED Display Boards knowing fully well that the said items were available at a much lower rate with M/s Apt Micro Solutions and Sinicon Control and thereby made the Railways to make the excess payment of Rs.33,57,680/-. The said proceeds of crime was used by Lenin MR in preparing fixed deposits totalling to Rs.8 lakhs with HDFC Bank.

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Learned counsel for the parties argued in verbatim to their respective pleadings as mentioned in Para Nos. 4 and 5 above.

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After hearing the rival submissions and going through the material on record, we have given our thoughtful consideration with the same. Filing of charge sheet by CBI after investigation is an admitted fact and the accused persons are facing trial in the said case. The defence taken by the accused persons in the said criminal case cannot be considered for appreciation in the present appeals against the impugned order. The contention of the appellants that the said attached assets were not

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FPA-PMLA-1914 & 1922/COCHIN/2017

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generated out of the proceeds of crime for want of any direct evidence is devoid of any merits, as it is very difficult to connect the trails of proceeds of crime in absence of direct transfers of funds from one account to another or procuring of any assets out of the commission of crime. In absence of any direct evidence to connect the proceeds of crime with the assets in possession of a person, the other assets of the said person can be attached as value thereof. The plea of non-applicability of the PMLA, 2002 on account of retrospective application is also devoid of any merits,in view of judgment of Hon’ble Supreme Court of India in Vijay Madanlal Chaudhary v. Union of India, 2022 SCC online 727.

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