Dismissed

FPA-PMLA-1927/BNG/2017 of Smt. Sulochanamma D. v. The Deputy Director Directorate of Enforcement, Bangalore

ATFP20 Jun 2024FPA-PMLA-1927/BNG/2017

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed appeals filed against the confirmation of provisional attachment of immovable properties belonging to appellants and property of a brother-in-law. The court held that money laundering is a continuing offence and rejected the contention that the Adjudicating Authority erred in investigating predicate offences.

What did the court decide?

The present appeals are dismissed being devoid of any merits; nothing expressed affects the rights of any party in the criminal trial.

FPA-PMLA-1927/BNG/2017 of Smt. Sulochanamma D. Vs. The Deputy… — Cheque Dishonour | ATFP (2024)

¶1

BEFORE RAJESH MALHOTRA, MEMBER; SINGLE BENCH: APPELLATE TRIBUNAL UNDER SAFEMA; AT NEW DELHI.

¶2

FPA-PMLA-1941/BNG/2017 Smt. Bharthi Jayachandra

¶3

FPA-PMLA-1926/BNG/2017 Prashanth Govindraju

¶4

FPA-PMLA-1927/BNG/2017 Smt. Sulochanamma D.

¶5

… Appellants

¶6

Versus

¶7

The Deputy Director Directorate of Enforcement, Bangalore … Respondent Advocates/Authorized Representatives who appeared For the Appellant : Mr. Ayush P Shah, Adv. Mr. Nishanth Patil, Adv. For the Respondent :Mr. N.K. Matta, Adv. Mr. Aaditya Raj Sharma, Adv.

¶8

FINAL ORDER

¶9

20.06.2024

¶10

Present appeals are filed under Section 26 of Prevention of Money Laundering Act, 2002 against the impugned order dated 07.07.2017 passed by the Adjudicating Authority in Original Complaint No. 686 of 2017 vide which properties attached vide Provisional Attachment Order No. 02/2017 dated 26.01.2017 were confirmed for attachment and the same are detailed as under: -

¶11

Table A- The property of appellant Bharathi Jayachandra and her husband are detailed as under: -

¶12

S.No.	Particulars of the properties	Value as per the registered sale deed
1.	SITE NO. 260, SY. NO. 57 TO 82, IST STAGE, AMARIYOTHI HOUSING BUILDING CO-OP SOCIEITY LTD., DOMMALUR VILLAGE, KASBA HOBLI, BENGALURU NORTH, ADMEASURING 60 FT X 40 FT. REGD IN SRO, INDIRANAGAR, BDA COMPLEX, DOMMALURU, BANGALORE VIDE SALE DEED NO. 1018/90- 91, 815/99-2000, GIFT DEED NO. 1953/99-2000 AND CANCELLATION OF GIFT DEED NO. 911/08-09 AND AGAIN GIFTED THE SAME VIDE GIFT DEED No. 80/2009-10 dated 29.04.2009. Smt. Sulochanama(D-2) gifted to Smt. Bharathijayachandra(D-4)	4,80,000
2.	SITE AND THE HOUSE CONSTRUCTED IN 1991-93 AT H.NO. 191/8, 6TH MAIN ROAD, BCC HBCS LAYOUT, CHANDRA LAYOUT, BANGALORE, ADMEASURING 65+63/2 X 40 SQ FT. SALE DEED NO. 66/91-92 DATED 05.04.1991. REGD WITH SRO VIJAYANAGAR	20,09,500
3.	SITE NO. 150/37 ADMEASURING 60 FT X (35+45)/2 FT IN BAPUJI LAYOUT, 6TH CROSS, CHANDRA LAYOUT, BANGALORE A HOUSE CONSTRUCTED ON THIS SITE IN2008-09. REGD VIDE SALE DEED NO. 736/99-2000 DATED	53,00,000

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Rajesh Malhotra Member

¶14

FPA-PMLA-1926,1927&1941/BNG/2017

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Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 2

¶16

	06.03.1999 AND GIFT DEED NO. 1474/04- 05. VALUE QUOTED AS PER THE VALUATION REPORT VIDE LOK/INV(G)/CITI/CR91/2008/BNG & LOK/INV(T)- VALUE- 65/2008/AE-2/146 DATED 04.02.2011 OF AE, TECHNICAL DIVISION, KARNATAKA LOKAYUKTA, SHRI. S.C. JAYACHANDRA(D-1)
4.	SITE WITH SY. NO. 29 IN YENTAGANAHALLI, NELAMANGALA TALUK, ADMEASRUING 7.36 ACRES AGRICULTURAL LAND VIDE SRO, NELAMANGALA, SALE DEED NO. 1332/01-02 AND GIFT DEED NO. 1935/2004-05 DATED 28.06.2004. SMT. SULOCHANAMMA(D-4),GIFTED TO SMT BHARATHI JAYACHNDRAD(D-2)	9,50,000
5.	AGRICULTURAL LAND AT SY. NO. 23/5, YENTAGANAHALLI, NELAMANGALA TALUK, BANGALORE RURAL ADMEASURING 1 ACRE 39 GUNTA REGD WITH SRO, NELAMANGALA, BANGALORE RURAL, VIDE SALE DEED NO. 1333/01-02 DATED 09.08.2001. SMT. SULOCHANAMMA(D-4),GIFTED TO SMT BHARATHI JAYACHNDRAD(D-2)	2,50,000
6.	AGRICULTURAL LAND WITH SY. NO. 23/4, 0.16 ACRE IN YENTAGANAHALLI, NELAMANGALA TALUK, BANGALORE RURAL PURCHASED VIDE SALE DEED NO. 837/04-05 DATED 12.05.2005 WITH SRO, NELAMANGALA SMT BHARATHI JAYACHNDRAD(D-2)	47,000
7.	AGRICULTURAL LAND WITH SY, NO. 23/4, 1 ACRE 01 GUNTA IN YENTAGANAHALLI, NELAMANGALA TALUK, BANGALORE RURAL PURCHASED VIDE SALE DEED NO. 838/04-05 DATED 12.05.2005 WITH SRO, NELAMANGALA SMT BHARATHI JAYACHNDRAD(D-2)	1,25,000
8.	AGRICULTURAL LAND WITH SY. NO. 23/4, 0.16 GUNTA IN YENTAGANAHALI, NELAMANGALA TALUK, BANGALORE RURAL PURCHASED VIDE SALE DEED NO. 839/04-05 DATED 12.05.2005 WITH SRO, NELAMANGALA SMT BHARATHI JAYACHNDRAD(D-2)	47,000
9.	AGRICULTURAL LAND ADMEASURING 1 ACRE 20.5 GUNTA AT SY.NO. 92/1, 92/2, 92/3 PURCHASED FOR RS. 6, 25,000 AND AT SHEEGEHALLI VILLGE, YASHVANTPUR HOBLI, BANGALORE	6,25,000
	TALUK IN THE NAME OF SMT. BHRATHI JAYACHANDRA VIDE SALE DEED NO. 9229/05-06 DATED 27.07.2005 REGISTERED WITH SRO, BANGALORE NORTH TALUK,BANGALORE SMT BHARATHI JAYACHNDRAD(D-2)
10.	AGRICULTURAL LAND ADMEASURING 1 ACRE 11 GUNTAS AT SY.NOS. 92/3, 4 AND 5 AT SHEEGEHALLI VILLGE, YASHVANTPUR HOBLI, BANGALORE TALUK IN THE NAME OF SMT. BHRATHI JAYACHANDRA VIDE SALE DEED NO. 9235/05-06 DATED 27.07.2005 REGISTERED WITH SRO, BANGALORE NORTH TALUK,BANGALORE,	5,15,000
11.	LAND AT SY.NO. 14/P1, ADMEASURING 4.20 ACRE IN ARISHINAGUNDI VILLAGE, HIRIYUR TALUK, CHITRADURGA DISTRICT REGISTERED IN THE NAME OF SMT. BHARATHI JAYACHANDRA VIDE SALE DEED NO. 778/05-06 DATED 01.08.2005 FOR RS. 90,000/-.	90,000
12.	LAND AT SY.NO. 14/P2, ADMEASURING 4.20 ACRE IN ARISHINAGUNDI VILLAGE, HIRIYUR TALUK, CHITRADURGA DISTRICT REGISTERED IN THE NAME OF SMT. BHARATHI JAYACHANDRA VIDE SALE DEED NO. 779/05-06 DATED 01082005ALSO FOR RS 90000/-	90,000
13.	..,.,. BUILDINGS AND OTHER FACILITIES CONSTRUCTED ON THE LANDS MENTIONED AT SL.NO. 4,5,6,7 AND 8 AT YENTAGANAHALLI, NELAMANGALA TALUK AS ABOVE. THEY INCLUDE A FARM HOUSE, PACKING SHED, COMPOST PIT, 17 WATER STORAGE FACILITIES, FENCING, RAIN WATER HARVESTING, SERVANTS HOUSE ETC. AS PER THE CHIEF ENGINEER, KARNATAKA LOKAYUKTA, VIDE LETTER LOK/INV(G)/CITI/CR-91/2008/BNG AND LOK/INV (T) VALUE- 65/2008/AE-2/146 DATED 04.02.2011 OF ASST ENGINEER, TECHNICAL DIVISON, KARNATAKA LOKAYUKTA, BANGALORE’S VALUATION REPORT THE CONSTRUCTION COST OF THE FACILITIES AS MENTIONED ABOVE WORKS OUT TO RS. 16,91,000/-	16,91,000

¶17

Properties at Serial no.1, 4 & 5 stated to be gifted by Smt. Sulochanama (D-4) gifted to Smt. Bharathi Jayachandra (D-2).

¶18

Table B The property of appellant Prashanth Govindraju Brother in-law of SC Jayachandra

¶19

S.No.	Particulars of the properties	Value as per the registered sale deed
13.	SY NO. 63/3: 29.5 GUNTAS, SY. NO. 59/7 35 GUNTAS SY NO. 62/2 23 GUNTAS OF LAND REGISTERED VIDE SALE DEED NO 15571/2006-07 DATED	33,77,500
	18.09.2006 FOR RS. 33.77,500/- WITH SRO, BANGALORE NORTH TALUK, YALAHANKA
14.	SY.NO. 64/4: 17 GUNTAS OF LAND REGISTERED VIDE SALE DEED NO.	5,95,000

¶20

Rajesh Malhotra Member

¶21

FPA-PMLA-1926,1927&1941/BNG/2017

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Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore

¶23

¶24

166949/2006-07 DATED 29.09.2006 WITH SRO, 14 BANGALORE NORTH TALUK, YALAHANKA. 15. SY.NO. 63/3: 10.5 GUNTAS OF LAND REGISTERED VIDE SALE DEED NO. 7,09,000 600/2008-09 DATED 06.06.2008 WITH SRO, BANGALORE NORTH TALUK, YALAHANKA 16. SY.NO. 63/3: 5.5 GUNTAS OF LAND REGISTERED VIDE SALE DEED NO. 3,72,000 1448/2008-09 DATED 29.09.2008 FOR RS. 16 3,72,000/- WITH SRO, BANGALORE NORTH TALUK, YALAHANKA.

¶25

As per the facts of the case, Central Bureau of Investigation Anti-Corruption Branch, Bengaluru registered FIR against SC Jayachandra and six others vide RC No. 23(A)/2016/CBI/ACB/Bangalore dated 03.12.2016 on the allegation to be involved in fortunately exchanging/converting the old demonetize Indian Currency of Rs. 500/- & Rs. 1000/denomination notes, with the newly introduced legal tender of Rs. 2000/- denomination which is punishable under Section 120 B read with 420/426/409/468/471/477A of IPC and under Section 13(2) read with 13(1) (c) & (d) of PC Act, 1988 and substantiate offences thereunder.

¶26

Earlier FIR No. 91/2008 dated 17.12.2008 was registered by Karnataka Lokayukta Police, City Division, Bengaluru against Shri S.C. Jayachandra working as Chief Project Officer, State Highway Development Project, Bengaluru for possession of assets disproportionate to his known sources of income which is punishable under Section 13(2) read with Section 13(1) (e) of Prevention of Corruption Act, 1988

¶27

As the said offences are schedule offences.The Enforcement Department registered ECIR/BGZO/13/2016 dated 03.12.2016 for investigation of offence under Prevention of Money Laundering Act.

¶28

Rajesh Malhotra Member

¶29

FPA-PMLA-1926,1927&1941/BNG/2017

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Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 4

¶31

During investigation respondent-ED recorded the statement of many persons under Section 50 of PMLA and collected many documents.

¶32

After investigation Deputy Director, ED formed a reasonable believe that part of proceeds of crime involved in the above FIR No. 91/2018 registered against S.C. Jayachandra are in the form of immoveable properties in his name & in the name of his family valued at Rs. 1,72,73,000/-, which are liable for attachment under PMLA. Accordingly, the said properties were provisionally attached in terms of Section 5 (1) of PMLA for period of 180 days vide order dated 26.01.2017. Thereafter, Original Complaint No. 686 of 2017 was filed before the Adjudicating Authority for confirmation of the said attached properties.

¶33

The Adjudicating Authority issued the Show Cause Notice to the defendants and they filed their respective replies. After going through the replies and material on record learned Adjudicating Authority confirmed the attachment of properties as mentioned in para no.1 above.

¶34

Aggrieved by the said order appellants have filed the present appeals.

¶35

During the arguments learned counsel for the appellant in appeal at serial no. 1 submitted that appellant is not named in the FIR dated 03.12.2016 registered by CBI ACB Bengaluru vide RC No. 23(A)/2016. In this particular FIR the main allegation is against Shri Suryanarayan Bairy, Chief Manager, Karnataka Bank Ltd., Bengaluru in changing the demonetize currency notes of Rs.

¶36

Rajesh Malhotra Member

¶37

FPA-PMLA-1926,1927&1941/BNG/2017 Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 5

¶38

500/- and Rs. 1000/- with new currency notes to the other accused persons. He pointed out that on the basis of this FIR of 2016, respondent-ED registered ECIR No. BGZO/13/2016 dated 03.12.2016 and initiated its own enquiry/investigation. However, in para 7B of ECIR, instead of giving the reason with respect to the FIR of 2016 cleverly inserted Section 13(1)(e) read with Section 13(2) of PC Act, 1988 under the heading “reasons to believe that an offence of money laundering has been committed and assessment thereof”

¶39

He pointed out however, this particular ECIR does not reflect about the registration of previous FIR of 2008 against Sh. SC Jayachandra,the husband of the appellant Smt. Bharti Jayachandra, for commission of offences under Section 13(1) (e) read with 13(d) of PC Act, 1988. He argued that the entire case of respondent-ED is based on the predicate offence with respect to possession of disproportionate assets to the known sources of income with respect to FIR 91/2008 dated 17.12.2008, instead of confining its investigation to the FIR RC 23(A) of 2016 dated 03.12.2016 he further contended that the properties attached in the Provisional Attachment Order and wrongly confirmed by the Adjudicating Authority were in fact acquired by the appellants prior to 2009, when even commission of offence under PC Act, 1988 was not in the schedule to the PMLA, 2002. He pointed out that there is not even a single whisper with respect to allegation of FIR of 2016. He argued that even otherwise, there is no explanation regarding the delay of 8 years for initiating the investigation with respect to disproportionate asset case by respondent-ED, which was in fact

¶40

Rajesh Malhotra Member

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FPA-PMLA-1926,1927&1941/BNG/2017

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Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 6

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inserted in the schedule vide amendment with effect from 1.06.2009. Accordingly, he submitted that provisions of PMLA are not attracted retrospectively. He further argued that in case FIR of 2016 on the basis of which ECIR was registered, there is nothing to reflect that the properties in possession to appellants are acquired out of proceeds of crime.

¶44

He contended that respondent-ED and the Adjudicating Authority failed to appreciate, the fact that all the properties confirmed for attachment were purchased before 2009 that is much prior to the registration of FIR in 2016. He submitted that Adjudicating Authority failed to appreciate the detailed reply filed by the appellant for acquiring the said properties from the legitimate sources. He argued that the Adjudicating Authority failed to consider the fact that the conclusions drawn by respondent-ED qua the properties of appellant on the ground that she had no source of income to purchase the properties are totally unsustainable in view of the detailed reply given by the appellant Bharti Jayachandra. Learned Counsel for the appellant pointed out the assets and expenditure of Smt. Bharti Jayachandra from the period 01.02.1986 to 18.12.2008 is mentioned in detail in ground (M) of para 4 of the grounds of appeal, which is reproduced as under: -

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Assets of Smt. Bharti Jayachandra

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Ref. of the	Assets of the Smt. Bharathi Jayachandra	Amount shown in	Actual Cost	Remarks
Order		order
12.2	Site and the House constructed in 1991- 93 at H. No. 191/8, 6 Main Road, BCC	20,09,500	23,00,550	The cost of site is as per Sale deed dtd:5-
	HOCS Layout, Chandra Layout, Bangalore measuring 65+63/2x40 sq.ft.			4-91 has been Rs 2,27,550
	Sale Deed No.66/91-92,dtd: 05-04-1991			Cost of construction

¶47

Rajesh Malhotra Member

¶48

FPA-PMLA-1926,1927&1941/BNG/2017

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Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 7

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	Regd. with SRO, Vijayanagar.			Rs. 20.73 lakhs as per confirmation by Chartered Engineers.
12.6	Agricultural Land with Sy No.23/4, 0.16 Acre in Yentaganahalli, Nelamangala Taluk, Bangalore Rural, Purchased vide Sale Deed No.837/04-05, Dtd: 12-05-05 with SRO,Nelamangala	47,000	47,000	It is 15 Guntas as per Purchase deed dtd: 12.05.2005
12.7	Agricultural Land with Sy.No.23/4, 1.01 Acre in Yentaganahalli, Nelamangala Taluk, Bangalore Rural, Purchased vide Sale Deed No.838/04-05, Dtd: 12-05-05 with SRO,Nelamangala	1,25,000	1,25,000	-
12.8	Agricultural Land with Sy. No.23/4, 0.16 gunta in 12.8 Yentaganahalli, Nelamangala Taluk, Bangalore Rural, Purchased vide Sale Deed No.839/04-05, Dtd: 12-05-05 with SRO,Nelamangala	47,000	47,000	-
12.9	Agriculture Land measuring 1 Acre 20.5 Gunta at Sy. No. 92/1, 92/2, 92/3 Sheegahalli, Yeshwanthpur Hobli, Bangalore Taluk, Sale Deed No. 9229/05- 06,Dtd:27.07.05	6,25,000	6,25,000	-
12.10	Agricultural Land measuring 1 Acre 11 Gunta at Sy. No.92/3, 92/4, and 92/5 at Sheegehalli village, Yeshwanthpur Hobli, Bangalore Taluk, Sale Deed No. 9235/05- 06,Dtd:27-07-05	5,15,000	5,15,000	-
12.11	Land at Sy. No. 14/P1, Measuring 4.20 Acre in Arishinagundi Village, Hiriyur Taluk, Chitradurga District, Vide Sale Deed No.778/05-06,Dtd: 01-08-05	90,000	90,000	-
12.12	Land at Sy. No. 14/P2, Measuring 4.20 Acre in Arishinagundi Village, Hiriyur Taluk, Chitradurga District, Vide Sale Deed No.779/05-06,Dtd: 01-08-05	90,000	90,000	-
12.17	Buildings and other facilities constructed on the lands mentioned at Sl.No. 4,5,6,7 & 8 at Yentaganalli, Nelamangala Taluk as above they include a Farm House, Packing Shed, compost Pit, Water Storage Facilities, Fencing, Rain Water harvesting, servants house etc. Total	16,91,000 52,39,500	- 38,39,550	The land has not been developed and no cost has been incurred

¶51

Income of Bharthi Jayachandra

¶52

14(1)	Rental Income	28,50,400
	Rentreceived 23,10,400
	Advance received 5,40,000
	28,50,400
	The income received by way of rent has been declared before income Tax authorities by her as required under the Income Tax Act. The advance received is not an income under Income Tax Act, but it is an income under P.C. Act 1988. Similarly in case of income received including rental income which is below taxable limit in any year, the said income need not be disclosed under the Income Tax Act,1961
14(2)	Net income from Cultivation of Lands.	78,86,500
	Smt. Bharathi Jayachandra has derived agricultural & horticultural income from lands bequeathed by her in Sy. No. 23/5 and Sy. No. 29 of Yentaganahalli village from 2004 and those acquired by her in Sy. No. 14/P1, 14/P2 at Hiriyur and in Sy. No. 92/1, 92/2, 92/3, 92/4 and 92/5 of Sigehalli, Yashwanthpur Hobli from 2005.
14(3)	Income from Salaries & Allowances, Business Income, Bank Interest etc.	37,85,935
	The details of income derived from various sources have been:

¶53

Rajesh Malhotra Member

¶54

FPA-PMLA-1926,1927&1941/BNG/2017

¶55

Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 8

¶56

i.	Opening Balance	44,500
ii.	Marriage Gift	1,00,000
iii.	Gifts on Social & Religious functions	38,500
iv.	Salaries & allowances	4,51,862
v.	Bank Interest	39,760
vi.	Lottery Income	25,000
vii.	Business Income	19,20,000
viii.	Bank Interest	11,66,313
		37,85,935
14(4)	Borrowings from State Bank	of India, Bangalore	25,000
14(5)	Borrowings from State Bank	of India, Bangalore	4,00,000
14(6)	Borrowings from State Bank	of India, Bangalore	1,50,000
14(7)	Borrowings from Karnataka	Bank, Bangalore	13,25,000
14(8)	Borrowings from Private Pers	ons	19,76,000
i.	From Smt. Sulochanamma	4,00,000
ii.	From Shri V. Govindraju	1,50,000
iii.	From Shri Suresh Jain	76,000
iv.	From Shri Parvathaiah	2,00,000
v.	From Shri Chinnalu	5,00,000
vi.	From Shri H.B. Rajanna	2,00,000
vii.	From Shri N.R. Jayram	2,00,000
viii.	From Shri D.M. Chandresh	2,50,000
		19,76,000
14(9)	Public Provident Fund		1,45,234
14(10)	Proceeds of Immovable Prope	rty sold	1,04,87,500
14(11)	Sale proceeds of Kinetic Hon 11051998	da Two wheeler sold on	20,000
14(12)	.. National Saving Certificates	encashed	2,48,960
14(13)	Fixed Deposits encashed		6,70,955
14(14)	Fixed Deposits of son and da	ughter encashed Total	12,68,490 3,12,39,974

¶57

He argued that against the above lawful income Rs. 312.40

¶58

lakhs, the appellant is in possession of assets only for sum of Rs.38.40 lakhs and this material fact is ignored by the respondentED as well as learned Adjudicating Authority.

¶59

Rajesh Malhotra Member

¶60

FPA-PMLA-1926,1927&1941/BNG/2017

¶61

Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 9

¶62

He pointed out that as far as appellant Smt. Sulochanamma D. is concerned, she has already gifted her properties in the name of Smt. Bharti Jayachandra. The source of acquisition of the said properties was also duly explained during investigation of the case.

¶63

He further contended that the properties of appellant Prashanth Govindraju, were also wrongly confirmed for attachment, by Ld. Adjudicating Authority, just because he is theBrother in-law of SC Jayachandra. He argued that appellant Prashanth explained the income of 125.33 lakh against the acquisition of assets for sum of Rs. 50,53,500/-. The said income is also ignored by the Adjudicating Authority.

¶64

Prayer is accordingly made to set aside the impugned order dated 07.07.2017 passed by the Adjudicating Authority and thereby release the properties attached by respondent-ED vide PAO 02/2017 dated 26.01.2017.

¶65

On the other hand, learned counsel for respondent-ED submitted that bare perusal of para 7B of ECIR, as pointed out by learned counsel for the appellant reflects that the ECIR was also registered for conducting investigation for the offence of money laundering w.r.t the FIR of 2016, as well as, with respect to the disproportionate asset case to the known-sources of income registered against Shri S.C. Jayachandra husband of the present appellant for commission of offence punishable under Section 13(2) read with 13(1) (e) of PC Act, 1988, which was registered by CBI ACB vide FIR in the year 2008. He argued that respondent-ED cannot be restricted to conduct investigation only with respect to

¶66

Rajesh Malhotra Member

¶67

FPA-PMLA-1926,1927&1941/BNG/2017

¶68

Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 10

¶69

the latest FIR, as it is empowered to conduct investigation with respect to the predicate offences and consequent money laundering committed with respect to previous instance/FIRs, as the offence of money laundering is a continuing offence. He further submitted that Prevention of Money Laundering Act make a continuing offence and appellant has no privilege of claim immunity from offence of money laundering, on the ground that offence was committed prior to amendment in the schedule with effect from 1.06.2009. He argued that in the previous investigation, CBI has clearly concluded that Shri S.C. Jayachandra husband of present appellant Bharthi Jayachandra was found in possession of the assets disproportionate to his known sources of income. In the said previous investigation CBI has considered the income of all the family members, including the present appellant from all the known sources, and thereafter, after deducting the expenditure, her husband was found in possession of disproportionate assets in his name and in the name of his family members. Prayer is accordingly made to dismiss the present appeal being devoid of any merits.

¶70

After hearing the rival submissions, I have given my thoughtful consideration to the same. I am satisfied with the contention of learned counsel for the respondent-ED that it can also investigate the previous incidents of money laundering, even if the same is not specifically mentioned in the ECIR, as the offence of money laundering is a continuing offence.

¶71

Rajesh Malhotra Member

¶72

FPA-PMLA-1926,1927&1941/BNG/2017

¶73

Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 11

¶74

The fact that provisions of PC Act were included in the schedule with effect from 1.06.2009 is no ground to allow the present appeal, in view the judgment of Hon’ble Supreme Court of India in case Vijay Madan Lal Chaudhary v. Union of India , MANU/SC/0924/2022, wherein it is held that:-

¶75

43. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of money-laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act -- for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of moneylaundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till 31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all.

¶76

There is nothing on record to conclude that ‘reason to believe’ is not properly appreciated either by respondent-ED before passing the Provisional Attachment Order or by the Adjudicating Authority before issuing the show cause notice, in view of the clear documentary evidence on record regarding the commission of offence under Section 13(1)(e) read with 13(2) of PC Act, 1988, by Shri S.C. Jayachandra husband of the appellant Bharthi Jaychandra and brother in law of appellant Prasanth Govindraju.

¶77

Rajesh Malhotra Member

¶78

FPA-PMLA-1926,1927&1941/BNG/2017 Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 12

¶79

Further FIR No. 23(A)/2016 registered by CBI reflects that sum of Rs. 25 lakhs were seized from the residence of Shri S.C. Jayachandra, out of which Rs. 5 lakhsare of new currency notes. Therefore, the allegations mentioned in the both the FIRs points towards direction regarding generation of proceeds of crime, which can be attached by respondent-ED. The Hon’ble Supreme Court of India, in case, Vijay Madan Lal Chaudhary v. Union of India , MANU/SC/0924/2022, held that: -

¶80

It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of "proceeds of crime" is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of "property" as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering.

¶81

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. To buttress this argument, reliance has been placed on the dictum in Attorney General for India 17 and Raman Tech. & Process Engg. Co. and Anr. v. Solanki Traders MANU/SC/8119/2007 : (2008) 2 SCC 302.

¶82

This Appellate Tribunal cannot go into the quality of evidence collected by the CBI/Investigation Agency in the said two criminal cases with respect to commission of predicate offences, as the same needs to be appreciated by the Ld. Special Judge, conducting the trial of the predicate offences.

¶83

However, there is nothing on record to doubt the attachment of properties, either as direct proceeds of crime, or as value thereof

¶84

Rajesh Malhotra Member

¶85

FPA-PMLA-1926,1927&1941/BNG/2017 Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 13

¶86

RAJESH MALHOTRA MEMBER

¶87

in absence of proceeds of crime. Hence, the present appeals are liable to be dismissed.

¶88

In sequel of my discussion, in the preceding para, the present appeals are hereby dismissed being devoid of any merits. It is however made clear that nothing expressed herein will affect the rights of the any party in criminal trial.

¶89

Appeals Dismissed .

¶90

Pronounced on this 20^th Day of June, 2024.

¶91

Rajesh Malhotra Member

FPA-PMLA-1927/BNG/2017 of Smt. Sulochanamma D. v. The Deputy Director Directorate of Enforcement, Bangalore

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FPA-PMLA-1927/BNG/2017 of Smt. Sulochanamma D. v. The Deputy Director Directorate of Enforcement, Bangalore

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