Appeal against confirmation of property attachment under PMLA dismissed. Tribunal held money laundering is a continuing offence and attachment of property equivalent to proceeds is valid regardless of prior schedule inclusion of predicate offences.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
BEFORE RAJESH MALHOTRA, MEMBER; SINGLE BENCH: APPELLATE TRIBUNAL UNDER SAFEMA; AT NEW DELHI.
FPA-PMLA-1941/BNG/2017 Smt. Bharthi Jayachandra
FPA-PMLA-1926/BNG/2017 Prashanth Govindraju
FPA-PMLA-1927/BNG/2017 Smt. Sulochanamma D.
… Appellants
Versus
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.
FINAL ORDER
20.06.2024
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: -
Table A- The property of appellant Bharathi Jayachandra and her husband are detailed as under: -
| 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 |
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 2
| 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 |
Properties at Serial no.1, 4 & 5 stated to be gifted by Smt. Sulochanama (D-4) gifted to Smt. Bharathi Jayachandra (D-2).
Table B The property of appellant Prashanth Govindraju Brother in-law of SC Jayachandra
| 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 |
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore
3
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.
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
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.
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 4
During investigation respondent-ED recorded the statement of many persons under Section 50 of PMLA and collected many documents.
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.
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.
Aggrieved by the said order appellants have filed the present appeals.
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017 Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 5
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”
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
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 6
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.
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: -
Assets of Smt. Bharti Jayachandra
| 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 |
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 7
| 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 |
Income of Bharthi Jayachandra
| 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: |
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 8
| 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 |
He argued that against the above lawful income Rs. 312.40
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.
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 9
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.
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.
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.
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 10
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.
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017
Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 11
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:-
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.
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.
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017 Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 12
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: -
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.
However, there is nothing on record to doubt the attachment of properties, either as direct proceeds of crime, or as value thereof
Rajesh Malhotra Member
FPA-PMLA-1926,1927&1941/BNG/2017 Smt. Bharthi Jayachandra, Prashanth Govindraju, Sulochanmma D. v. The Deputy Director, ED, Bangalore 13
RAJESH MALHOTRA MEMBER
in absence of proceeds of crime. Hence, the present appeals are liable to be dismissed.
Appeals Dismissed .
Pronounced on this 20th Day of June, 2024.
Rajesh Malhotra Member
3 issues framed by the court
Whether the Appellate Tribunal can uphold attachment of properties acquired prior to the amendment making PC Act offences scheduled offences under PMLA.
Whether the offence of money laundering is a continuing offence allowing attachment even if predicate offence dates back before the schedule inclusion.
Whether the value of attached properties can be recovered without them being direct proceeds of crime if equivalent value is held.
Colour shows how this judgement treated each authority
Vijay Madan Lal Chaudhary v. Union of IndiaReferred¶74
Vijay Madan Lal Chaudhary v. Union of India
Attorney General for India and Ors. v. Solanki TradersReferred¶81
Attorney General for India 17 and Raman Tech. & Process Engg. Co. and Anr. v. Solanki Traders
1 provisions across 1 enactments
Smt. Bharthi Jayachandra
Prashanth Govindraju
Smt. Sulochanamma D.
The Deputy Director Directorate of Enforcement, Bangalore
Rajesh Malhotra
As recorded by the court registry
8 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
