Dama Seshadri Naidu, J.

1. Someone owns brand-new vehicles and valuable house-property. Faced with the allegation of cheating and defrauding many people in the name of medical-college admissions, she is called on to explain that the funds she used to buy the property are not proceeds of crime. The burden is on her. Her failing to explain, she faces mone laundering charges. How to prove the source of funds and how to discharge the burden are the questions we face in this case.

The Controversy:

2. Appellant Kavitha G. Pillai runs a proprietary concern, K.G.K. Group Software Training and Career Guidance Centre, at Ernakulam. She faces these allegations: She promised to several students admission into MBBS/MD courses in various medical colleges in Kerala and collected about Rs.3.67 crores from their gullible parents. She along with certain other persons cheated those persons and used the proceeds of crime to buy vehicles and properties. To be explicit, the properties included two motor vehicles (two-wheelers) and a house of 2,100 sq. ft., on 1.89 acres of land in Edapally North Village, Kanayanoor Taluka, Ernakulam District. The immovable property is said to have cost Kavitha Rs.1,07,00,000/-; and both the vehicles, Rs.1,20,000/-.

3. Kavitha allegedly committed crimes—inducing and deceiving gullible people with false, deliberate, deceitful promises and mulcting money from them—between May 2013 and August 2013. As the record reflects, 17 crimes have been registered against her in various police stations for the alleged offences under Sections 120 (B), 406, 419, 420 r/w Section 34 IPC, 1860. Among these, offences under Sections 120 (B), 419 and 420 IPC are “Scheduled Offences” as per Section 2 (1) (y) (i) of the Prevention of Money Laundering Act, 2002 (“the Act”).

4. Based on the reports of the police stations where crimes have been registered, on 07.02.2014 the Enforcement Directorate registered a crime, ECIR/1/KCZO/2014, against Kavitha and others. If we indulge in a bit of chronology, we can see that on 31.03.2014, the Joint Director, invoking Section 5 (1) of the Act, provisionally attached Kavitha’s property, on the premise that she had acquired those properties using the ill-gotten money. On 23.04.2014 he filed Original Complaint No.308 of 2014 before the Adjudicating Authority; he, thus, complied with the statutory mandate under Section 5 (5) of the Act.

5. As seen from the record, on 28.08.2014 the Adjudicating Authority, under Section 8 (2) of the Act, recorded a finding that the provisionally attached properties are involved in money-laundering.

6. Aggrieved, Kavitha challenged the Adjudicating Authority’s order before the Appellate Tribunal, New Delhi. On 05.08.2015 the Tribunal dismissed the appeal. As a result, the Directorate issued an eviction notice on 07.09.2015. There is a flip-flop on Kavitha’s part about whether she was willing to continue in the property by paying rent: she agreed, paid the rent in part, defaulted, then questioned the orders. Kavitha filed W.P. (C) No.28032 of 2015. This Court, through its Judgment, dt.04.11.2015, extended time up to 04.11.2015 for Kavitha to pay the arrears of rent. When Kavitha failed to pay the arrears as directed, the Directorate on 23.10.2015 issued another eviction notice, following it later with another notice, dt.21.12.2015. Kavitha is said to have asked the Directorate 5 days’ time to vacate.

7. Still, challenging the eviction notice dt.21.12.2015, Kavitha filed WP(C) No. 39898 of 2015 but had it dismissed as withdrawn. Eventually, she filed this Appeal before this Court challenging the Tribunal’s order dated 05.08.2015 in MP-PMLA-1118/COCHIN/2014(STAY) & FPA-PMLA-639/COCHIN/2014. In the course of time, Kavitha amended her pleadings and introduced a challenge to Rule 5 of the Prevention of Money Laundering (Appeal) Rules, 2005 (“the Appeal Rules”).

Contentions:

Appellant’s:

8. Sri Ramesh Chander, the learned Senior Counsel appearing for appellant Kavitha, has contended