The attachment of properties under the Prevention of Money Laundering Act is justified when there is a risk of concealment of proceeds of crime linked to criminal activities.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 5(1) - Provisional attachment order challenged - Evidence established that funds amounting to Rs. 1.36 Crore collected by PFI routed through appellant's bank accounts - Allegations of criminal conspiracy and funding terrorism upheld - Common areas attachment justified as concealment risk existed. (Paras 15, 58, 60, 63)

(B) Money Laundering - Definition and Interpretation - 'Proceeds of crime' includes property derived from criminal activity; evidential burden on appellant to prove innocence if nexus established with unlawful activity. (Paras 19, 61)

(C) Procedural Validity - Appellate court maintains that provisional measures under PMLA are valid if apprehension of concealment is present. (Paras 58, 59)

Facts of the case:
Appellant, Munnar Villa Vista Pvt. Ltd., challenged provisional attachment order concerning funds linked to criminal activities by PFI. Investigations revealed significant illegal fund collections using illegal channels.

Findings of Court:
Corporate governance issues and discrepancies in financial reporting substantiated the claim of connection to money laundering activities related to PFI.

Issues: Whether provisional attachment under Section 5(1) of the Act was justified based on risks of concealment, and whether a valid nexus between the appellant and the proceeds of crime existed.

Ratio Decidendi: Risk of asset concealment authorized the attachment under PMLA; failure to clarify financial discrepancies indicates probable involvement in money laundering.

Result: Appeal dismissed.

ORDER

30.05.2025

By this appeal under section 26 of the Prevention of Money Laundering Act, 2002, a challenge has been made to the order dated 30.06.2023 passed by the Adjudicating Authority confirming the provisional attachment order dated 07.01.2023.

Brief facts of the case are as under:-

2. UP Police registered an FIR No. 0199/2020 dated 07.10.2020 [u/s 153A, 295A and 124A of IPC; 14 and 17 of UAPA; and 65, 72 and 76 of the IT Act] against four PFI/ CFI (Campus Front of India) members viz. Atikur Rahman, Md. Alam, Sidhique Kappan and Masud Ahmed who were arrested while they were on their way to Hathras with an intent to disturb communal harmony, incite communal riots and spread terror.

3. UP Police Anti-Terrorism Squad (ATS) registered FIR No. 04/2021 dated 16.02.2021 [u/s 120B and 121A of IPC, 13, 16, 18 and 20 of UAPA; 3, 4 and 5 of the Explosives Act and 3 and 25 of the Arms Act] against two PFI members - (i) Anshad Badharudeen and (ii) Firoz Khan who were arrested by UP Police and improvised explosive devices, one 32 bore pistol and 7 live cartridges were seized from them. As per the FIR, as part of criminal conspiracy, some PFI members were planning to form a terrorist gang and were collecting deadly weapons and explosive devices to simultaneously launch attacks on many important and sensitive places and personalities in UP with an intent to challenge the unity, integrity and sovereignty of the nation and to disturb communal harmony.

4. The Funds amounting to Rs. 1.36 Crore, raised/ collected abroad by office bearers/ members/ activists of PFI, CFI and their related organizations, were routed to the bank accounts of K A Rauf Sherif, the National General Secretary of CFI & also a member of PFI and his associates by way of remittances through a wide range of individuals/ entities and were used by PFI/ CFI office bearers/members/ activists in India for their continuous unlawful activities over time which included, but were not limited to funding of anti-CAA protests; inciting violence and fomenting trouble which led to Delhi riots in the month of February 2020; purported visit of PFI/ CFI to Hathras with an intent to disturb communal harmony, incite communal riots and spread terror.

5. The Documentary evidences shows that PFI has been collecting huge amounts of funds abroad through PFI members/activists specifically appointed for this purpose and that targets for foreign collection of funds have also been fixed. These foreign funds are not reflected in the bank accounts of PFI and are remitted through hawala/underground channels and through remittances sent to the accounts of members/activists/ office bearers (and to the accounts of their friends/relatives/ associates) of PFI/CF PFI/ CFI and other related organizations.

6. The conspiracy to fraudulently remit money through various individuals based abroad and also through their associates in India was thus part of the larger conspiracy to visit Hathras for disturbing communal harmony, instigating riots and spreading terror; to fund and conduct anti-CAA protests; and for CFI/ PFI’s other unlawful activities.

7. PFI and its associated organizations like CFI have been continuously involved in the offence of money laundering and have been using the proceeds of crime for committing unlawful activities across India.

8. In the investigation under PMLA, complainant found evidence against many persons and others as under:-

9. By way of criminal conspiracy, Abdul Razak BP & Ashraf MK, with the active association and involvement of other PFI members, hatched a criminal conspiracy to raise funds in India & abroad and fraudulently transferred the funds through underground & illegal channels. While part of the said funds was parked in the Munnar Villa Vista project and was projected as untainted, a large part was used by PFI & its related entities to carry out their continuous radical & unlawful activities.

10. Proceeds of crime mobilized/ remitted in the form of cash have been used in the constru

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2025 Supreme(Online)(ATFP) 348

The attachment of properties under the Prevention of Money Laundering Act is justified when there is a risk of concealment of proceeds of crime linked to criminal activities.

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