2025 Supreme(Online)(ATFP) 13296

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
G. C. Mishra, MEMBER, Rajesh Malhotra, MEMBER
Smt. S. Kumari D. Senthil Ms. Dhanalakshmi Sridhar v. Smt. S. Kumari D. Senthil Ms. Dhanalakshmi Sridhar
FPA-PMLA-1685/CHN/2017

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 5, 8, 6, 24, 26 - Attachment of properties - Proceeds of crime - Reason to believe - Show cause notice - Coram non judice - Requirement of reasons to believe in provisional attachment order (Section 5) and show cause notice (Section 8) - Single member bench of Adjudicating Authority - Validity.

(B) Section 5 of PMLA does not require communication of reasons in the form of show cause notice before ordering provisional attachment; the provisional attachment order itself has characteristics of a show cause notice (Madras High Court in G. Gopalakrishnan; Bombay High Court in Radha Mohan Lakhotia). Section 8 does not require recording of reasons in writing; subjective satisfaction of the Adjudicating Authority is sufficient. (Para 6)

(C) Property in the hands of any person in possession of proceeds of crime can be attached even if that person is not accused of the predicate offence or of money-laundering. The sweep of Section 5(1) is not limited to accused named in the criminal activity relating to a scheduled offence; it applies to any person involved in any process or activity connected with proceeds of crime (Vijay Madanlal Choudhary, paras 65, 69). (Para 7)

(D) Quantification of proceeds of crime is not necessary for attachment; the definition of “proceeds of crime” is wide enough to include the value of any such property, and property of equivalent value can be attached if the original proceeds have been siphoned off or layered (Vijay Madanlal Choudhary, para 68). (Para 8) (E) Section 6(5)(a)&(b) of PMLA does not mandate a two-member bench in every case; under Section 6(7), the chairperson may transfer a matter to a two-member bench if the nature of the case so requires, implying that a single member bench is permissible otherwise. (Para 9) (F) Burden of proof under Section 24 of PMLA lies on the person claiming that the property is not proceeds of crime. (Paras 7, 10)

Facts of the case:
A notorious criminal was involved in multiple heinous offences including murders, attempted murders, and kidnapping for ransom, leading to 26 FIRs. The Directorate of Enforcement registered an ECIR and attached numerous immovable properties in the names of the criminal’s wife, daughter, and brother. The wife was a housewife who had filed income tax returns showing modest income but held properties worth crores; the daughter was a student with no income and had not filed returns; the brother assisted in criminal activities and admitted to involvement in illicit liquor business and land deals. The Adjudicating Authority confirmed the provisional attachment order. Aggrieved, the appellants filed appeals under Section 26 of PMLA.

Findings of Court:
The Appellate Tribunal upheld the impugned order. It found that reasons to believe were elaborately discussed in the provisional attachment order and the impugned order; no separate communication in the show cause notice was required. The properties of the wife, daughter, and brother were rightly attached as they failed to discharge the burden of proving legitimate source of income. The brother’s involvement in predicate offences was established through FIRs and his own statements. The daughter’s properties were acquired by her father using illegal money. The wife’s properties were disproportionate to her declared income. The attachment of properties acquired before the PMLA came into force was valid under the wide definition of proceeds of crime. The single-member bench of the Adjudicating Authority was not coram non judice.

Issues: The main issues were whether lack of reasons in the show cause notice vitiated proceedings; whether properties of persons not accused in predicate offences could be attached; whether quantification of proceeds of crime was necessary; whether properties acquired before PMLA could be attached; and whether a single-member bench of the Adjudicating Authority was invalid.

Ratio Decidendi: The court ruled that the PMLA does not require explicit communication of reasons in the show cause notice; the provisional attachment order itself contains reasons. The definition of proceeds of crime and the scope of Section 5(1) allow attachment of property held by any person involved in money laundering, regardless of whether they are accused in the predicate offence. The value of proceeds of crime can be attached even if the original proceeds are not available. The composition of the Adjudicating Authority as a single member is permissible unless the chairperson directs otherwise. Result : Appeals dismissed. The respondent directed to refrain from taking coercive steps till conclusion of trial, except under exceptional circumstances as per Vijay Madanlal Chowdhary.

FINAL ORDER

12.08.2025

Dictated By: Rajesh Malhotra

The present appeals under Section 26 of Prevention of Money Laundering Act, 2002 (PMLA) are filed by the appellants against the impugned order dated 03.02.2017 passed by the Adjudicating Authority in Original Complaint (OC) No. 636/2016, whereby the provisional attachment order (PAO) No. 20/2016 dated 02.09.2016 was confirmed. The properties of the present appellant are mentioned in para no. 1 of the impugned order and the same is not reproduced herein.

2. As per the facts of the case, a large number of complaints were lodged against Shri Sridhar Dhanapal a notorious criminal for his involvement in 5 murders, 10 attempt to murders, kidnapping for ransom and also many other heinous offence cases and accordingly 26 FIRs were registered in different Police Station against him for commission of Schedule Offences. The details of the 26 FIRs registered against Sh. Sridhar Dhanapal & Ors. are mentioned in para no. 3 of the impugned order in the table at page no. 59 to 63, the same is not reproduced herein. Out of said FIRs, appellant D. Senthil is also named in the three FIRs, alongwith his brother.

Accordingly, the Directorate of Enforcement recorded the ECIR No. CEZO/03/2016 dated 09.03.2016 for conducting investigation for the offences of money laundering and to trace out the trail of the proceeds of crime.

During the investigation ED recorded the statements of suspects/ accused persons and others including the present appellants and also collected the documents from the Police and other sources including the Income Tax Authorities. As per report received from Income Tax Authorities Ms. Dhanalakshi Sirdhar daughter of accused Sh. Sridhar Dhanapal has not filed any Income Tax Returns (ITRs) during the period of Assessment Year 2006-07 to 2014-15. Smt. S Kumari wife of Sh. Sridhar Dhanapal proprietor of M/s Nithi Associates filed six ITRs, tabulated as under:

Appellant Sh. D Senthil younger brother of Sh. Sridhar Dhanapal had not filed any ITRs from the Assessment Year 2006-07 to 2014-15, though he is having PAN Card number AZQPS5575C.

Later on, Sh. D Senthil furnished his ITRs of three years as under:

The total immovable properties revealed in the name of the present appellant and accused persons Sh. Sridhar Dhanapal were 121 in number having valued of Rs. 72,28,48,000/- along with two bank accounts having deposits of Rs. 33,87,474/-, the totaling of Rs. 33,87,474/-.

On the basis of the allegations mentioned in the FIR and the material documents collected from the office of concerned Sub-Registrars, ED attached the said properties vide Provisional Attachment Order No. 20/2016 dated 02.09.2016. Thereafter, ED filed the Original Complaint No. 636/2016 before the Adjudicating Authority along with relied upon documents.

The Adjudicating Authority being satisfied with the allegations mentioned in the Original Complaint coupled with the relied upon documents issued the Show Cause Notice to the defendants. After receiving the replies and hearing the rival submissions the Adjudicating Authority confirmed the PAO vide its order dated 03.02.2017.

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

3. Ld. Counsel for the appellants submitted that the original complaint nowhere mentions as to how the impugned properties are proceeds of crime. The appellants were not involved in any scheduled offence or in any criminal activity hence the provision of Section 2(1)(y) are not applicable to the appellants, and they are merely the bonafide purchasers and the properties were purchased when no proceedings under the PMLA were initiated against the persons involved in the scheduled offence.

He further pointed out that the impugned proceedings are illegal and unconstitutional being hit by violation of the principle of Coram non -judice. He stated that the provision of Section 6 (5)(a)&(b) of the PMLA require that the matter should be decided by a bench of Chairperson along with one or two members and

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