2025 Supreme(Online)(ATFP) 13353

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member
Late Smt. Manorma Devi (through LRs) Smt. Archana Lal Smt. Kalpana Karn Dr. Aseem Kumar Dr. Pranav Kumar & Anr. Smt. Seema Kumari Ms. Ashta Lal Smt. Puja Kumari Smt. Bharti Thakur Shri Pranav Kumar Ghosh Dr. Amina Bano Ansari Late Smt. Manorma Devi (through LRs) Shri Bimlendra Prasad Karn Smt. Bandana Karn Shri Rudrajeet Kumar Lal – Appellant
Versus
The Deputy Director Directorate of Enforcement Patna – Respondent
FPA-PMLA-4179/PTN/2021

The date of dealing with proceeds of crime, not the date of the scheduled offence, determines the applicability of PMLA; attachment can be confirmed beyond 180 days if COVID-19 exclusion applies; proceedings continue after death of accused under Section 72.

Headnote:(A) Prevention of Money Laundering Act, 2002 (PMLA) - Sections 2(1)(u), 3, 5(1), 8, 72 - Provisional Attachment Order (PAO) - Confirmation within 180 days - Limitation period extended due to COVID-19 - Suo Motu Writ Petition No.3/2020 - Proceeds of crime - Definition - Property derived from scheduled offence - Continuing offence - Date of activity relevant - Attachment of properties of non-accused persons - Section 5(1) applies to any person in possession of proceeds of crime - Death of accused - Continuation of proceedings - Section 72 allows legal representatives to continue appeal - Scheduled offences under IPC and Prevention of Corruption Act, 1988 - Cooperative society - Banking business without RBI license - Diversion of government funds - Siphoning of funds - Modus operandi - Cash deposits and transfers - Burden of proof on claimants to show lawful source. (Paras 31-38)

(B) Limitation - Effect of Supreme Court order dated 10.01.2022 - Exclusion of period from 15.03.2020 to 28.02.2022 for termination of proceedings - PAO confirmed beyond 180 days but saved by COVID-19 exclusion - Sant Singh case (2024) followed. (Paras 35, 36)

(C) Evidence - Statements recorded under Section 50 PMLA - Bank account analysis - Builder/developer records - Cash transactions - Unexplained cash deposits - Inference of proceeds of crime - No documentary proof of lawful source - Attachment justified. (Paras 38)

Facts of the case:
The Deputy Director, Directorate of Enforcement, Patna issued two Provisional Attachment Orders (PAO I dated 29.05.2020 and PAO II dated 30.06.2021) attaching immovable and movable properties worth Rs.14,32,84,237/- and Rs.4,10,80,936/- respectively, belonging to legal heirs of a deceased secretary of a cooperative society, her relatives and associates. The attachments were confirmed by the Adjudicating Authority on 19.07.2021 and 05.04.2022. The cooperative society, Srijan Mahila Vikas Sahyog Samiti Ltd., was alleged to have been used to divert government funds from state department accounts to its bank accounts through collusion with bank and government officials, from 2003 to 2017. The diverted funds were used to acquire properties in the names of the society, its secretary, family members, and others. The Appellants challenged the confirmation orders on grounds including violation of 180-day period, lack of RBI license, death of the main accused, and that they were not accused in scheduled offences.

Findings of Court:
The Tribunal held that the cooperative society’s financial transactions without RBI license were illegal. The funds diverted from government accounts constituted proceeds of crime under Section 2(1)(u) PMLA. The definition includes property derived or obtained directly or indirectly from criminal activity relating to a scheduled offence. The date of the activity of dealing with proceeds of crime is relevant, not the date of the scheduled offence - following Vijay Madanlal Choudhary (2022) and Hari Narayan Rai (2010). The confirmation orders were not time-barred as the COVID-19 exclusion period applied. The death of the main accused does not abate the proceedings under Section 72 PMLA; legal representatives can continue. The properties of non-accused persons can be attached if they are in possession of proceeds of crime. The Appellants failed to provide any documentary evidence of lawful source for the funds used to acquire the attached properties. The cash deposits and transfers from the society’s accounts established the link to proceeds of crime. The attachments were necessary to secure the proceeds until trial.

Issues: The main issues were (i) whether the attached properties were proceeds of crime within the meaning of PMLA, (ii) whether the confirmation of PAOs beyond 180 days was invalid, (iii) whether the death of the main accused abated the attachment proceedings, (iv) whether non-accused persons’ properties could be attached, and (v) whether the Appellants had proved lawful source of funds.

Ratio Decidendi: The court ruled that proceeds of crime include any property derived from criminal activity relating to a scheduled offence, and the process of dealing with such property is a continuing offence irrespective of the date of the scheduled offence. The 180-day period for confirmation of PAO is subject to extension by the Supreme Court’s COVID-19 orders. Proceedings under PMLA continue despite the death of the accused by virtue of Section 72. Attachment can be made against any person in possession of proceeds of crime, not necessarily an accused in the scheduled offence. The burden lies on the claimant to prove lawful source of funds; failure to do so justifies attachment. Result : Appeals dismissed. The Impugned Orders dated 19.07.2021 and 05.04.2022 are not interfered with. Pending applications disposed of.