Rayilung Nsarangbe Ruth Chawang Zingshongam Muinao vs The Deputy Director Directorate of Enforcement Guwahati

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 5(1), 5(3), 8(1), 8(3), 17(1), 17(4), 26 - Provisional attachment - Confirmation period of 180 days - COVID-19 pandemic - Exclusion of period from 15.03.2020 to 28.02.2022 - Supreme Court orders in Suo Motu Writ Petition No. 03/2020 - Applicability to termination of proceedings - Scope of Section 5(3) - Burden of proof on appellant to disclose legitimate source of funds - Unregistered sale deeds - Evidentiary value - Sufficiency of documents to prove genuine business transactions.

(B) Criminal Procedure Code, 1973 - Section 167(2) - Distinction between personal liberty and property rights - Inapplicability of S. Kasi ratio to PMLA proceedings.

Facts of the case:
The respondents provisionally attached movable properties worth Rs.6,88,70,759/- under Section 5(1) of the PMLA on 11.08.2021. The attachment was based on an FIR dated 05.07.2020 registered by Assam Rifles for offences including extortion, criminal conspiracy, and offences under the Arms Act and UA(P) Act, involving the terrorist gang NSCN(IM). The National Investigation Agency filed a charge sheet. The Adjudicating Authority confirmed the provisional attachment on 25.05.2022. The appellants challenged the confirmation, arguing that it was passed beyond the 180-day period under Section 5(3), that the attachment should have been under Section 17, and that the attached properties were acquired from legitimate sources including sale of inherited land, contract work, and timber business.

Findings of Court:
The Tribunal held that the period from 15.03.2020 to 28.02.2022, as directed by the Supreme Court in Suo Motu WP No. 03/2020, is excluded for computing the 180-day limit under Section 5(3) PMLA. Consequently, the confirmation order dated 25.05.2022 was within time. The argument that Section 17 should have been invoked was rejected as there is no condition to first seize movable properties before attachment. Regarding the source of funds, the Tribunal found that the unregistered sale deeds and other documents submitted by the appellants were insufficient to prove genuine business transactions. The deposits in bank accounts were immediately transferred, and no supporting invoices or proof of execution of work were provided. The statements recorded under Section 50(2) and (3) were not matched. The Tribunal concluded that a prima facie case of money laundering under Section 3 of the PMLA existed against the appellants.

Issues: 1. Whether the confirmation of provisional attachment by the Adjudicating Authority was beyond the statutory period of 180 days under Section 5(3) PMLA, and whether the COVID-19 exclusion period applies. 2. Whether the respondents ought to have proceeded under Section 17(1) and 17(4) PMLA instead of Section 5. 3. Whether the appellants successfully disclosed the legitimate source of the attached properties.

Ratio Decidendi: The Supreme Court’s order excluding the period from 15.03.2020 to 28.02.2022 applies to all judicial or quasi-judicial proceedings, including the confirmation of provisional attachment under Section 5(3) PMLA, which is a termination of proceedings. The right to property under Article 300A is distinct from personal liberty under Article 21, and therefore the strict interpretation in S. Kasi (relating to Section 167(2) CrPC) does not apply. The appellants failed to produce reliable documentary evidence to establish that the attached funds were derived from legitimate sources, as the unregistered sale deeds and incomplete business records did not inspire confidence. Result : Appeals dismissed. The impugned order confirming the provisional attachment is upheld. (Paras 16-27)

Legal Category Hierarchy

1. Appeals under Section 26 of Prevention of Money Laundering Act, 2002 against confirmation of provisional attachment order. (Para 2 , 3 , 4 )

2. Appellants challenged attachment as time-barred and based on ignored source evidence; respondents defended. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 )

3. Appeals dismissed; provisional attachment confirmed. (Para 27 )

4. Does the 180-day period under Section 5(3) of PMLA exclude the COVID-19 pandemic period?

Yes, as per Supreme Court order, the period from 15.03.2020 to 28.02.2022 is excluded when computing the 180 days. (Para 15 , 16 , 17 )

5. Is prior seizure under Section 17 of PMLA mandatory before provisional attachment?

No, there is no condition to first seize movable properties before attaching them provisionally under Section 5. (Para 18 )

6. What evidence is required to prove legitimate source of funds to challenge provisional attachment?

Registered sale deeds and corresponding bank statements are necessary; unregistered documents and insufficient proof do not suffice. (Para 21 , 22 , 23 , 24 , 25 , 26 )

FINAL ORDER

29.10.2025

By batch of three appeals filed under Section 26 of the Prevention of Money Laundering Act, 2002 (in short `the Act of 2002’), a challenge has been made to the order dated 25.05.2022 passed by the Adjudicating Authority confirming the Provisional Attachment Order dated 11.08.2021.

Brief facts of the case:

2. It is a case where the movable properties worth of Rs.6,88,70,759/- have been provisionally attached under Section 5(1) of the Act of 2002. The details of the properties in the hands of many persons have been given in the impugned order. However, we would restrict these appeals in regard to the properties of the appellants leaving other properties. The properties were including seizure of the cash of Rs.11 Lakhs by the Assam Rifles from the possession of appellant No. 3 Zingshongam Muinao, Rs.15 Lakhs from the possession of Shri Vimal Kumar Jain, who is not appellant before us, Rs.1,32,72,800/- seized by the Assam Rifles from the house premise of Rayilung Nsarangbe and Mrs. Ruth Chawang, appellants. It is apart from the funds in the bank accounts, mutual funds and the insurance funds in the name of the appellants.

3. It is a case where Assam Rifles registered an FIR on 05.07.2020 with Dimapur Police Station, District Dimapur, Nagaland for the offence under Sections 120-B , 384,406,420,465, 468,471,506,34 IPC,1860. It was even for the offence under Sections 25(1A), (1B) (a) of Arms Act and for the offence under Explosives Substances Act, UA (P), Indian Passport Act and Indian Wireless Telegraphy Act, 1933. The charge sheet was thereafter filed by the National Investigation Agency (NIA), Guwahati finding commission of offence under the IPC and other offences under different statutes.

4. During the course of investigation by NIA, it was revealed that terrorist gang of NSCN (IM) was carrying on well-organized extortion racket in Manipur and Nagaland resulting for diversion of Govt. funds. It was in pursuance to the conspiracy for terrorist acts and through the terrorist gang, they got involved in the construction companies undertaking the road construction project in Manipur and demanded huge sum as illegal tax (extortion). It is with the threatening to the company officials and workers. Their work was to stop and to resume only after satisfaction of the demand of the terrorist gang. The amount was settled in two instalments of Rs.60 Lakhs in cash and in that regard, the meeting used to be organized in a hotel where in the first trench, Rs.34 lakhs were delivered to Rayilung Nsarangbe. Remaining amount of Rs.26 lakhs of instalment was to be paid to one Armstrong Pame who provided bank account details. The investigation further revealed involvement of others in reference to different accounts which includes demand and delivery of cash amount of Rs.15 Lakhs in Dimapur using business channel and subsequently delivery of a sum of Rs.11 Lakhs cash on 04.07.2020 at the residence of Dr. Rabi Pame and prior to that delivery of Rs.15 Lakhs cash from the shop of Mr. Vimal Kumar Jain. The house of the appellants Rayilung Nsarangbe and Ruth Chawang was searched and a sum of Rs.1,32,72,800/- was found and seized along with the illegal arms and ammunitions, explosives, incriminating documents and a fake passport. The appellant Rayilung Nsarangbe was arrested and appellant Ruth Chawang dishonestly withdrew Rs.4 crores cash from her bank account in Federal Bank and caused it to be delivered to the members of terrorist gang of NSCN (IM). In the investigation, it was also revealed that the appellants Rayilung Nsarangbe and Ruth Chawang were having multiple bank accounts in different banks and were using those bank accounts and managing the proceeds obtained for the terrorist activities. The documents seized from the premises of appellants Rayilung Nsarangbe and Ruth Chawang revealed their deep involvement in diversion of Govt. funds and collection of illegal tax by way of extortion. The respondents accordingly caused Provisiona

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2025 Supreme(Online)(ATFP) 13393

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, G. C. Mishra, Member
Rayilung Nsarangbe Ruth Chawang Zingshongam Muinao – Appellant
Versus
The Deputy Director Directorate of Enforcement Guwahati – Respondent
FPA-PMLA-5248/GWH/2022

The period from 15.03.2020 to 28.02.2022 is excluded for computing the 180-day limit under Section 5(3) PMLA for confirmation of provisional attachment, as per Supreme Court's suo motu order.

Legal Category Hierarchy

Table of Contents

4. Does the 180-day period under Section 5(3) of PMLA exclude the COVID-19 pandemic period?

5. Is prior seizure under Section 17 of PMLA mandatory before provisional attachment?

6. What evidence is required to prove legitimate source of funds to challenge provisional attachment?

2025 Supreme(Online)(ATFP) 13393

APPELLATE TRIBUNAL FOR FORFEITED PROPERTYMunishwar Nath Bhandari, Chairman, G. C. Mishra, MemberRayilung Nsarangbe Ruth Chawang Zingshongam Muinao – AppellantVersusThe Deputy Director Directorate of Enforcement Guwahati – RespondentFPA-PMLA-5248/GWH/2022

The period from 15.03.2020 to 28.02.2022 is excluded for computing the 180-day limit under Section 5(3) PMLA for confirmation of provisional attachment, as per Supreme Court's suo motu order.

Legal Category Hierarchy

Table of Contents

4. Does the 180-day period under Section 5(3) of PMLA exclude the COVID-19 pandemic period?

5. Is prior seizure under Section 17 of PMLA mandatory before provisional attachment?

6. What evidence is required to prove legitimate source of funds to challenge provisional attachment?

Cases Referred (1)

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, G. C. Mishra, Member
Rayilung Nsarangbe Ruth Chawang Zingshongam Muinao – Appellant
Versus
The Deputy Director Directorate of Enforcement Guwahati – Respondent
FPA-PMLA-5248/GWH/2022