2025 Supreme(Online)(ATFP) 13422

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
Shri Anand Chauhan – Appellant
Versus
The Deputy Director Directorate of Enforcement New Delhi – Respondent
FPA-PMLA-3165/DLI/2019

The offence of money-laundering is a continuing offence; the date of the scheduled offence is not determinative. The relevant date is when the person indulges in process or activity connected with proceeds of crime, even if the criminal activity predates the notification of the scheduled offence under PMLA.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 3, 5(1), 8 - Prevention of Corruption Act, 1988 - Section 13(2) read with 13(1)(e) - Constitution of India - Article 20(1) - The offence of money-laundering is a continuing offence; the date of the scheduled offence is not determinative; the relevant date is when the person indulges in process or activity connected with proceeds of crime, even if the criminal activity predates the notification of the scheduled offence under PMLA. (Paras 7, 8) - The definition of 'proceeds of crime' under Section 2(1)(u) is wide enough to include not only property derived or obtained from criminal activity but also the value of any such property, permitting attachment of equivalent untainted property when the actual tainted property cannot be traced. (Paras 9, 10) - The 'reason to believe' required under Section 5(1) need not be based on conclusive proof; it is a subjective satisfaction formed on the basis of material having rational nexus with the belief; sufficiency of material is not a matter for court to investigate. (Para 11) - Statements recorded under Section 50 of PMLA while a person is in judicial custody are not automatically inadmissible; other independent evidence may sustain the case. (Para 12)

(B) Appeal - Scope - Appellate tribunal to examine whether the impugned order is founded on law and logic; deference to the adjudicating authority's findings on facts if based on material on record.

Facts of the case:
The appellant challenged the order of the Adjudicating Authority confirming the Provisional Attachment Order of 68% of his share in an immovable property acquired through family settlement, valuing Rs.11,41,800/-, as proceeds of crime allegedly derived from commission earned through LIC policies and layering of disproportionate assets of a former Union Minister. The appellant argued that the PMLA amendments (including the relevant PC Act provisions in the Schedule) were prospective and could not apply to the period 2009-2012, that the attached property was not derived from crime, that no reasons to believe were provided, and that statements recorded while in judicial custody were inadmissible. The respondent contended that the offence of money-laundering is continuing, the definition of proceeds of crime includes value, and there was ample material to form a reasonable belief.

Findings of Court:
The tribunal held that the proceedings were initiated after the amendments, and the continuing offence principle as laid down in Vijay Madanlal Choudhary applies. The definition of proceeds of crime under Section 2(1)(u) includes the value of property, allowing attachment of equivalent untainted property. The 'reason to believe' was properly formed based on material including bank statements, witness statements, and investigation results. The statements recorded in custody were not the sole basis; other evidence existed. The appeal was dismissed.

Issues: (i) Whether the PMLA proceedings were retrospective and therefore invalid. (ii) Whether the attached property, acquired through family settlement, could be treated as proceeds of crime. (iii) Whether the Deputy Director had 'reason to believe' under Section 5(1). (iv) Whether statements recorded under Section 50 during judicial custody are admissible.

Ratio Decidendi: (i) The offence of money-laundering is a continuing offence; the relevant date is when the person deals with proceeds of crime, not when the scheduled offence was committed. (ii) The definition of 'proceeds of crime' includes the value of any such property, permitting attachment of property equivalent in value even if the property itself is not directly derived from crime, provided the actual tainted property cannot be traced. (iii) The 'reason to believe' under Section 5(1) is a subjective satisfaction based on material; sufficiency cannot be challenged if there is rational nexus. (iv) Statements recorded under Section 50 while in custody are not per se inadmissible; the overall evidence must be considered.

Result: Appeal dismissed. Applications disposed of. (Para 14)