Debabrata Mallick Vs Deputy Director (Appellate Tribunal Under Safema At New Delhi)
Reverse Burden Applies: Tribunal Upholds Bank Freeze Where Source of Funds Not Proved under PMLA
The Appellate Tribunal under SAFEMA dismissed the appeal challenging freezing of bank accounts and seizure of documents under Sections 17 and 17(1A) of the PMLA, holding that sufficient material existed to establish the appellant’s involvement in money laundering activities linked to diversion of bank loans by M/s BISWA and related entities. The Tribunal noted that the appellant, though claiming to be merely a Director and son of the main accused, was actively connected with multiple entities involved in layering of funds, and was found in possession of key financial records and data relating to loan disbursement and utilization.
Rejecting the argument of independent income (gym earnings and LIC commission), the Tribunal emphasized the principle of reverse burden under Section 24 of PMLA, holding that once foundational facts are established by the Enforcement Directorate, the onus shifts to the accused to prove legitimate sources. The appellant failed to produce bank statements or supporting evidence, and mere assertions were held insufficient.
The Tribunal further clarified that liability under PMLA cannot be tested on principles applicable to other statutes, and being a Director does not automatically absolve involvement where evidence suggests participation in the offence. Since the appellant failed to rebut the statutory presumption or explain the source of funds, the continuation of freezing and seizure was held valid, and the appeal was dismissed.
FULL TEXT OF THE ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
By this appeal 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 20.05.2025 passed by the Adjudicating Authority allowing retention of the seized documents/records, digital devices and continuance of the freezing of the bank accounts. Seizure of the documents and the digital devices apart from the freezing of the bank account was made during the course of search operation under Section 17 of the Act of 2002. The bank accounts were frozen under Section 17(1A) of the Act of 2002 while seizure of the records under Section 17(1) of the Act of 2002.
