Deva Manohar S Vs Deputy Director, Directorate of Enforcement (Appellate Tribunal Under SAFEMA, New Delhi)
“I Am a Victim” Is Not Enough Without Bank Proof: SAFEMA Tribunal Upholds ₹8.28 Lakh PMLA Attachment
Summary: The appellant, Deva Manohar S., challenged an order dated 13 December 2024 passed by the PMLA Adjudicating Authority confirming a PAO dated 9 July 2024. The appellant’s property was attached to the extent of ₹8,28,093, being the value of funds allegedly received by him from proceeds of crime.
The main allegation concerned Ms. Jyothi Madhu, former Branch Manager of a Co-operative Bank. An FIR was registered on the complaint of the Joint Registrar of Co-operative Societies against several accused for offences involving criminal breach of trust, cheating, forgery, conspiracy & manipulation of electronic records under the IPC & Information Technology Act, 2008.
The investigation allegedly revealed manipulation of funds relating to fixed deposits maintained with the Co-operative Bank. During tracing of the fund trail, the ED found that ₹8,28,093 was transferred from the account of one Sri Nivas & ultimately received in the appellant’s bank account.
Since the amount was no longer available or had vanished, the ED attached other property belonging to the appellant on a value-equivalent basis, limited to ₹8,28,093. The Adjudicating Authority confirmed the attachment, leading to the appeal before the Tribunal.
Issue before the Tribunal
The principal issue was whether the appellant’s property could remain provisionally attached merely because his bank account had received ₹8,28,093 allegedly traceable to proceeds of crime, when he claimed to be an innocent victim of the bank fraud.
The connected issue was whether repayment of an independent loan of ₹5 lakh & filing of a complaint before the Superintendent of Police were sufficient to establish bona fides & break the alleged link between the appellant & proceeds of crime.
The Tribunal also examined the evidentiary consequence of the appellant’s failure to produce his bank statement, despite specifically denying receipt of the disputed amount.
Appellant’s submissions
The appellant contended that he had obtained a loan from the Co-operative Bank & had repaid the loan amount of ₹5 lakh. Therefore, there was no justification for attaching his property for ₹8,28,093.
He maintained that he was not involved in the fraud allegedly committed by the former Branch Manager. Instead, he was himself a victim of the fraudulent transactions. To demonstrate his bona fides, he referred to a complaint made to the Superintendent of Police, followed by a report regarding the fraud.
The appellant denied having knowingly received the amount transferred from Sri Nivas’s account. According to him, the attachment wrongly treated an innocent bank customer as a recipient of proceeds of crime merely because of entries allegedly appearing in the fund trail.
He therefore sought setting aside of the provisional attachment & release of his property.
ED’s contentions
The ED opposed the appeal by relying upon the banking trail discovered during investigation. According to the ED, the appellant’s account received ₹8,28,093 originating from the account of Sri Nivas as part of the transactions allegedly orchestrated by the former Branch Manager.
The attachment was not made for the entire alleged fraud but was restricted only to the amount received by the appellant. Since the original funds were no longer available, property of equivalent value was validly attached.
Tribunal’s findings & legal reasoning
The Tribunal noted that the decisive factual question was whether the appellant had actually received ₹8,28,093 from the account of Sri Nivas. The appellant denied receipt or knowledge of the transfer, but did not produce his bank statement.
During the hearing, the appellant’s counsel was specifically asked to refer to the relevant bank account so that the alleged credit could be verified. No statement was furnished or relied upon. The Tribunal observed that if the amount had never been received, production of the bank statement would have been the simplest & most direct method of disproving the ED’s allegation.
The failure to produce evidence within the appellant’s exclusive possession operated against him. The Tribunal inferred that the bank statement would have demonstrated receipt of the disputed amount.
The Tribunal further observed that even if the money was initially credited without the appellant’s knowledge, his subsequent conduct was relevant. A bona fide recipient of an unexplained credit would ordinarily notify the bank immediately & seek reversal or clarification.
No contemporaneous communication was made to the Co-operative Bank regarding the unexpected transfer of ₹8,28,093. Therefore, the Tribunal was unwilling to accept that the appellant’s conduct was entirely innocent or bona fide.
The complaint made to the Superintendent of Police did not by itself establish that the disputed credit was never received or that the appellant had taken immediate steps concerning that specific transaction. Similarly, repayment of a separate loan of ₹5 lakh did not explain the receipt of ₹8,28,093.
The Tribunal emphasised that the attachment was provisional & value-equivalent. It was confined to the amount allegedly received by the appellant rather than extending to unrelated assets beyond the traced sum.
Finding no evidentiary basis to reject the fund trail or establish bona fide receipt, the Tribunal upheld confirmation of the attachment & dismissed the appeal.
Practical implications
The ruling highlights that a person claiming to be an innocent recipient of proceeds of crime must support the claim with contemporaneous banking evidence. Mere denial or assertion of victimhood is insufficient when the relevant bank statement is withheld.
Where an unknown amount is credited, the account holder should immediately notify the bank in writing, avoid utilisation of the funds, seek reversal & preserve emails, complaints & account statements.
The decision also confirms that when original proceeds are unavailable, other property may be attached on a value-equivalent basis, restricted to the amount traced to the recipient.
Importantly, confirmation of a provisional attachment does not finally establish criminal guilt. Nevertheless, at the attachment stage, failure to rebut a documented money trail may justify continuation of the restraint.
The central lesson is that innocence must be demonstrated through the bank trail & immediate bona fide conduct—not merely asserted after attachment.
FULL TEXT OF THE ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA, NEW DELHI
By this appeal, a challenge has been made to the order dated 13.12.2024 passed by the Adjudicating Authority confirming the provisional attachment order dated 09.07.2024. So far as the appellant is concerned, the provisional attachment of his property is to the extent of Rs. 8,28,093/-. It is on the ground that he remained the recipient of the proceed of crime to that extent whereas main allegation was against Ms. Jyoti Madhu, the former Branch Manager of the Cooperative Bank.
The case was initiated on the registration of the FIR by the Joint Registrar of the Cooperative Society for the offences under Section (s) 406, 408, 409, 417, 420, 465, 468, 120B, 34 and 471 of the IPC and Section 65 of the Information Technology (Amendment) Act, 2008. The FIR alleged to involve many accused including Ms. Jyothi Madhu, the former Branch Manager of the Cooperative Bank. The allegation against the accused was for the manipulation of funds related to the fixed deposits. The complete record for it was traced out during the course of the investigation where it was found that the appellant remained recipient of sum of Rs. 8,28,093/- and therefore the property of the appellant has been provisionally attached only to the extent to the amount of proceeds in the hands of the appellant. It is for the value thereof in absence of the availability of funds having been vanished or making it non-available.
The learned counsel for the appellant submits that he had obtained loan from the Cooperative Bank but loan amount of Rs. 5 lakhs was repaid, thus, there was no reason to provisionally attach the property even to the extent of Rs. 8,28,093/-. The appellant is in fact a victim of the fraud committed by the accused and had even made a complaint to the Superintendent of Police followed by a report. In view of the above, prayer was made to cause interference in the provisional attachment of the appellant’s property.
The counsel for the appellant did not raise any other issue than referred above despite an opportunity and called upon by this Tribunal to raise any other legal or factual issues.
I have considered the submission made by the counsel for the appellant. The appellant is in receipt of sum of Rs. 8,28,093/- which is said to be have been transferred to the accused’s account from the account of one Sri Nivas. The appellant has shown himself to be innocent for such a transaction and in fact denied his involvement in getting transfer of the said amount in his bank account. The learned counsel for the appellant was asked to refer to the bank account to verify whether the appellant had received the amount of Rs. 8,28,093/- from the account of Sri Nivas or not. The bank account statement of the appellant was not referred to verify the fact aforesaid. If the appellant has not received any amount from the account of Sri Nivas then he could have produced the bank account statement to show and prove the fact aforesaid but appellant has not deliberately produced the bank account statement and otherwise it would have been sufficient to prove the receipt of the sum of Rs. 8,28,093/-. It may be that receipt of the amount was without the knowledge of the appellant but his consequential action should have been to immediately inform the Cooperative Bank about transfer of sum of Rs. 8,28,093/- but no such communication was ever made, thus, action of the appellant cannot be said to be bonafide rather he remained recipient of the amount at the instance of accused Ms. Jyoti Madhu. In light of the aforesaid and finding that it is a case of provisional attachment of property for value equivalent and that too, only to the extent to the sum of procceds in the hands of the appellant, I do not find any reason to cause interference in the Impugned Order. With the aforesaid, the appeal is dismissed.
