PMLA Attachment Upheld as Money Trail Linked Property to Crime Proceeds: SAFEMA New Delhi

Alive Hospitality & Foods Pvt. Ltd. Vs Deputy Director (Appellate Tribunal under SAFEMA, New Delhi)

Summary: The Appellate Tribunal under SAFEMA, New Delhi dismissed the appeal of Alive Hospitality & Foods Pvt. Ltd. challenging confirmation of attachment of “Jay Bungalow”, purchased by it for Rs. 2.15 crores in a bank auction. The Enforcement Directorate’s case arose from allegations that M/s Vishal Exports Overseas Ltd. and its key persons had defrauded banks through credit facilities obtained using forged and fabricated documents and thereafter routed funds through connected entities. The appellant contended, among other grounds, that there was no valid “reason to believe”, that the property was not “proceeds of crime”, that the relevant predicate offences were not scheduled offences when the property was purchased in February 2009, and that purchase through a public auction had no nexus with the alleged criminal activity.

The Tribunal rejected these contentions. It found detailed reasons recorded in the Provisional Attachment Order and material indicating that the appellant and other companies were formed and controlled through persons associated with Pradeep Mehta and that funds reached the appellant through connected intermediary entities. On retrospectivity, the Tribunal held that money laundering had to be examined with reference to acts constituting money laundering and treated it as a continuing offence. On the money trail, it found sufficient material at the attachment stage connecting funds received by the appellant with the alleged proceeds of crime and relied on Vijay Madanlal Choudhary concerning the scope of “proceeds of crime”. The Tribunal also observed that attachment did not by itself disturb ownership or possession and that physical possession should arise only in exceptional circumstances. Finding no merit in the challenge, it dismissed the appeal, disposed of pending applications and made no order as to costs.