N. K. Proteins Ltd. Vs Deputy Director (Appellate Tribunal Under SAFEMA Delhi)
PMLA Tribunal Upholds ED Seizure in NSEL Scam – Pending PMLA Complaint Enough to Continue Retention; Even Non-Accused Family Member’s Assets Can Be Frozen
The Appellate Tribunal under SAFEMA, New Delhi, dismissed the appeals filed by N.K. Proteins Ltd., its directors and related entities challenging the seizure and continued retention/freezing of cash and luxury vehicles by the Enforcement Directorate in the NSEL money-laundering investigation. The Tribunal held that once a prosecution complaint under PMLA is already pending in the same ECIR, retention of seized properties can continue under Section 8(3), and there is no requirement that a fresh or supplementary complaint must be filed against every affected person or asset.
The Tribunal rejected the argument that ED had already attached assets exceeding the alleged proceeds of crime. It observed that the investigation was still evolving and allegations involved bogus warehouse receipts, paper transactions and diversion of funds generated through non-existent commodity trades on the NSEL platform. Statements recorded under Section 50 allegedly admitted that transactions were only paper entries and funds were diverted into other investments including real estate.
Importantly, the Tribunal reiterated that PMLA action is not confined only to persons named as accused in the scheduled offence or prosecution complaint. Relying on the Supreme Court ruling in Vijay Madanlal Choudhary and Delhi High Court ruling in Amlendu Pandey, it held that even a person not arrayed as an accused can face seizure/freezing if found in possession of suspected proceeds of crime. Accordingly, seizure of luxury vehicles standing in the name of a family member who was not an accused was also upheld.
The Tribunal also entered into an elaborate discussion on Sections 17, 20 and 8 of the PMLA and referred to conflicting interpretations surrounding the requirement of a separate retention order under Section 20, including the Delhi High Court judgment in Rajesh Kumar Agarwal.
FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
This Order disposes of the Appeals Nos. FPA-PMLA-2780/ MUM/2019 filed by M/s N. K. Proteins Ltd., FPA-PMLA-2781/ MUM/2019 filed by Shri Nilesh K. Patel, FPA-PMLA-2782/MUM/ 2019 filed by Shri Priyam Patel, and FPA-PMLA-2783/MUM/2019 filed by M/s N. K. Industries Ltd. against the Order dated 14.11.2018 (Impugned Order) passed by the Ld. Adjudicating Authority (AA) under the Prevention of Money Laundering Act, 2002 (PMLA) in the Original Application No. 236/2018 (OA) dated 28.06.2018. Cash amounts of Rs. 5,00,000/- & Rs. 12,00,000/-and 42 vehicles & 10 cars were seized for which the OA No. 236/2018 was filed, so as to continue with the seizure and retention. The Impugned Order allowed the retention and freezing.
