SAFEMA Tribunal Sustains PMLA Attachment Despite Lawful Property Acquisition

Mohamad Ibrahim Sait Vs Deputy Director (Appellate Tribunal under SAFEMA)

PMLA Attachment as Equivalent Value: Earlier Acquisition and Lawful Sources Do Not By Themselves Protect Property

Background

The proceedings arose from allegations of illegal granite quarrying in Madurai district. Two police cases concerned alleged encroachment, unauthorised extraction and related offences under the IPC, the Tamil Nadu property-damage legislation and the Explosive Substances Act.

The Enforcement Directorate registered an ECIR in December 2017, relying on offences included in the Schedule to the Prevention of Money Laundering Act, 2002.

According to the ED, the alleged criminal activity generated proceeds of crime totalling ₹79.50 crore. It provisionally attached 45 immovable properties valued at ₹4,69,55,706 through an order dated 29 March 2019. The Adjudicating Authority confirmed the attachment on 11 November 2019.

The appellants challenged that confirmation, principally disputing the existence of scheduled offences, the connection between the properties and alleged proceeds, their valuation and the recorded reasons for attachment.

Scheduled Offences Existed Despite the Mining-law Objection

The appellants argued that violations of the mining enactments relied upon were not themselves scheduled offences under the PMLA.

The Tribunal rejected this objection because the prosecution was not confined to mining-law violations. The charge sheet also invoked provisions including sections 420, 467, 471 and 304 IPC, and sections 3 and 4 of the Explosive Substances Act, which appeared in the PMLA Schedule.

Accordingly, the contention that there was no underlying scheduled offence failed.

Claimed Legitimate Sources Were Not Established

The appellants asserted that the properties had been purchased from lawful quarrying income, agricultural income, real-estate transactions, interest and accumulated cash. They furnished property particulars and explanations concerning acquisition.

The Tribunal nevertheless found that the claimed sources remained insufficiently substantiated. It accepted the ED’s objections regarding the absence of adequate supporting evidence and the limited income reflected in the returns available.

It therefore held that the appellants had not discharged their evidentiary burden.

More significantly, the Tribunal gave an independent reason for sustaining the attachment: the properties were attached as equivalent value of proceeds of crime, rather than solely as properties directly purchased from those proceeds.

Equivalent-value Attachment: Lawful Acquisition Was Not Conclusive

The Tribunal held that, where property is attached as “value of such property” under section 2(1)(u), its own source of acquisition is not decisive.

On that interpretation, even property acquired from fully explained lawful sources could be attached as a substitute representing the value of proceeds derived from the scheduled offence.

The distinction was therefore between property alleged to originate from criminal proceeds and other property attached in lieu of those proceeds. Establishing a lawful source for the latter did not, by itself, defeat attachment.

Properties Acquired Before the Alleged Offence

The appellants also pointed out that several properties had been acquired between 1993 and 2010, before the alleged offending period referred to in their submissions.

The Tribunal rejected this argument on the same basis. Since the attachment was as equivalent value, it held that acquisition before or after the scheduled offence was immaterial to that particular objection.

It relied on its earlier decision in Sadanand Nayak v. Deputy Director, dated 14 October 2024, and the Punjab and Haryana High Court’s decision in Dilbag Singh @ Dilbag Sandhu v. Union of India, dated 13 November 2024.

The Tribunal treated Pavana Dibbur as distinguishable in the equivalent-value context, following the reasoning reproduced from Dilbag Singh.

Valuation Objection Accepted, but Attachment Sustained

The appellants challenged the use of current guideline and market values, contending that the aggregate purchase cost of the properties was only ₹26,25,425.

The Tribunal accepted that, under section 2(1)(zb), “value” refers to fair market value on the date of acquisition, or the date of possession where acquisition cannot be determined. It found the ED’s adoption of present values incorrect.

However, it held that this error did not invalidate the attachment. The alleged proceeds of crime had been quantified by reference to the granite allegedly extracted, independently of the attached properties’ valuation. A lower property value therefore did not undermine the attachment challenged.

Sold Properties and Reasons to Believe

For properties the principal appellant claimed to have already sold, the Tribunal held that he no longer retained an interest sufficient to challenge their attachment as an aggrieved person under section 26. It did not adjudicate the purchasers’ rights through that finding.

The Tribunal also upheld the recorded reasons to believe. It considered the allegations, supporting material and risk of further alienation sufficient at the attachment stage. The appellant’s own assertion that some properties had already been sold supported that apprehension.

The disputed translation of his statement did not alter the result, since the Tribunal considered the remaining material sufficient without relying on the contested admission.

Decision

The Tribunal declined to interfere with the confirmation order and dismissed the challenge, leaving the attachment in place. The decision concerned attachment proceedings, not a final determination of criminal guilt.

Author’s Comments

The central lesson is to identify the legal basis of attachment before answering it. Proof that a property was lawfully acquired before the alleged offence may address an allegation that it represents direct criminal proceeds, but does not necessarily answer an equivalent-value attachment.

This ruling should nonetheless be cited within its limits. It does not establish that every property of an accused becomes attachable merely upon registration of an FIR. The Tribunal upheld a particular attachment on the alleged proceeds, recorded reasons and material before it.

The valuation finding is also important: the ED’s method was found incorrect, yet the attachment survived because the alleged proceeds were independently quantified. A valuation objection must therefore explain its effect on the permissible extent of attachment.

Finally, the dismissal concerning sold properties rested on the seller’s standing. It should not be presented as a ruling rejecting the independent rights or defences of bona fide purchasers.

FULL TEXT OF THE JUDGMENT APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI

The present appeal has been filed under section 26 of the Prevention of Money Laundering Act, 2002 (“PMLA”) challenging the order dated 11.11.2019 passed by the Ld. Adjudicating Authority (“AA”) in the O.C (“Original Complaint”) No. 1130 of 2019, which confirmed the Provisional Attachment Order (“PAO”) No. 03/2019 with respect to 45 immovable properties valued in all at Rs. 4,69,55,706/-.

Facts in Brief

2. The brief facts of the case are that the District Crime Branch, Madurai registered an FIR No. 21/15 dated 31.01.2015 under Sections 379, 430, 447, 434, 304(ii) read with Section 511 of the Indian Penal Code, 1960 (IPC), Section 3(1) of Tamil Nadu Property (Prevention of Damage and Loss) Act, 1992 (TNPPDL Act) and Sections 3(a) and 4(a) of the Explosive Substances Act, 1908, against Sh. Mohamed Ibrahim Sait (appellant herein), Muruganandam, Hakeem Sait, Sethuraman, Natarajan, Devadoss and other persons.

3. The Melur Police Station, Madurai, had earlier registered FIR No. 619/12 dated 06.08.2012 Section 447 and 379 of IPC and Section 4(1), 4(2)(A), 4(3) and 21 (b)(5) of Mines & Mines Development and Regulation Act 1957 and 3(1) of TNPPDL Act against Shri. Mohamed Ibrahim Sait (appellant herein), S/o Mohammed Kasim and Shri. S.K.P. Murugan, Rajapalayam. Charge sheet was filed before the Hon’ble Judicial Magistrate, Melur in the said FIR u/s 447, 379, 434, 420, 465, 467, 468, 471, 304(ii) IPC r/w 109, 114, 511 IPC and 3(1) TNPPDL Act and 3(a), 4(a) & 6 of Explosive Substances Act 1908 r/w 120B IPC.

4. Yet another FIR (FIR No. 21/15) had been registered on 31.1.2015 at District Crime Branch Police Station. The occurrence of the offence is stated to be from the year 2009 onwards. A complaint was made by the Village Administrative Officer, Keelavalavu Village, Melur Taluk, Madurai District, that on the basis of G.O (3D) No. 158 Industries (MMB-1) Dept. dated 11.04.1994, 0.42.0 Hectares land in Survey No. 379/5A, 5B, 5C, 5D, 5E, 5F and 5G within the limits of Keelavalavu Village, was leased for 10 years from 01.06.1994 to 31.05.2004 and later vide Order dated 29.04.2004 of the High Court in W.P. No. 12177/04 and in W.P. MP. No. 14239/04, the land was leased to Mohammed Ibrahim Sait, S/o Mohammed Kasim of Keelavalavu Village, Melur Taluk, Madurai District; that the said Shri. Mohammed Ibrahim Sait, his Manager Shri. Muruganandam, Quarry In-charge Sh. Hakkim Sait, Quarry Superintendent Shri. Sethurerann Procklain Operator Shri. Natarajan, Explosives In-charge Sh. Devadoss and other important persons working in the company have jointly from 2009 onwards, with the intention of illegally taking the granite stones, trespassed into Government land and illegally cut additional 14625 cubic metres of granite stones, thereby causing a loss of Rs. 58.50 cr.

5. As sections 120B, 304, 420, 467 and 471 of IPC, 1860 and section 3 and 4 of Explosive Substances Act, 1908 are scheduled offences under the PMLA, 2002, an Enforcement Case Information Report (ECIR) No. CEZO- II/16/2017 dated 12.12.2017 was recorded by the Directorate of Enforcement (ED), Chennai Zonal Office.

6. Details of the properties in the name of Sh. Mohammed Ibrahim Sait and others were obtained from the State Data Centre. Summons was issued to Sh. Mohammed Ibrahim Sait, s/o Mohamed Kassim, dated 10.01.2018 and his statement was recorded on 23.01.2018 and 12.02.2018.

7. Investigations revealed that Mohammed Ibrahim Sait had acquired and had been holding 45 properties for the value of Rs. 4,69,55,706/-.

8. Finding the same to be „proceeds of crime‟ or value thereof, all the above-mentioned properties were attached vide PAO no. 03/2019 dated 29.03.2019.

9. An OC No. 1130 of 2019 was filed before the Ld. AA. Subsequently, the Ld. AA vide order dated 11.11.2019, confirmed the PAO and allowed the OC.

10. Aggrieved by the said order, the appellants have filed these appeals.

Submission for Md. Ibrahim Sait

11. Detailed submissions have been made on behalf of the appellant. The submissions are fact-intensive, and contain details of the properties, dates of their acquisition, consideration paid and other relevant facts. Since there is nothing to be gained by re-phrasing the detailed submissions made by the appellant which contain specific particulars of properties, including survey numbers, addresses, dimensions, Deed Nos., consideration amount, the stated sources out of which they are claimed to have been acquired etc., the same are reproduced below verbatim as made by the appellant:

“1. It is respectfully submitted that the appellant initially entered into a unregistered lease agreement with his relatives (1) Mohamed Anifa, (2) Maimoon Beevi, and (3) Mamutha Beevi for quarrying an extent of 0.42.0 hectares of land in Survey Nos. 379/5A, 5B, SC, SD, 55. 5F, and 50 situated within the limits of Keelavalaru Village, Madurai District. Thereafter he purchased the properties in Survey Nos. 379/5A, 5C, SE and some other property through a registered sale deed in Doc Nos. 365/2000 dated 21.02.2000 and the properties in Survey Nos. 379/5G, 5D, through a registered sale deed in Doc No.2856/2000 dated 06.11.2000 from the granite quarrying by paying seiniorage fees for an amount of 2,71,095/- to obtain permit for 180.586 cubic meter, an amount of Rs.70,000 and agriculture income of Rs.35000, totaling an amount of Rs. 1,05,000/- out of the income, he purchased the above stated property for an amount of Rs.74,000, further the same also reflected in the income tax return filed by the appellant for the financial period of 2000-2001. Likewise, the property in survey Nos.379/5B, 5F and some other properties through a registered sale deed in Doc No.1025/2002 dated 11.07.2002 from the granite quarrying by paying seiniorage fees for an amount of 23,475/- to obtain permit for 156.373 cubic meter, an amount of Rs. 50,000 and agriculture income of Rs.30000, totaling an amount of Rs.80,000/-out of the income. he purchased the above stated property for an amount of Rs. 4,950, further the same also reflected in the Income tax return filed by the appellant for the financial period of 2002-2003. It is pertinent to note here that, even though the appellant had license to quarry multi-colored granite, he is unable to commence mining operations due to the absence of an access pathway to the quarry site. However, after establishing a pathway in the year 2000 and obtaining the requisite permits from the competent authority, mining operations commenced. The appellant also paid compensation for the non- operational period (i.e., 1994 to 2000) when quarrying could not be undertaken. Further, during the years 2008, 2009, and 2010, no rough stone quarrying was carried out due to a significant decline in the market value of granite.

2. It is further submitted that the appellant purchased the property In Survey No. 536/2 through a registered sale deed in Doc No.117/2003 dated 22.01.2003 from the granite quarrying by paving sciniorage fees for an amount of 23,475/ to obtain permit for 156.373 cubic meter, an amount of Rs.50,000 and agriculture income of Rs.30000, totalling an amount of Rs.80,000/- out of the income, he purchased the above stated property for an amount of Rs.44,100, further the same also reflected in the Income tax return filed by the appellant for the financial period of 2002-2003 and the property in Survey Nos. 536/3 through a registered sale deed in Doc No.2095/2003 dated 22.08.2003 from the granite quarrying by paying seiniorage fees for an amount of 61,600/- to obtain permit for 38.735 cubic meter, an amount of Rs.5,000 and agriculture income of Rs.67852, Interest on advances 46,525, cash on hand totaling an amount of Rs. 1,19,382/-out of the income, he purchased the above stated property for an amount of Rs.71,040, further the same also reflected in the Income tax return filed by the appellant for the financial period of 2003-2004 and the property in Survey Nos. 537 through a registered sale deed in Doc No.3494/1995 dated 20.01.1995 from executing lease in his properties in survey nos.57/6,7,8,9,10,11,48/3 for valuable consideration for an amount of Rs.2000 through a lease deed in Document No.2503/1995 dated 10.11.1995 and executing lease in his properties in survey nos.57/6,7,8,10,11 for a valuable consideration for an amount of Rs.52,100/- totalling an amount of Rs.54,100/- out of the income, he purchased the above stated property only for an amount of Rs. 13,800, further the same also reflected in the EC entries attached in page no.2-7, from the above said sale deed he purchased measuring an extent of 1.33.0 hectares of land in Survey Nos. 536/2. 536/3, and 537, situated within the limits of Thiruvathavur Village, Madurai District. Following the acquisition, the appellant submitted an application to the District Collector, Madurai, for the grant of a quarry lease to extract multi-coloured granite. Pursuant to G.O. (3D) No. 89, Industries (MMB-1) Department, dated 25.08.2004, the said extent of 1.33.0 hectares in Survey Nos. 536/2, 536/3, and 537 was leased to the appellant for a period of 20 years commencing from 25.08.2004. Subsequently, a transport permit was obtained in the year 2007 for a quantity of 30.646 cubic meters, and the appellant remitted a seigniorage fee of Rs. 48,700. However, due to financial difficulties, the appellant was unable to continue quarrying operations. On 28.06.2010, during a spot inspection of the leased site in Thiruvathavur Village, the Assistant Director (Geology & Mining) observed that there was no indication of recent quarrying activity within the leased area. It was noted that two existing pits were present in Survey Nos. 537 and 536/2, with the following dimensions:

Pit 1: 14 meters in length, 5 meters in width, and 4 meters in depth

Pit 2: 25 meters in length, 13 meters in width, and 8 meters in depth

Both pits were found to be waterlogged. Further, a local enquiry conducted by the Assistant Director (G & M), including consultation with the public and the Village Administrative Officer, revealed that the lessee had discontinued quarrying operations more than three years after the initial commencement in 2007. Accordingly, the Collectorate (Mines Section), by notice dated 11.07.2010 in Rc. No. 351/10/Mines, issued a show cause notice to the appellant seeking an explanation within 15 days regarding the discontinuation of quarrying operations. Thereafter, by memo dated 10.08.2010, the appellant was directed to attend a personal hearing on 16.08.2010 at 5:30 p.m., along with all relevant supporting documents. Subsequently, on 18.08.2010, another memo was issued in Re. No. 351/10/Mines stating that the reasons provided by the appellant for the discontinuation appeared to be genuine and reasonable, and therefore, the appellant was granted one final opportunity to recommence quarrying operations in the leased area within three months from the date of receipt of the memo. In compliance with the direction, the appellant legally transported granite stone from January 2011 to August 2012, covering a total period of eight months.

3). It is submitted that, as per the No Mining Due Certificate issued by the District Collector, Madurai, the appellant had carried out quarrying operations in the leasehold area of Keelavalavu during the financial years 1999-2000, 2000-2001, 2001-2002, and 2002-2003, and had duly remitted a total amount of Rs.10,43,185 towards seigniorage fee to the Government. Subsequently, after obtaining the requisite permits for the period 2004 to 2006, the appellant continued quarry operations. However, due to a significant decline in market value, no quarrying activity was carried out from 2007 to 2010. In the year 2011, transport permits were issued to the appellant by the competent Government authorities namely, the Assistant Geologist, Deputy Tahsildar and Surveyor after conducting inspections at the Keelavalavu quarry site These authorities verified and confirmed that the granite blocks proposed for transport had indeed been quarried from the appellant own leasehold area. During this period, the above- mentioned officials conducted 27 inspections at the Keelavalavu quarry site up to 31.05.2011 and issued transit receipts under Rule 36 of the Tamil Nadu Minor Mineral Concession Rules, 1959. It is further submitted that no adverse reports were recorded against the appellant by any of the inspecting authorities. There were no findings of trespass, encroachment, illicit quarrying, or unauthorized transport of granite.

4). It is submitted that, following the change of Government on 16.05.2011, the Assistant Geologist (Mines), along with the Deputy Tahsildar and the Surveyor (Mines), conducted an inspection of the Keelavalavu quarry on 06.06.2011. Pursuant to the inspection, a report was forwarded to the District Collector stating that the appellant had failed to maintain the mandatory 10-meter safety distance from Survey No. 380, identified as Sirumanickam Kulam. It was further alleged that the appellant had not maintained the 7.5-meter safety distance from Survey Nos. 379/4, 379/6A, and 379/6B, and that he had encroached upon the said areas and illegally excavated sand and rough stone to the extent of 3,312 cubic meters.

Additionally, it was reported that the appellant had deposited waste granite stones on the western banks of Sirumanickam Kulam, causing environmental and topographical disturbance. Similarly, with respect to another quarry operated by the appellant at Thiruvathavur Village, Madurai District, a separate inspectioni report was submitted to the District Collector, containing allegations of irregularities. In view of these circumstances, a show cause notice was issued to the appellant. Subsequently, the Government of Tamil Nadu, by order dated 06.09.2012, cancelled the quarry leases granted to the appellant both Keelavalavu and Thiruvathavur villages.

5. It is submitted that, in the meantime, based on a complaint dated 31.01.2015 filed by one Shri P. Ravichandra Prabhu, Village Administrative Officer (VAO), Keelavalavu, Madurai District, the Tamil Nadu Police registered a case alleging illicit granite quarrying activities in Madurai District. Consequently, FIR No. 21/2015. dated 31.01.2015, was registered against the appellant and 5 others for the alleged offences under Sections 379, 420, 447, 434, and 304(ii) read with Section 511 of the Indian Penal Code, as well as under Section 3(1) of the Tamil Nadu Public Property (Prevention of Damage and Loss) Act, and Sections 3(a) and 4(a) of the Explosive Substances Act, 1908. Further, pursuant to another complaint dated 06.08.2012 filed by Smt. Anuradha, Village Administrative Officer, Thiruvathavur Village, Madurai District and another case was registered in relation to alleged illegal quarrying operations. In this regard, FIR No. 619/2012, dated 06.08.2012, was registered against the appellant and 7 others for offences under Sections 447, 379, 434, 420, 465, 467, 468, 471, and 304(ii) of the Indian Penal Code, read with Sections 109, 114, 511, and 120B IPC, Section 3(1) of the TNPPDL Act, and Sections 3(a), 4(a) and 6 of the Explosive Substances Act, 1908.

6). It is submitted that the above offences in the above FIR are not scheduled offences under PML Act, 2002, However, based on the unsigned final report, which was not field before the Competent Court, reportedly prepared by the Superintendent of Police, Madurai, the contesting respondent registered ECIR/CEZO-II/16/2017 dated 12.12.2017 for conducting investigation under the provisions of PMLA, 2002, which is perse illegal and without any sanctity of law.

7. The aforesaid unsigned Final report prepared against the appellant and 5 others in Cr.No.21/2015 for the alleged offences under sec 379, 420, 447, 434, 304(ii) r/w 511 of IPC and 3(1) of TNPPDL act and 3(a), 4(a) of Explosive Substances Act and the unsigned final report prepared against the appellant and 7 others In Cr.No.619/2012 for the alleged offence under section 447, 379, 434, 420, 465, 467, 468, 471, 304(ii) IPC r/w 109, 114, 511 of IPC and 3(1) of TNPPDL act and 3(a), 4(a) and 6 of Explosive Substances Act 1908 r/w 120B IPC. Subsequently, the Final Report has been filed and cognizance of the case taken in Spl.SC. No.59 of 2024 and Spl.SC. No.09 of 2025 on the file of the Special Court constituted under the Mines and Minerals Act which is the Special District Judge Court to deal with MMDR Act and the same is pending.

8). Based on the aforesaid illegal ECIR, the Respondent Department carried out the investigation and issue summon to the appellant, his wife and his elder son under section 50 of the PMLA act, the appellant and his son appeared in person and the appellant herein gave a written explanation in Tamil on 12.02.2018, but in the English translation done by the authorities wrongly interpreted and translated according to their will and wish against the original written statement of Tamil. In order to display that the appellant voluntarily admitted that he is doing illegal quarrying. After the illegal investigation the properties of the appellant as well as his wife and his son properties were attached provisionally vide PAO No.3/2019 dated 29.03.2019 and the original complaint dated 12.12.2017 came to be filed before the Learned Adjudicating Authority under section 5(5) of PML Act, 2002. It is submitted that the Learned Adjudicating Authority has passed the impugned order dated 11.11.2019 on the above complaint thereby confirming the aforesaid PAO against the appellant.

9. It is submitted that on being aggrieved by the order dated 11.11.2019 passed in O.C No.1130/2019 by the Ld. Adjudicating Authority, the petitioner has filed the statutory appeal under sec 26 of the Act, PPA-PMLA-3370/CHN/2019 before these Appellate Tribunal.

10). It is submitted that the order dated 11.11.2019 passed in O.C No.1130/2019 by the Ld. Adjudicating Authority, is not speaking order and it was passed without appreciating the contention put forth by the appellant in the right prospective.

11). It is submitted that for the better understanding of these Honourable tribunal, the below tabular column shows, the attached properties were purchased by means of legal source and it is nothing to do with the proc eeds of crime alleged by the respondent.

[Table No.1]1

[Table No.2]

[Table No.3]

[Table No.4]

Unfortunately, instead of giving the exact price of the properties, the Respondents have introduced their own imaginary value of the properties shown at column 9 and 10, under guise of present guideline value, which has nothing to do with the proceeds of crime as per the Prevention of Money laundering act, 2002. Item o.2,3,4,5,6,7,19,20,21,22,24,25,26,27,28,29,30,31,32,33,35,36,37,39, 40, 41,42,43 and 44 were already sold. Further item no.8 and 23 are the properties in which stone quarrying operation were done. Item No.45 is ancestral property. Further in that tabular there is an double entries regarding lease deed executed for mining operation as it is portrayed as higher value, further there is no money consideration for the lease deed executed by the appellant in favour of the District collector, further the appellant here in is a member of DMK party, that he is a municipality Secretary from 2015, that he had been taking contracts for road, bridge, etc from 2006 to 2011. The same was reflected in the Income Tax returns for the period 2004-05, 2005-06 and 2007-08. Likewise, Item No. 15, 16, 17. 23 is belonging to appellant wife and she bequeathed the property from her father who is a retired military man and received pension accordingly, further the appellant wife is a professional tailor and she also earn income from However, those her work. Only from her hard earned saving money and from her Tather she purchased the above said property. Imaginary figures, though detrimental to the decision of the core issue, are taken into account. If proper figures would have been given in the attachment order with regard to those properties were purchased would have been considerably reduced. However as per the details in the complaint, the following submission in the form of calculations is made. From the above tabular column, it could be seen that the total cost for which the above 45 immovable properties were acquired comes to Rs.26, 25,425/-

12. It is submitted that at this juncture, another important lacuna in the complaint has to noted, The PML Act does not say that instead of “Cost of price” at which the property was purchased, the “present Guideline Value would be taken as the “proceeds of Crime for the purpose of proving the offence under the PML Act, 2002. Therefore, the respondent has done unnecessary exercise in projecting an imaginary figure as Present Guideline Value for every property, in order to boost the figure. Even otherwise, the total present value of 45 properties works out to Rs. 26,25,425 which is 63.67% of alleged legal Income.

13. It is submitted that thus, from a close reading of the complaint on the basis of the allegations and averments made in the complaint together with the details of figures with regard to earning of the appellant as well as the assets made them clearly establish that the Respondent/Complainant himself in the impugned complaint has admitted that the appellant has legally earned through the granite business a sum of Rs. 7.37,47,200 whereas, as per the complaint the assets accumulated by the appellant is Rs. 4,69.55.706/, which is 63.67% of his legal earnings. Thus, from the details given in the complaint at paragraphs 17 at pages 14 to 21, the complainant himself admits that the appellant have accumulated assets only around 63.67% of his legal earnings through granite business as per the complaint. When such is the fact, the complaint making allegations that the appellant has purchased properties mentioned in the complaint through proceeds of crime, which amounts to money laundering punishable under the PMLA, 2002, is inherently improbable.

14. It is submitted that the petitioners state that section 3 of the offence of PML Act 2002 reads as follows:

3. Offence of money laundering– whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money- laundering”

The ingredients contemplated in the provision to attract Section 3 are that the person concerned should have a link with proceeds of crime. Thus, only when the link is established section 3 stands attracted.

Section 2(u) defines “proceeds of crime” as under:

(u) ‘proceeds of crime means any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of the any such property for where such property is taken or held outside the country, then the property equivalent in value held within the country’

Therefore, there should be a link between the commission of schedule offence with that of the proceeds of crime, in other words, only when the property is derived or obtained directly or indirectly by any person as a result of criminal activity relating to schedule offence, the said property could be called ‘proceeds of crime. The definition of ‘Property’ is given in section as 2(v) which reads as follows:

“(V) ‘Property’ means any property or assets of every description, whether corporeal or in corporeal, movable or immovable, tangible or intangible and includes property of any kind used in commission of an offence under this Act or any of the scheduled offences.”

A conjoint reading of section 2(u), (v) and section 3 will clearly show that only when a person commits the schedule offence through which he acquires any property, movable or immovable, such an offence which is relatable to acquiring that property leading to that property which is called ‘proceeds of crime’ is an offence under section 3 and liable for punishment under section 4 of PML Act. When complainant admits that the petitioners have legally earned Rs. 7,37,47,200/-(Rupees seven crores and thirty-seven lakh and forty- seven thousand and two hundred only) which is sufficient enough to acquire 45 immovable properties, the question of acquisition out of source of illegal quarrying is inherently improbable.

15. It is submitted that in order to establish an offence under the Prevention of Monev Laundering Act 2002, it is essential that the property being described as the ‘proceeds of crime’ must have been acquired by committing “Schedule offence”. This is the fulcrum of money laundering offence. It is further submits that as per the complaint, at paragraph 5.8 and 5.9, the period of commission is from January 2011 to August 2012. Unfortunately, the prosecution has omitted see that many of the properties owned by the appellant was purchased between the period from 1993 to 2010. This fact itself is enough to show that the appellant has purchased the properties much earlier to the so-called crime period, which is from January 2011 to August 2012. This shows that the Respondent has attached the property with bereft of accurate details and with non-application of mind

16. It is submitted that as per the contents of Paragraph 5.4 and 5.6 of the complaint itself, the appellant legal income would be of Rs. 7,37,47,200/- as per the complaint the value of the 45 properties is Rs. 4,69,55,706/- which are alleged to be acquired by appellant as “crime proceeds”. It is impliedly admitted that the appellant has sufficient income as per the admission of prosecution in the attachment itself. Thus, the attachment is on conjectures and surmises and on the face of it is imaginary and fictitious.

17. It is submitted that the complaint is only on the basis of acquisition of assets with income through alleged “illicit quarrying”. However, “illicit quarrying is not a schedule offence and hence, PML Act is not attracted.

The appellant therefore prays that this Hon’ble appellate court may be pleased to set aside the order dated 11.11.2019 passed in O.C No.1130/2019 by the Ld Adjudicating Authority and allow these Appeal pending on the file of this Hon’ble Court and thereby grant the reliefs prayed thereon and pass such any or other orders as this Hon’ble Court may deem fit and proper in the circumstances of the case and thus render justice.

12. Based on the above stated submissions, it is prayed on behalf of the appellant that the present appeal be allowed.

13. The merits of the above arguments and contentions raised on behalf of the appellant in the aforesaid submissions will be considered while recording the findings of this Appellate Tribunal.

Submission for Sh. Sasi Kapoor & Smt. Basheera Begum

14. It is argued on behalf of the appellants that ld. AA failed to see that the provisions of S.3 of PMLA categorically relate to involvement in proceeds of crime. Hence the complainant ought to have firstly satisfied that there has been a criminal activity which yielded monetary or other gain and the same has been projected as licit properties. Further the provisions of S.5 expressly state that the properties are liable to be attached if and only if the person is in possession of any proceeds of crime and that such proceeds are likely to be concealed etc., to frustrate further proceedings under the PMLA. The proviso to the said proceeding mentions that in relation to the said scheduled offence, a report u/s 173 of Cr. P.C. has been filed.

15. The matter on hand involved the allegations of illegal mining which is covered under the provisions of the Mines Act 1952, Mines and Minerals (Development and Regulation) Act 1957, Granite Conservation and Development Rules 1999, Tamil Nadu Minor Mineral Concession Rules 1959, and Tamil Nadu Prevention of Illegal Mining, Transportation and Storage of Minerals and Mineral Dealers Rules, 2011. None of the violations of the said provisions of the above enactments are classified or categorized as a Scheduled Offence to S. 2(1)(u) of the PMLA. Further, the criminal provisions of IPC have no legs to stand on without the violation of the provisions of the above-mentioned enactments connected with the mining industry.

16. It is also argued that it is the bounden duty of the authority acting under section 5 to ascertain the truth of the facts involved in the matter because the complainant is both the adjudicating officer and also the investigator under the provision. Therefore, where the preponderance of evidence indicates absence of culpability and complexity, the noticee should not be harassed by the Department by insisting that he should prove the negative. In the instant case, the offences under IPC have no legs to stand if the offences under the various mining laws are not established. Admittedly, the proceedings with reference to the fact whether there has been illegal mining activity or not are still pending and inconclusive. In these premises, it is wholly erroneous on the part of the complainant to have concluded to pass an order of provisional attachment under S.5 of PMLA. Reference is made to the decisions in Gee Vee Enterprises v. Addl. CIT, 1975 (99) ITR 375 Del, and Calcutta High Court‟s decision in Rajmandir Estates (P) Ltd v. Principal Commissioner, G.A.no.509 of 2016. It is contended that the power of attachment is limited to attaching “proceeds of crime” and therefore, the existence’ of criminal activity relating to a scheduled office is the stratal condition for the existence of proceeds of crime and the applicability of S.5 of PMLA. Essentially the edifice of PMLA rests on the foundation of existence of a scheduled offence. For this proposition, the judgment of the Hon‟ble Delhi High Court in Rajiv Chanana Vs Dy. Director, W.P.(C) 6293/2014) is cited.

17. It is further argued that the ld. AA has also failed to see that the complainant having chosen to exercise the powers under S.50 of the PMLA, issued notices to the appellant and her husband herein calling upon them to explain their stand. The Appellant and her husband placed on record of the complainant all the documents, details and records on the various dates. Although duty bound to verify the said material put forth by the appellant’s husband and to come to an independent conclusion as envisaged u/s 5 of the PMLA, the complainant has not made any reference to any of the details provided by the defendants in the provisional order of attachment and also in the Complaint.

18. It is also argued that the ld. AA has failed to note that PMLA is a special Act which shall prevail over the general law. Similarly, the mining laws are also special enactments which shall prevail over the general law. Thus, the complainant ought to have endeavored to satisfy itself as to whether any material is available to assume jurisdiction under the provisions of PMLA. The complainant has wholly failed in this aspect. Except for recording the mandatory statutory requirement that there are reasons to believe that the defendants are involved in utilizing the funds aggregating to Rs. 4,69,55,706 crores out of the proceeds derived from criminal acts towards the acquisition/purchase of immovable properties the complainant has not put forth or recorded any reason of any sort to come to the said conclusion and the consequent order of provisional attachment leading to the present complaint.

19. It is also argued that the ld. AA has also failed to see that the complainant having exercised the authority under Section 50 of PMLA ought to have sought expert opinion especially from agencies such as GSI, as found in Section 8A of the MMDR Act to have an independent conclusion or reasoning before resorting to the draconian step of provisional attachment. The judgment in Binod Kumar v. State of Jharkhand & Ors, 2011 (11) SCC 463 is referred to.

20. It is also argued that the complainant having come to the said conclusion preferred the present complaint. The Authority u/s 8 of PMLA ought to have satisfied itself for reasons to be recorded in writing to issue summons to the defendants. The ld. Adjudicating Authority has issued notice to show cause to the appellant’s husband. The said show cause notice also does not mention the reasons of the Authority to reasonably believe that the Appellants have committed an offence u/s 3 of PMLA or are in possession of the proceeds of crime. Till date, there has been no communication of the reasons of such issuance of show cause notice by the authority to the Appellants. This in itself is a clear violation of the provisions of the PMLA and thus the whole of the proceedings before the Authority is non-est and void ab initio.

21. It is submitted that the appellant, in the best interest of justice and as a law-abiding citizen of this country, responded to the show cause notice and filed their written submissions along with the voluminous documents running into several pages evidencing the licit sources of income of the appellant’s husband and the details of the purchase of the various properties. The appellant and appellant’s husband also filed their additional documents. The rejoinder has also been filed by the complainant. The ld. AA has wholly turned a blind eye to documents placed on record to establish the legality and genuineness of the mining operations and the legality of the sources of income for the purchase of the various properties now provisionally attached by the complainant. Till date, no competent authority or court of law has found that the mining activity of the Appellants were illegal, thus attracting of the provisions of the PMLA.

22. It is next contended that the order of the ld. AA suffers from total non-application of independent mind. The Appellants having received a notice under Section 8(1) of the PMLA, albeit non est, are entitled to their rights under Section 8(2) of the PMLA. The ld. AA in addition to the relied upon documents filed by the complainant, is also duty bound to peruse and appreciate the documents filed by the Appellants. In fact, the mere perusal of the provisions of Section 8(2) obligates the Appellants to place on record all the materials that are available with them in order to dispel the suspicion saddled on them on the basis of the notice under Section 8 (1). Judgment of the Hon‟ble Delhi High Court Farida Begum Biswas Vs U.O.I, in W.P.(C) 8266/2015 and in Gautam Khaitan Vs U.O.I), W.P.(C) No.8970/2014 are cited.

23. It is contended that the ld. AA has failed to see that the documents produced by the Appellant’s husband which establish the hollowness of the complainant‟s case.

24. Attention is drawn to the judgment of the High Court of Karnataka in G.Lakshmi Aruna & Anr. Vs Deputy Director & Ors W.P. nos.11440-11441 of 2016, wherein it has been categorically laid down that an ECIR can only be registered once there has been conviction and judicial conclusion has been arrived at as to the quantum of proceeds of the crime of illegal mining, as the same is not a scheduled offence, and it is only upon a conviction by a trial court in the predicate offence the accused could be investigated. Going by the said judgment, the action initiated by the complainant is wholly illegal and arbitrary and liable to be struck down or set aside. The Appellants also place reliance on the decision of the Andhra Pradesh High Court in the case of B. Rama Raju Vs U.O.I 2011(164) Company Cases 149, wherein, it has been held that since the proceeds of crime is defined to include the value of the any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence and where the Appellant’ husband has by placing material and evidence having a probative value that his acquisition is bonafide, legitimate and for fair market value paid therefor then the AA must carefully consider the same. The order of the ld. AA does not display this at any part of the order.

25. It is also submitted that the ld. AA has failed to note that the provisional order of attachment has been passed after a substantial period of time. The Appellants have not dealt with the said properties during the said period. Some of the properties were mortgaged as security to the Banks and financial institutions and therefore the said Banks and financial institutions have a charge over the same and thus the same are not available to be freely dealt with by the ‘Appellant. The properties herein are all immovable properties in the form of lands. There is very less liquid cash in the Bank accounts. Thus, in this premise it is not clear as to what is the apprehension on the part of the complainant to reasonably apprehend that the same would not be available for future proceedings under the PMLA. It is also very pertinent to note that there is no material on record to show that the steps of money laundering that involves placement, layering, and integration and hence there is no basis for the order of provisional attachment passed by the complainant. (See decision of Calcutta High Court in G.A.no.509 of 2016 Rajmandir Estates (P) ltd Vs Principal Commissioner).

26. It is next submitted that the ld. AA has also wholly failed to see that in granite quarrying operations, the availability of the sale worthy mineral is ranging from 5% to 20% depending upon the specific site. The remaining 80% to 85% quarried minerals becomes waste, rejects, non-saleable due to genetic and tectonically disturbed geological province. The fact of quarrying waste and sale worthy recovery have been elaborately studied by national and international eminent apex bodies including the GSI, IBM. Thus, the conclusion of the complainant on the basis of 90% is wholly unsubstantiated.

27. It is next contended that the ld. AA has wholly overlooked that the appellants have furnished governmental, tangible, vital, reliable, relevant documents, to indicate the source of income, earning or assets, out of which or by means of which the Appellants have acquired the property and, thereby, discharged the burden of proof in tune to the statutory expectation as provided u/s 8 and 24.

28. It is also submitted that the ld. AA has also not appreciated that allegations of the law enforcing agencies in the scheduled offence cases are verbatim based on uncorroborated and unproved reports submitted by persons who are not qualified to issue the same and FIRs, charge sheets and show cause notices have been initiated on the basis of the same.

29. It is next contended that the ld. AA has also simply and mechanically reproduced the averments and submissions made by the parties without considering the same in a prospective manner. It is settled law that this Hon’ble Authority is required to completely look into the matter independently to arrive at a subjective satisfaction of considering the reply, hearing and taking into account all relevant materials placed on record by the Appellant’s husband.

30. It is submitted that according to the Black’s law dictionary, the word ‘consider’ means ‘to fix the mind on with a view to careful examination’. The consideration of the aggrieved person representations cannot be skipped. Further the term consider is vividly explained by the Hon’ble Supreme Court in its judgment in the case of Bhikhubhai Vithlabhai Patel vs. State of Gujarat (2008) 4 SCC 144. The term ‘consider’ means to think over, it connotes that there should be active application of mind. In other words, the term ‘consider’ postulates the consideration of all the relevant aspects of the matter. It is also beneficial to refer to what the Apex Court has said in paragraph No. 15 of its judgment in the case of The Barium Chemicals Ltd. vs. A.J. Rana: AIR 1972 SC 591 which reads as below:

“15. The words ‘considers it necessary’ postulate that the authority concerned has thought over the matter deliberately and with care and it has been found necessary as a result of such thinking to pass the order. The dictionary meaning of the word ‘consider’ is ‘to view attentively, to survey, examine, inspect (arch), to look attentively, to contemplate mentally, to think over, meditate on, give heed to, take note of, to think deliberately, be think oneself, to reflect’ (vide Shorter Oxford Dictionary). According to Words & Phrases-Permanent Edn: Vol. 8A to ‘consider’ means to think with care. It is also mentioned that to ‘consider’ is to fix the mind upon with a view to careful examination; to ponder; study; meditate upon, think or reflect with care. It is, therefore, manifest that careful thinking or due application of the mind regarding the necessity to obtain and examine the documents in question is sine qua non for the making of the order. If the impugned order were to show that there has been no careful thinking or proper application of the mind as to the necessity of obtaining and examining the documents specified in the order, the essential requisite to the making of the order would be held to be non-existent.”

Thus, it is argued, the order of the Adjudicating Authority is wholly vitiated and unsustainable.

The judgment in the case of Aslam Mohd. Merchant Vs Competent Authority, reported in 2008 Cri LJ 3621 is relied upon wherein, the Hon’ble Supreme Court of India, held that:

Para 28:- “It is, however, beyond any doubt or dispute that a proper application of mind on the part of the competent authority is imperative before a show cause notice is issued.”

Para 44:- “… The provisions of the Act must be interpreted in a manner so that its constitutionality is upheld. The validity of the provisions might have received constitutional protection, but when stringent laws become applicable as a result whereof some persons are to be deprived of his/her right in a property, scrupulous compliance of the statutory requirements is imperative.”

The judgement in Farida Begum Biswas Vs Union of India, in W.P. No. (C) 8266 of 2015 is also relied upon the wherein, the Hon’ble Delhi High Court held that:

Para 8- “In terms of section 8 of the PMLA, the Adjudicating Authority independently considers the issue of such attachment and if it has reason to believe that the person is in possession of proceeds of crime, he shall issue show cause notice to such person. The accused is entitled to explain the source of income, earning or assets, out of which or by means of which he has acquired the property, lead evidence and furnish any other information in his possession to justify the legitimate means of acquiring the properties in dispute. It is only, after taking all the submissions of the accused and documents brought on record to establish the sources of his property so attached that the adjudicating authority takes a final decision on the same.”

The judgment in the case of G.Lakshmi Aruna Vs Deputy Director in W.P. Nos. 11440-11441 of 2016, dated 13.03.2017 passed by, the Hon’ble Division Bench held that:

Para 15: “Mr. Sudhir Nandrajog, learned senior advocate, appearing in support of the writ petitioners, has taken a short point, contending that the allegation of theft or illegal mining is not a scheduled offence under the PML Act.”

Para 16: “As the offence of theft is not a scheduled offence under the PML Act, by applying the same principles as we have taken above, we find no merit in the initiation of proceedings against the petitioners in these writ petitions under the amended PML Act. Hence, the action taken against them under the said Act is, also, liable to be quashed.”\

31. It is further contended that the order impugned herein is a verbatim reproduction of the averments and pleadings of the parties and does not show any independent application of mind by the ld. AA as contemplated by the various decisions of the courts.

32. It is also contended that though, the appellant’s husband had sold 29 out of 45 properties by way of Registered Sale deeds from 1995 to 2015, the same are also attached as if those properties are belonging to the appellants herein. Further the respondent has, not issued any show cause notices to the owners of those properties and the Ld. AA failed to consider the same.

33. Thus, it is submitted that looking at it from any angle, the action initiated by the complainant and the order of the Adjudicating Authority impugned herein is mala-fide, without jurisdiction, and not supported by a shred of evidence and thus illegal and liable to be set aside.

34. It is submitted that the ld. AA in the impugned order after taking note of all the pleadings summarily upheld the provisional order without independently applying its mind.

Submission for the Respondent

35. The respondent has strongly contested the arguments advanced on behalf of the appellants. The Respondent admits that the appellant Sh. Sait was holding license for quarry of granites in leasehold lands at S.F. No.379/5A, 379/5B 379/5C, 379/5D, 379/5E, 379/5F & 379/5G vide permit No. G. O. (3D). No.89, Industries (MMBI) Department for a period of 10 years from 01.06.1994 to 31.05.2004 to the extent of 0.42.0 hectare patta land at Keelavalavu Village, Melur Taluk, in Madurai District, and was further holding granite mining license for a period of 20 years in an area to the extent of 1.31.0 hectares of patta land at Thiruvathur Village, Melur Taluk, Madurai District bearing S.F. 536/2 536/3 and 537 vide G. O. (3D) No.89, Industries (MMBI) Department dated 25.08.2004. It is also admitted that the appellant was granted lease for mining in land to the extent of 0.42.0 hectares in S.F. No * 0.379 / 5 * A 379/5B, 379/5C, 379/5D, 379/5 * E 379/5F & 379/5G for 10 years from 01.06.1994 to 31.05.2004 and thereafter 1.31.0 hectares of land in S.F. No.536/2.536/3 and 537 for a period of 20 years with effect from 25.08.2004.

36. It is also submitted that the appellant was granted license for quarrying in Survey Nos. 379/5A, 5B 5C 5D 5E 5F, and 5G in Melur, Keelavalavu Village in 1994 and that he quarried granite totalling to 16421.94 M³. The appellant had the permit for transporting only 1787.76 M³ of granite from the quarry but he transported granite totalling to 14625.18M³, thereby causing a loss to Exchequer/Government to the tune of Rs. 58.50 Crores; It is submitted that the appellant also had license for quarrying in Thiruvathavur Village in Survey Nos.536/2, 536/3 and 537 and that he had quarried granite worth Rs. 21 crores which are proceeds of crime within the meaning of PMLA, 2002.

37. As regards the averments made by the appellant regarding the alleged scheduled offences it is submitted by the Respondent that the issues are to be dealt by before the trial court where scheduled offence is being tried, and not by this Appellate Tribunal where the appeal is confined to provisional attachment of properties which are deemed to be proceeds of crime acquired out of the scheduled offence. The Respondent submits that by harping on the issues relating to amount of illegal quarrying of granites which is subject matter of trial, the appellant is trying to divert the attention against the possession of alleged proceeds of crime for which he has not come out with clean hands by revealing the source of acquisition. Provisional attachment is intended to protect the interest of the Government by placing the proceeds of crime under attachment till the conclusion of trial of scheduled offence, so that the properties are kept intact and not parted with or sold thereby frustrating the confiscation proceedings under the Act. It is stated that in the case of Sanjay Kumar Choudhary vs Govt. Of India & Anr. (Decided on 2 December, 2009), it was held that the provisions contained in Sec.3 never suggest that offence of money laundering can be launched only when one is found guilty of a crime, proceeds of which are being projected as untainted property.

38. As regards the submissions of the appellant that the appellant’s grievance that the evaluation reports are imaginary is to escape from the alleged scheduled offence committed by him. He has in his inculpatory statement given before the respondents categorically admitted illegal quarrying which was not retracted till date, and the same is admissible as evidence. Further the evaluation report has been given by experts in the field which cannot be simply brushed aside, and the same issue is pending before the Hon’ble Madras High Court.

39. It argued that the burden of proof in the proceedings under PMLA including the proceedings for provisional attachment is on the appellant and not on the Respondent, in terms of Sec.24 of the Act. The appellant has committed offences under various sections of IPC, 1860 and the Explosive Substances Act, 1908 mentioned in ECIR which are scheduled offence as per Sec. 2(1)(y) of the Act read with Para 1 and Para 3 of Part A of Schedule to PMLA.

40. As regards the ground of appellant he has acquired the properties out of real estate income and sold the properties is an unsubstantiated bald statement. The appellant at no point of the proceedings led in any such evidence in support of his defence, and not even during investigation. As he is unable to produce source of licit income with documentary evidence for purchase of the properties attached, he is taking a weak plea of agricultural income. The appellant has filed Income Tax Returns only for the years 2004-05 to 2007-08 during investigation. Further the ITO, Corporate Ward 2 (4) Madurai 2 has confirmed that the appellant has not filed Income Tax Returns from AY 2008-09 onwards. None of the so-called real estate transactions (income) has been reflected in the Income Tax Returns. Similarly, the appellant has not filed any evidence for support of agricultural income, also declared in Income Tax Returns for the source of purchase of attached properties. Agricultural income though exempt under Sec. 10 of the Income Tax Act 1961, is to be shown in I.T returns by an assessee for computation of slab rate of tax. Income from real estate is to be shown under head ‘capital gains’ for which also no evidence is filed. Hence the so-called source of income is imaginary claimed by the appellant are unsupported and uncorroborated.

41. With regard to the submission that as the scheduled offence is not adjudicated till date, the learned authority ought to have exonerated the appellant it is submitted that this ground goes against the scheme of the PMLA, especially Chapter III thereof. The provisional attachment is made under Sec.5 if the authority has reason to believe that (a) any person is in possession of any proceeds of crime (b) and such proceeds of crime are likely to be concealed, transferred, disposed of frustrating the confiscation proceedings under the Act, the properties (proceeds of crime) can be attached provisionally under Sec. 5(1) which has to be confirmed or otherwise, under Sec. 8(3) by the Ld. AA. Such confirmation of the properties attached would depend on the outcome of the trial against such persons for the money laundering offence under the Act. The properties attached will be dealt with later in terms of Sec. 8(5) and 8(6) of the Act, as the case may be. Provisional attachment is a civil proceeding and prosecution for scheduled offence and money laundering offence are criminal proceedings. Both are independent and, therefore, at this stage the order passed by the Ld. AA under Sec. 8(3) of the Act, is proper in law and needs no interference. Hence the ground taken by the appellant is contrary to law and contrary to the scheme of the Act and is therefore not merited. Further the offence of money laundering is a standalone offence, and can be tried separately under PMLA. It is further humbly submitted that various judicial forums have held that PMLA is an independent Act.

42. It is further argued that the appellant has failed to substantiate the same with documentary evidence or otherwise before the Ld. AA. For the few years for which IT returns were filed only meagre income including agricultural income was shown. Income from real estate is not shown. The appellant’s reference to granite business as playing rummy is mischievous and unwarranted. Since the appellant is not having any licit source of income for acquisition of properties attached, he is diverting the attention of the learned authority and this Hon’ble Tribunal with irrelevant submissions, while it is incumbent on him to produce source of income for each of the properties acquired. By merely attaching few private financial records without any link or correlation to the properties acquired, the appellant has not come out with clean hands.

43. It is further submitted that the reliance placed by the appellant on the judgment of Hon’ble Delhi High Court in the case of Himachal Emta Power Vs UOI, is not applicable to the present case as it was based on entirely different facts and circumstance. The period of scheduled offence, the proceeds generated out of the said scheduled offence, acquisition of properties the licit sources of which were not at all explained by the appellant, and hence the order of the Ld. AA confirming the provisional attachment is correct based on the facts and evidences placed by the Respondents.

44. It is also argued that the respondent in the PAO have clearly recorded such ‘reasons to believe’ (recorded separately in PAO in Para 22 to 25) which formed the basis of attachment of the proceeds of crime in the form of immovable properties acquired by the appellant, which he was projecting as untainted, thereby also involved in the offence of money laundering. In the case of S. Narayanappa & Ors vs Commissioner of  Income-Tax, 1967 AIR 523, 1967 SCR (1) 590, the Hon‟ble Supreme Court held that the existence of the belief, and whether the reasons for the belief have a rational connection with or relevant bearing on, the formation of the belief, are open to examination by the court. Further in the case of Gautam Khaitan Vs Union of India W.P.(C) 8970/2014 the Hon‟ble High Court of Delhi in a matter relating to attachment proceedings under PMLA and the question of “reasonable belief in such action had held that ” the reasonability of the grounds which lead to the formation of belief warranting provisional attachment is tested from the point of view of whether or not they are germane to the formation of belief that if, provisional attachment is not ordered, it could lead to frustration of proceedings under the Act. Therefore, if the grounds are relevant and have nexus to the formation of belief then, of course the designated/authorized officer would have the necessary jurisdiction to take action under the Act. What is required to be examined is not the adequacy or sufficiency of the grounds but the existence of belief. All that one is to examine, is that, whether there was some material which, gave rise to a prima facie view that if provisional attachment was not ordered, it would frustrate proceedings under the Act” Further when called upon to show cause as to why the same should not be held as proceeds of crime and involved in money laundering, in terms of notice issued by the learned authority under Sec. 8(1) the appellant failed to demonstrate with cogent and convincing evidences about the licit sources of acquisition of properties in question. Since the burden of proof was not discharged in terms of Sec. 24 of PMLA, and since the appellant failed to come out with sources of income, earning or assets out of which the same were acquired, the Ld. AA was right in confirming the attachment after considering the pleadings of the parties concerned.

45. In response to the reliance of the appellant upon the judgment of the Hon’ble Karnataka High Court in the case of Obalapuram Mining Company Pvt Ltd Vs DoE, it is submitted that the Hon’ble Apex Court in Directorate of Enforcement Vs Obalapuram Mining Co Ltd SLP Crl. No. 4466/2017 in its order dated 24.07.2017 while staying the operation of the Hon’ble High Court, mentioned that the judgment of High Court shall not operate as a precedent. It is also argued that the ground of retrospective application of PMLA will not apply to the present case as per the ratio laid down in several reported judgments of High Court, relied upon by the Respondents in this counter affidavit/reply and the fact that offence under Section 3 is a continuing offence till such a time the person is enjoying the proceeds of crime.

46. In response to the averment that the Complainant/Respondent has failed to prove and erroneously concluded that the properties are from proceeds of crime is baseless as upon forming a reasonable belief that the properties acquired are from the proceeds of the alleged scheduled offence, based on the investigation, statements recorded and evidences gathered, the respondent has attached the properties provisionally. In terms of the scheme of the Act and more particularly Sec. 5 there is no necessity to form a conclusive opinion or to file a proof at the time of provisional attachment. In fact, scope of Sec. 2(1)(u) is very wide to bring in to ambit any property obtained/derived by any person out of criminal activity relating to scheduled offence. The fact that the appellant is charged with scheduled offence is not in dispute. In the case of B. Rama Raju Vs. UOI & others 2011 SCC OnLine AP 152 it was held that Sec. 5 of the Act applies to property acquired even prior to coming into force the amended provisions (in 2009) and even in such an event it is not invalid for retrospective penalization.

47. The respondent has relied on the case of Narendra Mohan Singh and Anr. vs Directorate of Enforcement and Anr. (decided on 22 March, 2014), it was held that the date when one person is found involved in any process of activity connected with the proceeds of crime and projecting it as untainted property would be relevant for the purpose of prosecution under Sec 3 of the Act., and not the date when the scheduled offence was committed.

48. It is also argued that the averment of the appellant that some of the properties attached were acquired by him and his wife (2nd appellant herein) before the commencement of the Act, and hence the same cannot be attached as proceeds of crime is ill founded. Sec. 5(1) (a) categorically refers to „any person in possession of proceeds of crime‟. As per Sec. 2(1) (u) the term proceeds of crime mean the property derived/obtained by any person. It is submitted that the offence under Sec. 3 of PMLA, punishable under Sec. 4 is a “continuing offence”. In catena of judgments the Hon‟ble High Courts while examining the attachment proceedings including the PAO and Complaints filed, have categorically held that the Act applies retrospectively. In the case of B. Ramaraju vs UOI, Hon‟ble Division Bench of A.P High Court held that 2nd Proviso to Sec. 5(1) of the Act, applies to property acquired even prior to the coming into force of the provision, and it is not invalid for retrospective penalizations. Further in the case of Alive Hospitality and Food Private Limited Vs. Union of India in Special Civil Application Nos. 1059 and 4171 of 2012 decided on 31.07.2013, the Hon‟ble High Court of Gujarat at Ahmedabad held as follows. “So far as second proviso to section 5 of PML Act are applicable to property acquired even before coming into force the second amendment of the Act which came into effect from 06.03.2009 and even that is not invalid for retrospective operation…” In the case of Hari Narayan Rai Vs. UOI, and another dated 06.08.2010, the Hon‟ble High Court of Jharkhand at Ranchi held as follow;

“6. The argument is misconceived. The reason is that what is being targeted by section 3 and another provisions of the Act is the „laundering‟ which would be relevant. The laundering‟ as used in section 3 comprises of involvement in any process or activity by which the illicit money is being projected as untainted. Thus, the relevant date is not the date of acquisition of illicit money but the dates on which such money is being processed for projecting it untainted”.

49. It is also argued that the written submission filed along with Income Tax Returns to substantiate the income from agriculture, real estate etc is without any basis or proof. Appellant has been repeating the same ground even before the Ld. AA which is unsupported and unsubstantiated one. The appellant is trying to shift the burden of proof on the Respondent/Complainant to prove the source of income. As per the scheme of present proceedings. It is incumbent on the appellant to come out with source of income for acquiring the properties valued at around 4.69 crores. The appellant has merely filed financial statements and IT returns before the learned adjudicating authority. From the same it is seen that the appellant has only declared agricultural income of Rs. 2,60,000/- (A/Y 2010-11), Rs. 2,74,000/- (A/Y 2014-15), Rs. 2,65,000/- (A/Y 2015-16), Rs. 2.65,000/- (A/Y 2016-17) etc. whereas the value of immovable properties acquired by him is valued at around 4.69 crores. It is submitted that the appellant has not furnished any tangible or documentary evidence to prove that the properties attached were acquired out of agricultural income (licit income). It is further noticed that every Assessment Year (A /Y) the Defendant is declaring meagre amount less than 3 lakhs which cannot be a source of acquisition of immovable property. Without prejudice it is submitted that even for the agricultural income reflected in the income tax returns, the appellant has not placed any documentary evidence before the ld. AA.

50. As regards the averment of appellant in Ground-I, it is submitted that the appellant has misunderstood the provisions of the Act by saying that the offences are not listed under Sec. 2(1)(u). As clearly mentioned in the (ECIR ECIR/CEZOII/16/2017) the offences committed by the appellant (IPC offences and Explosive Substances Act) would fall within the ambit if Scheduled offences in terms of Part A of Schedule to PMLA read with Sec. 2 (1)(y) of the Act. The ECIR has been registered by the Respondent office consequent on the FIR filed by the Police at B-1 Melur Police Station, Tamil Nadu. Further charge sheet has also been filed in the scheduled offence case before the Trial Court.

51. It is further argued that the ‘reasons to believe’ is clearly recorded in the PAO and communicated to the appellant. In the case of Brizo Reality Company Pvt Ltd Vs Aditya Birla Finance Ltd (Bombay High Court) (2014 SCC OnLine Bom 804) the Bombay High Court held that the notice issued under Sec. 8 of PMLA, when fairly read, indicates that the Adjudicating Authority, on the basis of the material in the complaint had reason to believe that the ingredients necessary for the attachment order existed. The court further observed that it is apparent that the notice has been issued based on the reasons to be found in the complaint and the documents which have been expressly referred to in the contention. The complaint itself expressly sets out the reason to believe. If, on the basis of the facts disclosed in the enclosures, the Adjudicating Authority had formed the opinion that there was no reason to believe the existence of the factors mentioned in section 8, he would not have issued the show cause notice.

52. It is also argued that there is no necessity to record the opinion of experts under Sec.50 of the Act during the course of investigation into offence of money laundering. The experts are in no way concerned with the laundering of proceeds of crime as they have given a opinion on a issue which is relating to the scheduled offence, that is the huge volume of granite removed and sold, Based on various technical parameters. The statements of the experts are relied only the scheduled offence trial and not under PMLA trial. The respondents have not relied upon the expert‟s statements in the attachment proceedings. Hence the examination of the experts under Sec.50 is an un-called for suggestions.

53. It is pointed out that the ld. AA in the notice issued under Sec. 8(1) has clearly mentioned that on the basis of forming reasons to believe that the properties are proceeds of crime and involved in money laundering the adjudication process under Sec. 8 is taken up. It is for the appellant to apply for copy of the ‘reasons to believe’ recorded by the Adjudicating Authority, which he failed to do so. Having failed to obtain a copy of the reasons to believe recorded by the learned authority, for the reasons best known to him, the appellant cannot take shelter for the reason that the same is not supplied. As rightly pointed out by the learned Adjudicating authority that in terms of the judgment of the Mumbai High Court in the case of Radha Mohan Lakhotia Vs DoE, all that the learned authority is required to show is that there was sufficient and probable cause to form an opinion that property under attachment is proceeds of crime.

54. It is next stated that contrary to the claim of the appellants that the source of income it is again reiterated that no such evidence of voluminous nature was ever produced before the learned authority. The appellant only produced copies of account statements and ledger extracts which is neither linked nor correlated with the properties purchased. The agricultural income shown is meagre and no evidence of income from sale of immovable property or real estate. It is submitted that even in the Folder III filed before this Hon’ble Tribunal the appellant has not filed any such evidence. If such evidences are available, nothing prevented the appellant from preparing a chart (property wise) about the source of income, the evidence, how it is accounted before income tax authorities etc, and placed it before the Hon’ble Tribunal. By merely annexing copies of ledger extracts the appellant is only interested in diverting the attention of quasi-judicial authorities. Further the Ld. AA has categorically held that as against a meagre income of around twenty-five lakhs (25 lakhs) reflected in the income tax returns over a period of time, the appellant has not produced any tangible evidence for acquisition of properties over four crores of rupees. Therefore, it is bald and unsupported statement made in the grounds of appeal to be rejected forthwith as contrary to facts and evidences placed by the investigation.

55. Ld. AA after considering the submissions of the appellant (defendants before the learned authority) and respondents (complainant before learned authority) has come to a reasoned conclusions that the properties are acquired out of alleged proceeds of crime and are involved in money laundering.

56. It is also argued that there is no precondition that ECIR has to be filed only after conclusion of trial of scheduled offence. If such a view is taken the scheme of PMLA especially the provisions of Chapter III would be rendered otiose, which is never the intention of the legislature. ECIR which is triggered after the FIR is filed against the scheduled offence is an internal document for the purposes of investigation in the Directorate of Investigation. In other words, the investigation under PMLA is started soon after filing of ECIR. The said ECIR would form part of the attachment proceedings (PAO) complaint under Sec. 5(5) and trial for money laundering offence. The judgment of the Hon’ble Karnataka High court in the case of G. Lakshmi Aruna & Anr. vs Deputy Director & Ors. on value equivalent issue does not in any way help the appellant’s case.

57. As regards the grounds raised by appellant in Ground XI it is submitted that the PAO was passed after substantial period of time and there is no apprehension of disposing of property by appellant it is submitted that soon after registration of ECIR in December 2017 details of properties held by appellant and others were sought for from the Sub- Registrar, Madurai and also Inspector General of Registration, Chennai. This was followed up with further reminders and enquiry between July 2018 to December 2018 with state registration authority and also with income tax authorities. Summons were issued to appellant and his employees and after examination of them under oath in terms of Sec.50, investigation was complete when the reasons to believe that properties are involved in money laundering was formed. Therefore, the same were provisionally attached, and such attachment is well within the legislative mandate of 2nd Proviso to Sec.5 (1) of the Act. The appellant is taking different stands as regards the ownership of properties attached, as during investigation he affirmed that the properties were sold but EC is still in his name and only in appeal he has filed EC obtained during August 2019 to show that the properties are sold to others. He is taking contradictory stand that the same were returned to creditors. In view of the same the attachment of the properties under Sec.5 is very much justified as the gullible action on the part of appellant would derail and frustrate the confiscation proceedings under the Act. The appellant has taken a new ground that the properties attached are under mortgage which with any evidence appellant has typed “please verify” verify in brackets showing that this is a false ground taken to divert the attention of the Hon’ble Tribunal and as the appellant has not come out with clean hands even at appeal stage, the appeals lacks merit and liable to be rejected on this ground and the ground of diversionary tactics adopted by the appellant. It is submitted that there is no need for the respondent to prove the three stages of money laundering placement, layering and integration especially for the proceedings of provisional attachment, as the burden is always on the appellant to disprove the claim of the Complainant/Respondent that the properties are not involved in money laundering.

58. It is also argued that the judgments relied upon by the appellant Bhikhubhai Vithlabhai Patel vs. State of Gujrat (2008) 4 SCC 144, The Barium Chemicals Ltd. vs. A.J Rana: AIR 1972 SC 591, B. Rama Raju vs. Union of India 2011 (164) Company Cases 149, Aslam Mohd. Merchant vs. Competent Authority 2008 Cri L J 3621, Farida Begum Biswas vs. Union of India W.P No. (C) 8266 of 2015, G. Lakshmi Aruna vs. Deputy Director in W.P Nos. 11440-11441 of 2016 does not apply to the facts and circumstances of the case. The ld. AA on due consideration of the points in the Complaint and the replies/documents filed by the appellant have passed the impugned order giving a detailed finding on various issues involved.

59. It is also argued that the appellant has raised issues relating to scheduled offence which are not to be gone through in the current proceedings. Similarly, examination of the experts is also neither warranted nor necessary under Sec 50 of the Act. The appellant has placed a bald statement that in response to summons u/s 50 he has placed tangible, reliable and relevant documents. Even assuming that he has placed such documents, though not admitting, nothing prevented him to place the same either before the learned authority or the Hon’ble Tribunal.

60. It is further submitted that the appellant without any basis and without any specific reference to any document by merely reproducing certain sale documents numbers, has contended that he has sold the properties in question. There is no correlation of the documents enclosed in Folder III of appeal paper book with the averments made in grounds. The appellant has not come out with clean hands and the documents enclosed appears to have been fabricated or manipulated to serve his needs. Before the PAO was issued the Respondent office has received EC from the concerned sub-registrar showing that the properties are in his name. Similarly, after PAO was issued the EC showed attachment of the Respondent as encumbrance in the respective title deeds. While the fact remains so, it is not known as to with what ulterior motive the appellant is making a sweeping averment of sale of properties and taking a ground that EC is in favour of purchasers. The main document/title deed still show the name of appellant with encumbrance created on behalf of the Respondent due to passing of PAO. Few sample EC obtained are furnished for kind perusal of the Hon’ble Tribunal (Copies enclosed) Since the appellant is taking contradictory claim and filing documents not reflecting the true and full picture, it is submitted by respondent that by virtue of powers vested in this Hon’ble Tribunal by virtue of powers vested under Sec. 35(2) of PMLA 2002 summon the appellant for his attendance and examination on oath, summon the so called purchasers of property for examination on oath, receive evidence on affidavits from the appellant, permit the Respondents to cross-examine the appellant on the grounds raised and the documents filed in paper book as to the true and correctness of the same.

61. Based on the above stated contentions, it is argued on behalf of the respondent that the present appeal be dismissed.

Analysis, Findings & Order

62. I have given careful consideration to the material on record and the rival contentions of parties. I find that the issues raised on behalf of the appellants are as follows:

(i) That there was no underlying scheduled offence as the allegations made against the appellant do not make out a case of any offence which is a scheduled offence under the PMLA, and thus, there was no material to record an ECIR and undertake investigation under the PMLA;

(ii) That the source for the acquisition of the attached properties were duly explained and were legitimate;

(iii) That many of the attached properties had already been sold by the appellant;

(iv) That the impugned order is a non-speaking order passed without application of mind;

(v) That incorrect values were assigned to the attached properties by the respondent which was contrary to the provisions of the PMLA;

(vi) That there were no „reasons to believe‟ under sections 5(1) and 8(1); in particular, there was no apprehension of alienation.

63. The above issues have been taken up consideration seriatim in the following paragraphs.

64. Firstly, with regard to the scheduled offence, the contention of the appellant is that the allegations of illegal mining covered under the Mines Act, 1952, Mines and Minerals (Development and Regulation) Act, 1957 etc. do not constitute scheduled offences as none of these Acts are listed in the Schedule to the PMLA. It is also contended that in granite quarrying operations availability of sale-worthy mineral ranges from 5% to 20% depending on the site and the remaining 80 to 85% quarried minerals become waste and rejects. In this regard, studies by national and international bodies are cited. The agencies which booked the FIRs in the scheduled offences did so entirely on basis of unsubstantiated reports submitted by persons who were not qualified.

65. With regard to the above submissions, it is seen that in FIR No. 619/2012, a Charge sheet under section 173 (2) of Cr. P.C. 1973, stands filed before the Ld. Judicial Magistrate, Melur u/s 447, 379, 434, 420, 465, 467, 468, 471, 304(ii) IPC r/w 109, 114, 511 IPC and 3(1) TNPPDL Act1992 and 3(a), 4(a) & 6 of Explosive Substances Act, 1908 r/w 120B IPC. Notably, sections 3, 4 of the Explosive Substances Act, 1908 are in the Schedule to PMLA (Paragraph 3) as also sections 120B, 420, 467, 471, 304 of the IPC. As such there is no substance in the contention of the appellant that there is no underlying scheduled offence in these cases.

66. The next contention put forward on behalf of the appellants is that the attached properties were acquired out of legitimate and explained sources. A detailed tabular chart has been filed showing the details of each property, including deed number and date, property details, cost of acquisition, financial year during which acquired, the value of property, date of sale (wherever property had already been sold) the sources of income, TDS deducted and the documents relied upon in support of the submissions. Based on these submissions, it is contended that the appellants had furnished relevant and tangible evidence to indicate the sources of income, earning of assets out of which the properties were acquired and duly discharged their burden under section 8 and section 24 of the PMLA.

67. As against the above claims of the appellant, the respondent has contended that the claim that the properties were acquired out of real estate income is an unsubstantiated, bald statement; that the appellant did not produce documentary proof of source of licit income, including agricultural income, at any stage of the proceedings; that the appellant filed ITRs only for 2004-05 to 2007-08 only during the investigation; and even where ITRs had been filed, only meagre income had been disclosed (Rs.

2,60,000/- for A.Y 2010-11; Rs. 2,74,000 for A.Y 2014-15, which is the maximum disclosed for any A.Y); that the jurisdictional ITO confirmed that no returns were filed from 2008-09 onwards, none of the so-called real estate transactions had been reflected in the ITRs and so also agricultural income which is to be declared in the ITR for rate purposes. Hence, the claims of the appellant are imaginary and uncorroborated.

68. I have given careful consideration to the rival submission of parties and find merit in the submissions made from the side of the respondent. The appellants have claimed income by way of granite quarrying, agricultural income, interest on advances, cash on hand etc., as sources for acquisition of the properties. However, the same remained unsubstantiated and unsupported even by the returns of income filed for the few years for which returns were filed. As such, it cannot be said that the appellants have discharged the burden of proof which was squarely upon them under the Act. Even otherwise, I find that the properties in this case have been attached as „value‟ or in other words, properties equivalent to the proceeds of crime derived directly or indirectly from the scheduled offence. Where the property has been attached as „value‟ of the proceeds of crime, the source of acquisition of such properties per se is immaterial and the properties could be legitimately attached even if they were from fully explained sources, which is far from being the factual position of the present case.

69. It is next contended that some of the properties were acquired prior to the period of the alleged crime. The alleged period of commission of the offence was from January 2011 to August 2012, whereas many of the properties had been acquired between 1993 and 2010. Therefore, the appellant argues that such properties could not have been acquired from the alleged proceeds generated during 2011–2012.

70. With regard to the above, as already discussed, the properties in this case were attached as „value of such property‟. In such cases, the time of acquisition of the alternate property which is being attached in lieu of the proceeds derived directly or indirectly from the scheduled offence, i.e., whether such property was acquired prior to or after the alleged scheduled offence, is immaterial and of no consequence.

71. The underlying legal issue has been discussed in detail in the order dated 14.10.2024 of this Appellate Tribunal passed in the case entitled Sadanand Nayak v. Dy. Director, FPA-PMLA-5612/BBS/2023 (paragraphs 12 to 24) wherein, after a thorough review of all the authoritative case laws on the subject, including the judgment of the Hon‟ble Supreme Court in the case of Pavana Dibbur, no merit was found in contention that properties acquired prior to the alleged period of the scheduled offence cannot be attached as „proceeds of crime‟ as defined under section 2(1)(u). Furthermore, in a judgment passed subsequent to the aforesaid judgment of this Appellate Tribunal, the Hon‟ble Punjab and Haryana High Court, in Dilbag Singh @ Dilbag Sandhu v. Union of India & Ors., CWP 22688-2024 (Order dated 13.11.2024), also did not find any merit in the argument that property acquired prior in time to the period of the alleged scheduled offence cannot be attached. The relevant paragraphs of the said judgment are reproduced hereunder:

“1. Factual Matrix:

1.1 With the consent of learned counsel for the parties, as many as seven writ petitions involving common issues shall stand disposed of by this common order. The facts in this case have been derived from CWP22688 2024, in which the arguments were made.

1.2 The petitioner has raised the following issues:

“A. Whether any property of the petitioner can be attached which were acquired prior to the scheduled offence and cannot be said to have any connection with the proceeds of crime in view of the Hon’ble Supreme Court judgment in Pavana Dibbur vs. Directorate of Enforcement 2023 SCC Online 1586 as well as the Division Bench judgment in Seema Garg vs. Deputy Director, Directorate of Enforcement 2020 (2) RCR (Criminal) 701 upheld by the Hon’ble Supreme Court and followed by various High Courts?”

*                              *                                *                            *                  *

“3.8 Moreover, the reasoning adopted in Seema Garg‟s case (supra) to the effect that there was no need to insert third part in the definition of the „proceeds of crime‟ and that „value of such property‟ is superfluous does not appear sound. It appears that transformative journey of the definition of phrase „proceeds of crime‟ was not brought to the notice of the Division Bench in Seema Garg‟s case (supra). In Abdullah Ali Balsharaf‟s case (supra), Delhi High Court inadvertently overlooked the sub-category (i) of second part of definition of „proceeds of crime‟. Similarly, Andhra Pradesh High Court in Kumar Pappu Singh‟s case (supra) was not properly assisted. Furthermore, the attention of Patna High Court was not drawn to part 2(i) in HDFC Bank‟s case (supra). Similar is the position in M/s Himachal Emta Power Limited‟s case (supra). In this case, the attention of the Bench was not drawn to the second broader category of the definition. In Hemanshu Rajnikant Shah‟s case (supra) the Court relied upon Seema Garg‟s case (supra) and held that the properties acquired before the alleged crime and before the enforcement of the „2002 Act‟ cannot be attached.

3.9 On the other hand the judgments passed in Vijay Madanlal Chaudhary‟s case (supra), Axis Bank‟s case (supra) and Prakash Industries case (supra) completely answer the question in favour of ED.

3.10 The petitioner‟s counsel has also heavily relied upon Pavana Dibbur‟s case (supra). This Bench has carefully read the aforesaid judgment. The aforementioned case involved attachment of properly falling under the category of „direct‟ or „indirect‟ proceeds of crime. The complaint under Section 44-45 of 2002 Act was quashed by the Supreme Court. The Bench was never called upon to analyse the contentions based upon Section 2(i)(u) of 2002 Act, whereas, in Vijay Madanlal Chaudhary‟s case (supra) the Court directly answered the aforesaid question. Hence, there is no substance in the first argument of learned counsel for petitioner.”

72. In light of the above legal position, there is no merit in the argument that properties which pre-date the period of the alleged scheduled offence cannot be attached.

73. The next contention of the appellants is that many of the attached properties had already been sold by the appellant. In this regard it is submitted that 29 out of the 45 properties had already been sold by the appellants. The submission of the appellant has been noted. However, if the said properties already stood sold, in such an event, the appellant no longer had any interest in the property and could not have any grievance regarding the attachment of such properties which no longer belonged to him. Under section 26 of the PMLA, only a party aggrieved by an order of the Adjudicating Authority can prefer an appeal before this Appellate Tribunal. Accordingly, the appeal filed by the appellant who no longer had a right or title to the said properties, is not maintainable insofar as the said properties are concerned. Thus, there is no need for this Tribunal to adjudicate upon this issue.

74. In the next set of arguments put forward on behalf of the appellants, it is contended that the impugned order is a non-speaking order passed without any application of mind and without appreciating the contentions put forth by the appellant in the right perspective. The respondents have strongly contested the submission. In this context, I have perused pages 70 to 74 of the impugned order wherein the Ld. AA has discussed the rival contentions of the parties and finally arrived at his conclusions on page 74 of the order. The Ld. AA has inter-alia discussed the submissions of the appellant as well as the respondent with regard to the charges under the scheduled offences, the factual submissions with regard to grant of licence for granite quarrying from 1994 to 2010, the explanations with regard to the sources of income or rather the lack of any cogent explanation for the same, the fact that 45 properties have been acquired without any proper explanation of the sources, the absence of any reliable evidence of deriving income from real estate business or agriculture, meagre income reflected in the Income Tax Returns for the few years for which the same had been filed, the existence of the „reasons to believe‟, the legal position emerging from the judgements of higher judicial authorities, including the judgement of the Bombay Hon‟ble High Court in Radha Mohan Lakhotiya and Brizo Realty etc. with regard to the level of proof required for purpose of attachment of the properties and the confirmation thereof by the AA. Having considered the detailed discussions occurring in these paragraphs of the order, I do not find any merit in the contention that the impugned order is non-speaking order passed without considering the submissions made on behalf of the appellants. As regards each of the individual issues on which the order is contested by the appellants, the same have been dealt with individually in this order. In light of the same, I do not find any merit in the general contention advanced on behalf of the appellants that the order is a non-speaking order and that the issues raised by the appellants were not considered.

75. That next issue raised on behalf of the appellants is that the ED has assigned incorrect values to the attached properties which is contrary to the provisions of the PMLA. It is contended that instead of giving the exact price of the properties, the Respondents have introduced their own imaginary value of the properties under guise of present guideline value, which has nothing to do with the proceeds of crime. It is further contended that the total cost for which the 45 immovable properties attached were acquired comes to Rs.26,25,425/- which is only 63.67% of legal income of the appellant.

76. I have given careful consideration to the submissions made. Upon perusal of the table of attached properties on pages 3 to 9 of the impugned order, it is seen that the Guideline Value as well as the present market value of the properties are reflected in the last two columns of the table. The legal position with regard to the valuation of properties is that as per the provisions of the Section 2(1)(zb) “value” means the fair market value of any property on the date of its acquisition by any person, or if such date cannot be determined, the date on which such property is possessed by such person. In light of this definition, I find merit in the contention of the appellants that the respondent was not right in adopting the guideline value or the present market value as the value of the property. However, this issue has no bearing on the legality of the attachment of the properties in question. The quantum of the proceeds of crime has not been computed by the respondent on the basis of the value of the properties, but rather based on the value of the granite illegally extracted which would remain unaltered. In fact, if the contention of the appellant is accepted and the value of 45 properties is taken to be only Rs. 26,25,425/-, the implication thereof would that the respondents have only attached properties equivalent to a fraction of the actual proceeds of crime and properties of far greater value should have been attached. Therefore, this contention of the appellant has no bearing on the attachment of the properties against which the present appeal has been filed.

77. In the next set of submissions, it is argued that there were no „reasons to believe‟ under sections 5(1) and 8(1). In this regard, it is contended that no endeavour was made by the authority to examine whether any scheduled offence has been committed; no expert opinion from agencies such as the Geological Survey of India had been obtained; that there was no reason to believe that the properties would be alienated or dealt with as the properties had been in the possession of the appellant for substantial period and some of the properties had been mortgaged as security to the banks also; there was no effort at placement, layering or integration of the property.

78. The respondents have contested the submission with a detailed response.

79. Having considered the rival contentions, I find that the reason to believe on the basis of which the authority acted under section 5(1) have been stated in para 22 to 25, which are as follows:

“ RECORDING REASONS TO BELIEVE U/S 5(1) OF THE ACT

22. Shri. Mohammed Ibrahim Sait has directly indulged in criminal activities for which two FIRs and subsequent Charge sheet in one FIR was filed by the police authorities and committed scheduled offences u/s 2(1)(x)&(y) of the PMLA and from the scheduled offences he generated proceeds of crime of Rs. 21 crores in FIR 619/12 and Rs. 58.5 crores in FIR 21/15 totalling to Rs. 79.5 crores. These properties purchased by Shri. Mohamad Ibrahim Sait, in his and his family member’s names, is directly linked to both the crimes in FIR 619/12 and FIR 21/15 and therefore the properties mentioned in the Schedule above is proposed to be attached as part of the equivalent value of the proceeds of crime by invoking Sec 2 (ul of the Prevention of Money Laundering Act, 2002.

23. There are reasons to believe that properties mentioned in the schedule are proceeds of crime involved in money laundering and are likely to be transferred or dealt with any manner which ma y result in frustrating any proceedings relating to confiscation of such proceeds of crime. The subject assets may be transferred/ disposed off/encumbered without notice of this department and may result in frustrating any proceedings relating to confiscation of such proceeds of crime.

24. Further, it is also possible that trial of offences, both under the PMLA as also of scheduled offences, may take considerable time and if power of provisional attachment is not exercised here, when there are demands of circumstances, and existence of jurisdictional facts, it could result in defeating the very purpose for which PMLA has been enacted. If the immovable properties are transferred and change hands, it could lead to creation of bona-fide third party interest which may make it difficult for the authorities to retrieve the same at a later stage.

25. The immovable properties as detailed in the schedule are likely to be concealed, transferred or dealt with in such a manner that, I have reasons to believe that if no Provisional Attachment Order is passed in this case at this stage, it may result in frustrating the proceedings relating to confiscation under Chapter III of the Prevention of Money Laundering Act, 2002 (15 of 2003)”

80. The respondents have further relied upon judicial precedent to argue that the reasonability of the grounds which lead to the formation of the belief warranting provisional attachment is to be tested from the point of view whether or not they are germane to the formation of belief that if provisional attachment is not ordered it could lead to frustration of proceedings under the Act. Therefore, if the grounds are relevant and have a nexus to the formation of belief, then the authorised officer would have the necessary jurisdiction to take action under the Act. What is required to be examined is whether there was some material which gave rise to the prima-facie view that if attachment is not made it would frustrate the proceedings. There is no necessity at this stage to have conclusive proof in order to provisionally attach properties as has been upheld in various cases decided by higher judicial authorities which have been cited on behalf of the respondent, including Brizo Reality Co. Pvt. Ltd, 1014 SCC Online Bom 804, Radha Mohan Lakhotia (supra) etc.

81. Insofar as the legal position is concerned, the Hon‟ble Madras High Court, in G. Gopalakrishnan Vs. Deputy Director WP (MD)Nos. 11454, 14860 & 14894 to 14899 of 2018 (Order Dt. 03.01.2019) has held that section 5 nowhere stipulates that there should be communication of reasons in the form of show cause notice before ordering provisional attachment. The validity period of provisional attachment is only for a period of 180 days, and therefore, the initial order has all the characteristics of a show cause notice and no further requirement is contemplated in the statute. Further, it was also noted that the language used in section 8(1) of the Act is different from the one used in section 5(1). The AA is not required u/s 8(1) to record reasons and on the basis of the complaint filed by the initial authority u/s 5(5) can proceed with the process on the basis of subjective satisfaction.

82. The submission of the appellant regarding obtaining of opinion from expert bodies such as GSI is irrelevant as it is not in dispute that cases under various provisions of law which constitute scheduled offences stand filed against the appellant (see para 65 supra) and he has not been absolved of the charges in those scheduled offence cases. Neither the respondent Directorate nor the ld. AA, nor even this Appellate Tribunal, is a competent body to pronounce a verdict on the culpability or otherwise of the appellant in the scheduled offence cases. So long as charges exist against the appellant and he does not stand absolved in those cases, action for the attachment of properties under the PMLA remains valid and legal. Needless to say, attachment is only an interim stage under the PMLA and ultimate confiscation can only take place once the persons accused in the underlying scheduled offence case are actually convicted in the said case(s).

83. It is also contended that there was no reason to believe that the properties would be alienated or dealt with as the properties had been in the possession of the appellant for substantial period and some of the properties had been mortgaged as security to the banks. In this regard, it is seen that some of the properties which are a part of provisional attachment order have already been sold by the appellant, according to appellants‟ own submission. Therefore, there was cogent reason to believe that if the properties are not secured at this stage, it may result in alienation of other properties as well.

84. Therefore, for reasons of both fact as well as law as discussed above, I do not find any merit in this contention of the appellant either and, accordingly, reject the arguments with regard to non-existence/ non- recording/non-supply of reasons to believe under section 5 and 8.

85. It is also argued that appellant gave a written explanation in Tamil on 12.02.2018 but the English translation done by the authorities was wrongly interpreted and translated to display that the appellant voluntarily admitted that he is doing illegal quarrying. Upon perusal of the impugned order, it found that the Ld. AA, in the discussions appearing on pages 70 to 74 of the impugned order, has placed no specific reliance on the aforesaid admission made by the Appellant regarding illegal quarrying. Moreover, the facts discussed in detail in the proceeding paragraphs make out a sufficiently strong case for the confirmation of attachment at this stage of the proceedings on the test of preponderance of probabilities even without taking into consideration the aforementioned admission by the appellant which has been contested. No doubt, the ld. Special Court, while trying the case, would give due consideration to the admission reliability or otherwise, of the admission made by the appellant regarding illegal extraction in his statement under Section 50 of the PMLA.

86. In light of the detailed discussions as above, I do not find any reason to interfere with the impugned order. Consequently, this appeal is hereby dismissed.

87. Pending applications, if any, shall stand disposed of.

88. No order as to cost.