Case Note & Summary
The judgment pertains to three appeals filed by Radha Mohan Lakhotia, Radha Mohan Lakhotia (HUF), and Mrs. Asha Lakhotia against the order of the Appellate Tribunal under the Prevention of Money Laundering Act, 2002 (PMLA) dated November 23, 2009. The Appellate Tribunal had confirmed the order of the Adjudicatory Authority dated June 1, 2007, which in turn confirmed the provisional attachment orders passed by the Deputy Director, Directorate of Enforcement, Mumbai Zonal Office under Section 5(1) of the PMLA read with Notification GSR.441(E) dated July 1, 2005. The appellants challenged the attachment of their properties, alleging that the authorities had not established that the properties were proceeds of crime derived from scheduled offences. The court, after hearing counsel for both sides, found that the authorities had correctly applied the provisions of the PMLA and that the properties were indeed proceeds of crime. The court dismissed all three appeals, upholding the attachment orders. The judgment was delivered by a Division Bench of the Bombay High Court on August 5, 2010.
Headnote
A) Prevention of Money Laundering Act, 2002 - Provisional Attachment - Section 5(1) - Confirmation by Adjudicatory Authority - The court considered whether the provisional attachment of properties under Section 5(1) of the PMLA, 2002 was validly confirmed by the Adjudicatory Authority and the Appellate Tribunal. The court held that the authorities had correctly applied the provisions and that the properties were proceeds of crime derived from scheduled offences. (Paras 1-3)
B) Prevention of Money Laundering Act, 2002 - Scheduled Offence - Proceeds of Crime - Section 2(1)(u) and Section 2(1)(y) - The court examined whether the alleged hawala transactions constituted a scheduled offence under the PMLA, 2002. The court held that the predicate offence was a scheduled offence and that the properties attached were proceeds of crime. (Paras 2-3)
C) Prevention of Money Laundering Act, 2002 - Appeal - Section 26 - Appellate Tribunal - The court considered the scope of appeal against the order of the Appellate Tribunal confirming the attachment. The court held that the appeal was without merit and dismissed the same. (Para 3)
Issue of Consideration
Whether the Appellate Tribunal under the Prevention of Money Laundering Act, 2002 was justified in confirming the provisional attachment orders passed by the Deputy Director under Section 5(1) of the Act, and whether the properties attached were proceeds of crime derived from scheduled offences.
Final Decision
The court dismissed all three appeals, upholding the orders of the Appellate Tribunal and the Adjudicatory Authority confirming the provisional attachment of the properties.
Law Points
- Prevention of Money Laundering Act
- 2002
- Section 5(1)
- Section 3
- Section 2(1)(u)
- Section 2(1)(y)
- Section 8(3)
- Section 26
- Section 42
- Adjudicatory Authority
- Appellate Tribunal
- Provisional Attachment
- Confirmation of Attachment
- Burden of Proof
- Prima Facie Case
- Scheduled Offence
- Proceeds of Crime
- Property Involved in Money Laundering
- Hawala Transactions
- Enforcement Directorate
- Criminal Conspiracy
- Cognizance by Special Court
- Filing of Complaint
- Investigation
- Attachment Order
- Validity of Attachment
- Challenge to Attachment
- Appeal against Confirmation
- Common Judgment
- Overlapping Issues.
Case Details
2010 LawText (BOM) (08) 81
First Appeal No. 527 of 2010, First Appeal No. 528 of 2010, First Appeal No. 529 of 2010
A.M. Khanwilkar, A.A. Sayed
Mr. Vikram Nankani with Sushant Murthy & Sagar Kulkarni i/b. Madhur Baya for the appellants. Mr. Rajeev Awasthi with N.R. Prajapati i/b. Shri A.S. Rao for Respondents.
Mr. Radha Mohan Lakhotia, Mr. Radha Mohan Lakhotia (HUF), Mrs. Asha Lakhotia
The Deputy Director, PMLA, Directorate of Enforcement
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Nature of Litigation
Civil appeals against the order of the Appellate Tribunal under the Prevention of Money Laundering Act, 2002 confirming the provisional attachment of properties.
Remedy Sought
The appellants sought to set aside the order of the Appellate Tribunal and the Adjudicatory Authority confirming the provisional attachment of their properties.
Filing Reason
The appellants challenged the attachment of their properties under Section 5(1) of the PMLA, 2002, alleging that the authorities had not established that the properties were proceeds of crime.
Previous Decisions
The Adjudicatory Authority confirmed the provisional attachment order on June 1, 2007, and the Appellate Tribunal confirmed that order on November 23, 2009.
Issues
Whether the Appellate Tribunal under the Prevention of Money Laundering Act, 2002 was justified in confirming the provisional attachment orders passed by the Deputy Director under Section 5(1) of the Act.
Whether the properties attached were proceeds of crime derived from scheduled offences.
Submissions/Arguments
The appellants argued that the authorities had not established that the properties were proceeds of crime derived from scheduled offences.
The respondent argued that the authorities had correctly applied the provisions of the PMLA and that the properties were indeed proceeds of crime.
Ratio Decidendi
The court held that the authorities under the Prevention of Money Laundering Act, 2002 had correctly applied the provisions and that the properties attached were proceeds of crime derived from scheduled offences, justifying the provisional attachment under Section 5(1) of the Act.
Judgment Excerpts
Heard Counsel for the parties at length. By consent, we are finally disposing of the three appeals by this common Judgment and Order as the questions involved therein are overlapping.
These appeals are directed against the Judgment and Order passed by the Appellate Tribunal under Prevention of Money Laundering Act, New Delhi dated November 23, 2009 in appeals filed by the Appellants herein to challenge the order of the Adjudicatory Authority at New Delhi on Complaint Nos. 1,2,3 and 4 of 2007 dated 1st June, 2007, which in turn confirms the provisional attachment order passed by the Deputy Director, Mumbai Zonal Office, Directorate of Enforcement against the Appellants herein under section 5(1) of the Prevention of Money Laundering Act, 2002 read with Notification No. GSR.441(E)dated 1st July, 2005.
Procedural History
The Deputy Director, Directorate of Enforcement passed provisional attachment orders under Section 5(1) of the PMLA, 2002. The Adjudicatory Authority confirmed those orders on June 1, 2007. The appellants appealed to the Appellate Tribunal, which dismissed the appeals on November 23, 2009. The appellants then filed the present appeals before the Bombay High Court, which were dismissed on August 5, 2010.
Acts & Sections
- Prevention of Money Laundering Act, 2002: Section 5(1), Section 3, Section 2(1)(u), Section 2(1)(y), Section 8(3), Section 26, Section 42
