Properties Acquired By Utilising Proceeds Of Crime Can Only Be Attached U/S 5 PMLA: Kerala HC
The Kerala High Court has observed that only those properties which are acquired utilising the proceeds of crime can be attached under Section 5 of the Prevention of Money Laundering Act, 2002.
The Bench of Justice Bechu Kurian Thomas observed, “The aforesaid observations indicate that the properties that can be proceeded against, exercising the powers of attachment must be those that have been acquired utilising the proceeds of crime. The contention of the learned counsel for the respondents that the term proceeds of crime will also include the value of the property which had been acquired even earlier is, according to me, too far-fetched and will not be justifiable in the light of the constitutional provisions of fairness and reasonableness.”
Advocate Vinay Mathew Joseph appeared for the Petitioner whereas Advocate Jaishankar V Nair appeared for the Respondents.
During the investigation under PMLA against a proprietary concern i.e. the Petitioner, the bank accounts of the Petitioner were frozen and an order of provisional attachment was issued, attaching the very same bank accounts and an immovable property of the Petitioner.
Thus Petitioner, inter alia, challenged the freezing of his bank accounts and the provisional attachment order issued under Section 5 of PMLA.
The immovable property was purchased more than a decade and a half before the alleged offence was committed. The Court said, “If the attachment is to be effected to the extent of the monetary worth of a property which was not derived out of the criminal activity, then PMLA mandates that the property derived out of such criminal activity be taken out of India or is held outside the country. In other words, the only power to proceed against a property of equivalent value, which has no link with the predicate offence is, when the property was taken out or held out of India. Therefore, except when the property derived out of the criminal activity is not inside the country, can the provisional attachment be effected on a property purchased prior to such criminal activity.”
The Court held that the purpose of the PMLA is to remove tainted money and also to initiate proceedings against the proceeds of crime which have been transformed or converted into other property or intermingled with legitimate sources and then the value of the intermingled gain will assume the colour of proceeds of crime. Such a provision cannot be used to enable the authorities to proceed against properties that are unconnected with any of the criminal activity in question.
Accordingly, the Court concluded that the order attaching the immovable property was ex-facie ultra vires and totally illegal and arbitrary, therefore, liable to be set aside.
Cause Title: Satish Motilal Bidri v. Union of India (Neutral Citation: 2024:KER:46882)
Appearances:
Petitioner: Advocates Vinay Mathew Joseph, Manish K. Jha, Abhijeet Panday and Kislay Kumar.
Respondents: Advocates Jaishankar V Nair and Anuj Udupa
