ED Attaches Rs 538 Crore Assets of Jet Airways Promoters
Attachment and Confiscation Proceedings under the Prevention of Money Laundering Act (PMLA), 2002— a Primer.
Jet Airways Promoters’ Assets Attached in a Major ED Operation
On November 1, 2023, the Enforcement Directorate (ED) took decisive action, attaching assets totalling Rs 538 crore associated with Jet Airways Founder, Naresh Goyal, and his kin. This move is part of an ongoing money-laundering probe tied to an alleged loan fraud with Canara Bank. The genesis of this operation was an FIR by the CBI, which acted on a complaint from Canara Bank, Mumbai. It contends that the executives of Jet Airways redirected a sanctioned loan to affiliated entities, consequently transforming the loan into a significant non-performing asset valued at Rs. 538.62 crore.
The assets now under attachment span 17 opulent residential flats, bungalows, and commercial properties scattered across London, Dubai, and India. This development aligns with the ED's charge-sheet presented to the PMLA Court in Mumbai on Wednesday. It's worth noting that Goyal, the founder of the now-defunct Jet Airways which ceased operations in April 2019 due to financial constraints, was arrested earlier on September 1 and is currently under judicial custody in Mumbai.
Addressing Readers' Curiosity: Attachment and Confiscation by ED under PMLA
Amidst the buzzing headlines, numerous readers reached out to us, eager to understand the procedures and conditions under which the ED can undertake property attachment actions. Furthermore, questions arose regarding the ultimate destiny of these seized assets: Does the Government eventually confiscate them? Building on our prior article that delved into the core facets of PMLA, 20021, this piece aims to illuminate the foundational steps pertaining to property attachment and eventual confiscation under the Act. As a proactive note of clarity, we highlight that we aren't legally trained, and readers seeking in-depth details should consult a qualified lawyer.
Attachment of Property under PMLA, 2002
The PMLA empowers the Enforcement Directorate (ED) to take actions against properties suspected to be the "proceeds of crime" arising from scheduled offences. The purpose of these actions is to prevent money laundering and ensure that properties derived from illicit means don't benefit the wrongdoers.
1. The Process of Attachment (Section 5):
When the ED has reason to believe, based on material in its possession, that any person is in possession of proceeds of crime and such proceeds are likely to be concealed, transferred or dealt with in a manner which may result in frustrating any proceedings relating to confiscation, it can provisionally attach such property for a period not exceeding 180 days, starting from the date of the order of attachment.
This provisional attachment order needs to be confirmed by the Adjudicating Authority within this period. If the Adjudicating Authority finds merit in the ED's claim, it will confirm the attachment, else it may release the property.
2. Adjudication Process (Section 6 and Section 8):
Once the ED attaches a property provisionally, it approaches the Adjudicating Authority for its confirmation. The Adjudicating Authority then issues notices to all concerned parties to present their case.
After giving the opportunity of being heard to concerned parties, if the Adjudicating Authority finds that any property listed in the report is involved in money laundering, it will confirm the attachment. If not, the property will be released.
3. Path to Final Forfeiture/Confiscation (Section 8):
The final decision regarding the property comes after a trial concludes in the Special Court:
If the Special Court, after the trial, finds the accused guilty of an offence of money laundering under Section 3 and the property in question is believed to be the "proceeds of crime", then the court will order the confiscation of such property to the Central Government as per Section 8(5) of the Act.
In case of an acquittal, the attached assets will be returned to the person from whom they were attached.
4. After Confiscation (Section 9):
Upon confiscation, all rights and title in such confiscated property vest with the Central Government. The Central Government is then empowered to take measures for the management and disposal of the property.
To reiterate, the attachment of property under the PMLA is an interim measure designed to preserve the status quo of the property until legal proceedings conclude. The final determination regarding the property — whether it will be returned to its owner or forfeited to the State — is contingent upon the outcome of the trial under the PMLA.
Balancing Act: The Necessity of Rigorous Provisions in PMLA
To some, the provisions of the PMLA might appear stringent, even draconian. However, it's imperative to understand the rationale behind such measures. The assets in question, often labelled as "proceeds of crime", could be misappropriated public funds, as seen in this case, or funds sourced from drug trafficking, extortion, or even overseas financial contributions aimed at destabilising the nation. Allowing such funds to be freely utilised or transferred can undermine investigations and jeopardise national security. Moreover, these illicit resources can be exploited by the alleged offenders to coerce witnesses, tamper with evidence, or procure top-tier legal representation, which can skew the scales of justice. It's crucial, therefore, that such assets are momentarily immobilised during the investigation and trial phases. It's equally pivotal to remember that a permanent confiscation is executed only after a formal conviction by a judicial court, preserving the essence of due process.
