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Sunday, January 17, 2021

Explained: What happens when ED attaches the property of an accused?

The purpose of attachment is to deprive an accused of the benefits of the attached asset. The law also provides for the property to remain out of bounds for the accused until the trial is complete.

Written by Deeptiman Tiwary | New Delhi | Updated: January 6, 2021 8:36:24 am
Farooq Abdullah’s residence on Srinagar’s Gupkar Road. (File/Express Photo: Shuaib Masoodi)

Earlier this month, the Enforcement Directorate (ED) issued orders for the attachment of several properties belonging to former Jammu and Kashmir Chief Minister and leader of the National Conference Dr Farooq Abdullah in connection with its investigation into alleged money laundering in the Jammu and Kashmir Cricket Association (JKCA) case.

The attached properties include Farooq Abdullah’s Gupkar Road residence in Srinagar, where he lives. They also include two other residential properties in Tangamarg and Sunjwan, apart from commercial properties on Srinagar’s Residency Road.

Does this mean Farooq Abdullah is homeless now?

No. Provisional attachment orders issued by the ED do not lead to immediate sealing of a property. Farooq Abdullah can continue to live in his house while the matter remains pending in courts.

The ED order would be valid for 180 days, during which time it must be confirmed by the Adjudicating Authority under the Prevention of Money Laundering Act (PMLA). If it is not confirmed, the property would be automatically released from attachment. And if it is, the accused can challenge the confirmation in the Appellate Tribunal within 45 days, and subsequently in the concerned High Court and the Supreme Court.

What does the law say on the attachment of property?

The purpose of attachment is to deprive an accused of the benefits of the attached asset. The law also provides for the property to remain out of bounds for the accused until the trial is complete.

However, properties that are in use are generally not sealed until the case reaches its logical conclusion. Usually, the accused secures release of the property in appellate tribunals or High Courts, or is able to get a stay, and continue to enjoy it while the matter remains pending in the courts.

Also, running businesses are not shut down. Therefore, a running hotel can, for example, be attached under the PMLA, and still continue its business.

In 2018, the ED attached the Holiday Inn Hotel at Delhi’s IGI airport in connection with the Air India case. But the hotel continues to host guests as usual. The law provides for the resting of operational profits with the ED. But businesses can get a stay on this from the courts, for the matter to be finally decided in the eventual outcome of the case.

Also in 2018, the ED had attached 50% of former Finance Minister P Chidambaram’s bungalow in New Delhi’s Jor Bagh. Chidambaram and his family continue to enjoy the property. The ED had last year issued an eviction notice to Chidambaram’s son Karti, who has secured legal protection against the notice.

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Omar Abdullah has claimed the attachment is wrong, as it is ancestral property.

Under PMLA, proceeds of crime — money generated out of a criminal activity — is attached on the directions of the ED Director. However, if that wealth is not available, the agency can attach property equivalent to that value.

The PMLA defines “proceeds of crime” as “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 any such property, or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad”.

While the idea of attachment of property equivalent to proceeds of crime has been contested, various court orders in the past have ruled in favour of ED’s interpretation of the term “the value of any such property” to mean that the agency can attach any property of equivalent value with the accused.

The ED is, therefore, within its rights to attach Abdullah’s ancestral property. Notably, one of the properties attached — in Jammu’s Sunjwan — has also figured in the list of properties built on “encroached land” by the J&K administration following its probe into the Roshni Act cases.

The law also has a provision for the attachment of local property of equivalent value if investigations reveal that the accused has parked proceeds of crime abroad, and the same cannot be attached there.

What happens to assets that are sealed?

Attached properties may remain locked for years, and may start crumbling. There is a provision for a body to maintain such properties, but it has not been set up yet.

Attached vehicles are sent to warehouses owned by the Central Warehousing Corporation, where the ED pays to park the vehicle. As cases drag on for years, the vehicles rot. At the end of the trial, neither the accused nor the ED recovers anything from the vehicle. The agency could, in fact, end up paying more rent than the value of the vehicle.

What is the JKCA case?

The case relates to alleged irregularities in grants given by the Board of Control for Cricket in India (BCCI) to Jammu and Kashmir Cricket Association (JKCA). It is alleged that between 2002 and 2011, funds to the tune of over Rs 43 crore were siphoned off from the JKCA’s coffers. These funds were part of the Rs 112 crore grant given by BCCI to JKCA.

The case came to light in 2012. But a special team of the state police failed to complete the investigation after two cricketers, Majid Yaqoob Dar and Nissar Ahmad Khan, approached the Jammu and Kashmir High Court with a PIL in 2015. On September 3, 2015, the court handed over the case to the CBI.

Based on the CBI case, the ED registered a case of money laundering in the matter. ED has claimed that its probe has found that during the period from 2005-06 to December 2011, JKCA received total funding of Rs 109.78 crore from BCCI, of which Rs 45 lakh were laundered during Abdullah’s tenure as chairman of JKCA.

“Investigation reveals that Dr Farooq Abdullah was instrumental as well as beneficiary of the laundered funds of JKCA,” the ED has said.

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