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Issues: (i) Whether equity shares acquired in 2003 could be treated as proceeds of crime or property equivalent in value and be retained or frozen under the Prevention of Money-Laundering Act, 2002. (ii) Whether the Tribunal could grant a monetary decree for the amount allegedly wrongfully remitted, in addition to modifying the freezing orders.
Issue (i): Whether equity shares acquired in 2003 could be treated as proceeds of crime or property equivalent in value and be retained or frozen under the Prevention of Money-Laundering Act, 2002.
Analysis: The shares were subscribed through banking channels in 2003, before the Prevention of Money-Laundering Act, 2002 came into force and before the alleged scheduled offence period. The finding recorded in the earlier proceedings was that the shares were not acquired from proceeds of crime and that a ledger entry, by itself, is not property capable of being treated as proceeds of crime. The amended concept of property equivalent in value was treated as prospective, and could not be used to fasten liability on unrelated assets that had no nexus with the alleged crime. The freezing and retention orders were also examined against the statutory scheme requiring reason to believe, recorded material, and adherence to the procedural safeguards and time limits under the Act.
Conclusion: The shares could not be treated as proceeds of crime on the facts found, and the freezing and retention could not stand in their existing form; de-freezing was directed subject to compliance with the imposed condition.
Issue (ii): Whether the Tribunal could grant a monetary decree for the amount allegedly wrongfully remitted, in addition to modifying the freezing orders.
Analysis: The appellate power under the Act enabled confirmation, modification, or setting aside of the impugned order, but did not authorise the Tribunal to pass a civil decree for recovery of money with interest and damages. The Tribunal therefore limited relief to the statutory domain of modifying the impugned retention and freezing orders, while leaving recovery-type claims to the appropriate forum.
Conclusion: The request for a monetary decree was rejected, though consequential relief in the form of de-freezing was granted.
Final Conclusion: The appeals were allowed in part by setting aside the continued restraint on the shares upon compliance with the directed undertaking, while declining to grant a money decree and leaving other remedies open according to law.
Ratio Decidendi: Property acquired before the alleged criminal activity and before the statutory regime came into force cannot be treated as proceeds of crime, and the later insertion of an equivalent-value concept cannot be applied retrospectively to attach unrelated assets lacking a proven nexus with the alleged offence.
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