Benami property attachment and beneficial ownership inquiry: investment confiscable, prosecution deferred pending reinvestigation.

Attachment and confiscation of admitted funds invested by the appellant were held permissible as benami property under the prohibition framework; the investment amount of Rs.1 Crore may be attached and confiscated accordingly. However, the record lacks definitive evidence that the appellant was the beneficial owner or personally delivered demonetised currency to intermediaries, so prosecution for beneficial ownership offences is not supported at this stage and is deferred. Investigating Officer is granted liberty to conduct further inquiry on material aspects before initiating prosecution, with the matter remanded for re-investigation to be preferably completed within six months.

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Issues: (i) Whether the provisional attachment of Rs. 1,00,00,000 held by the appellant can be confirmed and treated as benami property liable for confiscation under Section 27 of the PBPT Act; (ii) Whether there is sufficient evidence to proceed with prosecution under Sections 53 and 54 of the PBPT Act or whether further investigation is necessary.

Issue (i): Whether the admitted amount of Rs. 1,00,00,000 received by the appellant and invested is rightly attachable/confiscable as benami property under Section 27 of the PBPT Act.

Analysis: The Court examined the admitted receipt of Rs. 1 crore by the appellant and its subsequent investment, considered the evidence and investigative gaps highlighted (including contradictions in directors' statements, unresolved questions about shareholding and signatories, and deficiencies in tracing key persons), and noted that possession/custody of the amount as investment is established. The Court contrasted this admissible fact with the absence of conclusive evidence that the appellant supplied demonetised currency or was the beneficial owner.

Conclusion: The provisional attachment of the admitted amount of Rs. 1,00,00,000 is confirmed as liable to be attached and can be confiscated under Section 27 of the PBPT Act. This conclusion is adverse to the appellant.

Issue (ii): Whether prosecution under Sections 53 and 54 of the PBPT Act against the appellant can be sustained on the existing record or whether further investigation is required.

Analysis: The Court analysed the quality of evidence relied upon by the Initiating Officer and Adjudicating Authority, including reliance on statements of name-lending directors, contradictions in statements, unresolved identity and traceability of key persons (notably Satish Pujari), gaps in verification of loan agreement authenticity, and missing inquiry into relevant third parties and records. Given these investigative lacunae, the Court found insufficiency of definite evidence to sustain prosecution at present.

Conclusion: There is insufficient definite evidence to proceed with prosecution under Sections 53 and 54; the matter is remanded for further investigation on material aspects before any prosecution is launched. This conclusion grants liberty to the Investigating Officer to complete further inquiry within a specified timeframe.

Final Conclusion: The appeal is answered by confirming the attachment and potential confiscation of the admitted sum of Rs. 1,00,00,000 under Section 27 while remanding the case for further investigation into material facts before any prosecution under Sections 53 and 54 is undertaken.

Ratio Decidendi: Where an amount admitted to be received and invested by a person is shown to be in their custody, it may be attached and confiscated under Section 27 of the PBPT Act; however, criminal prosecution under Sections 53 and 54 requires definite, admissible evidence establishing beneficial ownership or supply of demonetised currency, and absence of such evidence warrants remand for further investigation prior to prosecution.

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