TaxTMI 
TaxTMI 
2016 (12) TMI 1249
X X X X Extracts X X X X
X X X X Extracts X X X X
.... petitioners' property at Melandai Vaadai, Kamaraj Street, 3rd Division, Kancheepuram Town, Kancheepuram District. 2. For the sake of convenience, the petitioners will be referred to as the POTHYS and the others by their name. 3. One Sridhar, who is said to be a local don, has to his credit, about 25 criminal cases spread over several Police Stations for offences ranging from murder to criminal intimidation covered by the Penal Code, which would make even Macaulay turn in his grave. He is now an outlaw and is said to be hiding in the Middle East, presumably in Dubai and attempts are being made by the police to have him brought to India to face the music. There is no scintilla of a doubt that the offence alleged against him would fall ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mi were fruits of the poisonous tree acquired with the proceeds of crime committed by Sridhar. Consequently, the Deputy Director, by order dated 02.09.2016, provisionally attached the properties purchased by the POTHYS totally valued at Rs. 6.47 crores in terms of Section 5(1) of the PMLA for a period of 180 days, challenging which, the POTHYS are before this Court. 4. Heard Mr.B.Kumar, learned Senior Counsel for the POTHYS and Mr.Rajnish Pathiyil, learned counsel for the second respondent. 5. At the outset, Mr.B.Kumar, learned Senior Counsel submitted that the POTHYS already had a property adjacent to the properties purchased by them from Kumari and Dhanalakshmi and that they had made the purchase only for the purpose of acquiring free i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....forts to find out if their vendor is a person above reproach. 10. The definition of the expression "proceeds of crime" in Section 2(u) and the expression "offence of money-laundering" in Section 3 are worth quoting: "2(u) "proceeds of crime" means 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." 3. "Offence of money-laundering.- Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that - ..." 13. The expression "reason to believe" used in Section 5 of the PMLA has not been defined therein. Hence, it may be profitable to look into the expression "reason to believe" in Section 26 of the Indian Penal Code, which reads as follows: "26. "Reason to believe".- A person is said to have "reason to believe" a thing, if he has sufficient cause to believe that thing but not otherwise." 14. Section 5 has employed the expression "reason" and not "reasons", which means that even if there is one cause which is sufficient for t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ow cause notice has been issued by the Chairman, Adjudicating Authority, and therefore, the same is vitiated. 17. I am unable to accept this submission because Section 27 applies to the Appellate Tribunal and not to the Adjudicating Authority. Here, after the Deputy Director has initiated proceedings u/s 5 and attached the property for 180 days, she has lodged a complaint with the Adjudicating Authority, based on which, the Adjudicating Authority has stated that he has reason to believe that the property in question is a property derived or obtained as a result of criminal activities. Along with the show cause notice, a copy of the complaint and the documents appended thereto have also been furnished to the POTHYS. Now, it is for the POTHY....