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2024 (6) TMI 1392

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....petitioner, inter alia, challenges the freezing of his bank accounts and the provisional order of attachment issued under section 5 of PMLA, in this petition under Article 226 of the Constitution of India. 2. Petitioner is a businessman having an electronic shop at Sholapur, Maharashtra and claims that he has no connection with the business of Masters Finserv or its proprietor. During September 2023, petitioner was informed by his bankers that his bank accounts maintained with the IDFC Bank, ICCI Bank and Federal Bank were frozen under orders of the Enforcement Directorate. Since the order freezing the bank accounts was in violation of Section 17(1) of the PMLA, petitioner approached this Court in this writ petition. In the meanwhile, on 25.04.2024, an interim direction was issued by this Court, directing the second respondent to consider petitioner's request for permitting him to withdraw money from his bank account due to his wife's medical condition. Though the said direction was challenged by the petitioner before the Supreme Court in SLP (Crl) No.6628/2024, it was disposed of with a direction for an expeditious adjudication of the writ petition. While so, on 22.05.202....

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..... Jha, along with Sri. Vinay Mathew Joseph, learned counsel for the petitioner, while Sri. Jaishankar V. Nair and Adv. Anuj Udupa appeared on behalf of respondents 2 and 3. Though the counsel on either side exhaustively addressed various aspects of the case, this Court is of the opinion that in view of the order of provisional attachment dated 22.05.2024, the challenge against freezing of bank accounts has become academic in nature. The scope of the writ petition therefore revolves only around the order of provisional attachment and the consideration is confined to the said challenge.  5. PMLA was enacted as a preventive and punitive measure to combat the evil of money laundering. Removal of tainted money or those derived from selected crimes is understood as an effective mode of combating serious offences. Sections 3 and 4 of PMLA make money laundering an offence punishable with imprisonment which may extend upto 7 years apart from fine. The word 'money laundering' is explained to be an attempt to indulge or assist or be a part of any process or activity connected with the proceeds of crime. Section 5 of the PMLA authorises the Director or other persons mentioned the....

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....ional Society v. UCO Bank and Others (2024 INSC 297), the Supreme Court reiterated that when the statutory authority has not acted in accordance with the provisions of the enactment in question, a petition under Article 226 of the Constitution could be entertained, despite the availability of an alternative remedy. Thus, notwithstanding the existence of an alternative remedy, there is no absolute restriction in considering the contentions advanced, provided the case falls within the parameters mentioned above. 8. A reading of the impugned order of provisional attachment dated 22.05.2024 indicates that two schedules of properties have been ordered to be attached. Schedule A consists of an immovable property and Schedule B consists of movable properties. For the purpose of better comprehension, the schedule attached to Exhibit P11 is extracted as below: SCHEDULE OF PROPERTIES A. Immovable Property Sr. No. Description of Property Location of Property Amount (in INR) 1 Title Deed No.45/9/26 dated 05.01.2004 registered with Sub Registrar, North Solapur, Maharashtra - 413 001 Plot No.35A, Baveshwar Nagar, Hotgi Road, Solapur - 413 003 Rs.3,30,000/- Total (A) Rs.3,30,000....

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....side the country, then the property equivalent in value held within the country or abroad. Explanation: For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence." 12. On a reading of the above provisions, it can be assimilated that there are three types of proceeds of crime and they are: (i). property derived or obtained from a criminal activity, (ii) value of any such property and, (iii) if the property is taken or held outside India, then a property equivalent in value held within India. 13. Section 5 of PMLA authorizes attachment of proceeds of crime. The definition of the term 'proceeds of crime' explicitly states that when the proceeds of a crime is a property, such property must have been obtained or derived as a result of any criminal activity relating to a scheduled offence. No doubt, even if the property was obtained indirectly, it can still be regarded as proceeds of crime. Assuming that a property derived out of....

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.... v. Union of India and Others [2022 SCC Online SC 929], it has been held in paragraph numbers 295 and 296 that "The precondition for being proceeds of crime is that the property has been derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. .............Be it noted that the attachment must be only in respect of property which appears to be proceeds of crime and not all the properties belonging to the concerned person who would eventually face the action of confiscation of proceeds of crime, including prosecution for offence of money-laundering. As mentioned earlier, the relevant date for initiating action under the 2022 Act - be it of attachment and confiscation or prosecution, is linked to the inclusion of the offence as scheduled offence and of carrying on the process or activity in connection with the proceeds of crime after such date. The pivot moves around the date of carrying on the process and activity connected with the proceeds of crime; and not the date on which the property has been derived or obtained by the person concerned as a result of any criminal activity relating to or relatable to the schedul....