TaxTMI 
TaxTMI 
2024 (7) TMI 1566
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....n Overseas Bank, Zonal Office, Delhi alleging that the accused Ashu Mehra, Assistant Manager, Forex Department, Indian Overseas Bank, Chandigarh Main Branch in conspiracy with other accused personscheated Indian Overseas Bank, which caused a liability to the tune of USD 47.86 Million equivalent to approximate Indian Rs. 321.00 crores as on date (@Rs. 67 per USD). b) The accused Ashu Mehra had been working as an Assistant Manager, Forex Department, Indian Overseas Bank, Chandigarh Main Branch since 2010 and was also having the authority to make and check all SWIFT messages of the Bank. Besides, the Accused Ashu Mehra, two more officers namely accused Nitish Negi and Gaurav Bhatia were named by the Bank. They were working as Assistant Managers in the Bank and further informed that they were handling forex operations and were having the authority to make and check all SWIFT messages of the Bank Branch. c) The accused Ashu Mehra in collusion with other customers of the complainant bank, namely M/s Vision Procon (through its Proprietor Dinesh Kumar, Accused), M/s Heights International (through its Proprietor Amanpreet Singh Sodhi, Accused), and M/s Saibhakti Impex Pvt.....
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....t; apart from Mr. Dinesh Kumar, Proprietor of M/s Vision Procon, an authorized signatory for the operations in the account of M/s Heights International and that there are also inter-account transactions between these three entities. i) The Indian import firms/company M/s Heights International, M/s Vision Procon and M/s Saibhakti Impex Pvt. Ltd. were shown by the accused Ashu Mehra, Assistant Manager, Indian Overseas Bankto be applicants for availing Buyers Credit from the complainant bank, viz. Indian Overseas Bank, Sector 7, Madhya Marg,Chandigarh. j) As per documents provided by the complainant bank, the applicant Indian importers were importing goods from the accused Hong Kong based company M/s Colour Wave (HK) Ltd. and for the payment of the same to the overseas supplier, the buyers credit scheme was availed by them. In the investigation conducted revealed that in actual no goods were importedcorresponding to the buyers credit availed by the Indian importers. k) For availing the buyers credit, the applicant Indian importers were required to obtain offer letters from the overseas funding banks.For obtaining the offer letters, the accused Ashu Mehra was....
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.... `proceeds of crime‟ in terms of Section 2(1)(u) of the Act of 2002. Arguments of the appellant: 3. The learned counsel for the appellant submitted that the properties attached by the respondent were acquired much prior to the alleged offence in the year 2015, and in July 2016 to January 2017 (i.e., when the LOUs stated to have been issued). The properties were thus not obtained or derived out of criminal activity of scheduled offence. 4. It is further submitted by the counsel for the appellant that the respondent registered ECIR on 19.09.2016 and POA was issued on 29.06.2018 i.e., after two years from the date of registration of the ECIR. Thequestion of acquisition of said property as a result of alleged criminal activity does not arise. The appellant thus, prayed to set aside the order of confirmation passed by the Adjudicating Authority. Arguments of opposite side: 5. The learned counsel for the respondent has contested the appeal. The counsel submitted pursuant to the provision of the Act of 2002, the Authority is empowered to attach not only the property acquired or obtained directly or indirectly from the scheduled offence, but any other property of equiv....
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....arified 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;]" A perusal of the definition would show that the „proceeds of crime‟ includes the property derived or obtained directly or indirectly out of criminal activity but that is not end of the definition of Proceeds of Crime. It can be for „value of any such property'. The aforesaid words used in the definition of "Proceeds of Crime" is to cover those properties which are not derived or obtained directly or indirectly out of the criminal activity but attached for value equivalent to the Proceeds of Crime if money acquired has been vanished. The Act of 2002 was enacted pursuant to the International Convention to address the offence of money laundering. If the definition of "Proceeds of Crime" is given restricted meaning to hold that it shall include only the properties obtained or derived directly or indirectly from the criminal activity then it would nullify the very objects of the enactment and the consequence of ....
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....on of the learned counsel for the respondents that the term proceeds of crime will also include the value of the property which had been acquired even earlier is, according to me, too farfetched and will not be justifiable in the light of the constitutional provisions of fairness and reasonableness. It is also necessary to observe at this juncture that the purpose of the PMLA is to remove tainted money and also to initiate proceedings against the proceeds of crime which have been transformed or converted into other property or intermingled with legitimate sources and then the value of the intermingled gain will assume the colour of proceeds of crime. Such a provision cannot be used to enable the authorities to proceed against properties that are unconnected with any of the criminal activity in question. 18. Viewed in the above perspective, as the provisionally attached immovable property was purchased in 2004 more than a decade and a half before the predicate offence was allegedly committed, the order attaching the immovable property is ex-facie, ultra vires the powers of the statute and totally illegal and arbitrary to the extent of the said attachment. Since ex facie ill....
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....such property" was raised and decided in the judgment of Vijay Madanlal Chaudhary (Supra).It is by three Judge Bench and would be binding on us. At this stage, we may also refer to the relevant paras of the judgment of Delhi High Court in the case of Axis Bank (Supra) and are quoted thus: "106. Among the three kinds of attachable properties mentioned above, the first may be referred to, for sake of convenience, as "tainted property" in as much as there would assumably be evidence to prima facie show that the source of (or consideration for) its acquisition is the product of specified crime, the essence of "money laundering" being its projection as "untainted property" (Section 3). This would include such property as may have been obtained or acquired by using the tainted property as the consideration (directly or indirectly). To illustrate, bribe or illegal gratification received by a public servant in form of money (cash) being undue advantage and dishonestly gained, is tainted property acquired "directly" by a scheduled offence and consequently "proceeds of crime". Any other property acquired using such bribe as consideration is also "proceeds of crime", it having been o....
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.... to move against properties which may fall within the ambit of ―value of any such property or ―property equivalent in value held within the country or abroad. To the aforesaid limited extent, properties purchased prior to 01 July 2005 may also become vulnerable and subject to action under the Act. However, enforcement action against such properties would have to satisfy the tests and safeguards as propounded in Axis Bank with the learned Judge observing that in such a situation it would have to be established that the person accused of money laundering had an interest in such property at least till the time that he indulged in the proscribed criminal activity. The learned Judge further observed that bona fide rights acquired by third parties prior to the commission of the predicate offense would stand saved." The issue as to whether the properties acquired prior to the commission of the offence can be attached. The issue aforesaid has been dealt with by this Tribunal in the case of Ayush Kejriwal vs. The Deputy Director, Directorate of Enforcement, Kolkata, FPA-PMLA-4358/KOL/2021. Relevant paras are quoted hereunder for ready reference: "15. It is also neces....
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....y in it. The words "the value of such property" does specify it to be earlier to the crime or subsequent and we can insert words "thus value of such property" would mean the property acquired prior or subsequent to the crime." It is not that only those properties which have been were derived or obtained directly or indirectly out of the crime can be attached rather in case of non-availability of the property derived or obtained directly or indirectly rather when it is vanished or siphoned off, the attachment can be of any property of equivalent value. It is necessary to clarify that the proceeds of crime would not only include the property derived or obtained directly or indirectly out of the criminal activity relating to the scheduled offence but any other property of equivalent value. The word "or" has been placed before "the value of any such property" and is of great significance. Any property of equivalent value can be attached when the proceeds directly or indirectly obtained out of the crime has been vanished or siphoned off. Here,the significance would be to the property acquired even prior to commission of crime. It is for the reason that any property acquired subseq....