TaxTMI 
TaxTMI 
2025 (2) TMI 746
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....p;1. Ranbir Singh Gandhi Sale Deed No. 03AA552880. Schedule: Plot No. 113 on Akashneem Marg Road measuring 420m2 situated in residential colony known as DLF Qutab Enclave, Phase II, Tehsil and Distt. Gurgaon, Haryana , butted and bounded as under- East: Plot No. Akashneem Marg-12 West: Plot no. Akshneem Marg-114 North: Plot No. P-10/06; South: Road at Rajouri Garden, N. Delhi. 32,50,000/- 2. Charanjit Singh Gandhi Sale No. 02DDJ6J254, Plot no. 10 in Block-Z, land measuring 99.7 sq.yards situated in area of village Darapur and the colony knowng as Rajouri Garden, N. Delhi and is bounded by: East: Road 40‟ wide West: Remaining portion of the said property North: remaining portion of the said property South: Remaining portion of the said property (Mortgaged with Canara bank, Vikaspuri branch, N. Delhi) 4,25,000/- Sale Deed No. 02DDJ6J252 , Plot No.10 in Block -Z measuring 99.7 sq.yards situated in the area of Basai Darapur and the colony known as Rajouri Garden, N. Delhi and is bounded as under-East: Road of 40‟ wide West: remaining portion of the said property North: remainin....
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.....C. Hills, Haflong Division for the purposes of compensatory afforestation during the period from 06.09.2006 to 16.12.2010. 6. Out of the said amount of Rs. 9,48,33,330/- Rs. 58,65,265/- was received and utilized by the next DFO, Shri Shankar Hazarika, DFO. Investigations revealed no irregularity in utilization of the said amount of Rs. 58,65,265/-. The remaining amount of Rs. 8,89,68,035/- was received and is stated to have been utilized by Shri Dabiruz Jaman during his tenure as DFO. 7. Out of the said amount of Rs. 8,89,68,035/-, Shri Dabiruz Jaman had deposited Rs. 3,23,48,618/- into the account of the DFO, N.C. Hills Division, Haflong (A/c No. 4047) maintained at Langpi Dehangi Rural Bank, Haflong and the balance amount of Rs. 5,66,19,417/- was deposited into the DFO, N.C. Hills Division‟s account (A/c No. 0455050032300) at UBI, A.T. Road Branch, Guwahati on 06.03.2008, 08.03.2008, 29.03.2008 & 04.04.2008. The CBI, during its investigation, did not find sufficient evidence to indicate towards any criminality or misappropriation of the first-mentioned amount of Rs. 3,23,48,618/- which was deposited in Langpi Dehangi Rural Bank, Haflong. 8. However, out of the rem....
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....osh, a private contractor and awarded works contract worth of Rs. 2.5 crores to him relating to construction of roads under PWD, Mahur Division, Assam. However, for the purposes of these two appeals which have been filed by Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi, we are not concerned with that case. 12. Since some of the allegations against the accused under the IPC and the P.C. Act constituted scheduled offences under the PMLA, 2002, an ECIR numbered as ECIR No. 02/2013/KLZO/ GWZO/PMLA was registered by the Directorate of Enforcement on 23.08.2013. 13. Shri Charanjit Singh Gandhi was summoned under Sub-Section (2) and (3) of Section 50 of the PMLA, 2002 and on his appearance, made statements on 09.12.2013 and on 11.03.2016 wherein, he inter- alia stated that their partnership firms, viz., M/s Dimasa Associates and M/s Enn Cee Hills Traders had a legitimate claim from the N.C. Hills Autonomous Council arising out of the arbitration award in their favour under the direction of the Governor of Assam during Governor's Rule to compensate Rs. 18.08 Crores to them in accordance with the provisions of the Agreement made between them and the Council to supply ba....
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.... 17. Shri Prokanta Warisa was summoned under Sub-Section (2) and (3) of Section 50 of the PMLA, 2002 and on his appearance, made a statement on 07.02.2014 wherein, he inter alia stated he was appointed as the Adviser to CEM, N.C. Hills Autonomous Council in February 2008 as an honorary post in the Council and Shri Depolal Hojai was the CEM, N.C. Hill Autonomous Council at that time. On being asked why he had advised Shri Depolal Hojai to issue instructions to UBI Bank, A.T. Road Branch to transfer the funds received from NHAI into the Principal Secretary (N)‟s account, he replied that he had not tendered such advice to Shri Depolal Hojai. Further, he had stated that, he was aware that the Gandhis, Shri Ranbir Singh Gandhi and his son Shri Charanjit Singh Gandhi who were engaged in the business of supplying bamboo, had claimed compensation and an arbitrator had awarded some compensation to them on account of damage caused to the bamboo already felled. 18. From the investigations conducted under the PMLA, 2002, the Ld. Joint Director concluded that withdrawing and utilizing funds without knowing the actual source and without receiving confirmation from the Council indicat....
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....with full force and is binding. The appellant has relied upon the judgments in Govt. of AP v. N Rami Reddy & Ors, 2000 SCC Online AP 721 (para 10-14); Niranjan Chatterjee & Ors, v. State of West Bengal & Ors. 2007 SCC Online Cal 283 (para 17,18,20) & Palaniswamy & Anr. v. State of AP Revenue Dept. & Ors. 2018 SCC Online Hyd 16 (para 13,16,19,20). Thus, it is contended, that the proposition laid down in J. Sekar v. Union of India, i.e., mere reproduction of words of statute will not suffice to show satisfaction of the authority before attachment, continues to hold the field. For the same proposition, it is contended that judgment of the Hon‟ble Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement was challenged before the Supreme Court and the SLP was dismissed vide order dated 30.4.2021. 23. It is next contended that the properties were purchased much before the alleged period of commission of the predicate offence. It is submitted that the relevant documents have been brought on the record by the Respondent No.2 (Canara Bank) along with their reply in the appeal. The period of the alleged crime is April 2008 whereas the properties hav....
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....e charges were challenged by the appellant before the Guwahati High Court which passed the order dated 14.6.2019, thereby quashing the charges framed under section 409 IPC. A copy of the order is also submitted. Further, vide order dated 19.9.2023, the trial court has observed that trial would not proceed further without any specific order and disposal of the said Criminal petition before the Hon‟ble Gauhati High Court. A copy of the said order dated 19.9.2023 passed by the Special Judge, CBI, is also submitted. 27. Based on the above-mentioned arguments, it is prayed on behalf of the appellants that the present appeals be allowed. Arguments on behalf of the Respondent 28. The Respondents, in their submissions, have argued that the procedure under section 5 of PMLA, 2002 was duly followed, reasons to believe formed and recorded in writing and copy of reasons to believe recorded were duly forwarded by Ld. AA in terms of provisions of PMLA, 2002. As far as supply of reasons to believe to the appellant is concerned, it is submitted that there are no provisions under PMLA to supply copy of the reasons to believe to the concerned persons. 29. Similarly, the requirement....
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....committed and assessment thereof: "Investigation revealed that Shri Debiruz Zaman @ Dabiruz Jaman (A-1) was holding post of Divisional Forest Officer, North Cachar Hills Division, Haflong from 01.04.2003 to 24.03.2009. Shri Depolal Hojai (A-2) was elected as Member, N.C. Hills Autonomous Council in the year 2007 and was functioning as Chief Executive Member from 08.01.2008 to 27.11.2008. Shri Rnbir Singh Gandhi (A-3) established a firm namely M/s Hills Trade Agencies with its address at 407 P.B. Complex, AT Road, Guwahati- 781001 in partnership with his son Shri Charanjit Singh Gandhi @ Charanjeet Singh Gandhi (A-4) and other family members. The firm was dealing in the business of supply of bamboo to Hindustan Paper Corporation Ltd., Jagiroad, Nagaon and Panchgram, Silchar on contractual terms on behalf of N.C. Hills Autonomous Council, Haflong since the year 1993 onwards. He also established another three firms namely M/s Dimasa Associates, M/s Enn Cee Hills Traders and M/s Dimalik Forest Agencies in October 2006 for the same purpose. The partners of the said three firms are Shri Ranbir Singh Gandhi, Shri Charanjit Singh Gandhi and one local partner each from Haflong i.e.....
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....ques. Whereas out of the remaining amount of Rs. 17,19,417/- an amount of Rs. 16,99,000/- was dishonestly withdrawn in cash and misappropriated by Shri Debiruz Zaman (A-1) :- Sl. No. A/c of PS(N) vide No. 28055 (A/C Dimasa) A/c of PS (N) vide No. 28063 (A/c Enn Cee) Details of Cheque Amount (in Rs.) Details of Cheque Amount (in cheque) 1 Cheque No. 015103 Dt. 10.03.2008 65,00,000/- Cheque No. 015105 Dt. 04.04.2008 2,91,00,000/- 2 Cheque No. 015102 Dt. 10.03.2008 35,00,000/- Cheque No. 015107 Dt. 04.04.2008 1,58,00,000/- Total 1,00,00,000/- Total 1,58,00,000/- Investigation further revealed that for facilitating the transfer of fund due to be received from HPCL account of supply of bamboo to HPCL by the contractor of NCHAC in the A/c of M/s Dimasa Associates and M/s Enn Cee (both the partnership Firms of Shri Ranbir Singh Gandhi & Charanjit Singh Gandhi), the above two A/cs of PS(N), NCHAC was opened/maintained with UBI, AT Road Branch. Investigation has also transpired that as per the Standing Instruction dated 24.11.2006 given to the bank, as issued at the time of opening of the aforesaid t....
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....es no. 28020 Ac. Of Enn Cee Hill Traders no. 28047 1 12.03.2008 for Rs. 1,00,000/- 09.04.2008 Rs. 2,91,00,000/- 2 11.04.2008 for Rs. 1,58,00,000/- Total 1,00,00,000/- 4,49,00,000/- That Shri Debiruz Zaman (A-1) and Shri Depolal Hojai (A-2) by abusing their official powers/positions and in criminal conspiracy with each other and also with accused Shri Ranbir Singh Gandhi (A-3) and Shri Charanjit Singh Gandhi (A-4) had fraudulently and dishonestly misappropriated the fund of Rs. 5,49,00,000/- released by NHAI towards Compensatory Afforestation, Timber/Poles Operations etc. without implementing any schemes for which the fund was released and thereby caused huge wrongful loss to the Government of Assam to the tune of Rs. 5,49,00,000/- and corresponding wrongful gain to themselves to that extent. On the basis of the aforesaid information/ documents (s), a prima - facie case for an offence of money-laundering (section 3 of the Prevention of Money Laundering Act, 2002) punishable u/s 4 of the said Act appears to have been made out. A case is therefore, registered and is taken up for investigation under the provisions of the P....
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....(5) can proceed with the process on the basis of subjective satisfaction. 36. In view of the factual position brought out in paragraph 34 above, as well as the legal position discussed in paragraph 35 above, I do not find sufficient grounds to hold that the actions taken under sections 5 and 8 were not valid for want of recording of reasons (which were duly recorded) or on account of non-communication of the reasons by the relevant authorities. 37. It is next contended that the properties were purchased much before the alleged predicate offence. It is also submitted that the relevant documents have been brought on the record by the Respondent No.2 Canara Bank along with their reply in the appeal. The alleged crime took place much later, in April 2008. The fact of the acquisition of the properties prior to the alleged period of offence has not been disputed by the respondents. The decision of Hon'ble Supreme Court, in Pavana Dibbur Vs. Directorate of Enforcement (2023) SSC Online 1856 is relied upon wherein it was held that the property sought to be attached by the Directorate was purchased prior to the dates of the alleged crime and the same cannot constitute proceeds of ....
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.... definition of `proceeds of crime' given under Section 2(1) (u) of the Act of 2002, which is quoted thus: "(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 [or where such property is taken or held outside 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;" 13. The perusal of the definition aforesaid shows three limbs. In between every limb word "or" has been used to divide the definition into three parts. The first part refers to the property acquired or derived directly or indirectly out of the criminal activities relating to the scheduled offence. In the first part, all those properties which are acquired directly or indirectly out of criminal activities would be ....
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.... completion of the crime to save the victim from crime committed by the accused. It would be for the reason that if the property acquired prior to commission of crime would not fall in the definition of "proceeds of crime", then the accused would commit the crime and immediately proceeds would be siphoned off or vanished so that it may not remain available for attachment. In fact, the word "the value of any such property" was inserted by the legislature to attach the property of equivalent value, if the proceeds out of commission of crime is not available or vanished. If the second limb of the definition is made dependent on the first limb, it would be literally re-writing the provision or making it redundant to a great extent and for this, jurisdiction does not lie with any court of law which includes even the Constitutional Court. They can declare any provision to be unconstitutional but till then there remains presumption of constitutional validity. 16. At this stage, we may refer to Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) which is quoted hereunder. "68. It was also urged before us that the attachment of property must be equivale....
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....ioned above would ordinarily be "untainted property" that may have been acquired by the suspect legitimately without any connection with criminal activity or its result. The same, however, are intended to fall in the net because their owner is involved in the proscribed criminality and the tainted assets held by him are not traceable, or cannot be reached, or those found are not sufficient to fully account for the pecuniary advantage thereby gained. This is why for such untainted properties (held in India or abroad) to be taken away, the rider put by law insists on equivalence in value. From this perspective, it is essential that, before the order of attachment is confirmed, there must be some assessment (even if tentative one) as to the value of wrongful gain made by the specified criminal activity unless it be not possible to do so by such stage, given the peculiar features or complexities of the case. The confiscation to be eventually ordered, however, must be restricted to the value of illicit gains from the crime. For the sake of convenience, the properties covered by the second and third categories may be referred to as "the alternative attachable property" or "deemed tainted....
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....rcement, reported in 2020 SCC OnLine Punjab & Haryana 738. With due respect, we are unable to apply the judgment of Kerala High Court going against Para 68 of the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra). The judgment of Seema Garg (Supra) has been dealt with by the Delhi High Court in the case of Prakash Industries Ltd. v. Directorate of Enforcement reported in 2022 SCC OnLine Del 2087. The relevant paras are quoted hereunder: "76. Seema Garg principally holds that the phrase value of any such property and property equivalent in value held within the country or abroad cannot be ascribed the same meaning and effect. The learned Judges comprising the Division Bench then proceeded to hold that even if the intent of the legislature was to include any property in the hands of a person within the ambit of the expression proceeds of crime‖, there would be no need to create three limbs of definition of proceeds of crime. xxxx 79. Regard must also be had to the fact that the legislation itself is dealing with contingencies where proceeds of crime are layered and their origins camouflaged and masked enabling the accused to p....
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....construction but would clearly amount to the Court rewriting the provision itself in a manner that it stands deprived of vital and purposive content. The Court further notes that Axis Bank had enunciated important safeguards which would apply in respect of third-party interests in deemed tainted property. Those caveats duly secure and protect bona fide third-party interests created for valid consideration. This Court, thus, reaffirms those defences as were culled out in Axis Bank. The Court thus reiterates the interpretation accorded to Section 2(1)(u) by this Court in the aforesaid decision. Consequently, and for all the aforesaid reasons this Court finds itself unable to agree with the principles as laid down in Seema Garg as well as the subsequent decisions rendered by the Andhra Pradesh High Court in Kumar Pappu Singh Vs. Union of India and the Patna High Court in HDFC Bank Limited Vs Government of India, Ministry of Finance. 81. The Court also takes note of the position that although SLP (Crl) No. 28906/2019 is pending before the Supreme Court against the decision rendered in Axis Bank, the judgement of this Court has not been stayed or placed in abeyance. The interim....
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....eared therein did not elaborately argue the issue by referring to the definition of "proceeds of crime" having three limbs to give meaning to each limb for the interpretation of the definition of the "proceeds of crime". The reference of Para 68 of the judgment of three judges Bench of the Apex Court in the case of Vijay Madanlal Choudhary (supra) was not cited and thus counsel for the respondent submitted that the judgment in the case of Pavana Dibur (supra) does not propound ratio on definition of "proceeds of crime" and, therefore, direction for the property acquired prior to commission crime is to be taken on facts of that case. 22. It has already been clarified by us that if the definition of "proceeds of crime" is given interpretation by dividing it into two parts or by taking only two limbs, then it would be easy for the accused to siphon off or vanish the proceeds immediately after the commission of scheduled offence and in that case none of his properties could be attached to secure the interest of the victim till conclusion of the trial. This would not only frustrate the object of the Act of 2002, but would advance the cause of the accused to promote the crime of....
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....prior to commission of crime. We are not going even further that the properties have nexus with the proceeds out of the crime but even in given circumstances and scenario that the property was acquired prior to commission of crime then, also under certain circumstances, it can be attached for "the value of any such property." 23. At this stage, it is reiterated that any other interpretation other than the one taken by Delhi High Court in the cases of Axis Bank (supra) and Prakash Industries (supra) for the definition of "proceeds of crime" would defeat the object of the Act of 2002. It is more especially when the arguments raised by the appellant that the property acquired prior to the commission of crime would not fall in the definition of "proceeds of crime". In that case, the task of the accused would become very easy to first commit the scheduled offence and after obtaining or deriving the property out of the criminal activities, immediately siphon off or vanish so that it may not remain available for attachment and otherwise the contingency aforesaid would satisfy only the first limb of definition of "proceeds of crime" leaving the second. We are thus unable to accept....
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....e Hon‟ble Gauhati High Court for quashing of the Special Case filed against them under Sections 3 and 4 of PMLA, 2002, the said petition of the appellants is still pending before the Hon‟ble High Court. Further, as clarified by both parties in the hearing held on 08.01.2025, prosecution complaint under the PMLA, 2002, also stands filed against the accused persons in this case. Proceedings in the prosecution case under the PMLA, 2002, have been stayed by the Ld. Special Judge following the stay granted by the Hon‟ble Guwahati High Court. It is also clarified by both the counsels that these proceedings before the Appellate Tribunal have not been stayed by any higher judicial authority. Thus, at this stage, when the criminal prosecution case against the appellants is still pending, the attachment of properties cannot be held to be invalid. The legal position is well-settled that attachment of property is a balancing arrangement to secure the interests of the person, as also ensure that the proceeds of crime remain available to be dealt with in the manner provided by the Act. Mere attachment of property does not alter the position with regard to the ownership or even ....