TaxTMI 
TaxTMI 
2025 (5) TMI 1836
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.... a loan of Rs. 50,00,000/- had been sanctioned against the said Flat by the Appellant in 2012 itself. Furthermore, the loan of Rs. 49,50,000/- was paid by the Appellant to the DDA directly vide Pay Order No. 6460 dated 05.06.2012 and rest of the payment was also paid on 11.06.2012 vide Pay Order No. 7279 to the DDA by Sh. Sanjay Aggarwal. Ld. Counsel argued that since alleged illegal transactions were indulged-in by Sh. Sanjay Aggarwal after April, 2015, the Impugned Flat cannot be proceeds of crime. Moreover, the Flat in question was already mortgaged with DCHFC hence, it could not have been attached under the provisions of PMLA. Ld. Counsel argued that the Appellant has the first charge over the Flat. Moreover, as per Section 140 of the DCS Act, its provisions have overriding effect. 3. Ld. Counsel for the Appellant during the course of the argument relied heavily upon the Judgment dated 02.04.2019 of the Hon'ble High Court of Delhi in the matter of Deputy Director, Directorate of Enforcement, Delhi and Ors. Vs. Axis Banks and Ors. MANU/DE/1120/2019. He stated that the said Judgment resolves the conflict between the sovereign authority of the State to take away and confiscate th....
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....on 8) to a person claiming "a legitimate interest" to approach the adjudicating authority and the appellate tribunal, as indeed the court, to prove that he had "acted in good faith", taking "all reasonable precautions", himself not being involved in money-laundering, to seek its "release" or "restoration". In this context, however, as also earlier noted, the presumptions that can be drawn in terms of Sections 23 and 24 of PMLA are to be borne in mind, the burden of proving facts contrary to the case of money-laundering being on the person claiming to have acted bonafide. ..... 162. But, in case an otherwise untainted asset (i.e. deemed tainted property) is targeted by the enforcement authority for attachment under the second or third part of the definition of "proceeds of crime", for the reason that such asset is equivalent in value to the tainted asset that was derived or obtained by criminal activity but which cannot be traced, the third party having a legitimate interest may approach the adjudicating authority to seek its release by showing that the interest in such property was acquired bona fide and for lawful (and adequate) consideration, there being no intent, while acqu....
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.... 6. Ld. Counsel for the Respondent alleged that Sh. Sanjay Aggarwal in his statement admitted that such remittances were meant for the purpose of facilitating importers indulging-in under invoicing in connivance with promoters of M/s P.R. Forex (P) Ltd, Karol Bagh. During recording of statement of his employee Shri Sunil Choudhary, (who was also a director in his foreign companies), printouts from Sanjay Aggarwal's email id from which various emails exchanged with promoters of M/s P.R. Forex were taken and confronted. These emails in nutshell revealed that Shri Sanjay Aggarwal was permitting forex so parked in his foreign companies for onward remittance to various companies in China and Hong Kong on behalf of the promoters of P.R. Forex (P) Ltd. Shri Sanjay Aggarwal in his voluntary statement admitted and confirmed that the remittances made by him were ultimately being used by various importers who were involved in import of goods by way of under- invoicing. He also created several companies, whose cheque books and fake proforma invoices were recovered and seized from his office premises through which he was converting cash and was sending RTGS into the accounts of his companie....
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.... Bank (Supra) does not carry forward the arguments of the Ld. Counsel for the Appellant to allow the Appeal and release the property. He further stated that the Judgment has elaborated the definition of proceeds of crime given under Section 2(1)(u) of PMLA. The three limbs of the definition explained in the Judgment makes the meaning of the proceeds of crime broad enough so as to cover the Impugned Property purchased by Sh. Sanjay Aggarwal even though on loan from the Appellant. Moreover, Sh. Sanjay Aggarwal paid the EMIs through proceeds of crime and therefore the attachment cannot be challenged. He also stated that the reading of the Judgment brings out clearly that in the present matter by virtue of Section 71 of PMLA the Act of 2002 notified on 01.07.2005 shall prevail over the DCS Act. Ld. Counsel for the Respondent prayed for dismissing the Appeal. 9. I have considered the rival submissions and the material on record. It is an admitted fact that the Appellant DCHFC is neither involved in the Scheduled Offence nor in the money laundering offence. It has been clarified at the Bar that the Appellant is not an accused either in the chargesheet filed by CBI in the predicate....
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....ere proceeds of crime are layered and their origins camouflaged and masked enabling the accused to project or claim it to be untainted property. The Act clearly as does Axis Bank take into consideration a situation where a person who has obtained proceeds of crime by commission of a scheduled offence has managed to ensure that a property directly or indirectly connected to criminal activity is rendered untraceable. It is to confer authority upon the Directorate to proceed further in such a situation that Section 2(1)(u) uses the expression or the value of any such property. The safeguard which stands constructed in Section 2(1)(u) in such a contingency is that in case the Directorate does proceed against any other property, it must be equivalent in value to the illegal pecuniary benefit or gain that may have been obtained as a result of criminal activity. 80. In the considered opinion of this Court to tie the Directorate's power to move forward in this direction only in cases where property is taken or held outside the country would not only do violence to the plain language of Section 2(1)(u), it would clearly whittle down the scope and intent of the definition itself. It would ....
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....nk, the judgement of this Court has not been stayed or placed in abeyance. The interim order of 30 August 2019 passed in the aforesaid Special Leave Petition only requires parties to maintain status quo. Insofar as the judgement of the Punjab and Haryana High Court in Seema Garg is concerned, although SLP (C) No.14713- 14715/2020 preferred against the same came to be dismissed, while doing so the Supreme Court recorded that the petition was being rejected in the peculiar facts and circumstances of the case. The dismissal of the aforesaid Special Leave Petition cannot in any case be interpreted or understood as being an affirmation of the view as expressed by the Punjab and Haryana High Court. XXXX 105. It would be pertinent to recall that properties which were acquired prior to the enforcement of the Act may not be completely immune from action under the Act in light of what this Court had held in Axis Bank. As was explained by the Court in Axis Bank, the expression proceeds of crime envisage both ―tainted property as well as ―untainted property with it being permissible to proceed against the latter provided it is being attached as equal to the "value of any such p....
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....ree limbs. It may therefore be difficult to ignore the elobration of the "proceeds of crime" as given by the Hon'ble Delhi High Court in the case of Axis Bank (2019 SCC OnLine Del 7854). The relevant paras of the Judgment (Supra) in Axis Bank are quoted herein: "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 assumable 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 obtained "indirectly" from a prohibi....
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....th the responsibility to seek resolution through a professional (RP), failure on his part leading eventually to the liquidation process." 15. In the Impugned Order a finding has been made that the EMI has been paid from proceeds of crime, indicating on prima facie basis that at least part of consideration for acquisition of the Impugned Property is product of specified crime. The Respondents No. 2 and 3 to the Appeal viz. Sh. Sanjay Aggarwal and his wife Smt. Isha Aggarwal in their replies to the Appeal have accepted that the purchase of the Impugned Property viz. Flat No. 902, Sector-18B, DDA, Pocket II, Phase 2, Dwarka, New Delhi was funded to the extent of loan of Rs. 49,50,000/- from the Appellant. They contended that 50% of the EMIs of Rs. 40,600/- per month from June, 2012 to December, 2015 have been paid through lawful means. They have expressed willingness to pay further instalments provided the instalments as not considered as proceeds of crime. Ld. Counsel for the Appellant has cited paragraph 149 of the Judgment (Supra) in Axis Bank which requires that it would be unfair that the claim of bonafide third party be sacrificed. The legislative scheme of the PMLA itself prov....