TaxTMI 
TaxTMI 
2025 (6) TMI 687
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....n under PMLA,2002 i.r.o search of the premises 'Bansal Plastic Store, 5442/71, Regharpura, Arya Samaj Road, Karol Bagh, Delhi' of Sh. Ritesh Bansal @ Bharat Delhi. 2. Rs.2,30,000/- Ritesh Bansal @ Bharat Delhi and Ankush Bansal Seized on 09/10.05.2015 under panchnama drawn under PMLA,2002 i.r.o search of the premises 'Balaji Agencies, 5336/68, Regharpura, Arya Samaj Road, Karol Bagh, Delhi' of Sh. Ritesh Bansal @ Bharat Delhi. Facts in brief 2. The brief facts of the case as recorded in the impugned order are that in pursuance of specific intelligence regarding operation of large scale Hawala racket in online international cricket betting through U.K- based website "betfair.com" by one Sh. Girish Parshottam Patel @ Tommy Patel and his associate Sh. Kiran Jayantilal Mala (Thakkar), the premises identified as a farm-house in village Sikandarpur. Nr. Ajwa Chowkdee, Vadodara was searched on 19.03.2015 under Section 37 of Foreign Exchange Management Act, 1999 ("FEMA, 1999") which resulted in recovery and seizure of incriminating documents, digital records, hard cash etc. Follow up searches under Section 37 of FEMA, 1999 conducted at the residential premises of Mr. Kira....
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....o. 37, Esplanade Court, Mumbai, Maharashtra in Case No. 3700738/PW/2013 by the DCB Crime, Mumbai against certain known, and unknown accused spread not only in India but also abroad including Dubai. Pakistan etc. 6. Perusal of the said report of DCB, Mumbai revealed that some of the known accused in the said report, including Shri Ritesh Bansal @ "Bharat Delhi" were still active. Examination of initially known players, i.e., partners of "Maruti Ahmedabad" in the illegally run online betting racket revealed generation of a large amount of funds, settlement of such accounts between different set of persons spread not only within the geographical boundary of India but beyond, including Dubai, Pakistan, U.K. etc., who were using and identified mainly by different code names/assumed names. 7. Some of persons (bookies) were identified by initially known persons as "Bharat Delhi", "Mukesh Delhi" and "Shibu Jaipur" with whom "Maruti Ahmedabad" was settling their accounts of illegal gains generated as a result of online cricket-betting racket. One of such bookie, who was identified by his code-name "Bharat Delhi", was further identified as Ritesh Bansal and located to be running his pa....
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....99,08,750/- in form of various bets placed by a large number of bookies/punters spread not only within the geographical boundaries of India but also in Dubai, Pakistan etc., on different matches played between 04.12.2014 till 19.03.2015 was generated by "Maruti Ahmedabad"; • Out of the aforesaid settlement amount of Rs. 2469,99,08,750/-, Shri Ritesh Bansal @ Bharat Delhi was found to have placed/received bets and settled accounts with "Maruti Ahmedabad" to the tune of Rs. 81,63,50,020/- from 01.12.2014 to 19.02.2015; • Also, out of the aforesaid settlement amount of Rs. 2469,99,08,750/- proceeds of crime to the tune of Rs. 60,71,75,090/- has been settled between Sh. Mukesh Kumar and "Maruti Ahmedabad" from 01 12.2014 to 16.03.2015; • Further, out of the aforesaid settlement amount of Rs. 2469,99,08.750/-, proceeds of crime to the tune of Rs. 387,56,85,702/- had been settled between "Shibu Jaipur" and "Maruti Ahmedabad" from 01.12.2014 till 16.03.2015; • Between 01.12.2013 till 19.03.2015, Proceeds of Crime to the tune of Rs. 14,92,54,455/- in form of winning and commissions in running of betting racket had been earned by "Maruti A....
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....order was passed, and hence, the question of having reason to believe that any person is in possession of any proceeds of crime does not arise. Thus, the condition as mentioned in Section 5(1)(a) is not satisfied, or in other words, not applicable. Hence the attachment order is in violation of this mandatory condition u/s 5(1)(a) and is, therefore liable to be set aside. 21. Further, since the so-called 'proceeds of crime' as alleged by prosecution was already with the ED hence the question of having reasonable belief of the fact that such proceeds of crime are likely to be concealed, transferred, or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter does not arise. Thus, this mandatory condition for attaching the property is also not fulfilled. In such a scenario, the said order of attachment is liable to be set aside. 22. It is also argued that Section 8 of PMLA casts a duty on the Adjudicating Authority that after considering the reply to the notice, hearing the parties, and considering all relevant materials placed on record before it, by an order must record finding whether proper....
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....ted as a result of criminal activity relating to the scheduled offence and that under the PMLA, 2002 cricket-betting is not a scheduled offence and hence, the same is not covered under the Act. It is also pertinent to mention that in the present case the alleged criminal activity of cheating/forgery could not have generated any 'proceeds of crime' as the said activities were performed only for the procurement of SIM cards. That the alleged forgery/fabrication of records to obtain SIM cards cannot in any manner whatsoever be linked or connected with the properties attached and any alleged connection is much too far-fetched, remote, and fanciful. 26. Even after assuming the Appellants to have indulged in betting activities (which is not a scheduled offence), the same has absolutely nothing to do with the procurement of SIM cards by the other accused which was entirely de-hors the activities of the appellants. The property owned by Appellants, obtained through cricket-betting using sim cards and fake documents cannot be considered as 'proceeds of crime'. 27. It is further contended that the Adjudicating Authority failed to recognize that separate FIR/CR 85 of 2015 was regist....
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.... found to be connected to an offense of money laundering ('proceeds of crime'), the authorities are empowered to take further legal actions. Under the PMLA, they can take appropriate steps to prevent the proceeds of crime from being used or dissipated, such as issuing an attachment order. The goal here is to ensure that the ill-gotten gains from criminal activities are not lost or used for further illegal purposes. 34. It is further argued that according to Section 17 of PMLA, 2002, if the Enforcement Directorate (ED) seizes property or records during an investigation/search, they are allowed to retain these items for a period of six months u/s 20. This provision allows for a reasonable period to conduct an investigation into the possibility of money laundering. During this time, the authorities analyze the seized items to gather evidence or determine if the property is connected to criminal activity. 35. Even though the proceeds of crime could have been secured through a retention order u/s 20 of PMLA, 2002 and followed by Original Application u/s 17 of PMLA, 2002, however, this does not preclude the authorities from issuing an attachment order under Section 5, which allows ....
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....According to Section 17 of the PMLA, when the ED conducts a search and seizure, they can retain the seized property for up to 6 months, i.e., until November 9, 2015. This period allows the authorities to investigate whether the property is linked to money laundering or any criminal activities. 40. During the investigation, the authorities determined that the seized property was indeed proceeds of crime, meaning the property was linked to illegal activities such as money laundering. If the property were released or allowed to be transferred after the 6-month period, it could potentially be hidden, destroyed, or transferred to other parties, making it difficult to seize again or use as evidence. 41. To prevent the property from being released, the ED issued a Provisional Attachment Order (PAO) No. 08/2015 dt. June 12, 2015. A PAO is a temporary attachment of property that ensures the property is secured while the investigation continues. This order is a legal step under Section 5 of the PMLA to secure property that is suspected to be connected to the proceeds of crime. The need for the PAO arose due to the expiration of the 6-month period for retention under Section 17 and the ....
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....same, it is contended that the attached proceeds of crime are already prayed for confiscation and the trial is pending before the Ld. PMLA Court, Ahmedabad, in PMLA Case No. 08/2015, whereby the Appellant would be required to lead cogent evidence with regard to the attached amount vis-à-vis the veracity of the books of accounts upon which the Appellant has relied in the present Appeal in view of the presumptions under Section 23 and 24 of the PMLA, 2002 and without discharging the onus to prove the same to be genuine, the ownership of the attached property cannot be conclusively determined. Accordingly, the Directorate contends that the present Appellant may be directed to approach the Ld. PMLA Court, Ahmedabad, u/s 8(8) of PMLA, 2002, to raise his claim over the attached property, if any, as a bona fide claimant. 45. The respondent has placed reliance on the observations of Hon'ble Delhi High Court, in the case of The Deputy Director, Directorate of Enforcement v. Axis Bank [2019 SCC OnLine Del 7854], wherein in Paragraph 171, the High Court observed: "171. It will be advantageous to summarize the conclusions reached by the above discussion, as under:- ....
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....ould not have been invoked by the Directorate as the property was already in their possession after seizing the same from the appellants and hence, the question of having 'reason to believe' that any person is in possession of any proceeds of crime does not arise. Thus, the condition as mentioned in Section 5(1)(a) is not satisfied. Furthermore, since the so-called 'proceeds of crime' were already with the ED, hence the question of having reasonable belief of the fact that such proceeds of crime are likely to be concealed, transferred, or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter does not arise. Thus, the mandatory conditions for attaching the property u/s 5 were not fulfilled. 50. The contention of respondent ED, on the other hand, is that both the options, namely, seeking retention of the seized property or attachment thereof u/s 5 were available to them; that the conditions for invoking the provisions of Section 5 were fully met; and that the powers of attachment u/s 5 were validly invoked. 51. We have considered the issue carefully. It is not in dispute in the present case....
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....etained for the purposes of adjudication under Section 8, such property may, if seized, be retained for a period not exceeding 180 from the day of seizure. 5. Forwarding a Copy of Retention Order to the AA U/s 20(2), the officer authorized by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the property for purposes of adjudication under Section 8, forward a copy of the order along with the material in his possession, referred to in Sub-Section (1), to the Adjudicating Authority, in a sealed envelope, in the manner prescribed. 6. Return/Further Retention of Seized Property U/s 20(3), on the expiry of the period specified in Sub-Section (1), i.e., 180 days, the property shall be returned to the person from whom such property was seized, unless the Adjudicating Authority permits retention of such property beyond the said period. U/s 20(4), the Adjudicating Authority, before authorizing the retention or continuation of freezing of such property beyond the period specified in Sub-Section (1), shall satisfy itself that the property is prima facie involved in money-laundering and the property is req....
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....was seized even before the expiration of 180 days. However, if they decide that the property needs to be retained, the same would have to be in accordance with the provisions of the Act as mentioned above. 54. There is nothing on record in the present case to indicate that the respondent Directorate, having seized the properties under Section 17(1), took any of the other mandatory steps as laid down in the Act, including forwarding of reasons and material to the AA immediately after the search, filing an of OA before the AA within 30 days thereafter, recording any reason to believe that the property is required to be retained for the purposes of adjudication, forwarding a copy of Retention Order, along with the material in possession to the AA, etc.. Insofar as seeking permission of the Ld. AA to retain the property beyond the initial period 180 days is concerned, the same has admittedly not been done by the respondent Directorate. Instead, they proceeded to attach the property already seized and lying in their custody under Section 5 and, thereafter, follow the procedure laid down by the Act in respect of attached properties rather than the one in respect of seized properties. ....
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....) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this material in his possession, that- (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country: P....
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....ers under Section 5(1), first and foremost, the twin requirements mentioned in (a) and (b) have to be met, namely, the Director or other officer authorised by the Director for the purposes of the section, has to have reason to believe, which are also required to be recorded in writing, on the basis of material in his possession, that, (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter. 58. Admittedly, the properties in question were already in the possession of the respondent Directorate in the present case. A perusal of the definition of "person" u/s 2(s) indicates that the respondent Directorate would not fall within the ambit of "person" for the purposes of the Act. Therefore, the first requirement of the provision that the property in is the possession of any "person" was not met in the present case. Insofar as the second requirement in concerned, namely, that such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which....