TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 130
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.... case for commission of offence under Section 120-B, 419, 420, 467 and 471 IPC. The allegation was made against M/s Vasundhara Enterprises Pvt. Ltd. along with its Director for availing a Cash Credit Limit of Rs. 10 Crores along with short term loan of Rs. 54 lakhs from IDBI, Guwahati in a fraudulent manner. The account of borrower was declared NPA on 30.06.2010. In the investigation, it was revealed that the funds were routed through maze of accounts opened in the name of different entities and a sum of Rs. 9,81,15,000/- was finally withdrawn in cash. It was further revealed that the Cash Credit loan of Rs. 10 Crores was completely misappropriated and utilized for the purpose other than that for which the loan was taken. The appellant is daughter of Shri Bahadur Singh Kathotia involved in the commission of crime and finding Flat in the hands of the appellant having no source for its purchase, it was attached by the respondents finding its source by the accused. Arguments of counsel for the appellant: 4. The learned counsel for the appellant submitted that the property attached by the respondents has no nexus with the crime. The loan amount was sanctioned on 15.09.2009 while the ....
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.... repetition of the same facts. Finding of the Tribunal: 8. The facts pertaining to registration of the FIR against M/s Vasundhra Enterprises Pvt. Ltd. and its Director for their fraudulent act to take cash credit limit of Rs. 10 Crores and short term loan of Rs. 55 Lakhs have been narrated. The account of the company was declared NPA on 30.06.2010. The appellant's father was part of the conspiracy and was accused to make the proposal along with others for advance of Rs. 33 Crores for the company by sending a letter on 02.07.2009. It was found that for opening of the bank account, signatures of Gour Chandra Ghosh were forged by Rindam Ghosh. However, the current account was opened on 11.09.2009 to sanction CD limit of Rs. 10 Crores in favour of the Company and the sanction came to the company on 15.09.2009. 9. The learned counsel for the appellant submitted that the property in question was registered in the name of the appellant on 11.05.2009 while the loan amount came in the account of the company on 15.09.2009 i.e. subsequent to purchase of property and, therefore, the purchase of Flat could not have been connected with the proceeds of crime. The counsel for the appellant has ....
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....long with brother were summoned but did not appear to make statement to clarify the position. Hence, to protect the proceeds in the hands of the accused, property of the equivalent value has been attached of which the appellant could not disclose the source to acquire the property. The appellant could have produced the bank statement to show her earning from the salary or any other earning and the accumulated amount in the bank account to justify purchase of the property worth of Rs. 12,00,000/-. 13. The counsel for the appellant submitted that the properties acquired prior to the commission of crime had no nexus with the crime and thus could not have been attached. The appellant had purchased the property prior to the commission of crime, thus it would not fall within the definition of "proceeds of crime". In that regard, the appellant has referred to the judgment of the Patna High Court in the case of HDFC Bank Ltd. (supra) but with clear admission that the matter is pending consideration before the Hon'ble Supreme Court on an SLP preferred against the judgment. We have taken cognizance of the aforesaid, and otherwise the issue as to whether the property acquired prior to the co....
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.... 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 termed to be the proceeds of crime. The properties can be acquired directly or indirectly with the use of proceeds of crime. The use of proceeds directly or indirectly would be relevant part to fall in first part of the definition of `proceeds of crime'. To clarify the definition, it may be illustrated. Assuming in a case of dacoit, the accused secured the money and it has been used for the purchase of property, then such a property would fall in the definition of `proceeds of crime' having been obtained out of proceeds of crime. In other case where....
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....shed. 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 equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of "proceeds of crime" is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of "property" as in Section 2(1)(v) is equa....
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....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 property". 17. The judgment of the Delhi High Court makes it clear that the definition of "proceeds of crime" has three limbs and in the second limb the properties of equivalent value to the proceeds obtained out of crime can be attached which may have been acquired prior to the commission of crime but it would be when proceeds of crime has been vanished and is not available. It is sought to achieve the object of the Act of 2002. 18. In the light of judgment of the Apex Court in Vijay Madanlal Choudhary (supra), we are unable to apply the judgment of Kerala High Court in the case of Satish Mo....
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....he 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 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 equivale....
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....inds 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 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 ....
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.... 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 money laundering. The Judgment in the case of Vijay Madanlal Chaudhary (supra) is of three judges bench while the judgment in the case of Pavana Dibur (supra) is of two judges bench. The issue has otherwise been dealt with by this Tribunal in the case of FPA-PMLA-2909/CHD/2019 M/s. Besco International FZE vs. The Deputy Director Directorate of Enforcement, Chandigarh dated 31.07.2024. The relevant para of the said judgment is quoted hereunder: "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 i....
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.... 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 the argument raised by the appellant so as to make the middle part of the definition of "proceeds of crime" to be redundant. 24. In view of the above, we are unable to accept the only argument raised by the appellant and for that appeal fails and is dismissed". 14. The perusal of the order would reveal elaborate discussion on the issue in reference to the provisions of the Act of 2002 and the different judgments from time to time. It has been held that when proceeds is vanished or not available in the hands of the accused, the property of the equivalent value can be attached. The counsel, however, submitted that the attachment in the case in hand is not for the equivalent value but the proceeds of cri....