TaxTMI 
TaxTMI 
2025 (10) TMI 970
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....e four storied building known as 'Kailash Niwas', Inder Nagar Dhalli, Shimla-1 built on land comprised in Khata Khatoni No.52/129 Khasra No. 266, 267, 268 and 269" of value Rs. 11,41,800/- was thus attached. 2. Ld. Counsel for the Appellant challenged the Impugned Order on the ground that it is founded neither in law nor in logic. Ld. Counsel contended that amendment in 2012 of Section 3 of PMLA, which became effective from 15.02.2013, is not applicable to the present proceedings. The provisions of Section 3 before the amendment were restricted to any process or activity which is connected with the proceeds of crime. It is only after the amendment that the provisions included concealment, possession, acquisition or use and claiming it as untainted property. Since, the main matter related to the case of disproportionate assets filed by CBI under the Prevention of Corruption Act 1988 (PCA) against Shri Virbhadra Singh then Union Minister for the check period from 28.05.2009 to 26.06.2012 the post amended Section 3 of PMLA does not apply. Ld. Counsel further argued that the role of the Appellant was limited to procuring the LIC Policies for Shri Virbhdra Singh and his family member....
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.... of Shri Virbhadra Singh and his family members. The AA confirmed the PAO and the Appeals are pending before the Hon'ble High Court of Delhi. He therefore, pleaded that the present proceedings may also await the outcome of the proceedings before the Hon'ble High Court of Delhi. Ld. Counsel stated that since the proceeds of crime if any have already been attached there is no scope left for the attachment of the property of the Appellant. He therefore, pleaded to allow the Appeal. 4. Ld. Counsel for the Respondent stated that in the well-reasoned Impugned Order the arguments made by the Appellant have already been dealt with. He informed that the Prosecution Complaint under PMLA was filed on 06.09.2016 before the Special Judge PMLA, Patiala House Court, New Delhi against the Appellant. The CBI has also filed a charge-sheet against the Appellant and others on 31.03.2017 before the Special Judge (CBI) Patiala House Court, New Delhi. Subsequently a Supplementary Prosecution Complaint under PMLA was further filed against the Appellant. Ld. Counsel stated that it was revealed during the course of investigation that the Appellant deposited cash of huge amount in his bank accounts with P....
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....t and Late Shri Virbhadra Singh to explain the disproportionate assets by claiming these to be from the lawful earnings the Apple Orchard. Ld. Counsel also explained that on the basis of assessment of Income Tax and Bank statements submitted by the Appellant himself it is seen that during May 2010 an amount of Rs. 1,00,00,000/- in cash was claimed as advance by the Appellant from Shri Chunni Lal Chauhan reportedly on behalf of M/s Shrikhand Orchards. Shri Chunni Lal Chauhan stated that the cash was paid through 13 different firms across the country. The enquiries revealed that these firms did not exist and other six firms denied making any cash payments. Ld. Counsel contended that strategy was adopted to support the revised returns of Income Tax of Virbhadra Singh (HUF) for three years so as to enhance its agricultural income by 14 times from Rs. 47.35 Lakhs to Rs. 6.56 Crores. Ld. Counsel further argued that the Appellant except for one payment of Rs. 10,00,000/- in 2011 did not receive any other payment during three years for the management of Orchard. Ld. Counsel stated that since commission of Rs. 11,41,800/- from LIC was no longer available in the two bank accounts of the Appe....
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....torate. The said Writ petition is sub judice. The Hon'ble High Court vide order dated 30.05.2016 has directed not to give effect to order passed, if any under Section 8(3) of PMLA, 2002 in respect of the properties held in the name of Petitioners Virbhadra Singh and Pratibha Singh. It is pertinent to mention here, that the Respondent Directorate has filed Prosecution Complaint against the Appellant Shri Anand Chauhan and Others before Special PMLA Court. The court has taken cognizance of same in CT Cases No./12/2019. Charges have been framed against the Appellant and Others and at present, the examination of the prosecution witness is going on. He further submitted that the Appellant had filed WP No.11991/2024 with a prayer that proceedings before PMLA Appellate Tribunal in the case FPA-PMLA-3165/ DL1/2019 be kept in abeyance till disposal of WP 4228/2016 & 3008/2016. However, the petition was dismissed as withdrawn vide order dated 15.10.2024. It is further submitted that since the Appellant himself withdrew his Writ Petition filed before the Hon'ble High Court wherein, he had made a prayer for keeping the proceedings pending before this Hon'ble Appellate Tribunal in abeya....
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....ed. The offence of money-laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provisions (Section 3, as amended until 2013 and were in force till 31.07.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 20) Act, 2019. Thus understood, inclusion of clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all." 8. Another argument which has been taken by the Ld. Counsel for the Appellant is that the alleged proceeds of crime is the commission which the Appellant earned through the sale of the LIC Policies. He cited the Judgment in the matter of Razorpay Software Private Limited vs. Union of India [2024 SCC OnLine Kar 23] in support of his argument. In this matter the Hon'ble Karnataka High Court had observed that there was no evidence to suggest that Razor pay had knowledge that funds were derived from crim....
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....operty 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 equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money laundering." The Hon'ble Delhi High Court in the case of Prakash Industries Ltd. v. Directorate of Enforcement reported in 2022 SCC OnLine Del 2087 has dealt with the issue in detail. The relevant paragraphs are quoted as under: "76. Seema Garg principally holds that the phrase value of any such property and property equivalent in val....
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....e statutory imperatives underlying the deployment of the phrase ―or the value of any such property and the concept of deemed tainted properties enunciated in Axis Bank. On a plain textual interpretation of Section 2(1)(u) as well as in the backdrop of the amendatory history of that provision, this Court finds itself unable to agree with the line of reasoning adopted in Seema Garg. As held hereinbefore, affirmation of Seema Garg would amount to virtually deleting the phrase ―or the value of any such property from Section 2(1)(u). That would not only violate the well settled tenets of statutory 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 aforesa....
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....ement 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." 10. Ld. Counsel for the Appellant further contended that Shri Krishan Chand Chauhan, father of the Appellant had done settlement of property for the benefit of children on 09.05.1989 and registered a deed to that effect on 30.06.2016. Ld. Counsel cited the Judgment in the matter of Pavana Dibbur vs. Directorate of Enforcement (2023)15 SCC 91 in this regard. It may be mentioned that in the matter of Pavana Dibbur (Supra) the Appellant was not an accused in the charge-sheet filed pertaining to the alleged Scheduled offences, unlike the present case. The Final Order dated 14.10.2024 of this Tribunal in the matter of Shri Sadananda Nayak vs. Deputy Director, Directorate of Enforcement,....
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....on 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." 11. The Appellant has also contended that the invocation of Section 5 (1) of PMLA has been without giving the reasons to believe. We note that this contention has been dealt with in the Impugned Order. It is also observed that the PAO was issued on 26.07.2018. The charge-sheet in the Scheduled offence was filed on 31.03.2017. The ECIR was registered on 27.10.2015. Moreover, the PAO itself reveals the reasons for which Section 5 (1) of PMLA has been invoked. We find that the material before the Deputy Director of the Enforcement Directorate was adequate so as to issue the PAO. In this regard we quote the following portion from paragraph 13 of the Impugned Order: "As detailed out in the Provisional Attachment Order and Para 5 herein above, the reasonable belief is entertained in no uncertain term and the same is well amplified. Before forming the reasonable belief, the Deputy Director has extensively referred to the material in his possession and well formulated the reasons ....