TaxTMI 
TaxTMI 
2025 (11) TMI 520
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....sion of offence under Section 186, 204, 353 and 120-B IPC against Suryakant Tiwari, a resident of Raipur along with others. The offence under Section 384 IPC was added with the permission of the court vide Addendum dated 03.09.2022. 3. The Central Board of Direct Taxes (CBDT) issued an Office Memorandum (O.M.) on 13.09.2022 titled as "sharing of information with ED in the case of M/s Jai Ambey Group of Raipur (Suryakant Tiwari Group)" based on the report of DGIT, Investigation, Bhopal. 4. As per the O.M., Mr Suryakant Tiwari colluded with Chhattisgarh State Government officials to carry out the offences of large-scale illegal extortion punishable under Section 384 read with 120-B of IPC. The CBDT disclosed the need of Enforcement Directorate to investigate the matter for contravention of Section 3 of the Act of 2002. 5. According to the FIR and the documents received by the Income Tax Department, a search and seizure operation was conducted at the premises of Suryakant Tiwari and his associates. Various evidences in the form of handwritten diaries, papers and digital evidences were collected which revealed cash transaction by a syndicate operated and coordinated by Shri Su....
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....ed to the State Police of Chhattisgarh coupled with the offence under Section 7A and 12 of Prevention of Corruption Act, 1988 and Section 420/120-B of IPC. It is also a fact that on 26.06.2023, the offences and facts disclosed by the Income Tax Department were incorporated in the ECIR by issuing an addendum. 9. The properties belonging to the appellants were provisionally attached finding appellant Ranu Sahu and her family members to be recipient of the proceeds of crime in the shape of bribe while she remained posted as Collector/DM of District Korba between June, 2021 to July, 2022. She worked as District Collector, Raigarh from July, 2022 till her transfer during the period of scam and received Rs. 5.52 Crores as bribe. 10. The main accused Suryakant Tiwari was running a racket and was mainly operating in the State of Chhattisgarh and for the aforesaid purpose, he deployed several associates in the district from where coal is to be mined by SECL. The associates developed their liaison with the Collectorate's office and other agencies to collect Rs. 25/- per ton for coal transportation. Without payment of the amount aforesaid, coal transportation was not to be permitted. To....
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....or receipt of bribe money as a consequence thereof. She has been implicated for receipt of bribe money only based on a diary recovered from an associate of Suryakant Tiwari i.e. Nikhil Chandrakar. Other than the diary, there was no material to relate the appellant Ranu Sahu with the commission of crime or for receipt of the proceeds of crime out of it. Thus, based on imagination, the provisional attachment of properties of the appellants was caused. 13. The learned counsel for the appellants has given details of the documents and material produced along with the appeal to show generation of income out of business or agriculture to purchase the properties and thereby it could not have been provisionally attached by the respondents. 14. The learned counsel for the appellants further submitted that the impugned order has been passed mainly relying on the statements of the appellants and other witnesses ignoring the documents in the shape of income tax returns. The respondents grossly erred in referring the statement of Nikhil Chandrakar in reference to the diary recovered from him. The amount of Rs. 5.52 Crores was mentioned in the diary but it was with the indication of 'R.S' o....
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....ce under Section 384 IPC have been given and was existing at the time of recording of the ECIR. It is a fact that subsequently charge sheet was not filed under Section 384 IPC finding the offence in the territory of Chhatisgarh. Accordingly, pursuant to the order, the FIR was registered in the State of Chhatisgarh in continuance to the FIR registered in the Police Station at Bangalore. 21. At the first instance, we would be dealing with the argument raised by the counsel for the appellants challenging the provisional attachment of the properties despite disclosure of the source of income for acquiring those properties. It would be relevant to refer the material brought on record by the respondents and for that it would be relevant to refer the statements of the appellants recorded under Section 50(2) and (3) of the Act of 2002 which is given hereunder: "Statements of Mr Arun Sahu (father of Ms. Ranu Sahu) recorded u/s 50 of PMLA, 2002: In his voluntary statement on 09.11.2022 under Section 50(2) and (3) of PMLA, 2002, he had inter alia, stated: - a. That he did not have any other source of income other than agriculture. b. On being asked about....
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....s given by Smt. Shalini Sahu W/o Shri Piyush Sahu under the provisions of Section 50(2) and (3) of PMLA,2002 wherein upon being asked about the source of funds with respect to Rs. 17,08,000/. invested in the above mentioned lands and Rs. 1,45,139/. spent for the registration of the said properties, Smt Shalini Sahu stated that she has no knowledge of the source of the funds for the aforementioned investments, that her husband, Shri Piyush Sahu is aware of the same. That she gets income from the agricultural land which was purchased in Gram, Kalmidadar, C.G. in the year 2021 but she is not aware about the amount of income generated from the said agricultural land and her husband, Shri Piyush Sahu can give details of the same. She further stated that apart from the aforementioned source she has no knowledge of any other source of her income. Statement given by Shri Piyush Kumar Sahu (brother of Ms. Ranu Sahu) under Section 50 of PMLA - Shri Piyush Kumar Sahu, in his statement dated 21.10.2022, has, inter alia, stated that :. a. That, he is the proprietor of M/s Poonam Jewellers and M/s Mahamaya Constructions; that M/s Poonam Jewellers is involved in trading....
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....0 of PMLA:- That, voluntary statement dated 21.11.2022 was given by Shri Devendra Chandrakar under the provisions of Section 50(2) and (3) of PMLA,2002 wherein he had inter alia, stated as under a. That he knows Mr. Piyush Sahu and his family members including Ms. Ranu Sahu on account of their respective agricultural land being adjacent and that Sahu family used to buy goods from his various shops in Gariyaband. b. On being asked about financial transactions between Piyush Sahu and his family members, he stated that he arranged bank entries worth Rs 7.5 lakh and 12.5 lakh against cash for Mr. Piyush Sahu in the bank accounts specified by him. That, Mr. Piyush Sahu utilized these funds in purchase of land from Mr. Jayant Bhai Tank. That, he had facilitated this land deal between Sahu Family and Shri Jayant Bhai Tank. c. That apart from above he had also arranged following entries against cash for Mr. Piyush Sahu:. S.No. Name of entity whose bank account was used Amount paid via bank against cash 1. Balaji Group Rs 6 lakh 2. Karishma Organics Rs 12 lakhs 3. Dev Exim Rs 21.2 lakhs 4. Mauli Group Rs 2.8 la....
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....om the service of mobile repairing which is to the tune of Rs. 2.53 Lakh and interest from unsecured loans. b. That Mr. Manish Nankani who is his cousin opened various bank accounts opened in his (Nikhil Nankani's) and his family member's names and used to operate the same. That, Shri Manish Nankani had once told him that he will be depositing an amount of Rs. 5 Lakh in cash in these bank accounts and transfer it to Shri Piyush Sahu. That, he was supposed to get a commission of 12% for this transaction. Statement given by Shri Bhupesh Dewangan under Section 50 of PMLA. That, voluntary statement dated 25.11.2022 was given by Shri Bhupesh Dewangan @ Bunty Dewangan under the provisions of Section 50(2) and (3) of PMLA,2002 wherein he had inter alia, stated that on the behest of his friend Shri, Devendra Chandrakar, who is partner in his Drip irrigation business, he had transferred an amount of Rs. 6 lakhs from his firm M/s Shree Balaji Group and Rs. 2.80 Lakh from his firm M/s Mauli Group to the bank account of Shri Pankaj Sahu. That, this amount was returned in cash by Shri Piyush Sahu to Shri Devendra Chandrakar. Statement given by Shri Tu....
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.... 50 of PMLA: That, statement of Shri Jayant Bhai Tank S/o Late Shri Haribhai Tank was recorded u/s 50 of PMLA, 2002 on 15.11.2021 & 18.11.2022 wherein he inter.alia stated that he and his sons, Akash Tank & Vishal Tank had sold 50 acres of their land for an amount of Rs. 1.2.1.3 Crore to Piyush Sahu & his family members in June, 2021. He further added in his statement that Mr. Arun Sahu paid him Rs. 90,11,000/. in cash over and above the deed registration amount. That, bank account analysis of Shri Jayant Bhai Tank and his family members revealed that just before the registry of the lands, cash totalling to Rs. 90,11,000/. was deposited in these bank accounts which have been corroborated by the statement of Mr. Jayant Bhai Tank. Statement given by Smt. Neha Sahu under Section 50 of PMLA. That, statement of Smt. Neha Sahu W/o Shri Jitendra Sahu was recorded u/s 50 of PMLA on 09.01.2023 wherein she inter alia stated that the land registered in her name at Village Labhrakhurda, Mahasamund, Chhattisgarh was sold to Smt. Laxmi Sahu. That, against the sale of land she had received the registry value i.e Rs. 3,98,000/. in her bank account and apart from....
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....n the relevant years so as to earn disclosed amount. In few cases, agriculture land was purchased during the crime period and in few other cases just before it thus could not have generated agriculture income for earlier period so as to purchase other properties. The total properties in the name of the appellants have been given in the tabular form and is quoted hereunder: "Properties before 15.07.2020: BELONGING TO RANU SAHU S. No. PARTICULARS BUYER DATE OF ACQUISITION ALLEGED NATURE OF PROPERTY 1. Kh no. 481 (0.09 Hect) Vill Aasara, Tehsil Chhura, Distt. Gariyaband RANU SAHU 05.10.2017 Value thereof 2. Kh no. 498/3 (0.21 Hect) Vill Aasara, Tehsil Chhura, Distt. Gariyaband RANU SAHU 05.10.2017 Value thereof 3. Kh no. 276, (1.86 Hect), Kh no. 282, (0.35 Hect) Vill Vodarabanda, RNM, & Tehsil Chhura Distt Gariyaband RANU SAHU 30.03.2018 Value thereof 4. Kh no. 281, (0.46 Hect), Kh no. 259 (0.32 HEct), Village Bodarabanda, RNM & Tehsil Chhura, Distt Gariyaband RANU SAHU 28.03.2018 Value thereof 5. 5. Kh no. 416 (0.11 Hect) 479 (0.27 Hect), 487 (0.25 Hect), 490/1 (0.12 HEct) Vill Aasara Tehsil ....
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....d ARUN KUMAR SAHU 16.07.2020 Direct PoC (Serial No.9 on page 93 of IO) 2. Kh no. 394, (0.08) Hect, Vill. Kutena, RNM & Tehsil, Chhura, Distt. Gariyaband ARUN KUMAR SAHU 23.03.2021 Direct PoC (Serial No.10 on page 93 of IO) 3. Kh no. 407/1, 407/2, 407/3, Hect Village, Tulsi, PH No. 41, RNM, Raipur 1, Tehsil & Distt Raipur ARUN KUMAR SAHU LAXMI SAHU 27.03.2021 Direct PoC (Serial No.8 on page 92 of IO) 4. Part of Kh no. 1149/1 Total Area 0.86 Hect. Vil Pateva RNM & Tehsil, Nawapara, Distt Raipur ARUN KUMAR SAHU 13.05.2021 Direct PoC (Serial No.11 of 3rd PC) 5. Part of Kh no. 1149/1 Total Area 0.86 Hect. Vil Pateva RNM & Tehsil, Nawapara, Distt Raipur PANKAJ KUMAR SAHU 13.05.2021 Direct PoC (Serial No.12 on page 93 of IO) 6. Kh no 108/1,108/2,155, Total 1.630 Hect Gram Kalmidadar, RNM. Bagbahara, Mahasamund SHALINI SAHU 26.05.2021 Direct PoC (Serial No.6 on page 92 of IO) 7. Kh. No. 69/2, 71/1, 72/2,73,105, 106, 107, 109, 117, 119, 156, 157 Gram Kalmidadar, RNM. Bagbahara, Mahasamund ARUN KUMAR SAHU 26.05.2021 Direct PoC (Serial No.7 on page 92 of IO) 8. KH No. 158, 159/,163/2,164,1....
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....1,09,55,802/- in the hands of the appellants while they had purchased the property worth of more than Rs. 4 Crores disproportionate to their income shown in the income tax return. It has been analyzed by the respondents while passing the Provisional Attachment Order and otherwise 13 properties for a value of Rs. 2.18 Crores including registration charges were purchased after July, 2020 and most of the properties were purchased out of the cash. The cash was used at two levels. At the first instance, the appellants engaged a Chartered Accountant to use the bank account of others to pass on the cash in their account and thereupon to transfer the amount in the bank account of the appellants through the banking channel and at the second level, the amount was directly used for purchase of the properties though while doing so, consideration was paid through the banking channel and even in cash as per the statement of the seller, as recorded by the respondents. In the light of the facts given above, we are unable to accept the plea raised by the appellants that the purchase of properties under provisional attachment was out of disclosed source of income. It is otherwise a fact that appella....
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....the FIR and recording of the ECIR, followed by investigation where the role of the appellant for commission of crime has been found. The only argument raised was to challenge the attachment of three properties out of four. However, no argument was raised for the property acquired subsequent to the commission of crime i.e., fourth Property. 11. It was submitted that the properties acquired prior to the commission of crime had no nexus with the crime and thus could not have been attached. It was not obtained or derived directly or indirectly out of criminal activities relating to the scheduled offence. The respondent could not show nexus of three properties with the crime out of four attached by them. 12. The reference of the judgment of the Apex Court in the case of Pavana Dibur (supra) and also of Kerala High Court in the case of Satish Motilal Bidri (supra) has been given. To analyze the issue, we may quote the 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 relati....
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.... of trial, it would fall under "the value of any such property" which is commonly taken to be the property of equivalent value. The case in hand falls in the second category of the definition of "proceeds of crime" because proceeds are not available and, therefore, the property of equivalent value is attached. 15. The argument has been made in reference to the judgment of Kerala High Court in the case of Satish Motilal Bidri (supra) and the judgment of Apex Court in Pavana Dibur (supra) to hold that the properties acquired prior to commission of crime would not fall in the definition of "proceeds of crime". We are unable to accept the arguments which may otherwise make second part of the definition of "proceeds of crime" to be redundant. It would be for the reason that if the definition is taken only in two parts leaving the middle part, then it would be difficult for the enforcement agencies to protect the property till 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....
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....operty" 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 prohibited criminal activity within the meaning of first limb of the definition. 107. In contrast, the second and third kinds of properties mentioned 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 t....
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....rate arguments to define "proceeds of crime" on the issue were not raised by the parties after referring to the object of the Act of 2002 which was enacted out of the international convention. The Delhi High Court has discussed the issue elaborately and otherwise if we apply the judgement of Kerala High Court in the case of Satish Motilal Bidri (supra,) it would be making the second limb of the definition of "proceeds of crime" to be redundant. The counsel who appeared before the Kerala High Court did not argue that the definition of "proceeds of crime" has three limbs and unfortunately the view expressed by Delhi High Court in Axis Bank (supra) was not discussed elaborately while it was cited by the counsel. 20. The Ld. Single judge of Kerala High Court did not subscribe the judgment aforesaid, rather applied the judgment of Punjab and Haryana High Court in the case of Seema Garg Vs. Deputy Director, Directorate of Enforcement, 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 Se....
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....om commission of a scheduled offence. The Court observes that Section 2(1)(u) clearly and in unambiguous terms includes not only property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence but also the value of any such property. Seema Garg thus seems to gloss over the 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-....
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....urse to move against properties which may fall within the ambit of ―value of any such property or ―property equivalent in value held within the country or abroad. To the aforesaid limited extent, properties purchased prior to 01 July 2005 may also become vulnerable and subject to action under the Act. However, enforcement 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." 21. The issue aforesaid was not raised in the case of Pavana Dibur (supra). The counsel appeared 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 o....
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....crime would be directly or indirectly proceeds of crime and then, it would fall in the first limb of the definition of proceeds of crime. In the second limb, which refers to "the value of any such property" would indicate any other property which was acquired prior to the commission of crime and it would be attached only when the proceeds directly or indirectly obtained or derived out of the criminal activity is not available. It may be on account of siphoning off or vanished by the accused. In those circumstances the property of equivalent value can be attached. The word "the value of any such property" signifies without any embargo that it should be the property purchased after the commission of crime or prior to it rather it would apply in both the eventuality in the given circumstance. Thus, we are not in agreement with the counsel for the appellant who has questioned the attachment in reference to the property acquired 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 circum....
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....t was added on 03.09.2022 while the FIR was registered on 12.07.2022. It may be that ECIR was recorded subsequent to addition of the offence under section 384 of IPC but while filing the charge sheet by Karnataka State Police on 15.06.2023, it was not for the offence under section 384, 120 B IPC thus to be treated as dropped. The reference of the two orders passed by the Apex Court on bail application in the case of Laxmi Kant Tiwari and Sunil Kumar Agarwal was given to support their argument. 28. We have considered the submission and find no force in the second argument. It is in the light of a detailed judgement of the Supreme Court in the case of Saumya Chaurasia Vs. Directorate of Enforcement in Criminal Appeal number 3840/23 decided in the order 14.12.2023. The appellants therein raised the same argument, as has been raised in these appeals. It was submitted that the offence under section 384 IPC was dropped by the State Karnataka Police thus in absence of scheduled offence, the proceeding under PMLA was not tenable. The argument aforesaid was not accepted by the Hon'ble Supreme Court and for that paras 26 to 29 of the said judgement are reproduced hereunder:- ....
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.... laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. 29. In the instant case, there is neither discharge nor acquittal nor quashing of the criminal case by the court of competent jurisdiction against Suryakant Tiwari in the predicate/ scheduled offence. 30. In that view of the matter the Court does not find any merit in the instant appeal. Since the Court has found that there was an attempt made by and on behalf of the Appellant to misrepresent the facts by making incorrect statements in the appeal for assailing the impugned order passed by the High Court, the appeal deserves to be dismissed and is accordingly dismissed with cost of Rs. 1 Lakh, which shall be deposited by the Appellant before the Supreme Court Legal Services Authority within two weeks from today. 29. The perusal of the paras quoted above reveals an elaborate discussion of the facts in reference to the registration of FIR number 129/2022 and thereafter addition of the offence under section 384 of IPC but for that charge sheet was not filed by the Karnataka State Police. The Apex Court has not taken it to be the....
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....a) holds it to be a case of schedule offence, therefore, we do not find any force in the second argument also". 30. In the light of the discussion made above, we find that ECIR was recorded when the predicate offence was added in the FIR initially registered at Bangalore and on a subsequent transfer of the case for the offence under Section 384 IPC and registration of the case at Chhatisgarh with addition of the offence under the Act of 1988. The matter was rightly proceeded. In the light of the aforesaid, we are unable to accept even the second argument raised by the appellants to challenge the impugned order. 31. An argument has been made by the counsel for the appellants that there was no reason to denote 'RS'/'R' to mean Ranu Sahu so as to co-relate the diary recovered from Rajni Kant Tiwari in reference of bribe money to the appellant. The counsel for the respondents contested the argument and submitted that 'RS' was mentioned in short to denote Ranu Sahu and similarly 'R' was to denote again Ranu who was the District Magistrate/Collector of Korba District at the relevant time. This is otherwise fortified from the statement of Nikhil Chandrakar one of the close associate....