TaxTMI 
TaxTMI 
2025 (3) TMI 1549
X X X X Extracts X X X X
X X X X Extracts X X X X
....s received as wrongful gain. After registration of the FIRs against the appellant company and its promoters, the ECIR was recorded against the Joint Managing Director, President (Commercial) and Liason Officer of the company as well. 3. The case pertains to allocation of coal blocks. The allegation against the company and its officials is for misrepresentation in the application as well as in the feedback form for allocation of the coal blocks. The misrepresentation was in regard to the availability of the land for its end use for the project at Sitara where the company claimed to have possession of 220 acres of land whereas investigation revealed that it was having registered sale deeds only for180 acres. The misrepresentation was made with an intent to get favourable recommendation of Coal Block at Rawanwara (North) and other places. The allegations were made even against the officials of Ministry of Coal who willfully did not scrutinize the relevant documents and facilitated the company in allocation of coal blocks and thereby it was not only the appellant company but the Government officials were also found involved in the criminal act. 4. The case pertains to allocation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he respondent is neither "proceeds of crime" nor the property involved in money laundering. In view of the above, attachment of properties by the impugned orders so as its confirmation deserves to be set aside. The properties attached were not acquired out of the alleged criminal activity thus it could not have been reckoned to be "proceeds of crime". On the aforesaid ground also, the impugned order deserves to be set aside. 9. The appellant did not raise any other issue during the course of oral arguments but in written arguments, an additional ground was raised to indicate that proceedings before the Tribunal and Special Court are separate and independent of each other and accordingly for attachment, the respondent could not have relied on the charge order dated 27.03.2024 passed by the Trial Court. 10. The respondents were called upon to contest the appeal. The elaborate arguments were made by the counsel for the respondent on all issues raised by the appellant company which would be referred at the time of recording finding in reference to the issues raised by the appellant. Finding of the Tribunal 11. The brief facts pertaining to the case have been given in the op....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on 31.12.2014. The ECIR was recorded finding a case of money laundering and thereby the offence under the Act of 2002. The date of commission of offence of money laundering is relevant. In the instant case, when the respondent could reveal a case of money laundering in reference to the offence under Section 420 IPC and Section 13(2) and 13(1)(d) of the Prevention of Corruption Act, it was a scheduled offence. The relevant date to find out the commission of offence under Section 3 is the date when a case of money laundering is revealed or detected and not the date of commission of predicate offence. In the instant case, Section 420 IPC and Section 13(2) and 13(1)(d) were made scheduled offence on 01.06.2009. The FIR was registered in the year 2014. The case for commission of offence under section 3 of the Act of 2002 was revealed much subsequent to the aforesaid date and, therefore, the first ground raised by the appellant company is not made out. Rather, the issue aforesaid has already been settled by the Karnataka High Court in the case of Dyani Antony Paul Vs Union Of India reported in (MANU/KA/4442/2020) 11 December, 2020 The relevant paras of the said judgment are reproduce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion under Section 3 of the PML Act and not the date when the scheduled offence was committed. What is being targeted by Section 3 is the "laundering" of money which would be relevant. The expression "laundering" as used in Section 3 comprises of involvement in any process of activity by which the illicit money is being projected as untainted. In that view of the matter, the relevant date is not the date of acquisition of illicit money but the dates on which such money is being processed and projected it as untainted. The relevant date to find out offence of money laundering is when proceeds is projected to be untainted property. The issue aforesaid has been decided even in the case of Vem Krishna Keerthan vs Directorate of Enforcement reported in CRIMINAL PETITION No.9314 of 2022 and in the case of Vijay Madanlal Choudhary vs Union of India on reported in 27 July, 2022 (2022 INSC757) 38. In respect of the second argument, it should be borne in mind that the offence of money laundering is a continuing offence. The date of commission of the scheduled offence may not be relevant to prosecute a person for the offence of money laundering at a later point of time. Even after ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dering 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 provision (Section 3, as amended until 2013 and were in force till 31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No.2) 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. 15. The relevant paras of the judgment referred to above covers the first issue adverse to the appellant company. The FIR was otherwise registered in the year of 2014.i.e., much subsequent to the amendment and thereby the ECIR for offence of money laundering and attachment of property cannot be held to be illegal. In view of the above, we are unable to accept first argument. Second Issue 16. The counsel for the appellant company further submitted that the Adjudicating Authority failed to confirm the order of attachment within t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oceedings but even for termination of proceedings under any statutes. Specific illustration of few Acts was given which include Section 29A of the Arbitration and Conciliation Act, 1966. Section 29A of the aforesaid Act provides period for passing an award by the Arbitrator. The period aforesaid was extended by exclusion of the period till 28.02.2022. Similar arrangement was made for other statutes and in furtherance to the first judgment of the Supreme Court in Suo Motu Writ Petition No.03/2020 decided by the order dated 10.01.2022, a detailed judgement was given by the Apex Court in the case of Prakash Corporates v. Dee Vee Projects Limited reported in MANU/SC/0180/2022 wherein it explained its earlier judgment in the case of S. Kasi v. State Criminal Appeal No. 452 of 2020 decided on 19.06.2020. The relevant paras of the judgment (supra) are quoted hereunder: "10.3. With reference to the decision of this Court in the case of S. Kasi v. State Criminal Appeal No. 452 of 2020 decided on 19.06.2020, it has been argued on behalf of the Respondent that a 3-Judge Bench of this Court has specifically ruled that the said order dated 23.03.2020 in SMWP No. 3 of 2020 is not applic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ook judicial notice of steep rise in COVID-19 cases that had engulfed the entire country and found that the situation required extraordinary measures to minimise the hardship of litigant-public. Therefore, the order dated 23.03.2020 was restored and in continuation of the order dated 08.03.2021, it was directed that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasijudicial proceedings, whether condonable or not, shall stand extended until further orders. Further clarification was also made for exclusion of the period from 14.03.2021 in regard to the other period(s) prescribed under different laws. In this order dated 27.04.2021, this Court took note of the orders earlier passed in the matter and thereafter, observed and directed as under: Supreme Court Advocate on Record Association (SCAORA) has now through this Interlocutory Application highlighted the daily surge in COVID cases in Delhi and how difficult it has become for the Advocates-on-Record and the litigants to institute cases in Supreme Court and other courts in Delhi. Consequently, restoration of the order dated 23rd March, 2020 has been prayed f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the process of compulsory pre-litigation mediation Under Section 12A of the Commercial Courts Act, 2015 shall stand extended for 45 days after lifting of lockdown. **** 19.5. Reverting to the orders passed by this Court, noticeable it is that on 27.04.2021, this Court restored the order dated 23.03.2020 and it was directed, in continuation of the order dated 08.03.2021, that the periods of limitation as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended. Ultimately, the said MA No. 665 of 2021 was disposed of on 23.09.2021 with this Court issuing directions similar to those contained in the order dated 08.03.2021 but while providing that in computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 02.10.2021 shall stand excluded. 19.6. We are not elaborating on other directions issued by this Court but, when read as a whole, it is but clear that the anxiety of this Court had been to obviate the hardships likely to be suffered by the litigants during the onslaughts of this pandemic. Hence, the legal e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ill the date of passing of confirmation order to compute the period of 180 days. iv) It is relevant to note that the Apex Court in In re: Limitation (supra) took suo moto cognizance of the Covid-19 pandemic situation and extended the period of limitation from 15.03.2020 for the purpose of filing petitions/applications/suits/ appeals/all other proceedings under any general or special law before any Court or Tribunal. The object of such extension was in recognition of the difficulties that might be faced by lawyers/litigants to file their applications physically. The relevant paragraphs of In re: Limitation (supra) are extracted below: 1. This Court has taken suo motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under special laws (both Central and/or State). 2. To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, 1996, Section 12-A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. vi) For instance, Section 29A of the Arbitration & Conciliation Act, 1996 provides a time limit of 12 months within which an award has to be passed. By virtue of In re: Limitation, 2022 (supra), the period from 15.03.2020 to 28.02.2022 shall be excluded to compute the period of 12 months under Section 29A of the Arbitration & Conciliation Act, 1996. Similarly, Section 12A(3) of the Commercial Courts Act, 2015 provides an outer time period of three months within which pre-institution mediation shall be completed. However, by virtue of In re: Limitation, 2022 (supra), the period from 15.03.2020 to 28.02.2022 shall be excluded to compute the period of 3 months. Therefore, In re: Limitation, 2022 (supra) states that wherever a statute prescribes a maximum period within which proceedings have to be completed, the period from 15.03.2020 to 28.02.2022 shall be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted. (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (3) of Section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation. -For the purposes of this sub-section, "person interested", in relation to any immovable property, includes all pers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e fulfillment of the other conditions in Section 5. A prescribed procedure after the same has been initiated cannot be equated to institution of a suit or filing of a petition/application which is a starting point of litigation for a person who seeks relief under a statute. The 180 days window in Section 5 contemplates an endpoint whereas the Supreme Court in the Suo Motu writ petition sought to protect the startingpoint, which was at the risk of being defeated by reason of the pandemic. 19. In other words, what was being protected by the orders of the Supreme Court was the right to remedy, not the right to take away a remedy under a given statute. The respondents before this Court seek to do the latter. The only step taken by the ED is the order of the provisional attachment dated 30th September, 2021. No other steps were taken by the ED before the petitioners reply on 3rd January, 2022 or before the expiry of 180 days period on 31st March, 2022. By its inaction and failure to act in terms of Section 5(1)(b) or the other conditions of the said section, the ED has made itself vulnerable to Section 5(3) of the PMLA. The petitioner in turn has been given the breather of exhaustion of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he decision in S. Kasi (supra) cannot be relied upon by the Petitioners to contend that In re: Limitation (supra) is not applicable in computing 180 days under Section 5(3) of the PMLA. In S. Kasi (supra), In re: Limitation (supra) was held to be inapplicable to proceedings involving personal liberty of a person where the investigating officer failed to file charge sheet within the prescribed time. The decision in S. Kasi (supra) cannot be extended to PMLA proceedings dealing with confirmation of provisional attachment order within 180 days. xix) It is true that provisional attachment of property has an effect of potentially depriving a person of his property. However, right to personal liberty and right to property stand on a different footing and cannot be equated. This is evident from the fact that the urgency in concluding proceedings dealing with a person in jail is much higher than a person whose property is provisionally attached. Further, under Section 5(4) of the PMLA, the person whose property is provisionally attached can still enjoy such property till the same is confiscated. Even in cases of confirmation of provisional attachment, a person can still enjoy such....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] and in continuation of the previous orders, has further directed that the period from 15-3-2020 till 28-2-2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. Be that as it may, the fresh order in SMWP No. 3 of 2020 need not be elaborated for the present purpose.] **** 32.2. In fact, in S. Kasi case [S. Kasi v. State, (2021) 12 SCC 1 : 2020 SCC OnLine SC 529], this Court also noticed that a coordinate Bench of the same High Court had already held [Settu v. State, 2020 SCC OnLine Mad 1026] that the said order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] did not cover the offences for which Section 167CrPC was applicable but, in the order [S. Kasi v. State, 2020 SCC OnLine Mad 1244] impugned, the other learned Single Judge of the same High Court took a view contrary to the earlier decision of the coordinate Bench; and that was found to be entirely impermissible. In any case, the said decision, concerning the matter of personal liberty referable to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation of In re: Limitation (supra) was left open. xxv) As far as Gobindo Das (supra), is concerned, though it is true that Adjudicating Authority is not a litigant, the authorized officer representing the ED is a litigant to the proceedings initiated under PMLA and for the purpose of application of In re: Limitation (supra). Therefore, where the ED has been diligent in provisionally attaching the property and filing the original complaint within 30 days under Section 5 of the PMLA, prejudice cannot be caused to it by not excluding the period from 15.03.2020 to 28.02.2022. One litigant's interests cannot be protected at the cost of another. This Court would further like to stress that the provisionally attached properties can still be enjoyed under Section 5(4) of the PMLA. xxvi) The reasoning in Hiren Panchal (supra) that what was protected under In re: Limitation (supra) was institution of proceedings and not proceedings which were already initiated cannot be accepted in light of the decision in Prakash Corporates (supra) which held that In re: Limitation (supra) cannot be narrowly applied. xxvii) Lastly, the decisions in S. Kasi (supra),Vikas WSP Ltd. (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sue, 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 relating to a scheduled offence or the value of any such property [or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad; Explanation. For the removal of doubts, it is hereby clarified that "proceeds of crime" 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 crimina....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tect 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 crime and immediately proceeds would be siphoned off or vanished so that it may not remain available for attachment. In fact, the word "the value of any such property" was inserted by the legislature to attach the property of equivalent value, if the proceeds out of commission of crime is not available or vanished. 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 pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nds 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 the proscribed criminality and the tainted assets held by him are not traceable, or cannot be reached, or those found are not sufficient to fully account for the pecuniary advantage thereby gained. This is why for such untainted properties (held in India or abroad) to be taken away, the rider put by law insists on equivalence in value. From this 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 proper....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, 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 Seema Garg (Supra) has been dealt with by the Delhi High Court in the case of Prakash Industries Ltd. v. Directorate of Enforcement reported in 2022 SCC OnLine Del 2087. The relevant paras are quoted hereunder: "76. Seema Garg principally holds that the phrase value of any such property and property equivalent in value held within the country or abroad cannot be ascribed the 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 thirdparty 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 aforesaid decision. Consequently, and for all the aforesaid reasons this Court finds 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 abeyanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he 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 of three judges Bench of the Apex Court in the case of Vijay Madanlal Choudhary (supra) was not cited and thus counsel for the respondent submitted that the judgment in the case of Pavana Dibur (supra) does not propound ratio on definition of "proceeds of crime" and, therefore, direction for the property acquired prior to commission crime is to be taken on facts of that case. 22. It has already been clarified by us that 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 promot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rty 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 circumstances, it can be attached for "the value of any such property." 23. At this stage, it is reiterated that any other interpretation other than the one taken by Delhi High Court in the cases of Axis Bank (supra) and Prakash Industries (supra) for the definition of "proceeds of crime" would defeat the object of the Act of 2002. It is more especially when the arguments raised by the appellant that the property acquired prior to the commission 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 una....