TaxTMI 
TaxTMI 
2025 (12) TMI 1314
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....ir involvement in money laundering. Before we refer to the arguments of the respective parties, it would be relevant to give brief facts of the case: Brief facts of the case: 2. It is a case where an FIR was registered on 30.03.2013 by CBI, ACB, SPE, Kolkata for offence under Section 120B & 420 of IPC, 1860 and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 against Shri Mahesh Kumar Kejriwal and others. Charge sheet was filed on 29.12.2013 by CBI, ACB, SPE, Kolkata for offence under section 120(B), 468, 471 & 420 of IPC and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988. The investigation was initiated by the Enforcement Directorate, Kolkata after recording ECIR on 13.02.2020 for alleged commission of offence under Section 3, punishable under Section 4 of the Act of 2002. The charge-sheet was filed finding that Shri Mahesh Kumar Kejriwal along with his wife Smt. Alka Keiriwal and his son Shri Siddhartha Kejriwal are involved in commission of offence. They took a loan from the Allahabad Bank, Kolkata but did not return the amount and had outstanding to the tune of Rs. 23,39,13,241/-. They had taken overdraft (OD) facility aga....
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....sly assigned policies) in favour of the said Account Holders. 5. Further, out of 8 LIC Policies, 2 LIC Policies (vide No. 579267919 and 578980791) worth Rs. 50 lakhs each were assigned after the date of sanction of above OD limits i.e., after 17.02.2010 since LIC Policy no. 579267919 was assigned on 18.02.2010 and registered on 19.02.2010 whereas LIC Policy No. 578980791 was assigned on 08.03.2010 and registered on 09.03.2010. Thus Rs. 1 crore was sanctioned without any security. Shri Abhijit Roy on 15.03.2010 without any proper security sanctioned the enhancement of the OD limit from Rs. 8 crores to Rs. 19.05 crores based on security of LIC of Rs. 22.75 crores (including 22 previously assigned policies) in favour of the Account Holders. Out of 22 LIC Policies, LIC Policies (vide No. 579241925, 579241926, 578997074 and 578997079) were assigned on 19.03. 2010 and registered on 20.03.2010 and hence all the Policies worth Rs. 50 lakhs each were assigned after the date of sanction (which is about four days after the date of sanction) of above OD limits i.e., after 15.03.2010. 6. It was brought on record that on the notice of assignment by the party Shri Mahesh Kejriwal on the abo....
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.... recovered total Rs. 13.15 Crores out of Rs. 23.39 Crores by surrendering 23 LIC policies but the bank failed to recover Rs. 10.24 Crores which is still in the possession of accused persons, which represents the proceeds of crime acquired out of commissions of scheduled offence. 10. The complainant, having described the nature of offence and its relation to the movable/ immovable properties attached, issued Provisional Attachment Order dated 31.03.2022 under sub section (1) of section 5 for provisional attachment in the form of movable/ immovable properties to the tune of Rs. 10.24 Crores under the possession of the appellants. 11. The facts referred to above shows that an amount of Rs.10.24 Crores was lying with the accused out of Rs.23.39 Crores thus was provisionally attached. Aggrieved by the order of the Adjudicating Authority, appellants have preferred these appeals raising factual and legal issues. Arguments of counsel for the appellants: 12. The learned counsel submitted that none of the appellants are involved in commission of crime; rather, the complaint was filed based on presumption. The amount of loan extended by the Allahabad Bank was well protected by 36 ....
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....to the issues raised above and made a prayer for appropriate order thereby to cause interference in the impugned order. Arguments of counsel for the respondents: 15. The learned counsel for the respondents vehemently contested the appeals. It was submitted that the appellants were involved in commission of crime and, therefore, complaint was rightly registered by the CBI, ACB, SPE Kolkata for offence under Section 120-B and 420 IPC and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. After the FIR, charge sheet was filed on 29.12.2013 and accordingly, ECIR was recorded. The outstanding amount out of the loan amount was found to be Rs. 23,39,13,241/-. However, out of it, the bank had received a sum of Rs.13.15 Crores out of 23 LIC Policies but amount of Rs. 10.24 Crores could not be recovered and accordingly, after causing ECIR and investigation, the Provisional Attachment Order was caused to the extent of proceeds of crime in the hands of the appellants. The properties were provisionally attached for the reason that the amount of proceeds of crime was not found available with the accused, rather vanished and siphoned off by the appellants. Elaborate....
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..... They were not acquired or obtained directly or indirectly out of the proceeds of crime related to the criminal activities of scheduled offence. According to the appellants, the properties under provisional attachment had no co-relation with the proceeds of crime. The issue aforesaid was contested by the respondent and it was submitted that attachment of the properties for equivalent value was caused because despite all efforts during the course of investigation, the proceeds of crime were not found available with the appellants having been vanished or siphoned off. It is without a dispute that the appellants had taken loan from the Allahabad Bank which remained unpaid for a sum of Rs.10.24 Cores. The provisional attachment was thus caused for the property of equivalent value falling under the definition of Section 2(1)(u) of the Act of 2002. 20. We have considered the rival submissions and find that definition of "proceeds of crime" has three limbs out of which first limb is the property acquired or obtained directly or indirectly out of the proceeds of crime related to the scheduled offence. The definition of "proceeds of crime" has two other limbs out of which one limb allow....
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....o 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 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 cla....
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....me 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 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....
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....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 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 ha....
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.... 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 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 indirect....
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....rd-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 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 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 again....
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....t 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 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-....
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....cumstances, 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 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. We may further quote relevant paras of the judgment of the Punjab and Haryana High Court in the case of Dilbagh Singh (supra) wher....
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.... scope of the expression 'proceeds of crime'. In 2015, the amendment restructured the definition into three parts to cover the property taken or held outside the country. The concept of the property of equivalent value was introduced with respect to the aforementioned properties. The amendment enabled the authorities to go after any other property of a person of equivalent value. In 2019, the scope of the phrase 'proceeds of crime' was further expanded so as to include other properties which were not directly or indirectly the proceeds of crime, but were held abroad, to be liable to attachment. In 2019, the explanation has been added so as to give a wider scope to the authorities. From the objects and reasons of the '2002 Act', it becomes evident that the money laundering posed a serious threat not only to the financial system of the countries but also to their integrity and sovereignty. The '2002 Act' was enacted to prevent money laundering and connected activities. The act of money laundering is a multi-layered, complex and complicated diversion of the property, which is required to be prevented. Consequently, the definition of proceeds of crime ha....
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....a meaning it was assigned by the Legislature. The words used in statute are of utmost significance. The Court cannot widen or restrict the provisions on its own whims and fancies. When a statute's language is clear and unambiguous, the general rule of interpretation of statute is to read the provision as a whole and the Court must adhere strictly to the ordinary, plain meaning of the words used. The words in a statute are used precisely, not loosely, and efforts must be made to interpret them in a literal manner to give effect to the objective of the Act. This approach of interpretation is based on the idea that the legislature's intent is best reflected in the exact words of the statute. 3.8. Moreover, the reasoning adopted in Seema Garg's case (supra) to the effect that there was no need to insert third part in the definition of the 'proceeds of crime' and that 'value of such property' is superfluous does not appear sound. It appears that transformative journey of the definition of phrase 'proceeds of crime' was not brought to the notice of the Division Bench in Seema Garg's case (supra). In Abdullah Ali Balsharaf's case (supra....