TaxTMI 
TaxTMI 
2025 (12) TMI 1613
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....ng Authority in Original Complaint No.525/2015 dated 24.02.2016, whereby Provisional Attachment Order No. 03/2015 dated 23.09.2015 passed in ECIRs No. 02/PMLA/LZO/2012, 03/PMLA/LZO/2012 and 08/PMLA/LZO/2012 (all dated 14.04.2012) was confirmed by the said Authority. Facts in Brief 2. The factual context of these cases is the same as in the cases of Sh. Sourabh Jain and Smt. Rajni Jain (FPA-PMLA-1283/LKW/2016 and FPA-PMLA-1282/LKW/2016, respectively) which were disposed of by this Appellate Tribunal vide a common order dated 21.11.2024. The relevant facts, briefly, are that three FIRs, namely, FIR No. RC-02(A)/2012-CBI/SC- II/NDLS dated 02.01.2012, FIR No. RC-03(A)/2012/CBI/SC-II/NDLS dated 02.01.2012, and FIR No. RC2202012E0003 dated 18.01.2012, were registered by CBI, New Delhi in compliance with order dated 15.11.2011 passed by the Hon'ble Allahabad High Court (Lucknow Bench) in Writ Petition No. 3611(MB) of 2011(PIL) and connected Writ Petition No. 2647(MB) of 2011(PIL). The allegations in the said FIRs were in relation to alleged misuse of funds allocated under National Rural Health Mission (NRHM) Scheme in the State of Uttar Pradesh (U.P.) during the period 2010-11. It w....
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....s Kapil Medical Agencies (proprietorship concern of Sh. Vivek Jain, cousin of Sh. Saurabh Jain). Further, proceeds of crime to the tune of Rs. 513.75 lakh parked in the bank account of M/s Siddhi Traders (proprietorship concern of Smt. Rajni Jain w/o Saurabh Jain) was withdrawn in cash. Investigations therefore revealed that, proceeds of crime aggregating to Rs. 587.75 lakh (Rs. 74 lakh + Rs. 513.75 lakh) were in the hands of Saurabh Jain who placed, layered and integrated the same by showing acquisition of Flat No. 701-C, Kasmanda Regent Apartment, 2 Park Road, Vikramaditya Marg Ward, Lucknow for Rs. 8 lakh, and in acquisition of M/s BA Constructions Pvt Ltd., M/s Shivali Constructions Pvt. Ltd., M/s Renu constructions Pvt. Ltd. The said companies own prime real estate in the posh area of New Delhi which was of very high market value. Control over the prime real estate in the commercial centre of New Delhi was thus acquired in the name of Sh. Saurabh Jain and Smt. Rajni Jain by investment of proceeds of crime of crores of rupees. 6. It may be mentioned that during the same period when the above investment in M/s BA Constructions Pvt Ltd., M/s Shivali Constructions Pvt. Ltd., M/....
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....n the name of M/s DIGI Entertainment network Pvt. Ltd. 7,50,000/- 4,00,000/- 8. Cash seized from residence of Sh. Saurabh Jain during the search 9,50,000/- 9,50,000/- TOTAL 7,12,49,479/- 195,99,38,673/- 9. In the present three appeals, we are concerned with the properties mentioned at Sl. Nos. 4, 5 and 6 of the above table. 10. In consequence of the passing of the aforesaid PAO, an Original Complaint (OC) was filed by the respondent Directorate. The consequent adjudication proceedings culminated in the passing of the impugned order dated 24.02.2016 by the Ld. AA, confirming the attachment of properties made vide the aforesaid PAO. 11. Aggrieved by the said order of the Ld. AA, the appellants have filed these appeals challenging the impugned order on various factual and legal grounds. Arguments on Behalf of the Appellants 12. Common written arguments have been filed on behalf of the three appellant companies. It is, firstly, contended that it is the respondent Directorate's case, as mentioned in para-102 of the PAO, that funds amounting to Rs. 5,13,75,000/- and Rs. 74,00,000/- (totalling Rs. 5,87,75,000/-) withdrawn in cash by ....
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....tructions Pvt Ltd. from the erstwhile shareholders through cheques handed over to them till 03.08.2010. M/s SRJ Infratech Pvt. Ltd. paid a sum of Rs. 2,35,00,000/- to the erstwhile shareholders on 19.05.2010 and 26.05.2010 and Rs. 3,00,00,000/- on 03.08.2010, aggregating to a total of Rs. 5,35,00,000/- as full and final payment towards the share purchase before the alleged crime period and, thereafter, no payment was ever made to the erstwhile shareholders. As such, the share purchase process was over by 03.08.2010, before the commission of the alleged scheduled as per the PAO. Subsequent to the payment made upto 03.08.2010, the erstwhile directors of the three companies resigned from the board of the companies and the names of Smt Rajni Jain and Sh Saurabh Jain were enrolled as directors on 19.08.2010 in the records of Registrar of Companies, Delhi and Haryana in place of the erstwhile shareholders. 13. Thus, it is contended that as the shares of M/s BA Properties Pvt Ltd, M/s Renu Constructions Pvt Ltd and M/s Shivali Constructions Pvt. Ltd. were purchased by M/s SRJ Infratech Pvt Ltd prior to the crime period, the same was out of the jurisdiction of respondents as per the law....
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.... it was observed as follows: - "51. In view of above discussion, we summarise our findings as below: i) In case investigation is pending, filing of complaint against others is not sufficient to deprive any person from benefit of time cap of 365 days, ii) Property acquired prior to commission of scheduled offence i.e. criminal activity or introduction of PMLA cannot be attached unless property obtained or acquired from scheduled offence is held or taken outside the country. iii) Director or any other officer authorised by him is bound to record reasons which must be specific and mere reproduction of wording of Section 5 is not sufficient." 15. It is further contended that in normal business transactions, cheques operate as payment from the date of issuance and delivery and not from the date of its realisation. The respondent had made a misleading averment in para no. 136 of the complaint about the date of payment made to the erstwhile shareholders in respect of purchase of the share in the above three companies and intentionally and deliberately concealed the material facts that cheques were in fact delivered upto 03.08.2010, before the alleged....
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....ssued to purchase the shares of the aforesaid companies. Out of them, 9 cheques for a sum of Rs. 2,15,00,000/- were issued on 19.05.2010, one cheque on 26.05.2010 for a sum of Rs. 20,00,000/-, and remaining 9 cheques for a sum of Rs. 3,00,00,000/- on 03.08.2010. Of the aforesaid 19 cheques, 8 cheques dated 19.05.2010 for a sum of Rs. 2,15,00,000/- and 1 cheque dated 26.05.2010 for a sum of Rs. 20,00,000 were encashed by 28.05.2010. 4 cheques issued on 03.08.2010 for a sum of Rs. 1,50,00,000/- were realised by 20.09.2010. By this date, the share purchase account of M/s Shivali Constructions Pvt Ltd and M/s Renu Constructions Pvt Ltd were already completed as per the payment chart relied upon by the respondent itself, before the crime period. 19. It is also contended that apart from above, the remaining 5 cheques amounting to Rs. 1,50,00,000/-, though issued on 03.08.2010, were encashed on later dates as per the convenience of the holders of the cheques, i.e., erstwhile shareholders of M/s BA Properties Pvt Ltd which does not affect the nature of the payment. Accordingly, the appellant submits that it is abundantly clear that all transactions regarding purchase of shares happened ....
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....equent that the cheque must be met on presentation, the date of payment, if the cheque is duly met, is the date when the cheque was posted." In the case before us none of the cheques has been dishonoured on presentation and payment cannot, therefore, be said to have been defeated by the happening of the condition subsequent, namely dishonour by non-payment and that being so there can be no question, therefore, that the assessee did not receive payment by the receipt of the cheques. The position, therefore, is that in one view of the matter there was, in the circumstances of this case an implied agreement under which the cheques were accepted unconditionally as payment and on another view, even if the cheques were taken conditionally, the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques." 21. It is contended that the Ld. AA has mechanically confirmed the impugned PAO without considering the fact that the appellant companies, namely, M/s B.A. Properties Pvt Ltd, M/s Renu Constructions Pvt Ltd and M/s Shivali Constructions Pvt....
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....pellant's properties in the prosecution complaint. In the light of the amended provisions under section 8(3)(a) of the Act, the attachment order has now lapsed as no prosecution complaint has been filed against them. The appellant companies are entitled to the benefit of amended provisions and cannot be denied merely on the grounds that the prosecution complaints have already been filed against some other persons. On this issue it has been held by this Hon'ble tribunal in case of Sanjay Kumar Vs The Deputy Director, Directorate of Enforcement, New Delhi FPA-PMLA-2510/DLI/2018 (order dated 02 May 2019) wherein it was held as under: - "7. On the other hand, the learned counsel for the respondent admitted that no Prosecution Complaint has been filed against the present appellant. But Shri Rajesh Kumar Pandey, Deputy Director, Directorate of Enforcement, Delhi Zonal Office-II, the respondent in his written submissions dated 11.04.2019, inter-alia stated that a Prosecution Complaint under Section 44/45 of PMLA, 2002 for commission of offences under this Act was filed before the Hon'ble Special Judge PMLA, Patiala House Court, New Delhi on 08.02.2018 cognizance has b....
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....ussion, we summarise our findings as below: 1) In case investigation is pending, filing of complaint against others is not sufficient to deprive any person from benefit of time cap of 365 days" 24. It is further submitted that the impugned order confirming the attachment order is against the mandate of law under section 8(3)(a) of the Act which provides that at the time of confirmation of the PAO, proceedings under this Act must be pending before a court but in the instant case, there was no criminal proceedings pending under this Act before any court. And therefore, this order is nothing in the eye of law. In case of Santiagu Martin Vs The Deputy Director, Directorate of Enforcement, FPA- PMLA-1529/COCHIN/2016 decided on 18.09.2019, the court held as follows: "36. The issue now before this Tribunal is to decide whether the attachment lapses in the absence of non- filing of the charge-sheet at the time of passing the confirmation order before the AA. As already mentioned, that the impugned order in the above said matter was passed on 22.9.2016 and the charge-sheet was filed on 11.6.2018. "47. In the context of the Prevention of Money Laundering Act, 20....
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....ny of the said witnesses clearly shows that at no point of time, the alleged proceeds of crime Rs. 5,87,75,000/- were ever generated to purchase the properties mentioned in para no. 102 of the PAO. In fact, the entire amount released by the State Government from 22.09.2010 to 28.03.2011 to the firm of M/s Guru Kripa and M/s Siddhi Traders was invested in completion of work awarded under NRHM scheme 2010-2011. In the light of the evidence of PW 28, PW 3 and PW 5, the allegations to supply the material at an exorbitant rate, lesser quantity of material and sub- standard material in PAO stands negated. 27. In light of the above contentions, it is prayed by the appellants that the appeal deserves to be allowed in toto setting aside the impugned orders. Arguments on Behalf of the Respondent 28. On behalf of the respondent, it is firstly contended that Smt. Rajni Jain has vacated the office of directorship of the Appellant company and can no longer represent the said company. A perusal of the of the website of Ministry of Corporate Affairs (MCA-21) reveals that the appellant company has not filed either its financial statements or annual returns for the last five years; the last....
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.... Director, Smt. Rajni Jain, by making payments by cheques; (ii) That the shares of the appellant companies were purchased prior to the period of the alleged scheduled offence, and the appellant companies, in turn, had been owning the subject properties (which have been attached by the Directorate) for a long time before that, having purchased the same as early as in 2002. As such, the properties acquired prior to the period of the alleged offence, could not be attached in view of the prevailing legal position on the issue; (iii) That the appellant companies are not accused in the criminal prosecution case filed under PMLA, but their properties have been attached which is legally untenable; (iv) That no 'proceedings' were pending at the time of passing of the impugned order and, therefore, the impugned order confirming the attachment was illegal as per the provisions of the Act; (v) That there are no proceeds of crime in the case as no scheduled offence was committed. Materials of appropriate quality were duly supplied to the State Government by the companies to whom the contracts had been awarded. 34. I propose to deal with the aforesaid issue....
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....PML Act. It is important to note that the aforesaid property was purchased by the Appellant even prior to the commission of alleged scheduled offence in the present case and as such the aforesaid property is out of the scope and ambit of the PML Act. 3. That the aforesaid provisional attachment order was confirmed by the Ld. Adjudicating Authority vide order dated 24.02.2016 passed in OC No. 525 of 2015, against which the captioned appeal is pending before this Hon'ble Tribunal. 4. That during pendency of the captioned appeal, the Appellant was facing some legal problems in running its business as a private limited company, therefore, on the advice of legal experts in this field, the Appellant applied for its conversion from a Private Limited Company into a Limited Liability Partnership in accordance with provisions of Section 56 read with Third Schedule of the Limited Liability Partnership Act, 2008. 5. That the Registrar after being fully satisfied that all requirements of law have been complied with by the Appellant registered the Appellant as a Limited Liability Partnership under Section 58 of the LLP Act, and accordingly issued a certificate of r....
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...., shall have effect as from that date as if- (a) the limited liability partnership were a party to such an agreement instead of the company; and (b) for any reference to the company, there were substituted in respect of anything to be done on or after the date of registration a reference to the limited liability partnership. 11. Existing contracts, etc. All deeds, contracts, schemes, bonds, agreements, applications, instruments and arrangements subsisting immediately before the date of registration relating to the company or to which the company is a party shall continue in force on and after that date as if they relate to the limited liability partnership and shall be enforceable by or against the limited liability partnership. 9. In terms of Third Schedule of the Act, the decision of this Hon'ble Tribunal in the present appeal would be applicable and executable whether pro or against the LLP, which undertakes to abide by the final decision to be passed by this Hon'ble Tribunal, while reserving its rights to invoke legal provisions contemplated under PMLA. 10. That in view of the conditions enunciated in Third Schedule of the LL....
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....or against the limited liability partnership." 40. Accordingly, considering the express provisions of the LLP Act as stated above, the present appeals filed by the directors of the erstwhile companies which have since been converted into LLPs are maintainable and would have to be decided on merits. Accordingly, I do not find any merit in the objection taken by the respondents in their reply to their appeal dated 03.11.2016 wherein the issue of locus standi was raised by them. 41. Coming to the issues raised on merits, the first contention is that the shares of the three appellant companies namely, M/s. Renu Constructions Pvt. Ltd., M/s. Shivali Constructions Pvt. Ltd., M/s. B.A. Properties Pvt. Ltd., were not purchased out of cash withdrawn from M/s. Siddhi Traders (the proprietary concern of Smt. Rajni Jain) and M/s Kapil Medical Agency (the proprietary concern of Shri Vivek Jain, cousin of Shri Saurabh Jain), but the same were purchased by M/s. SRJ Infratech Pvt. Ltd. through its Director, Smt. Rajni Jain, by making payments of cheques. 42. With regard to the above issue, I find that the findings of the investigations conducted by the respondent directorate have been rec....
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.... Rs. 4 crore made on 26.04.2010 Rs. 1.5 crore was received from one M/s Mridul Securities Pvt. Ltd. Rs. 1.5 crore was received from M/s Atul Jalan Portfolio and Finances Pvt. Ltd. and another Rs. 1 crore was received from M/s Rajrani Securities Pvt. Ltd. It was found during the investigation that all the above three companies belonged to Mrs Sudha Mittal and her brother Mr. Atul Jalan who were in the business of issuing cheques against cash. Investigations conducted by the Directorate thus established that the aforesaid sums aggregating in all to Rs. 10.65 сгоге credited in the bank account of M/s SRJ Infratech Pvt. Ltd. were neither from genuine business transactions nor the said money has been returned back to the entities which had remitted the said funds, nor any interest was paid by M/s SRJ Infratech Pvt. Ltd.; • That scrutiny of the aforesaid bank account of M/s SRJ Infratech Pvt. Ltd. further revealed that the company had no business transactions. Neither the receipts nor the payments out of the said bank account justified any commercial business being carried out by the aforesaid company. Thus, the it was clearly a shell company in....
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....ers was utilized to pay the erstwhile shareholders themselves which cannot be considered a normal commercial transaction; • That during the investigation under PMLA, 2002 several opportunities were given to Saurabh and Rajni Jain to appear before the Directorate to make their submissions with regard to their directorship and ownership in several companies wherein the tainted money was invested to acquire assets, but they did not appear despite issuance of summonses on 04.04.2014, 05.09.2014, 07.10.2014 and 24.11.2014. Thereafter a further summons was issued after the conduct of search at the residential premises of Sh. Saurabh Jain u/s 17 of the Act on 15.07.2015, but once Sh. Saurabh Jain did not appear and sought adjournment. Vide a letter received in the Directorate on 17.09.2014, Sh. Saurabh Jain had stated that there are no records available with him and that CBI had taken away all the records during its search. He had further stated in the said letter that during the period commencing from 01.01.2008 to 31.03.2014 no property, either movable or immovable, was purchased or sold by him and that his business is completely closed at present. He had further stated in ....
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....ments of witnesses to this effect, including one Smt. Sudha Mittal, Director of Mridul Securities Pvt. Ltd., Sh. Atul Jalan a Director of the said company and also of M/s Atul Jalan Portfolio Pvt. Ltd., and the statement of Sh. Jitendra Kumar Sharma, CA also support the case of the respondent directorate that M/s SRJ was merely a shell company fully in the control of Sh. Saurabh and Smt. Rajni Jain. 44. I am also in full agreement with the submission of the respondent that upon receipt of the Show Cause Notice, the onus was squarely upon the defendants under section 8(1) to explain the source of funds in the hands of M/s SRJ Infratech to the tune of Rs. 12.28 crore. However, despite numerous opportunities, the defendants failed to do the same. In addition to the burden under section 8, the burden of proof under section 24 as well as the presumption in inter-connected transactions under section 23 are also against the appellants. 45. It may also be pointed out here that the Hon'ble Supreme Court in the landmark case of Vijay Madanlal Choudhary 2022 SCC OnLine SC 929, has categorically held that the purpose of the PMLA is to reach the proceeds of crime in whosoever's name they ....
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....A-1341/GWH/2024). The relevant part of the order is reproduced as below: "13. The learned counsel for the appellant raised only one issue for challenge to the impugned order. He did not raise argument in regard to the allegation against the appellant for his involvement in commission of scheduled offence and even recording of ECIR naming him as one of the accused for commission of offence under Section 3, punishable under Section 4 of the Act of 2002. It is also when allegations have been made for receipt of the proceeds of crime to the extent of Rs. 40,00,000/- out of Rs. 6,13,74,440/- involved in the crime. Therefore, involvement of the appellant in commission of crime and receipt of the proceeds of crime remain uncontested. The period of commission of crime has not been disputed, which is between 11.04.2018 to 19.09.2020. The only issue is that the flat in question was purchased on 25.06.2019 said to be prior to the commission of crime thus could not have been provisionally attached even for the value thereof. The counsel for the appellant made reference to the recent judgment of Kerala High Court in the case of Davy Varghese & Anr. Vs. Deputy Director, Directorate of E....
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....lyzed by the Punjab and Haryana High Court in the case of Seema Garg (supra), the order was passed treating only two limbs/parts of the definition of proceeds of crime. This Tribunal has even discussed the case of Pavana Dibbur (supra) to analyze the issue. The reference of the judgment in the case of Vijay Madanlal Choudhary (supra) was given to indicate that in the said judgment, three parts/limbs of the definition of proceeds of crime have been analyzed and out of which middle part is relevant and discussed by this Tribunal in the case of Sadananda Nayak Vs. Directorate of Enforcement, Bhubaneswar (Appeal No. 5612/2023) decided on 14.10.2024. As against the judgment of the three Judges Bench of the Apex Court, we would not be able to accept the view taken by different High Courts where the counsel for the parties did not refer to the relevant part of the judgment in the case of Vijay Madanlal Choudhary (supra) which otherwise goes in the root of the case. The principle laid down by the Kerala High Court in its recent judgment emphasized the attachment only of the "proceeds of crime". There cannot be a debate on the aforesaid. However, what falls in the definition of "proceeds of....
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....l for the appellant did not raise argument in reference to registration of 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, di....
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.... and, therefore, to secure the proceeds of equivalent value till completion 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 ....
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....bove, the first may be referred to, for sake of convenience, as "tainted property" 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, ho....
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....Choudhary (supra) decided by three judges of the Apex Court. In fact, elaborate 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 Ape....
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....ch has no link, direct or indirect, with property derived or obtained from 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 ha....
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....ver the tainted property that they can take the statutory recourse 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 "....
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....y acquired subsequent to the commission of 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 commissi....
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....d was not purchased by the appellant prior to the scheduled offence, rather during the period of scheduled offence itself. Thus, finding no merit in the only issue raised by the appellant, we dismiss the appeal." 49. For the detailed reasons discussed in the above order of the Appellate Tribunal, this contention of the appellant is also rejected. 50. The next issue raised on behalf of the appellants is that the appellant companies are not accused in the criminal prosecution case filed under PMLA, but their properties have been attached which is legally untenable. Having considered the contention, I find no merit in the same. It is by now well-established that the sweep of Section 5(1) is not limited to the accused named in the scheduled offence. It would apply to any person (not necessarily being accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime. It has been so held by the Hon'ble Supreme Court in its landmark judgment in the case of Vijay Madanlal Choudhary, Special Leave Petition (Criminal) No. 4634 of 2014). In the said case, it was further held by the Apex Court that the objective of enacting the Act was t....
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....roperty u/s 5(1) shall continue during investigation from 90 to 365 days or the pendency of the proceedings relating to any offence under the PMLA before a court 55. In the present case, the impugned order was passed on 24.02.2016 when there was no time limit for filing the prosecution complaint. After the law was amended with effect from 19.04.2018 to provide that the attachment of the property u/s 5(1) shall continue during investigation only for a maximum period of 90 days, the directorate was bound to file the prosecution complaint within the period of 90 days from the date the amended law came into force. However, in this case the prosecution complaint already stood filed on 27.03.2018, prior to the date when the amendment made by the Finance Act, 2018 setting a 90- day time period for filing the prosecution complaint came into force. As such the attachment order shall continue till the final disposal of the prosecution case against the accused. 56. In holding as above, reliance is placed on the judgment of this Appellate Tribunal in Nirved Traders Pvt. Ltd., FPA-PMLA-1394/MUM/2016 (Order dt. 15.04.2024). Accordingly, I find no force in the argument of the appellant eith....