TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 523
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....orruption Act, 1988. The main allegations were made against M/s Shakti Bhog Foods Ltd. and its directors, apart from unknown public servants and consequent to the scheduled offence, ECIR was recorded by the respondents. The case is involving an amount of Rs. 3269.42 Crores. The amount aforesaid was towards the loan taken by the accused from consortium banks led by the SBI and thereafter company failed to discharge its liability and declared it to be non-performing assets. 3. During the course of investigation, it was found that M/s Shakti Bhog Foods Ltd. in association with Kewal Krishan Kumar, Raman Bhuraria, CA, Devki Nandan Garg, Ashok Kumar Goel and others were directly involved in paper sale purchase transactions without conducting any actual business transactions. It resulted in false inflation of M/s Shakti Bhog Foods Ltd. financials which were presented to the consortium banks, with an intention to cheat/fraud the banks to borrow enhanced loan. Instead of utilizing the borrowed funds for the purpose it was obtained, the accused diverted it to many entities which in turn came to the appellants also and accordingly their properties were also subjected to provisional attach....
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.... after invoking second proviso to Section 5(1) of the Act of 2002 without showing any apprehension to deal with the property so as to frustrate the proceedings of confiscation. It was found in the case of Devki Nandan Garg, one of the recipient of the proceeds of crime but such 'reasons to believe' was not recorded in the case of the appellants to apprehend alienation of the property and thus without any apprehension to deal with the properties vis-à-vis the appellants, second proviso to Section 5(1) of the Act of 2002 was caused in an illegal manner thus the impugned order deserves to be interfered in the aforesaid ground. 7. The second issue raised by the appellants was in reference to the value of the proceeds of crime vis-à-vis the value of the property. According to the counsel for the appellants, proceeds of crime received by the appellants was quantified to be of Rs. 82 Lakhs. As against the aforesaid, their properties worth of crores have been attached. To take the value of the property, the appellants approached the valuer. The valuation of the property assessed therein is far more than taken by the respondent and to the alleged proceeds of crime in the ha....
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....has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything ....
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.... may result in frustrating any proceedings relating to confiscation. The second proviso to the provision aforesaid starts with non-obstante clause to the first proviso and can be invoked when the Director or any other officer not below the rank of Deputy Director authorized by him has reasons to believe that if the property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under the Act of 2002. The reasons to believe have to be recorded in writing. It is submitted that no reasons to believe to apprehend alienation or transfer the property by the appellants were recorded for invoking Section 5(1) of the Act of 2002. 14. To examine the issue aforesaid, we called for the Provisional Attachment Order and was accordingly placed on record. The relevant para where reasons to believe were recorded is quoted hereunder for ready reference: "From the available records, it has been noticed that report u/s 173 of CrPC has not yet been forwarded by CBI to the Magistrate. This process is likely to take some more time. It has been revealed that Devki Nandan Garg has disposed his propert....
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....KOL/2019) decided on 02.07.2024. Relevant paras of the order are quoted hereunder for ready reference: "17. The second limb is also required to be satisfied because the mandate of Section 5(1) of the Act of 2002 is for the satisfaction of both the limbs given under clause (a) and (b) to sub-section (1) of Section 5. The attachment can be sought when the property is "likely" to be transferred or concealed to frustrate the confiscation. The learned counsel for the appellant submitted that there was no material to prove transfer or concealment of the property, rather the respondent had sent a letter to the builder not to transfer the property. The counsel for the appellant further submitted that his client is not intent to transfer or alienate the property. The issue aforesaid needs to be analysed after referring to the language of the provision quoted above. The word "likely" used in the provision is of great significance. The attachment of the property does not pre-supposes actual transfer or alienation but its chances which always remain in the hands of the person holding it. Mere sending a letter to the builder is not sufficient and it does not bound the builder under the....
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.... of Vijay Madanlal Choudhary Vs. Union of India reported in 2022 SCC Online SC 929. Finding no merit, the appeal is dismissed, however, with the protection given above". We would further refer the order of this Tribunal on the same proposition in the case of Kamlesh Kanungo & Ors. Vs. Directorate of Enforcement (Appeal No. 3417/MUM/2020) decided on 24.07.2024. Relevant para of the order is quoted hereunder for ready reference: "10. We have analyzed the issue and find that as per the mandate of Section 5(1)(b). The attachment of properties can be when it is likely to be concealed, transferred or dealt with in any manner, which may frustrate confiscation. The argument is raised about the material to prove apprehension of concealment or transfer. In the instant case, the Respondents are successful in making reference of the proceedings initiated by the Union Bank of India for auction of the properties attached with them. The apprehension does not mean an action but when it is apprehended Section 5(1) can be invoked when transfer of property is "likely' to take place, The word "likely" used under Section 5(1) is of significance. Section 5(1) can thus be invoked when ED pres....
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.... be in excess to the value of the proceeds of crime. It happened because value of the attached property was not taken on current market rate but the date of its acquisition. To support value of attached property to be of Rs. 216,84,36,000/- a reference of the Valuation Report has been given. The main issue for consideration is as to whether attachment of the property should be after assessment of its value on the current market price as on the date of attachment to protect the proceeds of crime. To answer of the question mentioned above, it would be necessary to quote Section 2(1)(u) & 2(1)(zb) of the Act of 2002. Both the provisions are quoted hereunder: - "Section 2 in The Prevention of Money-Laundering Act, 2002 (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" inc....
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.... the provisions or given different meaning to a provision than provided under the Statute. The substitution of the provision of a statute by the Tribunal and even by the Court is not permissible though it can be struck down by a Constitutional Court if it is found to be ultravires to the Constitution. No challenge to the word "value" defined under Section 2(1)(zb) has been made before any Constitution Court. The Tribunal was inclined to defer the hearing of the Appeal for that but Appellant did not show inclination to challenge the Constitutional validity of the provision referred above. The Tribunal was even inclined to give liberty to the Appellant to first raise the legal issues before the Adjudicating Authority where it was kept open and is coming out from the perusal of the impugned order. The Learned Counsel for the Appellant submitted that liberty is not required in view of the clear instructions of the Appellant to press the legal issue before this Tribunal. The word "value" has been used in Section 2(1)(u) defining "proceeds of crime" and if Section 2(1)(u) & 2(1) (zb) are read together "value of any such property" can be assessed at the fair market value....
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.... are well settled. 31. It is also settled principle of law that the statute must be read as a whole and one provision of the Act should be construed with respect to the other provisions in the same Act, so as to make a consistent enactment of the whole statute. This, in fact, is the elementary rule of interpretation. {AG v. HRH Prince Ernest Augustus, (1957) 1 All ER 49; Philips India Ltd. v/s. Labour Court, (1985) 3 SCC 103 (Two Judges)}. 32. Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter. {M. Pantiah and others v.Muddala Veeramallappa and others, AIR 1961 SC 1107 (Five Judges)}. The principle for such construction is ex visceribus actus {Newspapers Ltd. v. State Industrial Tribunal, U.P. & others, AIR 1957 SC 532 (Three Judges)}. 33. It is also a settled principle of law that the same word may mean one thing in one context and another in a different context. For this reason the same word used in different sections of a statute or even when used at different places i....
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....the terms employed by the statute. It is no doubt true that the meaning should be ascertained only from the words employed in the definitions, but the get-up and context are also relevant for ascertaining what exactly was meant to be conveyed by the terminology employed. As observed, by Lord Atkinson in Keates v. Lewis Merthyr Consolidated Collieries Ltd. "In the construction of a statute it is, of course, at all times and under all circumstances permissible to have regard to the state of things existing at the time the statute was passed, and to the evils which, as appears from it provisions, it was designed to remedy." If the words are capable of one meaning alone, then it must be adopted, but if they are susceptible of wider import, we have to pay regard to what the statute or the particular piece of legislation had in view. Though the definition may be more or less the same in two different statutes, still the objects to be achieved not only as set out in the preamble but also as gatherable from the antecedent history of the legislation may be widely different. The same words may mean one thing in one context and another in a different context. This is the rea....