TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 128
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....ate Limited, M/s INX News Private Limited, Shri Karti P. Chidambaram, M/s Chess Management Services Pvt. Ltd., M/s Advantage Strategic Consulting Pvt. Ltd. Chennai and others for commission of offence punishable under Section 120-B read with Section 420 of Indian Penal Code, 1860 and Sections, 8, 13(2) & 13(1)(d) of Prevention of Corruption Act, 1988. 3. On the basis of the FIR, ECIR was recorded by the respondent against Shri Karti P. Chidambaram, M/s Advantage Strategic Consulting Pvt. Ltd. (ASCPL) and others under the Act of 2002. The facts on record reveal a conspiracy of INX Media Private Limited and other entities in receiving Foreign Direct Investment (FDI) more than the amount approved by the Foreign Investment Promotion Board (FIPB). The role of the appellant involves influencing the public servants to engage in unauthorized downstream investment by M/s INX Media Private Limited in M/s INX News Private Limited without FIPB approval. 4. The investigation revealed that M/s INX Media made an application on 13.03.2007 for approval from FIPB for issuance of equity shares and preferential share to three non-residents investors i.e. (i) Dun earn Investment (Mauritius) Pte. ....
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....the tune of Rs. 65.88 Crores was generated. Rs. 53.93 Crores was attached vide Provisional Attachment Order dated 10.10.2018 which was confirmed by the Adjudicating Authority vide order dated 21.03.2019. The appeal pertaining to the said PAO has already been dismissed by this Tribunal vide order dated 28.10.2025. By way of present appeal, the appellant has challenged the attachment of the remaining Rs. 11.95 Crores attached and confirmed vide the impugned order. Arguments of the Ld. Counsel for the appellant: 8. The Counsel for the appellant submitted that moveable and immovable properties have been attached by way of the impugned order, however, the challenge has been made with respect to the immovable property at Coffee Estate known as Swathi Estate lying in the name of the appellant. 9. Ld. Counsel for the appellant has argued that the respondent has failed to show any nexus between the property attached and the proceeds of crime. Ld. Counsel for the appellant argued that the property was acquired much prior to the commission of crime as is evident from the Sale Deed dated 26.09.1994. 10. It was further argued by the Counsel for the appellant that there is no a....
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....ving proceeds of crime as illegal gratification. 16. The evidence established that invoices were raised by M/s ASCPL and payment for the said invoices was made by M/s INX Media Private Ltd. which was the part of the gratification of USD 1 million demanded by the appellant. The statement of one, Shri V.N. Kumara Ganapathy Rao confirmed that the payment was for FIPB work of M/s INX Media Pvt. Ltd. The money received in the account of ASCPL have been routed from one account to another. Further, the money has been transferred from ASCPL Chennai to ASCPL Singapore and AEE Spain. As a part of foreign investment, money was further routed by Advantage Spain (AEE) whose parent company is ASCPL to purchase 25% shares of a French company Pampellone. A total 1245 shares were purchased amounting to a total of Euro 747,160.82. The allegation on the appellant is that out of 1245 shares, 375 shares owned by AEE have been sold by Shri Rajesh Mohanan one of the Directors of Advantage Group at a sale price of Euro 1600 per share. The sale was organized by the appellant and the sale proceeds were remitted to the new foreign bank account in the name of BNP Paribas in Marseille, France in the name of....
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....id has been settled by this Tribunal in the case of Sadananda Nayak Versus The Deputy Director, Directorate of Enforcement, Bhubaneswar in Appeal No. FPA-PMLA-5612/BBS/2023 on 14.10.2024 after referring various judgments of the High Courts and the Supreme Court. The relevant paras of the order dated 14.10.2024 are quoted thus:- 10. The Ld. Counsel 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 ....
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.... the definition aforesaid starts with "or" after the first part referred and discussed in the para above. The second part of the definition is commonly considered to be attachment of property of equivalent value. The second part applies when the property obtained or derived directly or indirectly out of the criminal activities is not available or vanished 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....
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....ndia. The argument aforesaid was not accepted and it simplifies that the definition of "proceeds of crime" has three limbs and elaborate judgment to define the "proceeds of crime" was given by the Delhi High Court in the case of Axis Bank (supra). The relevant paras are quoted herein. "106. Among the three kinds of attachable properties mentioned above, 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 obtai....
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....clarified in Para 68 of the same judgment has not been taken into consideration whereas judgement of the Apex Court on the issue is binding on the High Court. 19. The reference to the judgment in the case of Pavana Dibur (supra) has been given where the Ld. Counsel for the parties did not refer Para 68 of the judgment in the case of Vijay Madanlal 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 Hig....
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....n 2(1)(u), it would clearly whittle down the scope and intent of the definition itself. It would essentially amount to erasing the expression value of any such property as appearing in Section 2(1)(u) altogether. The Court further notes that in Seema Garg the learned Judges themselves observed that the phrase value of any such property would not mean and include any property which 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, affirmatio....
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....operty with it being permissible to proceed against the latter provided it is being attached as equal to the "value of any such property" or "property equivalent in value held within the country or abroad". However, both the italicised categories would be liable to be invoked in cases where the actual tainted property cannot be traced or found out. It is only where the respondents are unable to discover 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 ....
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.... any other property of equivalent value. The word "or" has been placed before "the value of any such property" and is of great significance. Any property of equivalent value can be attached when the proceeds directly or indirectly obtained out of the crime has been vanished or siphoned off. Here, the significance would be to the property acquired even prior to commission of crime. It is for the reason that any property 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 i....
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....to a Larger Bench. However, the Supreme Court in Vijay Madanlal Chaudhary's case (supra) has interpreted the provision in para 298, which is extracted as under: "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 of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of "property" as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering." 3.3. The aforesaid observations made by the Supreme Court enable this Bench to re-examine the enti....
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....ing tainted property and untainted property held in India; and the 'proceeds of crime' taken out of the country or any other property of equivalent value thereof. However, this Court is of the considered view that the definition can be divided into two broader categories namely tainted properties and untainted properties. The first part provides about the tainted properties derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. Thereafter, the untainted properties are further divided into two parts; the first part deals with a situation where the property derived or obtained from 'proceeds of crime' is not traceable. In the aforesaid situation the competent authority is authorized to attach or confiscate any other property of accused, which is of the same value as that of the 'proceeds of crime'. The second sub-category is a result of amendment brought in 2015 and 2019 in the Act. It provides that if the property derived or obtained from the proceeds of crime has already been taken out of the Country then the property equivalent in value held within the Country or abroad can be made liable t....
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....f Patna High Court was not drawn to part 2(i) in HDFC Bank's case (supra). Similar is the position in M/s. Himachal Amta Power Limited's case (supra). In this case, the attention of the Bench was not drawn to the second broader category of the definition. In Hemanshu Rajnikant Shah's case (supra) the Court relied upon Seema Garg's case (supra) and held that the properties acquired before the alleged crime and before the enforcement of the '2002 Act' cannot be attached. 3.9. On the other hand the judgments passed in Vijay Madanlal Chaudhary's case (supra), Axis Bank's case (supra) and Prakash Industries case (supra) completely answer the question in favour of ED. 3.10. The petitioner's counsel has also heavily relied upon Pavana Dibbur's case (supra). This Bench has carefully read the aforesaid judgment. The aforementioned case involved attachment of properly falling under the category of 'direct' or 'indirect' proceeds of crime. The complaint under Section 44-45 of 2002 Act was quashed by the Supreme Court. The Bench was never called upon to analyse the contentions based upon Section 2(i)(u) of 2002 Act, wher....