TaxTMI 
TaxTMI 
2026 (2) TMI 1281
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....Resto. MP-PMLA-12355/JL/2023 COD MP-PMLA-12356/JL/2023 Mics MP-PMLA-12357/JL/2023 COD MP-PMLA-13711/JL/2023 Mics MP-PMLA-13712/JL/2023 COD FPA-PMLA-1375/JL/2016 and MP-PMLA-2672/JL/2016 Stay FPA-PMLA-1389/JL/2016 SHRI BALESH KUMAR (MEMBER) For the Appellants : Mr. Uttam Singh, Adv., Mr. Rajat Bhardwaj, Adv. Mr. Kaustubh Khanna, Adv. Mr. Dharmender Bhan, Adv. Mr. Prateek Kumar, Adv., Mr. Manish Kumar, Adv. Mr. Rahul Sharma, Adv. Mr. Shantanu Gaur, Adv., Mr. Mohit, Bhuvnesh Satija, Adv. Ms. Vibhooti Malhotra, Adv., Mr. Udit Sharma, Adv. and Mr. Rahul Sharma, Adv. For the Respondent (ED) : Ms. Nattasha Garg, Advocate and Ms. Shristy Singh, Advocate FINAL ORDER This Order disposes of a bunch of 15 Appeals bearing Nos. and names of the Appellants as mentioned afore. The Appeals have arisen out of the order dated 10.06.2016 (Impugned Order) passed by the Ld. Adjudicating Authority ("AA") under the Prevention of Money Laundering Act, 2002 (PMLA) in Original Complaint No. (O.C.) 542/2016. The Impugned Order confirmed the Provisional Attachment Order (PAO) No.04/2015 dated 17.12.2015, whereby attachment of several movable/ immovable properties belonging to various individuals....
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.... 7. House No. 92, New Light Cooperative House Building Society, Khurla Kingra Road, Bank Enclave-II, Jalandhar purchased in the name of Sundip Kaur W/o Avatar Singh @ Tari measuring 15 Marlas vide Vasika 12391 dated 21.12.2012 21.12.2012 Rs.18,60,000/- Cash 8. H. No. 10, at Officer Enclave-I (Village Kheri Gujran) Patiala purchased in the name of Harpreet Singh vide Vasika No. 10299 dated 29.09.2010 29.09.2010 Rs.48,00,000/- 1. Rs. 18,00,000/- by Demand Draft No. 202489 dated 29.09.2010 issued by ICICI Bank, Patiala 2. Rs.30,00,000/- vide Banker Cheque No. 884730 dated 20.07.2010 issued by PNB Housing Society, Ludiana 9. Agricultural Land measuring 8 Kanal at Village Vairoke in the name of Joginder Kaur W/o Partap Singh purchased for an amount of Rs.2,00,000/- vide Vasika No. 155 dated 28.04.2004. 28.04.2004 Rs.2,00,000/- Cash 10. Agricultural Land measuring 4 Kanal at Village Vairoke in the name of Joginder Kaur W/o Partap Singh purchased for an amount of Rs.1,00,000/- vide Vasika No. 1292 dated 29.09.2004. 29.09.2004 Rs. 1,00,000/- Cash 11. Agricultural land measuring 2 Kanal 10 Marla at village Vairoke in the na....
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....6 dated 03.12.2011 for Rs.6,48,270/- issued by Oriental Bank of Commerce, Chogawan, Distt. Amritsar 18. ½ share in land measuring 7 Kanal 7 Marla at Village Kambo, Amritsar in the name of Maninder Singh S/o Partap Singh purchased vide Vasika No. 14476 (other half share held by Late Harbir Singh S/o Kapoor Singh is not being attached. 10.01.2007 Rs. 18,37,500/- for land measuring 7 Kanal 7 Marla Cash 19. Land measuring 8 Kanal 17 marla at Village Dosanjh Khurd, Tehsil Phillaur purchased in the name of Gurjit Kumar vide Vasika No. 156. Dated 27.04.2010 Rs. 8,00,000/- Cash 20. Plot No-135 Urban Estate Phagwara measuring 200 sq. yards purchased in the name of Rekha W/o Gurjit Kumar and Swaran Luthra mother- in-law of Gurjit Kumar vide Vasika No. 2675. Dated 16.11.2005 Rs.84,13,700/- (* Rs.5,60,000/- is only the registration value of this plot. However, present valuation of the House on Plot No. 135, Urban Estate, Phagwara is Rs.84,13,700/-) Bank pay Order No. 753064 dated 14.11.2005 State Bank of Patiala Jalandhar for Rs.3,60,000/- & Rs.2,00,000/- in cash 21. Land measuring 3 Kanal 9 Marla at Village Mehli, Tehsil Banga purchase....
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....and measuring 4 Kanal at Village Bahua purchased in the name of Gurmesh Kumar vide Vasika No. 2313 09.02.2007 Rs.6,00,000/- Cash 31. Land measuring 8 Kanal at Village Rurkan Khurd, Tehsil Phillaur, purchased in the name of Gurmesh Kumar jointly with his brother Mahesh Kumar vide Vasika No. 42 Dated 12.04.2004 Rs.7,00,000/- Cash 32. ¼ share in land measuring 4 Kanal at Vilalge Rurkan Khurd purchased in the name of Gurmesh Kumar jointly with his brother Mahesh Kumar vide Vasika No. 964 Dated 14.10.2004 Rs.3,50,000/- Cash 33. Land measuring 19 marlas at Village Rurkan Khurd purchased in the name of Gurmesh Kumar vide Vasika No. 1382 Dated 16.01.2006 Rs.9,50,000/- Cash 34. Land measuring 4 Kanal 8 Marla 4 sarsaian at village Dosanjh Khurd purchased in the name of Gurmesh Kumar vide Vasika No. 262. Dated 02.05.2012 Rs.11,40,000/- Cash 35. Land measuring 3 Kanal 2.5 marlas at village Dosanjh Khurd purchased in the name of Gurmesh Kumar vide Vasika No. 2174 Dated 03.02.2010 Rs.5,00,000/- Cash 36. ½ share in 12 kanal in Village Bahua, Tehsil Banga purchased in the name of Gurmesh Kumar j....
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....urchased in the name of Harmesh Kumar Gaba vide Vasika No. 2269 02.03.2009 Rs.13,60,000/- Cash 50. Land measuring 4 kanal 8 marla 4 sarsaian at village Dosanjh Khurd purchased in the name of Harmesh Kumar Gaba vide Vasika No. 538 01.06.2012 Rs.11,40,000/- Cash 51. Land measuring 3 kanal 5 marla at village Dosanjh Khurd purchased in the name of Harmesh Kumar Gaba vide Vasika No. 540. 01.06.2012 Rs.8,30,000/- Cash 52. Land measuring 4 kanal 8 marla 4 sarsaian at village Dosanjh Khurd purchased in the name of Harmesh Kumar Gaba vide Vasika No. 263. 02.05.2012 Rs.11,40,000/- Cash 53. ½ share in land measuring 3 kanal 5 marla at village Rurka Khurd purchased in the name of Harmesh Kumar Gaba purchased vide Vasika No. 168. (other half share owned by Harbinder Singh S/o Harbhajan Singh is not being attached.) 09.05.2008 Rs.20,00,000/- * (* Total amount paid is Rs.40,00,000/-. However, half share owned by Harbinder Singh S/o Harbhajan Singh is not being attached.) Cash 54. Land measuring 4 kanal at village Rurka Khurd purchased in the name of Harmesh Kumar Gaba vide Vasika No. 1045. 19.11.2008 Rs.7,50,0....
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....39 28.12.2009 Total Rs.10,50,000/- Cash 67. Land measuring 9 Marla at village Rurka Khurd, Tehsil Banga purchased in the name of Harmesh Kumar Gaba vide Vasika No. 547 13.08.2003 Rs.3,66,000/- Cash 68. Land measuring 4 marla 6 sarsaian at Goraya purchased in the name of Harmesh Kumar Gaba vide Vasika No. 58 29.08.2001 Rs.3,50,000/- Cash 69. Land measuring 7 marla at village Rurkan Khurd purchased in the name of Harmesh Kumar Gaba vide Vasika No. 974 07.11.2008 Rs.4,50,000/- Cash 70. ½ share in land measuring 17 kanal 17 Marla 6 sarsaian at Goraya purchased in the name of Harmesh Kumar Gaba jointly with Gurmesh Kumar S/o Chunni Lal Gabba vide Vasika No. 1398 11.02.2011 Rs.40,28,000/- Cash 71. ½ share in 14 kanal 8 marla at Rurkan Kalan in the name Khushant Gabba S/o Harmesh Kumar jointly with Mahesh Kumar S/o Chunni Lal Gabba vide Vasika No. 1742 19.03.2010 Rs.7,00,000/- Cash 72. Land measuring 28 kanal 16 marla at Rurkan Kalan purchased in the name of Harmesh Kumar Gaba vide Vasika No. 1743 19.03.2010 Rs. 12,00,000/- Cash 73 Land measuring 7 Kanal 10 Marlas at vill....
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....0/- Cash 80. Land measuring 4 kanal 15 marlas at village Mehli, Tehsil Banga, District Shaheed Bhagat Singh Nagar purchased in the name of Gurmesh Kumar Gaba S/o Chunni Lal vide Vasika No. 531 dated 06.06.2007 06.06.2007 Rs. 8,91,000/- Cash 81. Plot No. 330 measuring 16 Marlas 104 sq. feet and building constructed on it at Village Gadaipur, Tehsil & District Jalandhar in the name of M/s. Birji Electricals vide Vasika No. 6057. (1/2 share in respect of Harmesh Kumar and Mahesh Kumar is being attached) 05.12.2007 1/2 share of Harmesh Kumar and Mahesh Kumar amounting to Rs. 30,14,388/- out of Rs. 60,28,775/- which is the value of this property. Cash Movable Properties Sl. No. Account No. Date of Issue Name of the Person Amount 1. 62419415046 16.04.2015 Vaibhav Mehra 2,27,717/- 2. 62419401860 07.04.2015 Vaibhav Mehra 2,20,245/- 3. 62419401940 07.04.2015 Vaibhav Mehra 6,71,839/- 4. 62419402003 07.04.2015 Vaibhav Mehra 5,59,864/- 5. 62419402105 07.04.2015 Vaibhav Mehra 6,70,296/- 6. 62419402161 07.04.2015 Vaibhav Mehra 6,71,839/- 7. 6241940222....
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..... Ranjit Singh -2,92,075/- 3. M/s White Rose Pharma Chem. Ltd., Goraya 1. Chunni Lal 2. Harmesh Kumar 3. Sukhdev Singh . Dhaliwal 4. Nirmal Kaur Dhaliwal 5. Amandeep Singh Dhaliwal 6. Gurjit Kumar 7. Damanveer Singh Rs. 13,70,914/- (being 3/7 share of directors mentioned at Sr. No. 1,2 & 6 out of total amount of Rs. 31,98,800/- 4. M/s White Rose Estate and Investment Pvt. Ltd. 1. Chunni Lal 2. Sukhdev Dhaliwal 3. Nirmal Kaur 4. Sudesh Rani Rs. 59,80,488/- (being ½ share of directors mentioned at Sr. No. 1 and 4 out of total amount of Rs. 1,19,60,977/-) 5. M/s Shaan Fibres Private Limited, G.T. Road, Goraya 1. Chunni Lal 2. Gurmesh Kumar 3. Sadhu Ram Mittal 4. Mahesh Kumar 5. Harmesh Kumar 6. Smt. Sudesh Rani Rs. 65,00,000/- (being 5/6 share of directors mentioned at Sr. No. 1, 2, 4, 5 and 6 out of total amount of Rs. 78,00,000/-) 6. M/s Shiva Cold Storage & Ice Factory 1. Sukhdev Dhaliwal 2. Nirmal Kaur 3. Chunni Lal 4. Dhamanvir Singh 5. Nirmaljit Kaur 6. Smt. Sudesh Rani Rs. 27,37,985/- (being 34% share of partners 3 and 6 out of total amount of Rs. 80,52,898/-) 7....
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....m the regular business. Ld. Counsel for the Respondent submitted that during investigation statements of a number of accused persons were recorded and several documents from different agencies/authorities have also been collected by the Respondent Directorate. During the course of searches conducted, Indian Currencies, Foreign Currencies and incriminating documents have been recovered and seized. The accused and their associates have siphoned off the cash proceeds generated from the drug trade and the same has been invariably routed into moveable/immovable properties for laundering the proceeds of crime. Appeal Nos. FPA-PMLA-1404/JL/2016 & FPA-PMLA-6564/JL/2023 Arguments by Appellant 4. Ld. Counsel for the Appellants in Appeal Nos. PMLA-1404/JL/2016 and PMLA-6564/JL/2023 filed by Shri Vaibhav Jalota/Mehra and Shri Anil Kumar Jalota respectively, argued that 34 FDRs of total amount of Rs. 1,13,86,055/- in the name of Shri Vaibhav Mehra are accounted for. Ld. Counsel for the Appellants submitted that the Appellant entered into negotiations with one Smt. Bhawna and Smt. Payal, related to Shri Gurmesh Kumar Gaba, for selling a part of his ancestral property situated at Phagwar....
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....required under the sale agreements dated 25.07.2012. The Appellant was to sell 58 Marla of land to Sh. Gurmesh Kumar Gaba and Sh. Chunni Lal Gaba which was to be executed and registered on or before 29.01.2014. The Appellant received an amount of Rs. 84,00,000/- (Rs Eighty-Four Lakh) from Sh. Gurmesh Kumar Gaba and Sh. Chunni Lal Gaba towards earnest money which was forfeited. Therefore, it is important to mention that in the present case, the Appellant is only concerned with the amount of Rs. 84 Lakhs and Rs. 33 lakhs which were received as earnest money and were forfeited by the Appellant since the registration for these parcels of land were not done by Sh. Gurmesh Kumar Gaba, Sh. Chunni Lal Gaba, Smt. Payal and Smt. Bhavana. The prospective buyers of both the lands failed to make the remaining payment and consequently failed in executing and registering the sale deeds within the stipulated timeline. This failure gave the Appellant the right to forfeit the entire earnest amount as agreed in the sale agreement. The Appellant retained the entire amount of Rs. 1,17,00,000/- (One Crore Seventeen Lakh Rupees Only) received as earnest money from the prospective buyers of both the parce....
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....to Sh. Anil Kumar Jalota R/o Amritsar to purchase plot which has also been written in the diary marked A-1 seized by the Income Tax authorities from the premises of their firm M/s C.G. Real Estate, Goraya. The Appellant Sh. Anil Kumar Jalota S/o Sh. Maheshwar Nath disclosed in his statement under section 50 of PMLA, that he entered into an agreement on 25.07.2012 with Sh. Gurmesh Kumar S/o Sh. Chunni Lal and Sh. Chunni Lal S/o Sh. Mehnga Ram to sell a plot measuring 2 kanal 18 marla 7 Sarsain at Phagwara for an amount of Rs. 7,62,66,667/- and received amounts totalling to Rs. 84,00,000/- from them. He also entered into another agreement on 25.07.2012 with Smt. Payal w/o Abhimanyu and Smt. Bhawana w/o Kirti Vardhan to sell a plot for an amount of Rs. 3,81,33,333/- and received an advance amount of Rs. 33,00,000/- from them. It is also important to mention that Smt. Payal is relative of Sh. Chunni Lal Gaba. The said purchasers failed to make full payments as per the agreements and therefore the sale deeds were not executed. The Appellant created fixed deposits in the name of his son Vaibhav Mehra. From the abovementioned it is clear that the Appellant and his son Vaibhav Mehra have c....
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....ouflage the flow of funds from the Gaba family to the Appellants. In addition, the letter dated 06.11.2015 of Sh. Gurmesh Gaba and recovery of diary by the Income Tax Authority clearly corroborate that the arrangement was entered into by the Appellants with the Gaba family so as to provide the 'parking place' for the Proceeds of Crime generated out of the trafficking of Narcotics and Psychotropic Substances. Reference to the suits filed by the Appellants in the Court of Ld. Civil Judge, Phagwara provided for injunction to prevent the alienation of the ancestral properties owned by the Appellants and hence, strengthen the inference drawn about the nature of the transactions indulged in by the Appellants. These were attempts to give credence to these transactions so as to hoodwink their true nature as to layer the proceeds of crime. The creation of the FDRs either in the sole name of Shri Vaibhav Mehra or in the joint names of father and son would in fact go on to show that the Appellant Shri Anil Kumar Jalota made efforts to bring in his son, so as to distance himself from the said allegations. No evidence has been produced as to show whether the amount transferred in either cheque ....
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.... Swarn Luthra had been able to save and retain certain amount in the form of FDRs which were duly reflected in the Income Tax Returns (ITRs). On these FDRs the Appellant availed overdraft facility for an amount of Rs. 3,60,000/- to purchase the said property. Another overdraft facility of Rs. 2,60,000/- was also availed against the FDRs. From the said facility Rs. 2,50,000/- was withdrawn and out of which Rs. 2,00,000/- was paid to the seller in cash and the balance amount was used for the payment of the stamp duty and meet other expenses. The Loan amount of Rs. 3,60,000/- has been repaid by the Appellant Smt. Swarn Luthra from her own income by depositing cash/cheques of small denomination over a period of five years. Also, the loan amount of Rs. 2,50,000/- plus interest totalling to Rs. 3,12,505/- was repaid in 2009 from the saving bank account of the Appellant Smt. Swarn Luthra. 19. Ld. Counsel for the Appellant submitted that there are no allegations against the Appellant Smt. Swarn Luthra as she has not been made an accused in any of the complaints. Moreover, the attached property was purchased and constructed before the occurrence of crime. Ld. Counsel pointed out that App....
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..... She also did not produce the source of funds for constructing a house on this plot. It is, therefore, clear that the plot was purchased by Sh. Gurjit Gaba in the name of his wife and mother-in-law and a double storey house was constructed by Sh. Gurjit Gaba with the proceeds of crime. 22. Ld. Counsel for the Respondent contended that the Appellant Smt. Swarn Luthra in order to justify the source of funds for constructing the house on the plot under-estimated the cost of construction to only Rs.2,90,000/-. Ld. Counsel contended that it is a double storey house which could not have been constructed with a meagre amount of Rs.2,90,000/-. The present value of the house as per the Approved Valuer is Rs. 84,13,700/-. Sh. Gurjit Gaba in his statement dated 24.10.2014 has admitted that the plot was purchased by him for an amount of Rs.14,00,000/-. Ld. Counsel for the Respondent, therefore, rejected the explanations of the Appellant Smt. Swarn Luthra about the valuation of the house and the source of funding of the plot of land and of the construction of the house. The Appellant failed to give any documentary evidence about source of funds towards the construction of the house. The App....
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....ot apply to the facts of the present case where there is close relationship of the Appellant with Shri Gurjit Gaba who is allegedly involved in the scheduled offence. Shri Gurjit Gaba is already convicted in the scheduled offence vide Order dated 13.02.2019 in NDPS 118/2018 by Ld. Special Judge CBI, Punjab Sas Nagar (Mohali) in State vs. Davinder Singh & Ors. Moreover, there are contradictions between the facts and the explanations about the funding for the said property as given by the Appellant and as given by Shri Gurjit Gaba. As mentioned afore Shri Gurjit Gaba in his statement has stated that it was he who had purchased the plot and constructed the house thereupon. The contention of the Ld. Counsel that the Appellants Smt. Swarn Luthra and Smt. Rekha Rani have not been made accused in the Scheduled Offence has been dealt with by the Tribunal. This Tribunal in its Order dated 01.05.2024 in Appeal No. FPA-PMLA-4358/KOL/2021 relating to the matter of Ayush Kejriwal vs. Deputy Director, Directorate of Enforcement has observed the following: "14. The definition of 'proceeds of crime‟ was given interpretation by the Apex Court in the case of Vijay Madanlal Choudhary a....
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....he issues as brought out in the following paragraphs: "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 (2023 SCC OnLine SC 1586) and also of Kerala High Court in the case of Satish Motilal Bidri (WP(CRL) No. 406/2024, decided on 28.06.2024) 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, 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....
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....e" 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 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 t....
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....uct 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, 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 ....
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....as 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 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 202....
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.... 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 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 third-party interests created for valid consideration....
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....n 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 "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 tha....
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....e owner of the property in question. The property was purchased even prior to birth of the Appellant by his father Sh. Ram Lubhaya. The father of the Appellant is living in joint family with other family members in the said property. Ld. Counsel alleged that the Appellant has been falsely implicated in the case. The father of the Appellant is not an accused in any case. The property is used as a dwelling unit for the residence of the family. There is no ground for an apprehension that the property shall be transferred or alienated. The Respondent has made the averment without any basis or material on record to fulfil the requirement under Section 5 of the Act of 2002. The apprehension as required under Section 5 of the Act of 2002 has to be reasonable and on the basis of some material. 28. Ld. Counsel for the Appellant submitted that Sh. Ram Lubhaya father of the Appellant purchased the plot in the year 1978 and a house was constructed on the said plot in the year 2005. The attachment was done by the Enforcement Directorate in the year 2015 under the impression that the Appellant is the owner of the said property which is incorrect as the property is registered in the name of Sh....
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....ointed out that the Ld. AA did not even issue Show Cause Notice u/s. 8(1) of PMLA to Shri Ram Lubhaya. Ld. Counsel pointed out the in view of the failure to comply with the second proviso of Section 8(1) of PMLA there has been serious contravention of the principles of natural justice. He pleaded that on this sole ground the impugned order against the Appellant for the impugned property listed at Serial No. 6 of the table at Paragraph No. 1 of this Order should be set aside. 33. Ld. Counsel for the Appellant further submitted that the valuation report relied by the Respondent is exaggerated and is based on the present market value of the property. Apart from the statements of the Appellant and his father Sh. Ram Lubhaya, the Title Document also verifies the fact that the said property is in the name of the father of the Appellant. Hence, the valuation report submitted by the Refine Engineers and Associates cannot be relied on as the said report states that Sh. Suresh Kumar is the owner of the said property which is factually incorrect. The cost of construction has been taken as too high. The building was constructed about more than 8 years back. The construction cost has to be c....
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....g Authority has reason to believe that any person has committed an 1[offence under section 3 or is in possession of proceeds of crime], it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub- section (1) of section 5, or, seized [or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property." 36. Ld. Counsel therefore argued that on this sole ground the confirmation of the provisional attachment of the said property vide the Impugn....
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....along-with the report filed by the police u/s. 173 Cr.P.C. in connection with the said F.I.R. After planting the above-mentioned drugs on the Appellant in the said F.I.R. no. 241, the officials of Punjab Police further falsely implicated the Appellant in another F.I.R No. 50 dated 03.04.2013, u/s. 22, 29, 61/85 NDPS Act, P.S Urban Estate, Patiala without there being any grounds of arrest and evidence of any kind. It is contended that, there was no recovery of contraband either from the Appellant or at his instance under the said F.I.R. no. 50 dated 03.04.2013. 39. Ld. Counsel for the Appellant submitted that the immovable property of the Appellant i.e., flat no. C-35, Ahinsa Vihar, Sector 9. Rohini, Delhi was jointly purchased by the Appellant and his elder brother Sh. Sanjeev Kumar Jain in the year 1988 by making payment of total consideration through demand drafts from their respective bank accounts. The Directorate of Enforcement conspired with the local police (Punjab Police). On 05.08.2013 when the appellant was in judicial custody, Sh. Niranjan Singh Assistant Director (Directorate of Enforcement) along with various other officials including many officials of Punjab Police....
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....leadings made in the Appeal that a family settlement was done between the two brothers that the Appellant Sh. Ajay Jain shall be the exclusive owner of the impugned property and is elder brother Sh. Sanjeev Kumar Jain shall not claim any right, title and interest in the said property. Ld. Counsel prayed for allowing the Appeal. Arguments by the Respondent 41. Ld. Counsel for the Respondent argued that the Appellant was running a business of Poultry feed raw materials and chemicals in the name of M/s Ajay Trading Co. She further argued that the Appellant had purchased 100 kg of Pseudoephedrine in 2012 for an amount of Rs.68,00,000/- and then sold it to Sh. Suresh Kumar for an amount of Rs.70,00,000/- and had earned a profit of Rs. 2,00,000/- from the said deal. 42. Ld. Counsel for the Respondent contended that the investigation has revealed that the Appellant was involved in drug trafficking along with Sh. Chunni Lal Gaba, Sh. Gurjit Gaba and Sh. Varinder Singh. Ld. Counsel argued that since Rs. 70,00,000/- was acquired by the Appellant through the sale of Pseudoephedrine covered under the NDPS Act, the sale proceeds are nothing but the POC. Since the Appellant failed to po....
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.... value to the extent of Rs. 70,00,000/- only." 44. In this regard the issue has been dealt with by this Tribunal in the case of FPA-PMLA-2909/CHD/2019 M/s. Besco International FZE vs. The Deputy Director Directorate of Enforcement, Chandigarh dated 31.07.2024. The relevant para of the said judgment is quoted hereunder: "It is not that only those properties which have been were derived or obtained directly or indirectly out of the crime can be attached rather in case of nonavailability of the property derived or obtained directly or indirectly rather when it is vanished or siphoned off, the attachment can be of any property of equivalent value. It is necessary to clarify that the proceeds of crime would not only include the property derived or obtained directly or indirectly out of the criminal activity relating to the scheduled offence but 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 proper....
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....oephedrine, which is a controlled substance, mentioned in Schedule A annexed to the NDPS (Regulation of Controlled Substances) Order, 2013 published in the Gazette of India dated 26.03.2013, meaning thereby that sale/purchase of pseudoephedrine prior to 26.03.2013 was not a scheduled offence under NDPS Act. That for the sake of argument, even if it is to be believed, then any property which was purchased by anyone involved in the sale of pseudoephedrine before 26.03.2013, also cannot be stated to be from the proceeds of crime, as alleged by the complainant. Ld. Counsel stated that based on the case no. ECIR No. 02/JLZO/2013, u/s. 3/4 Prevention of Money Laundering Act, a complaint has been filed by ED u/s. 5(5) of the PMLA before the Adjudicating Authority on 11.01.2016 for adjudication of the properties attached by PAO No. 04/2015 dated 17.12.2015. The Adjudicating Authority passed the impugned order in a casual and routine manner without considering the facts and documents relied upon by the Appellant and without proper application of mind. 48. Ld. Counsel for the Appellant further submitted that the Appellant Smt. Joginder Kaur had expired on 24.12.2022 and an Application for....
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....ich were laundered by purchasing immovable properties in his name and in the name of wife and mother. She further argued that the Appellant Shri Maninder Singh in his statements dated 12.01.2015 and 13.01.2015 had himself explained the modus oprandi for the drug trafficking. She argued that none of the three appellants could explain the source of funds to purchase the impugned properties. 51. Ld. Counsel for the Respondent also stated that for many of the properties the payment for their acquisition was made in cash. Even where payment was made in cheque, the Appellants failed to give evidence of lawful source of such funds. She stated that for the property at Serial No. 12 of the Table in Paragraph 1 of this Order, the investigation has revealed that part of the funds came from the sale of the property which had been provisionally attached vide PAO dated 31.03.2015. She also contended that for the property at Serial No. 13 of the Table in Paragraph 1 of this Order, payment was made from the account of Smt. Joginder Kaur in which certain credits were made which could not be explained. Ld. Counsel contended that merely referring to the funds being from agricultural income and hav....
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....ct. The pleading in the Appeals show that the aforementioned properties at Serial No. 9 & 10 in the name of the deceased Appellant Smt. Joginder Kaur has been contended to have been included in Serial No. 12 of the Order dated 09.03.2015 of the Ld. Competent Authority and Administrator, SAFEM (FOP) & NDPS, New Delhi. However, on comparison of the said Order with the impugned order the description of the two properties do not match. While the property at Serial No. 9 is of 8 Kanal & Serial No. 10 is of 4 Kanal the aforementioned Order dated 09.03.2015 states that the property in the name of Smt. Joginder Kaur was of 51 Kanal and 17 Marlas. No identifying particulars have been submitted by the Appellant or her LR to corroborate the contention made in the Appeal. With respect to the properties at Serial No. 14 & 15 of the impugned order in the name of the Appellant Shri Maninder Singh the prayer in the Appeal has been made that these were also already attached vide the aforementioned order dated 09.03.2015 of the Ld. Competent Authority and Administrator, SAFEM (FOP) & NDPS, New Delhi. However, in these pleadings not even the Serial No. in the Table of the said order dated 09.03.2015 ....
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....e offence of money-laundering 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 provisions (Section 3, as amended until 2013 and were in force till 31.07.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 20) 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." 55. These three Appeals are therefore dismissed. Liberty is granted to the Appellants to approach this Tribunal in case the conviction orders are reversed at subsequent stage. Appeal No. FPA-PMLA-1386/JL/2016 Arguments by Appellant 56. Ld. Counsel for the Appellant stated that the Appellant Sh. Davinder Singh Nirwal migrated to Canada in 1972 and has been Canadian citizen since 1978. He was working as a truck driver in a company and purchased four trucks of his own. His son Sh. Roy Bahadur Nirwal ....
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....Counsel for the Respondent also challenged the lawful acquisition of the agriculture land acquired by the Appellant. She contended the same was also purchased from the proceeds of crime in the absence of any explanation. Ld. Counsel for the Respondent stated that the Appellant had failed to produce any evidence of source of funds transferred from Canada to India and Cash amounts deposited in his Bank account. She contended that the Appellant used the accounts of his mother and brother to layer the proceeds of crime. 61. Ld. Counsel for the Respondent pleaded that the Appeal No. PMLA- 1390/JL/2016 filed by Sh. Roy Bahadur Nirwal was not pursued by him and was dismissed for non-prosecution by this Tribunal on 10.04.2023. She further informed that this Tribunal vide Order dated 28.08.2017 in Appeal No. FPA-PMLA-1423/JL/2016 filed by the ICICI Bank allowed the Appellant Bank to take possession of the properties mortgaged with it as secured assets. The Tribunal further allowed the bank to sell the said properties as listed at Serial No. 1 of the Table in Paragraph 1 of this Order. Ld. Counsel for the Respondent further informed that the Respondent Directorate had filed an Appeal bear....
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....ctory nor was he aware of its functioning. Ld. Counsel for the Appellant Shri Khushant Gaba submitted that the Appellant is a student and lives with his father Sh. Harmesh Kumar Gaba and his family. This Appellant as well has not been named as an accused in any of the FIRs. 64. Ld. Counsel for the Appellant argued that just because the Appellant is the brother of Sh. Chunni Lal Gaba and held certain properties in the joint name with his brother, he has been made an accused in the prosecution complaint under PMLA filed by the Respondent. Ld. Counsel for the Appellant further contended that just because the Appellant Shri Khushant Gaba's father is the brother of Sh. Chunni Lal Gaba and held certain properties in the joint name with his brother, he too has been made an accused in the prosecution complaint filed by the Respondent. It is important to mention that the properties that were jointly developed have been distributed among themselves by purchasing new assets in the name of the Appellant and his family as part of family settlement. Both the Appellants i.e. father and son are not involved in any illegal activity or scheduled offence and have only been made a party because of ....
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....t of the aforesaid there exists no case against the two Appellants and the impugned order ought to be set aside. He prayed for allowing the Appeals. Arguments by Respondent 69. Ld. Counsel for the Respondent contended that the factory was established in the year 2007. At that time the Appellant was living with Sh. Chunni Lal Gaba. The submissions made by the Appellant that the factory was established in 2009 is incorrect. 70. Ld. Counsel for the Respondent further contended that the Appellant is the brother of Sh. Chunni Lal Gaba and jointly owned a property in Banga Colony mentioned at serial no. 23 of the Table in the Paragraph 1 of this Order. She stated that the Appellant has informed that they sold the said property, divided the sale proceed and used the sale proceed to purchase other properties. It was further submitted that the value of the joint property was Rs. 10,50,000/-. However, the properties purchased after the sale of the said property were of higher value hence the submission made by the Appellant is incorrect. 71. Ld. Counsel for the Respondent submitted that several properties of the two Appellants have been attached. They have failed to place any evi....
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....also Director/Partner, except M/s Birji Electricals wherein Sh. Chunni Lal Gaba retired and was substituted by Sh. Mahesh Kumar. The shares/net worth of these Companies/Firms have been attached vide the Impugned Order. The Appellant Shri Harmesh Gaba has failed to produce any evidence documentary or otherwise, as to show the lawful generation of income and its utilisation for purchase of the impugned properties in his name and in the name of his son. 74. Even though the Appellants have blamed their relationship with Shri Chunni Lal Gaba for the invocation of scheduled offences and money laundering offences against them, such denial cannot be accepted in view of the strong nexus which has existed between Shri Harmesh Gaba and his family with Shri Chunni Lal Gaba and his family not only personally but also professionally. As mentioned afore quite a few properties are still jointly owned by the members of the two families. Shri Harmesh Gaba and Shri Chunni Lal Gaba are Directors/Partners in M/s White Rose Pharma Chemicals Ltd., Shiva Cold Storage and Ice Factory, M/s, Shiva Agriculture Farm and M/s. C.H. Real Estate. Shri Chunni Lal was earlier partner in M/s. Briji Electricals alo....
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....hased by the Appellant and his family members/companies etc. But the Investigation Officer (I.O.) rejected the plea of the Appellant and issued PAO No. 04/2015 for the attachment of the immovable property at Serial No. 19 of the Table in Paragraph 1 of this Order. 77. Ld. Counsel for the Appellant stated that the Respondent has attached the property of the Appellants as direct POC which is incorrect. The Respondent and the Ld. AA have arrayed the Appellants as accused. The Respondent has placed nothing on record to show that either the properties purchased by the Appellants were from the POC or have been purchased with the ill-gotten money. The entire case was based upon the statements without any corroborating evidence. The documents which have been seized would only reveal business dealings of the Appellants. Ld. Counsel for the Appellants submitted that the Respondent Directorate has failed to show as to how the Appellants were involved in the process of money laundering. Respondents' case is only dependent on the diary entries mentioning certain transactions. The Appellants have proper licence and have been running companies and maintaining proper entries of all the necessar....
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....of Shri Chunni Lal Gaba in the scheduled offence cannot lead to the inference that the attachment of his properties is nullified. Ld. Counsel for the Respondent argued that unless the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of the scheduled offence are quashed in its entirety, the scheduled offence will continue to exist and therefore the prosecution of a person who alone is acquitted in the scheduled offence shall continue under the provisions of PMLA. It therefore follows that the existence of the proceeds of crime and money laundering cannot be ruled out. Hence, the attachment of the properties of such person cannot be set aside merely on the ground that he has been acquitted in the scheduled offence. Ld. Counsel further argued that the properties of the Appellant Shri Chunni Lal Gaba which have been attached, besides being those which are individually owned by him, are also those which are jointly owned by him with other individuals and those which he owns by virtue of his position in various companies. Ld. Counsel for the Respondent stated that the Appellant Shri Gurjit Gaba has been conv....
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....Sh. Gurmesh Gaba and his brother Sh. Mahesh Gaba. While Sh. Mahesh Gaba is not an Appellant in this bunch of Appeals, he was Defendant No. 15 in the Adjudication Proceedings before the Ld. AA. This very fact of acquisition of such a large number of properties raises questions about the manner in which such properties have been created and have since been maintained. The dubious nature of coming into existence of such a large number of properties cannot but lead to an inference about the nature of such properties being tainted in the absence of any adequate explanation about the funding of these properties. The use of cash for the acquisition of these properties confirms the suspicion about the properties being tainted. It is also on record that all the three Appellants have been investigated for trafficking in Narcotics Drugs and Psychotropic Substances. While the Appellant Shri Chunni Lal Gaba and Shri Gurjit Gaba were arrested under the provisions of the NDPS Act, the investigation also revealed that Shri Gurmesh Gaba had kept record of the suspect transactions. In fact, Shri Gurjit Gaba has since been convicted under the provisions of the NDPS Act. These facts as mentioned afore....
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....nefit if he is still under trial for the money laundering offence. In this regard, Paragraph 18 of the Judgment of the Hon'ble Supreme Court dated 29.11.2023 in the matter of Pavana Dibbur Vs. Directorate of Enforcement (2023 SCC OnLine SC 1586) is cited below: "In a given case, if the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of the scheduled offence are quashed in its entirety, the scheduled offence will not exist, and therefore, no one can be prosecuted for the offence punishable under Section 3 PMLA as there will not be any proceeds of crime. Thus, in such a case, the accused against whom the complaint under Section 3 PMLA is filed will benefit from the scheduled offence ending by acquittal or discharge of all the accused. Similarly, he will get the benefit of quashing the proceedings of the scheduled offence. However, an accused in PMLA case who comes into the picture after the scheduled offence is committed by assisting in the concealment or use of proceeds of crime need not be an accused in the scheduled offence. Such an accused can still be prosecuted under PMLA so long as the s....