TaxTMI 
TaxTMI 
2026 (3) TMI 1450
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.... the Act of 2002), a challenge has been made to the order dated 04/07/2023 passed by the Adjudicating Authority confirming the provisional attachment order dated 17.01.2023. 2. The case was initiated in pursuance to the order of Jharkhand High Court in Writ Petition (PIL) number 803/2009. The CBI, ACB, Ranchi registered the FIR on 22.10.2009 for the offence under section 120 B, 420, 467, 468, 471 IPC and 13 (2) read with 13 (1) (d) of Prevention of Corruption Act, 1988. It was mainly against Sh. Baleshwar Baitha, Sh. Hiraman Mehto and M/s Kaushalya Infrastructure Development Corporation Ltd. apart from unknown persons. It was alleged that Shri Baleshwar Baitha and Shri Hiramal Mehto were the Executive Engineer during the year 2004 to 2006 and entered into the criminal conspiracy with M/s Kaushalya Infrastructure Development Corporation Limited and unknown others in pursuance thereof the appellant M/s Kaushalya Infrastructure submitted false/bogus invoices, showing procurement bitumen for the execution of the work awarded to it. It caused wrongful gain to the Contractor and the official concerned and corresponding loss to the Government of Jharkhand. 3. After investigation, th....
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....velopment Corporation. The amount of proceed of Rs. 1,08,95,583/- was intermingled with other business activities of M/s KIDCL. The respondent undertake to freeze a sum of Rs. 18,63,939/- on 10/11/2022 of M/s KIDCL and its associate/Companies. The remaining proceeds of crime of Rs. 90,31,644/- were found in the possession of the contractor company and subsequently routed in the business venture which includes the investment in the share capital/premium and advances into sister concerns equivalent to the proceeds of crime. The attachment of the property was made by the respondents on the analysis of the fact aforesaid. The provisional attachment order was sent for confirmation to the Adjudicating Authority which passed the impugned order and aggrieved by the said order, the appeal has been preferred by the appellant. Argument for the counsel for the appellant 6. The counsel for the appellant submitted that an agreement was executed between the appellant Kaushalya Infrastructure and RCD, Dolatganj for strengthening Parwa-Garwa road, for which 1257.122 MT of Bitumen was to be used. 26 out of 59 invoices, showing utilization of 560.959 MT of bitumen were found to be forged. The b....
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....llant Mahesh Mehra but ignored by the Adjudicating Authority. The ledger statement produced by Mahesh Mehra were relevant along with the MOU but it was taken selectively by the respondents in passing the impugned order. In the light of the fact aforesaid, the impugned order deserves to be set aside. 12. The learned counsel further submitted that the respondent even failed to trace out the trail of the proceeds of crime in regard to 26 fake bitumen invoices for a sum of Rs. 1,08,95,583/-. The KIDCL received a total sum of Rs. 4.03 crores out of which Rs. 1.39 crores is taken to have been paid to M/s Nagraj Construction, though it was an amount of Rs. 3,67,66,178. The documents were produced to indicate the aforesaid but ignored by the respondent. In fact, if the proceeds of crime exist in reference to 26 fake invoices, it was with M/s Nagraj Construction and even if it is assumed that only a sum of Rs. 1.39 crore was pass to M/s Nagraj Construction, the proceeds of crime should have been taken proportionately but ignored by the respondents. 13. The learned counsel for the appellants further made a reference to the judgement of the Jharkhand High Court in the case of appellate ....
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....reement between the appellant and RCD, Government of Jharkhand. It is also that as per the agreement, 1257.122 MT packed bitumen of 60/70 was required to be used for the road work. The allegation against the appellant was caused for generation of 26 fake bills of bitumen and accordingly non use of bitumen to the extent, it was required to execute the agreement between RCD and the appellant. 59 bitumen invoices were produced to show procurement of 963.635 MT issued by HPCL, Tata Nagar though it should have been 1257.122 M.T. Out of which 26 invoices covering procurement of 560.959 MT of bitumen were fake and forged. 18. The fake bills were not verified and confirmed by the HPCL and accordingly, the provisional attachment order was caused to attach the property of equivalent value to the proceeds of crime of Rs. 1,08,95,583/-. The appellant has not denied the agreement between M/s Kaushalya Infrastructure Development and RCD, Dolatganj for execution of the work between 0-30 kms of road. The case of the appellant is that after execution of the agreement between the two parties, i.e. M/s Kaushalya Infrastructure and RCD Dolatganj, Jharkhand, they entered into the MOU with M/s Nagraj....
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....ayment was not paid through banking channel has been given and accordingly the respondent rightly caused provisional attachment order to protect the proceeds of a crime to the extent of Rs. 1,08,95,583/-. 20. In view of the above, the argument of the learned counsel for the appellant to pass on the responsibility on M/s Nagraj Construction for execution of work and for production of the 26 invoices in lieu thereof is without substantiation through the documentary evidence. The appellant said to have paid a sum of Rs. 3,67,66,172/ - to Nagraj construction, but in absence of documentary proof, the fact aforesaid cannot be accepted. 21. The appellant, said to have passed Rs. 1.39 crore to M/s Nagraj Construction which is not the entire payment for execution of work and therefore the work was to be executed by the appellant where the quantity of the bitumen as per terms of agreement was not utilized and therefore only the public interest litigation was filed followed by an order by the High Court. The appellant has come with the case that certain part of the amount was transferred to M/s Nagraj Construction, thus even if it is Rs. 1.39 crores, the provisional attachment of the pr....
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....eeds 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 removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;" 13. The perusal of the definition aforesaid shows three limbs. In between every limb word "or" has been used to divide the definition into three parts. The first part refers to the property acquired or derived directly or indirectly out of the criminal activities relating to the scheduled offence. In the first part, all those properties which are acquired directly or indirectly out of criminal activities would be termed to be the proceeds of cri....
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....rime 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 the property of equivalent value, if the proceeds out of commission of crime is not available or vanished. If the second limb of the definition is made dependent on the first limb, it would be literally re-writing the provision or making it redundant to a great extent and for this, jurisdiction does not lie with any court of law which includes even the Constitutional Court. They can declare any provision to be unconstitutional but till then there remains presumption of constitutional validity. 16. At this stage, we may refer to Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) which is quoted hereunder. "68. It was also urged before us that the attachment of property must be equivalent in value of the proceeds o....
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....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 account for the pecuniary advantage thereby gained. This is why for such untainted properties (held in India or abroad) to be taken away, the rider put by law insists on equivalence in value. From this perspective, it is essential that, before the order of attachment is confirmed, there must be some assessment (even if tentative one) as to the value of wrongful gain made by the specified criminal activity unless it be not possible to do so by such stage, given the peculiar features or complexities of the case. The confiscation to be eventually ordered, however, must be restricted to the value of illicit gains from the crime. For the sake of convenience, the properties covered by the second and third categories may be referred to as "the alternative attachable property" or "deemed tainted property". 17. The ....
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....e 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 2022 SCC OnLine Del 2087. The relevant paras are quoted hereunder: "76. Seema Garg principally holds that the phrase value of any such property and property equivalent in value held within the country or abroad cannot be ascribed the same meaning and effect. The learned Judges comprising the Division Bench then proceeded to hold that even if the intent of the legislature was to include any property in the hands of a person within the ambit of the expression proceeds of crime‖, there would be no need to create three limbs of definition of proceeds of crime. xxxx 79. Regard must also be had to the fact that the legislation itself is dealing with contingencies where proceeds of crime are layered and their origins camouflaged and masked enabling the accused to project or claim it to be untainted ....
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....nt 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. This Court, thus, reaffirms those defences as were culled out in Axis Bank. The Court thus reiterates the interpretation accorded to Section 2(1)(u) by this Court in the aforesaid decision. Consequently, and for all the aforesaid reasons this Court finds itself unable to agree with the principles as laid down in Seema Garg as well as the subsequent decisions rendered by the Andhra Pradesh High Court in Kumar Pappu Singh Vs. Union of India and the Patna High Court in HDFC Bank Limited Vs Government of India, Ministry of Finance. FPA- PMLA-5612/BBS/2023 Page 13 of 16 81. The Court also takes note of the position that although SLP (Crl) No. 28906/2019 is pending before the Supreme Court against the decision rendered in Axis Bank, the judgement of this Court has not been stayed or placed in abeyance. The interim order....