TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 219
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....06, 420, 506 r/w 34 of IPC, 1860 and section 5 of Telangana Deposits of Financial Establishments Act, 1999 and section 4 and 5 of the A.P. Protection of Depositors of Financial Establishments Act, 1999 against Smt. Nowhera Shaik, M/s Heera group of companies and related others. After completing the investigation, chargesheet was filed by WCO, A-Division central crime station, detective department, Hyderabad, Telangana against Nowhera Shaik, Biju Thomas, Molly Thomas, Shaik Abubakar, Khamar Jahan Shaik, Mubarak Jan Shaik. Shaik Naheena, Shaik Mohammad Ashraf, Shaik Ismail, Shaik Abdul Qaiyum. Yaseen Baig. Shaik Abdul Rahaman, Shaik Noorulla, M/s Heera Group of Companies and M/s Suvan Technologies Solutions India Pvt. Ltd. for offences under sections 406, 409, 420 and 506 & 120-B of IPC, 1860, and section 5 of Telangana Depositors Financial Establishments Act, 1999 and section 6 of the Price Chits & Money Circulation Schemes (BANNING) Act, 1978. 3. It was alleged that Smt. Nowhera Shaik and related others have collected Rs. 5600 crores as unauthorized deposits from around 1,72,000 investors (BIG members) across the country. They engaged market executives and direct selling agents ....
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....he provisionally attached properties were acquired much prior to the alleged commission of crime and, therefore, could not have been considered to be the proceeds of crime. The properties had no nexus with the crime and thus, could not have been attached. In the light of the aforesaid, the impugned order deserves to be set aside. 10. The learned counsel for the appellants made reference to the judgment of the 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, the judgment of Kerala High Court in the case of Satish Motilal Bidri vs. Union of India reported in 2024 SCC OnLine Ker 3410, and the judgment of this Tribunal in the case of Omar Ali Obaid Balsharaf vs. Deputy Director, Directorate of Enforcement reported in 2019 SCC OnLine ATPMLA 49. The property acquired prior to commission of crime would not fall in the definition of "proceeds of crime" defined under Section 2(1)(u) of the Act of 2002. The prayer was accordingly made to cause interference in the impugned order. 11. The learned counsel for the appellants did not raise any other issue than referred to above despite ....
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.... 8 of them in UAE and Saudi Arabia. It was found that Smt. Nowhera Shaik and related others have diverted the depositor's money to their personal accounts for wrongful gain and utilized it for purchase of movable and immovable properties. An ECIR was accordingly recorded finding a case of money laundering. 15. The appellant Syed Akhtar is a partner in M/s SA Builders and Developers and the proceeds of crime has been layered by Smt. Nowhera Shaik and Heera Group in lieu of purchasing land. A total proceeds of crime amounting to Rs. 78,63,45,010/- has been layered to M/s SA Builders and Developers, Mr. Syed Akhtar and Mr. Syed Afsar. Out of the said proceeds Rs. 41.05 Crores is lying with M/s Neelanchal Technocrats Pvt. Ltd. and the balance of Rs. 37,58,45,010/- is still with the appellants. 16. The learned counsel for the respondent argued that proceeds of crime received towards purchase of land were utilized by the appellants and thus, the attachment of the properties in the name of the appellants has been made for "value equivalent". 17. It was on ground that the provisionally attached properties were acquired prior to the commission of the crime and thus, could not have ....
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....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, 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....
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....ds 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 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 t....
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...." 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 account for the pecuniary advantage thereby gained. This....
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....i 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 2022 SCC OnLine Del 2087. The relevant paras are quoted her....
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....nal 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. This Court, thus, reaffirms those defences as were cul....
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...., 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 that the judgment in the case of Pavana Dibur (supra) does ....
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....ould 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 commission of crime then, also under certain circumstances, it can be attached for "the value of any such property." 23. At this stage, it is reiterated that any other interpretation other than the one taken by Delhi High Court in the cases of Axis B....
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.... Supreme Court enable this Bench to re-examine the entire issue, as in the considered opinion of this Bench, the judgment passed in Seema Garg's case (supra) is no longer a good law. This Court has taken this view due to the subsequent interpretation by the Supreme Court, which has superseded the legal principles established in Seema Garg's case (supra). 3.4. It is evident that the original (unamended) definition of phrase 'proceeds of crime' was structured into two distinct parts. The first part relates to the property derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence, whereas, the second part relates to the value of any such property where the proceeds of crime are not traceable. This clearly means that if the property derived or obtained, directly or indirectly, from the proceeds of a crime of scheduled offence is not traceable, then any property of equivalent value falls within the scope of the expression 'proceeds of crime'. In 2015, the amendment restructured the definition into three parts to cover the property taken or held outside the country. The concept of the propert....
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....held within the Country or abroad can be made liable to be attached. This position has been explained by the Delhi High Court in an elaborate manner in Axis Bank's case (supra) and Prakash Industries case (supra). 3.6. It is not disputed that the Supreme Court in Vijay Madanlal Chaudhary's case (supra) was examining the scope of the '2002 Act' including definition of phrase 'proceeds of crime'. The submission put forth by the learned counsel that the phrase 'or the value of any such property' is superfluous was rejected by the Court and it was held that the definition of 'proceeds of crime' is wide enough to not only include to the property derived or obtained as a result of criminal activity related to a schedule offence but also any other property of equivalent value. 3.7. While interpreting a statutory provision, it is the bounden buty of the Courts to interpret it in manner so that each word used by the statute conveys a meaning it was assigned by the Legislature. The words used in statute are of utmost significance. The Court cannot widen or restrict the provisions on its own whims and fancies. When a statute's lang....