TaxTMI 
TaxTMI 
2026 (6) TMI 116
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....70/CHD/2024 JUSTICE MUNISHWAR NATH BHANDARI (CHAIRMAN) For the Appellant(s) : Shri Surinder Singh Tiwana, Shri Arun Sharma, K. Singh, Ms. Tamanna, Advocates For the Respondent(s) : Shri Chandra Prakash, Advocate ORDER By these batch of appeals, a challenge has been made to the order dated 12.02.2024 passed by the Adjudicating Authority confirming the Provisional Attachment Order ("PAO") dated 06.09.2023. In all these appeals, a common issue about claim and disbursement of enhanced compensation in fraudulent manner under the guise of Special Leave Petitions in favour of appellants has been raised. Since a common question of law for challenge to the appeals have been raised, thus, a common order is passed. Brief facts of the case: 2. The brief fact giving rise to the impugned order is in reference to the FIR No. 411 registered on 28.08.2018 for the offences under Section 120B read with Section 406 and 420 of the Indian Penal Code, 1860 (IPC). The allegations were made against the Directorate of Urban Estate, Panchkula and others for award of enhanced compensation towards the land acquisition despite dismissal of their Special Leave Petition (SLP) by the Apex Cour....
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....a, was acquired for the development of Sector 9 & 10 in Ambala City under Award o. 8 dated 27.12.1990. Landowners Sh. Ajmer Singh, Sh. Hazara Singh, Sh. Gulzar Singh, Sh. Pritam Singh, Sh. Sher Singh and Sh. Ishar Singh received compensation of Rs. 59,871/- each by cheque dated 27.12.1990. (ii) After a petition under Section 18 of the Land Acquisition Act was allowed in favour of Shri Gulzar Singh & others, they were granted compensation of Rs. 2,37,284/- and interest of Rs. 9,30,372/-. (iii) The Punjab and Haryana High Court ordered compensation of Rs. 13,08,656/- along with interest. Disbursements were made on 21.12.2000 and 28.05.2004. (iv) An LPA No. 12 & 13 of 2009 filed by Sh. Gulzar Singh & others was dismissed by the Punjab and Haryana High Court on 28.04.2009. An SLP No. 23443 of 2009 filed by them was also dismissed on 29.09.2009. (v) Sh. Rajbir Singh (Kanungo) calculated enhanced compensation of Rs. 8,60,26,344/- referencing RFA No. 788 of 1995 and SLP No. 23993 of 2009 (Ishwar Singh Vs. Lala Vishambhar Dayal). The amount was approved by Sh. M.S. Sangwan and disbursed on 24.03.2015. The funds were credited to the bank account of Sh. Ka....
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.... the landowners maintained a claim for enhancement of the amount which was fraudulent disbursed in favour of the landowners in connivance with the Revenue officials and accordingly, after registration of the ECIR, provisional attachment of the properties was caused to the extent of enhancement of compensation taken by the appellants' father(s)/grandfather(s) / close-relative(s) and accordingly property of equivalent value were provisionally attached. 7. The role of each appellant was investigated. (i) Rajdeep Singh In the case of Rajdeep Singh son of Late Sh. Hardeep Singh. Rajinder Kaur W/o Late Sh. Hardeep Singh received Rs. 30 lakhs in A/c No. 29070100008893. The PoC (Rs. 30 lakhs) along with interest (Rs. 10,92,019) has been consumed by Rajinder Kaur and Rajdeep Singh (son of Hardeep Singh) for their own personal use. Thus, they are in possession of PoC of Rs. 40,92,019/-. During investigation, it is revealed that Rajinder Kaur and Rajdeep Singh jointly owns an ancestral agricultural land registered in the name of Late Pritam Singh at Village Julka, Tehsil Dudhansadha, District Patiala. 01 immovable property worth of Rs. 4,47,019/- jointly held in the name ....
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....hare of land measuring 1.71 acre has been attached vide PAO No. 02/2023 dated 06.09.2023. (iv) Satvinder Singh In the case of Shri Satvinder Singh son of Late Ishar Singh & Kulwant Kaur. Late Ishar Singh received Rs. 1,06,74,246.80/- on 30.03.2015 from the joint A/c No. 29070100011047. Scrutiny of bank account statement of Late Ishar Singh and legal heirs of Late Ishar Singh namely Satvinder Singh (son of Late Ishar Singh) and Kulwant Kaur (wife of Ishar Singh) and statement of Satvinder Singh, indicated that Satvinder Singh is in possession of Rs. 59,09,760/- (including interest of the FDs) which he has failed to return. Further, it is noticed that enhanced compensation has been received long back by Late Ishar Singh in his bank account. This amount has been layered/concealed in the form of FDs, transferred to the bank account of Satvinder or consumed for personal use after cash withdrawal. Neither Late Ishar Singh nor his legal heirs (Satvinder Singh and Kulwant Kaur) have bothered to comply with the recovery notices and pay back the illegally got enhanced compensation to the Government. During the investigation, it is revealed that Satvinder Singh jointly owns ....
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....in the accounts of the family members of Late Gulzar Singh. Thus, beneficiary legal heirs of Late Gulzar Singh i.e. Rani Kaur and Avtar Singh are in possession of POC amounting to Rs. 1,20,08,186/-. Therefore Rs. 57,32,257/- along with interest have been attached u/s. 5(1) r/w Section 2(1)(u) of PMLA, 2002. It is further revealed that Avtar Singh owns an ancestral agricultural land registered in his own name which he has inherited from his grandfather Late Gulzar Singh situated at Village Naraingarh, Wasava Singh Wala, Tehsil Dudhansadha, District Patiala. Therefore, immovable property worth Rs. 62,75,929/- [Rs. 30,28,469 (rest of POC) + 32,47,460 (interest)] are attached u/s. 5(1) r/w Section 2(1)(u) of PMLA, 2002 in terms of value of any such property. (vii) Rajinder Kaur Rajinder Kaur W/o Late Hardeep Singh (son of late Pritam Singh) received Rs. 30 lakhs in A/C No. 29070100008893 and she invested the said amount in the form of FDs. She closed and re- invested the aforementioned amount again in FDs and hence Rs. 10,92,019/- accrued as interest (consequential POC) on the FDs. The PoC along with interest has been consumed by Rajinder Kaur and Rajdeep Singh (son o....
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....crime to the tune of Rs. 8,13,323/-. Further, it is noticed that enhanced compensation has been received in his bank account from joint account. This amount has been layered/concealed in the form of FDs, utilized for acquisition of immovable property or consumed for personal use after cash withdrawal. Baljit Singh has not bothered to comply with the recovery notices and pay back the illegally got enhanced compensation to the Government. Therefore, POC to the tune of Rs. 8,13,323/- in the form of immovable property has been attached u/s. 5(1) r/w Section 2(1)(u) of PMLA, 2002 in terms of value of any such properties. (x) Gurvinder Singh In the case of Shri Gurvinder Singh son of Karnail Singh & Kamlesh Kaur, it is noticed that enhanced compensation has been received long back by Late Karnail Singh in his bank account. This amount has been layered/concealed in the form of FDs, transferred to the bank account of his family members or consumed for personal use after cash withdrawal. Neither Late Karnail Singh nor his legal heirs (Kamlesh Kaur and Gurvinder Singh) have bothered to comply with the recovery notices and pay back the illegally got enhanced compensation to ....
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....ir Kaur is in possession of proceeds of crime amounting to Rs. 20 lakhs, therefore, her movable property in the form of FD along with interest as consequential POC has been attached u/s. 5(1) r/w Section 2(1)(u) of PMLA, 2002. (xii) Jaspreet Singh Jaspreet Singh S/o Davinder Singh received Rs. 10 lakhs in A/c No. 29070100007207 directly from the account of his grandfather Late Sh. Pritam Singh's A/c No. 29070100010117 and invested the said amount in the form of FD bearing A/c No. 29070300010103. Rs. 4,90,537/- has accrued as interest (consequential POC) in the FDs. Thereafter, he re-invested the amount in the form of shares in Demat A/c No. 80019731. Also, scrutiny of bank account statements and statement of Jaspreet Singh S/o Sh. Davinder Singh under PMLA, indicate that he is in possession of Rs. 14,90,537/-(including interest of the FDs) which he has failed to return. Further, it is noticed that enhanced compensation has been received long back by Late Pritam Singh in his Pritam Singh in his bank account. This amount has been layered/concealed in the form of FDs, transferred to the bank account of family members or consumed for personal use after cash withdr....
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..... Therefore, immovable property worth Rs. 62,75,929/- [Rs. 30,28,469 (rest of POC) +32,47,460 (interest)] have been attached u/s. 5(1) r/w Section 2(1)(u) of PMLA, 2002 in terms of value of any such property. (xiv) Davinder Singh In the case of Davinder Singh S/o Late Pritam Singh received Rs. 20 lakhs in A/c No. 29070100007137 from the account of his father Late Sh. Pritam Singh's A/c No. 29070100010117 and invested the said amount in the form of FD bearing A/c No. 29070300010109. Also, scrutiny of bank account statement and statement of Davinder Singh, indicates that Davinder Singh is in the receipt of Rs. 20 lakhs which he has failed to return. Further, it is noticed that enhanced compensation has been received long back by Late Pritam Singh in his bank account. This amount has been layered/concealed in the form of FDs, transferred to the bank account of family members or consumed for personal use after cash withdrawal. Neither Late Pritam Singh nor Davinder Singh have bothered to comply with the recovery notices and pay back the illegally got enhanced compensation to the Government. Therefore, Davinder Singh's movable property in the form of FD worth R....
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....hs in his A/c No. 29070100013159. Subsequently Gurcharan Singh invested/re-invested Rs. 30 lakhs in FDs and finally closed the FDs and got interest (consequential POC) amounting to Rs. 3,80,383/- accrued on the FDs. During investigation, it is also revealed that Gurcharan Singh has spent his share of 30 lakhs and also consumed the remaining amount over and above 90 lakhs out of Rs. 1,06,74,246/- on construction of his house and shop at Village Jandli, District Ambala. Also, scrutiny of bank account statement and statement of Gurcharan Singh S/o Late Pritam Singh and Rajinder Kaur W/o Late Hardeep Singh, indicates that Gurcharan Singh is in the possession of Rs. 50,54,629/- (including interest of the FDs) which he has failed to return. Further, it is noticed that enhanced compensation has been received long back by Late Pritam Singh in his bank account. This amount has been layered/concealed in the form of FDs, transferred to the bank account of family members or consumed for personal use after cash withdrawal. Neither Late Pritam Singh nor his legal heir (Gurcharan Singh) have bothered to comply with the recovery notices and pay back the illegally got enhanced compensation to the G....
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....,019 were consumed by Rajinder Kaur and Rajdeep Singh for their own personal use. The proceed of crime in their hands were taken to be for a sum of Rs. 40,92,019. As against the aforesaid, ancestral property initially registered in the name of Late Pritam Singh was attached for a value of Rs. 4,47,019. It was jointly held by Rajinder Kaur and Rajdeep Singh. The balance amount of proceeds was of Rs. 36,45,000/- and has been protected by the provisional attachment of the 5 FDs of equivalent value. Ld. Counsel for the appellant submitted that the provisional attachment of the properties has been made in respect of assets totally unconnected with the alleged crime and therefore prayer was made to cause interference in the impugned order. 13. Ld. Counsel for the appellants further submitted that the enhancement of the compensation received by the appellant was based on the judgment of the Apex Court in the case of State of Haryana versus Manhoar Lal dated 11.04.2013, though, it was not in the case of the appellant's grandfather/ father but in some other case. However, based on the judgment aforesaid, the appellant's grandfather/ father was extended the benefit of enhanced compensatio....
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.... in the appeals. Elaborate arguments were made and would be referred while addressing each issue raised by the appellants in the appeals. It is to avoid repetition of the same facts and for the sake of brevity. Findings of the Tribunal: 18. I have considered the rival submissions of the parties and scanned the matter carefully. The fact pertaining to each case has been given by me while narrating the facts which demonstrate that the land belonging to the appellants' father(s)/ grandfather(s)/ appellant(s) was acquired by issuing notice under Section 4 of the Land Acquisition Act. After completion of the process, an award was passed determining the compensation. Dissatisfied with the award, the appellant approached the Courts and the matter went up to the Supreme Court. The Hon'ble Supreme Court did not find a case to cause interference in the award so as to order for enhancement and accordingly dismissed the appeals. It is a fact that after dismissal of the appeal, the appellant/ grandfather/ father/ close relatives sought their claims based on a judgment of Supreme Court unconnected to the present matter. It was also under circumstance that SLP preferred by the appellant to ....
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....any person as a result of criminal activity related to scheduled offence. Ld. Counsel for the appellant submitted that the ancestral property has also been attached in few cases, though purchased, prior to commission of crime, thus, it was not related to the predicate offence. In view of above, such property would not fall under the definition of "proceed of crime". I don't find any substance in the argument in the light of recent judgment of Punjab and Haryana Court in the case of Dilbag Singh @ Dilbag Sandhu Vs. Union of India & Ors. in CWP 22688-2024 dated 13.11.2024. The definition of "proceed of crime" has been given meaning and relevant part of the said judgment is quoted hereunder: "3.2. In light of the Division Bench's judgment in Seema Garg's case (supra), this Bench would have been obligated to either follow it or refer the matter 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....
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....to be liable to attachment. In 2019, the explanation has been added so as to give a wider scope to the authorities. From the objects and reasons of the '2002 Act', it becomes evident that the money laundering posed a serious threat not only to the financial system of the countries but also to their integrity and sovereignty. The '2002 Act' was enacted to prevent money laundering and connected activities. The act of money laundering is a multi-layered, complex and complicated diversion of the property, which is required to be prevented. Consequently, the definition of proceeds of crime has undergone transformative changes from time to time so as to include all the complex acts involved in the offence of money laundering. 3.5. In Axis Bank's case (Supra), the Delhi High Court has dissected the definition in three parts while covering 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.....
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....etation is based on the idea that the legislature's intent is best reflected in the exact words of the statute. 3.8. Moreover, the reasoning adopted in Seema Garg's case (supra) to the effect that there was no need to insert third part in the definition of the 'proceeds of crime' and that 'value of such property' is superfluous does not appear sound. It appears that transformative journey of the definition of phrase 'proceeds of crime' was not brought to the notice of the Division Bench in Seema Garg's case (supra). In Abdullah Ali Balsharaf's case (supra), Delhi High Court inadvertently overlooked the sub- category (i) of second part of definition of 'proceeds of crime'. Similarly, Andhra Pradesh High Court in Kumar Pappu Singh's case (supra) was not properly assisted. Furthermore, the attention of 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 upo....
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....idri (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; 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 ....
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.... 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 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 ....
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.... 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 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 r....
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....urt 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 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. xx xx xx xx xx xx 79. Regard must also be had to the fact that the legislation itself is dealing with contingencies where proceeds of crime a....
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....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 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. 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 judgem....
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....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 not propound ratio on definition of "proceeds of crime" and, therefore, direction for the property acquired prior to commission crime is to be taken on facts of that case. 22. It has already been clarified by us that if the definition of "proceeds of crime" is given interpretation by dividing it into two parts or by taking only two limbs, then it would be easy for the accused to siphon off or vanish the proceeds immediately after the commission of scheduled offence and in that case none of his properties could be attached to secure the interest of the victim till conclusion of the trial. This would not only frustrate the object of the Act of 2002, but wou....
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....ioned 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 Bank (supra) and Prakash Industries (supra) for the definition of "proceeds of crime" would defeat the object of the Act of 2002. It is more especially when the arguments raised by the appellant that the property acquired prior to the commission of crime would not fall in the definition of "proceeds of crime". In that case, the task of the accused would become very easy to first commit the scheduled offence and after obtaining or deriving the property out of the criminal activities, immediately siphon off or vanish so that it may not remain available for attachment and otherwise the contingency aforesaid would satisfy only the first limb of definition of "proceeds....