TaxTMI 
TaxTMI 
2026 (7) TMI 240
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..... The FIR invoked Sections 120-B, 406, 420, 464, 465, 468, 471 and 477-A of the Indian Penal Code. It was alleged that during internal inspection conducted by the Head Office of the Bank, several gold ornaments pledged for obtaining gold loans were found to be spurious. Investigation revealed that 178 gold loan accounts had been opened between May 2012 and March 2013 in the names of Shri S.P. Rajendran, his wife Smt. Booma (the appellants herein), their relatives, friends and associates. Shri S.P. Rajendran was found to have acted in collusion with the Bank's approved gold appraiser, Shri Thangadurai, who facilitated the acceptance of the spurious gold ornaments as genuine, thereby enabling the fraudulent sanction of loans. The value of loans obtained against the allegedly fake gold ornaments was assessed at approximately Rs. 6.33 crore, resulting in a corresponding loss to the Bank. 3. Based on the FIR, an ECIR was registered by the respondent, the case of the Respondent Directorate being that S.P Rajendran charged 15% commission for arranging loan, and thereby, received an amount of Rs. 82 Lakh (identified as proceeds of crime) as commission for facilitating fraudulent gold lo....
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.... a condition for grant of bail, there could have been no reason to believe that the said amount would be concealed, transferred or dealt with in a manner which would frustrate the proceedings relating to confiscation thereof. 11. Based on the above contentions, it is prayed by the appellants that the impugned order be set aside and the appeals be allowed. Submission from the side of the Respondent: 12. Ld. Counsel for the respondent strongly contested the arguments and contentions raised on behalf of the appellants. He placed reliance on the appellant's statement recorded under Section 50 wherein certain admissions were made by the appellant. He referred to the relevant discussions which are to be found in para 3.4 (page 8 to 10) of the impugned order. With regard to the house property which has been attached, he submitted that the same was no doubt acquired prior to the period of offence, but the loan has been repaid out of the proceeds of crime, which was also admitted by the appellant. As regards reason to believe in respect of security deposit made with the Ld. Judicial Magistrate, he submitted that the Directorate legitimately apprehended that the amount could be rele....
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.... obtaining loans from some individuals. He deposed in his statement dated 02.09.2015 that he had repaid the said loans obtained for construction of the house by using the amount of Rs. 82 lakhs received as commission. Similar is the situation of the movable properties. He had settled the loan taken for the car out during the alleged offence period and therefore, it could be presumed that the proceeds of crime were utilized to settled the loans. As regards the FD of Rs. 5 lakh, the same was also deposited out of the 82 lakhs received as commission for pledging spurious gold. 15. It is contended that the properties were duly reflected in the Income Tax Returns. However, the findings recorded in the impugned order is that Smt. Booma was a housewife, who was not working anywhere outside the house, and had not filed any returns of income. Nor was she aware of the sources of income for acquiring the properties which have been attached. These facts have not been refuted by the appellants by production of any cogent material. Only a copy of one assessment order has been appended as a part of the appeal paper book filed in the case of Shri S.P. Rajendran which is for Assessment Year 2013....
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....Ors., CWP-22688-2024 (Order dated 13.11.2024), also did not find any merit in the argument that, as a rule, property acquired prior in time to the period of the alleged scheduled offence cannot be attached. The relevant paragraphs of the said judgment are reproduced hereunder: 1. Factual Matrix: 1.1 With the consent of learned counsel for the parties, as many as seven writ petitions involving common issues shall stand disposed of by this common order. The facts in this case have been derived from CWP-22688 2024, in which the arguments were made. 1.2 The petitioner has raised the following issues: "A. Whether any property of the petitioner can be attached which were acquired prior to the scheduled offence and cannot be said to have any connection with the proceeds of crime in view of the Hon'ble Supreme Court judgment in Pavana Dibbur vs. Directorate of Enforcement 2023 SCC Online 1586 as well as the Division Bench judgment in Seema Garg vs. Deputy Director, Directorate of Enforcement 2020 (2) RCR (Criminal) 701 upheld by the Hon'ble Supreme Court and followed by various High Courts?" * * * * "3.8 Moreover, the reasoning adopte....
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....f the appellants that properties acquired prior to the alleged period of crime cannot be attached, therefore, lacks merit and is consequently, rejected. 18. The appellants also contended that the respondent has placed substantial reliance upon the statement of S.P Rajendran recorded under Section 50 of the Act of 2002. According to the appellants, the statement was recorded under duress and the appellant had, before the Adjudicating Authority, disputed the voluntary nature of the said statement. I have perused the statement of the appellant and find that in the said statement, Sh. S.P Rajendran made several important admissions. Furthermore, it is seen that no formal retraction of the statement was made by S.P Rajendran, but only a submission was made before the Ld. AA that the statement had been made under duress and he does not stand by it. Having considered the contents of the statement as well as the manner of 'retraction', I am of the view that the so-called retraction is clearly an afterthought to which not much credence can be given. Furthermore, the legal position emerging from the judgments of the Hon'ble Supreme Court in a catena of cases, including, Rohit Tandon Vs. D....
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....er of provisional attachment was passed. It is no doubt that the provisions of the Act of 2002 are having over riding effect to other legislation in case of conflict but in this case we do not find any conflict between two legislations. The property can be attached by the respondent department under Section 5 of the Act of 2002 but it can be when they possess material to show that property may be concealed, transfer or be dealt with in any manner to frustrate the proceeding of confiscation. When the property was already attached by the Special Court, how it could have been transferred or concealed. We, therefore, find that reasons to believe were recorded without application of mind. The material to attract Clause (b) of Sub Section (1) of Section 5 of the Act of 2002 is missing. Accordingly, the last argument raised by the appellant is accepted and accordingly the order of provisional attachment so also the order passed by the Adjudicating Authority are set aside. It is however with clarity that if, the Special Court withdraws the attachment order or the trial pursuant to the FIR is completed, the respondents would be at liberty to exercise their authority under Section 5....