TaxTMI 
TaxTMI 
2026 (7) TMI 655
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....e total value Rs. 60,98,000/- was attached. 2. Ld. Counsel for the Appellant submitted that the investigation in the matter was initiated on the basis of FIR No. 148/2011 registered by Uttar Pradesh Police, Thana Kotwali Dehat on 25.10.2011 under Section 409, 419 and 420 of IPC on the basis of Complaint by Shri Rajesh Kumar Singh, the then District Statistical and Economical Officer, Balrampur for the alleged financial fraud involving Rs. 90,85,000/-. As per the Chargesheet No. 08/2012 dated 08.09.2012, the number of students shown by New India Public School, Maheshbhari and Ajijia Montessori School, Balrampur was not found correct during physical inspection. On perusal of the evidences, it was established that no scholarship was given to students studying in both these schools. No evidence of distribution of scholarship was submitted by Shri Sanjeev Kumar Srivastava, Manager of New India Public School, whereas Sh. Sabir Ali, Manager of Ajijia Montessori School submitted fraudulent documents and on perusal of those documents it was found that no scholarship was distributed. In this way, the Government fund was misused by receiving and disbursing with the help of forged documents....
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....e also cited the Judgment dated 21.05.2019 of this Tribunal in the matter of Amlendu Pandey vs. The Deputy Director, Directorate of Enforcement, Mumbai (FPA-PMLA-1431/MUM/2016). He argued that Section 72 of PMLA is applicable under the circumstances when the PAO has been adjudged and not at prior stage. Ld. Counsel asserted that the Appellant has nothing to do with the alleged scheduled offence and the offence of money laundering. Moreover, the alleged proceeds of crime amounting to Rs. 9,24,450/- came into the school account of Ajijia Montessori School, Balrampur on 04.09.2009 and 10.07.2009. However, the impugned property had been purchased by Shri Sabir Ali on 08.04.2009 i.e. before the proceeds of crime travelled to him. Ld. Counsel stated that even the attached property does not have nexus with the alleged proceeds of crime and the Respondent had to rely upon the concept of the value thereof to do the attachment. Ld. Counsel cited 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). Ld. Counsel reiterated that the property of already dead person could not be ....
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....d 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." At this stage, we may refer to Para 68 of the Judgment (by the Hon'ble Supreme Court) in the case of Vijay Madanlal Choudhary (2022 SCC OnLine SC 929) which is quoted hereunder. "68. 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 outside India. This argument, in our opinion, is tenuous. For, the definition of "proceeds of crime" is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but ....
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....om 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". 8. The Judgment of Seema Garg (Supra) has been dealt with by the Hon'ble Delhi High Court in the matter 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 prop....
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....on 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 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 Prades....
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....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 upon Seema Garg's case (supra) and held that the properties acquired before the alleged crime and before the enforcement of the '2002 Act' cannot be attached......" 10. Ld. Counsel for the Appellant has emphatically raised the issue that the impugned property was attached on 26.03.2021, however, Shri Sabir Ali had expired on 02.12.2019. Hence, he challenged the attachment on the ground that the property of the dead person could not have been attached. It is clear that the provisional attachment and the confirmation of the impugned property happened only after the demise of Shri Sabir Ali. It is also evident that the allegations are against Shri Sabir Ali and not against the Appellant Shri Rashid Ali, who as legal heir stands in the shoes of his father. ....
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....ourt proceeded with the trial and recorded a conviction two years after his death. Then, this null and void conviction was used as a basis for making an attachment of his properties before the Sessions Court. Astonishingly, all applications succeeded, the attachment was made absolute and over and above all, the High Court upheld the attachment. 11. The orders of the Criminal Court vis-a-vis Ramachandraiah are illegal and liable to be set aside. We also find that the impugned judgment in appeal is unsustainable and is liable to be set aside. The orders of the Courts below are accordingly set aside. The appeal succeeds." The provisions of the Ordinance being discussed in the Judgment (supra) required an application to be moved to the District Judge where the person whose property was proposed to be attached ordinarily resided or carried on business. It was found to be incomprehensible that such an application could have been made in regard to a dead person, who obviously could not be said to be ordinarily resident or carrying on business anywhere. We find that in contrast under the provisions of PMLA, the authorities prescribed under the Act can provisionally attach a pro....
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....r this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted." Reading of the provisions of Section 5 (1) of PMLA shows that no prior notice is required to be issued to the person whose property is attached. Therefore, in the facts of the present case the attachment of the property of Shri Sabir Ali without any notice to him was in accordance with the provisions of the law, even though Shri Sabir Ali had since expired. The provisions of Section 8 (1) of PMLA are as follows: "Section 8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating 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) ....