TaxTMI 
TaxTMI 
2026 (7) TMI 1545
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....nder Section 2(1)(x) and (y) of the Act of 2002 and accordingly an ECIR was recorded for investigation. After recording of the ECIR, the Competent Authority and Secretary of the Govt. of Kerala, under Section 7(3) of the Banning of Unregulated Deposit Schemes Act, 2019, registered 122 cases at Koipuram and Thiruvalla Police Stations. The total amount payable to the depositors of PRD Chits and Investment was worked out to be Rs. 44.82 Crores. The calculation of which has been given in the impugned order. During the course of investigation, the statements of the relevant persons were recorded under Section 50(2) and 50(3) of the Act of 2002. The modus operandi to acquire the proceeds of crime could be revealed. 3. It was found that the company had received Rs. 105.9 Crores in the form of savings accounts, recurring deposits and fixed deposits. The conspiracy was orchestrated by the promoters of the company, in collusion with Mr. David George to siphon of those funds. They falsely recorded withdrawals from the company as loans to staff members. The staff members were misled into believing that the cash withdrawals made in their names or through their bank accounts were used to pay ....
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....se when the properties were acquired much prior to the period of crime, there was no reason to assume them to be proceeds of crime. They could not have been provisionally attached by drawing presumption, rather it should have been after drawing money trail to connect the properties with the crime. The respondents failed to establish such a connection and, therefore, the impugned order deserves to be set aside. 8. The counsel for the appellant made detailed submissions to indicate the source of each property. It is said to be not out of the proceeds of crime but either by his own means or was out of gift from his father or with other sources. It has been ignored by the respondents and accordingly, impugned order has been caused unmindfully and, therefore, it deserves to be set aside. 9. The learned counsel for the appellant submitted that Building No. 307, Ward V. Thottappuzhasserry Panchayat was given by his father, Thomas David as gift, vide Settlement Deed dated 29.03.1993 and, therefore, with no stretch of imagination, it could have been taken or said to be corresponding to the commission of crime. In ignorance of the aforesaid, provisional attachment of the said property ....
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....n for the year 2015-16. 18. The properties of Survey No.82/14, land measuring 3.24 acres, Survey No.82/1/1, land measuring 0.60 acres and Survey No.84/7, land measuring 6.04 acres were purchased by the appellant from one Mr. A.C. Jose vide Sale Deed dated 08.09.2016 for the total consideration of Rs. 5 lakhs only. The consideration for the properties mentioned above was paid by way of a cheque of Rs. 2.5 lakhs on 27.09.2016 from the bank account of the Federal Bank. It was followed by payment of an equivalent amount by his wife Mariamma George on 27.09.2016 from her bank account with Federal Bank. 19. The further statement of the appellant was regarding receipt of the Gift of Rs. 50,000/- from his father-in-law, Mr. Vargese Mathew on 08.07.2016. A sum of Rs. 25,000/- was credited in the account of Federal Bank on 22.07.2016. It was with further statement that the credit of Rs. 25,000/- along with Rs. 15,000/- was made being earnings from DTP Centre of his wife with the Federal Bank. 20. The appellant had disclosed the source of income for purchase of property and investment out of which Rs. 1,50,000/- was deposited with the Federal Bank on 09.09.2016 and equivalent deposit....
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.... by the counsel for the appellant mainly on the ground that source to acquire the properties under provisional attachment was disclosed by the appellant but has been ignored by the respondents. The appellant did not challenge the allegation made against him for his involvement in the crime. It does not exist even in the written arguments submitted by the appellant in pursuance to the liberty given by the Tribunal. The only argument was that appellant was wrongly taken to be a key managerial figure in the PRD Group. The management of the company was in the hands of Anilkumar D and Deepa Divakaran and their sons Anantha Vishnu and Anantha Krishnan. The finance of the company was handled by the aforesaid persons. The account of the company was maintained by M/s Logic Solutions and M/s Elioenai Technologies. The appellant has not questioned registration of FIRs naming him as an accused or the serious allegation made against him for his involvement in the case for siphoning of the funds. Thus, it reveals nothing but admission of the allegations levelled against the appellant. Substantially, the allegations would be tried by the Special Court. However, I find a prima facie case of money ....
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.... 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 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 also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of "property" as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering." 3.3. The aforesaid observations made by the Supreme Court enable this Bench to re-examine the entire issue, as in the considered opinion of this Bench, the judgment passed in Se....
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.... 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. The first part provides about the tainted properties derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. Thereafter, the untainted properties are further divided into two parts; the first part deals with a situation where the property derived or obtained from 'proceeds of crime' is not traceable. In the aforesaid situation the competent authority is authorized to attach or confiscate any other property of accused, which is of the same value as that of the 'proceeds of crime'. The second sub-category is a result of amendment brought in 2015 and 2019 in the Act. It provides that if the property derived or obtained from the proceeds of crime has already been taken out of the Country then the property equivalent in value 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 el....
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....imilar 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. 3.9. On the other hand the judgments passed in Vijay Madanlal Chaudhary's case (supra), Axis Bank's case (supra) and Prakash Industries case (supra) completely answer the question in favour of ED. 3.10. The petitioner's counsel has also heavily relied upon Pavana Dibbur's case (supra). This Bench has carefully read the aforesaid judgment. The aforementioned case involved attachment of properly falling under the category of 'direct' or 'indirect' proceeds of crime. The complaint under Section 44-45 of 2002 Act was quashed by the Supreme Court. The Bench was never called upon to analyse the contentions based upon Section 2(i)(u) of 2002 Act, whereas, in Vijay Madanlal Chaudhary's case (supra) the Court directly answered ....
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.... has been given by the appellant, however, without disclosing how the loan amount was repaid. In fact, it was out of the proceeds of crime and mainly by using the cash amount. It was deposited in the bank so as to clear the loan amount and, therefore, the amount aforesaid was taken towards the proceeds of crime in the hands of the appellant. 34. The counsel for the appellant further referred to a loan amount of Rs. 10 Lakhs obtained from District Co-operative Bank on 07.08.2015. The fact, however, remains about the repayment of the loan amount which has not been clarified by the appellant deliberately because it was again repaid by using the proceeds and the fact otherwise remains that though a sum of Rs. 37,80,000/- was incurred on construction of the building, the total amount out of the loan from Federal Bank and the District Co-operative Bank remains only of less than Rs. 25 Lakhs and thereby no source for remaining amount could be given by the appellant and as to how the loan was repaid to the District Co-operative Bank and Federal Bank. It is despite the fact that burden of proof lies on the appellant in view of Section 24 of the Act of 2002. 35. The next property refer....