TaxTMI 
TaxTMI 
2026 (8) TMI 798
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....on 66C & 66D of the Information Technology Act, 2000 ("IT Act"). Another FIR was registered by the Special Cell PS, Delhi Police for commission of offence under Section 419, 420,468,471,34,120-B IPC and Section 66D of the IT Acts. The third FIR was registered by the CID, Cybercrime PS, Karnataka State Police for commission of offence under Section 420 IPC and Section 66D of the IT Act. The FIRs were registered almost on similar allegations of cheating and fraud with the public nationwide, involving more than Rs.250-300 crores. 3. The allegation against the accused was for large-scale money laundering. It was collected through applications, namely, Power Bank App, Tesla Power Bank App, Ezplan, etc. The public were lured in the guise of doubling the money on their investment. It was for short-term investment. Initially the public was given benefit to the extent of 10-15% interest. However, later on the accused did not respond to the investors and laundered the money. 4. The respondents recorded ECIR under the Act of 2002 and caused investigation. It was found that various shell companies like M/s Diyabati Technology Pvt. Ltd., M/s Maojaza Technology Pvt. Ltd., M/s Sumyth Techno....
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....e proceeds of crime as a consequence thereof. He resigned from the post of Director on 01.04.2021 while the commission of crime is of the period subsequent to it. The Adjudicating Authority ignored the aforesaid aspect, rather recorded the finding that appellant was holding substantial shares in M/s Tanvi Gold Pvt. Ltd. and was even authorized signatory of the company. Those facts were not mentioned in the OA and even in the seizure order. The finding to this effect could not have been recorded without affording an opportunity of hearing. It is even in reference to the address of the registered office of the company. It is said to be the residential address of the appellants. Those findings have been erroneously recorded by the Adjudicating Authority thus an interference in the order may be caused on the aforesaid ground also. 9. The learned counsel for the appellants further submitted that any property acquired prior to the commission of crime could not have been seized or freezed because the movable property can be freezed only when it is derived or obtained out of the commission of crime. The respondents have failed to connect the material seized at the time of search and the....
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.... for the appellants has disputed the aforesaid and submitted that no material has been placed on record by the respondents to show involvement of the appellant in commission of crime. It is more so when initial burden lies on them to make out a case and if that burden is discharged, the reverse burden of defence may come on the appellant. The respondents herein failed to discharge their obligation and accordingly there was no burden on the appellant to reverse it. Accordingly, on the aforesaid ground itself, the impugned order deserves to be set aside. 17. I have considered the aforesaid submission and find that M/s Tanvi Gold Pvt. Ltd., apart from many other entities, were found involved in commission of crime. The money was collected by luring the public with an assurance of high return but after initial payment to the extent of 10-15% towards interest, the company stopped paying any amount to the investors. The FIRs were lodged as a consequence thereof. The ECIR was recorded thereupon finding a predicate offence. It was followed by the investigation where it was revealed that M/s Tanvi Gold Pvt. Ltd., apart from other entities are available on paper only and were, otherwise, ....
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....ants fairly admitted that the pleading does not contain allegations about the fact narrated in the impugned order pertaining to the registered address of the company and the appellant, Surendra Abhay Chaplot being the majority shareholder, apart from the authorized signatory. If the fact aforesaid came for the first time in the adjudication order though it was narrated in the rejoinder given by the respondents, then appellant ought to have framed a ground but no such ground has been raised to question the authority of the Adjudicating Authority to rely on a fact alleged to have been referred later on. It is even the averment that the appellant was the majority shareholder of the company, apart from being the authorized signatory. If such facts were mentioned in the impugned order, then appellant was at least required to clarify as to whether he was a majority shareholder or not coupled with the fact that he was the authorized signatory of the company. No refusal to the aforesaid fact has been given in the appeal. It has not even been pleaded that such facts came in the order of Adjudicating Authority for the first time. Therefore, the allegation that the appellant was the authorize....
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....orted in 2022 SCC Online SC 929. It is on the ground that any property acquired prior to the commission of crime should not have been provisionally attached or even seized or freezed. The argument has been raised in ignorance of the recent judgment given by the Punjab and Haryana High Court in the case of Dilbag Singh @ Dilbag Sandhu Vs. Union of India &Ors.(CWP 22688-2024) dated 13.11.2024 where interpretation of definition of "proceeds of crime" was given after taking into consideration the judgement of the Apex Court in the case of Vijay Madanlal Choudhary (supra). It is with the finding that the property purchased prior to crime period may fall under the definition of "proceeds of crime". The relevant paras of the judgment in the case of Dilbag Singh (supra) are quoted thus: "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 mus....
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....operties which were not directly or indirectly the proceeds of crime, but were held abroad, 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 ca....
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....hem in a literal manner to give effect to the objective of the Act. This approach of interpretation 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 cat....