SEIZURE OF BANK LOCKERS AND GOLD

[DR.MARIAPPAN GOVINDARAJAN]

In SHRI LUV BHARDWAJ, SHRI VIVEKPRATAP, SMT. SONAL DUBEY VERSUS THE DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT, DELHI - 2025 (2) TMI 108 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI, the appellant was an erstwhile Director of Rangoli International Private Limited.  The said company is engaged in the production and export of garments.   The company entered into an agreement with the consortium bank to obtain credit facilities.  The credit facilities offered to the company by the consortium bank was withdrawn since search was conducted by the CBI after the lapse of 4 years of the credit facility.  The assets of the company were declared as Non-Performing Asst and also it was declared that the accounts of the company was fraud.  FIR was filed against the company.  The company filed a writ petition before the High Court, challenging the order passed by the bank that the accounts of the appellant was fraud.  The High Court allowed the writ petition vide their order dated 12.05.2023. 

In view of the order of High Court, the sole genesis for registration of predicate offence by CBI ceased to exist.  However, the Director of Enforcement caused a search.  During the search, CBI seized the bank lockers and a sum of Rs.5.62 lakhs.  On the same day the Directorate of Enforcement seized 3.2 kgs of gold.  The Adjudicating Authority confirmed the seizure of locker and other gold. 

The appellant filed the present appeal before the Appellate Tribunal challenging the order of Adjudicating Authority.  In respect of seized gold, the appellant submitted the following before the Appellate Tribunal-

• The recovered gold was inherited or purchased by appellant’s mother apart from the wife and daughter.
• The married woman is allowed to keep 500gms of gold jewellery, an unmarried woman up to 250 gms. of gold as per the circular issued by the Central Board of Direct Taxes on 01.12.2016. 
• The gold was belonging to his wife Usha Bhardwaj, an unmarried daughter Riya Bhardwaj apart from his mother Raj Sharma and his married sister Deepa Bhardwaj Singh. 
• The locker nos. 86 and 96 maintained in the name of the appellant in Federal Bank were also freeze which was in ignorance of the fact that those lockers were seized / freeze by the CBI on 18.09.2014.
• The availability of 3.2 kg of gold was within the permissible limit.
• The married woman is allowed to keep 500gms of gold jewellery, an unmarried woman up to 250 gms. of gold as per the circular issued by the Central Board of Direct Taxes on 01.12.2016. 
• 3.2 kg of gold was within the permissible limit which has been seized. 
• The seizure memo of CBI dated 18.09.2014 was for gold jewellery etc. of 16.9 kg. and 3.4 kg. respectively.
• The gold was purchased in the year 2005-2006 from MMTC under invoice.
• Once lockers were under seizure of CBI there was no reason to seize those lockers by the respondent again.
• The amount of Rs.5,62,000/- was also seized in ignorance of the fact that such amount remains available in the ordinary course with a citizen.
• The bank accounts were seized by the CBI and therefore there was no reason for the respondent to invoke seizure of those bank accounts.
• The locker No. 236 was also under seizure of CBI and thus, there was no reason to seize the aforesaid locker and accordingly impugned order is illegal.

Therefore, the appellant prayed for the quashing of the impugned order.  The respondent supported the findings in the impugned order.

The Appellate Tribunal considered the submissions of both the parties.  The Appellate Tribunal found that if the lockers are already under seizure of CBI, it could not have been seized by the respondent by invoking Section 17(1) of the Prevention of Money- Laundering Act, 2002.  The seizure could have been when they apprehend concealment or tampering of the record or the property. It could not be said that there was concealment once the lockers have been seized by the CBI.  Therefore, the Appellate Tribunal found that there was no justification on the part of the respondent to seize the locker no. 86 and 96 in the name of the appellant. 

In respect of 3.2 kgs of gold the Appellate Tribunal found that the appellant justified for the said quantum of gold at the resident of the appellant.  The Appellate Tribunal found justification in the argument of the appellant for possession of 3.2 kg. gold and thereby there remains no justification to seize the aforesaid gold.

In respect of the amount Rs.5,62,000/- the Appellate Tribunal found that the appellant could not give any justification to possess the aforesaid amount.  The source of the said amount has not been explained by the Appellant.  Therefore, the Appellate Tribunal did not interfere with the said amount.

The lockers of Vivek Pratap i.e. no. 236 and 327 have also seized though it was under seizure of CBI.  The Appellate Tribunal interfered with the seizure of the said lockers.  The Appellate Tribunal further clarified if the locker is released by the CBI, respondent is having liberty to take action afresh to seize those lockers, if so required.  The Appellate Tribunal allowed the appeal to some extent as discussed above.