9911796707
TMI Blog2021 (4) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.03.2018, against various persons including Sri Kumar Pappu Singh, the writ petitioner in W.P.No.9338 of 2020, who was arrayed as Accused No.3 in the said complaint. The complaint of the bank was that between the years 2009 and 2012 the bank had sanctioned Kisan Credit Card (KCC) Loans to 101 borrowers to the tune of Rs. 74.99 crores without obtaining proper loan documents and without conducting pre-sanction and post-sanction inspections and without ensuring the end use of the loan. It is further stated in the complaint that these loan amounts were disbursed to the savings accounts of the beneficiaries, from where the money was transferred to the accounts of the aggregators and later misappropriated. The petitioner in W.P.No.9338 of 2020 was named as accused No.3 on the ground that he stood as guarantor for 87 KCC loans and diverted the sanctioned amounts to his savings account and bank account of his firms/companies. These diverted amounts are said to have been used, by the petitioner in W.P.No.9338 of 2020, to fund his Pisciculture business which ran into losses. 3. As the said complaint included scheduled offences under the Prevention of Money Laundering Act, 2002 (herein af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the merits of the case, the 2nd respondent goes into the details to show that the petitioner in W.P.No.9338 of 2020 had diverted huge amounts of money given to the loanees and used the diverted funds for purchase of some of the properties. He would rely upon the Judgment of the High Court of Delhi in the case of Deputy Director, Directorate of Enforcement Delhi, Union of India v. Axis Bank &Ors; State Bank of India &Ors; IDBI Bank Ltd; Punjab National Bank &Anr., 2019 Law Suit (Del) 1037 = 2019 (2) Crimes (HC) 181. to contend that the definition of "proceeds of crime" should be given an extensive definition, which would include the properties set out in Table-I of the impugned attachment order. 7. Sri Vimal Varma Vasireddy, learned counsel for the petitioners would rely upon a Judgment of the Division Bench of the erstwhile High Court for the State of Telangana and the State of Andhra Pradesh at Hyderabad reported as Satyam Computer Services Limited v. Government of India 2019 (3) ALD 472 = 2019 (1) ALT 355, the Judgment of the Hon'ble Supreme Court in Aslam Mohd. Merchant v. Competent Authority and Ors., (2018) 14 SCC 186, and Whirlpool Corporation v. Registry of Trade Marks, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Supreme Court in Raza Textiles Limited v. Income Tax Officer, Rampur AIR 1973 SC 1362 = (1973) (1) SCC 633. In that case, the Hon'ble Supreme Court had held that an order of quasi judicial authority, who has conferred jurisdiction to itself, by deciding jurisdictional fact wrongly, can be challenged by way of a writ petition. Relying on the said judgment, the Hon'ble High Court had held that the writ petition is maintainable. 12. In the case of Whirlpool Corporation v. Registrar of Trade Marks, Mumbai &Ors., the Hon'ble Supreme Court, while considering the maintainability of a writ petition, in view of the availability of an effective alternative remedy, in paragrah Nos.14 & 15, had held that an alternative remedy does not operate as a bar in at least three contingencies, viz., where the writ petition has been filed for the enforcement of any of the Fundamental Rights, or where there has been a violation of the principle of natural justice, or where the order or proceedings are wholly without jurisdiction, or the vires of an Act is challenged. The Hon'ble Supreme Court had considered the judgments of two Constitutional Benches of the Hon'ble Supreme Court in A.V. Venkateswar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... graph-35 above were acquired prior to the commission of scheduled offence, they are qualified to be treated as proceeds of crime for the remaining amount of which was exhausted by Mr. Kumar Pappusingh in his fish farming business under Section 2(1)9u) of PMLA, 2002 and therefore, the properties in table-I of paragraph-35 above are taken as deemed tainted properties for the purposes of attachment. Hence, the movable and immovable properties as detailed in paragraphs-34 & 35 are being considered for attachment under Section 5(1) of PMLA, 2002." 15. The factual matrix as set out by the authority is that, the money said to have been obtained by Mr. Kumar Pappu Singh by committing the scheduled offences was obtained after September, 2010 and a large part of the amount was invested in aquaculture and lost. 16. The properties that have been attached under the impugned order fall into two categories. The first category consists of assets purchased prior to the commission of the offences and the second category consists of properties purchased after the commission of offences and where doubt is expressed by the authority that these properties may have been purchased from the proceeds of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act. Provided also......... 1).......... (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under subsection (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (2) of section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notice issued under subsection (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides under subsection (2) that any property is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or l[record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property or record shall- (a) continue during the pendency of the proceedings relating to any offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and (b) become final after an order of confiscation is passed under sub- section (5) or subsection (7) of section 8 or section 58B or sub-section (2A) of section 60 by the Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t involved in the offence of money laundering]: [Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed.] 20. The jurisdictional fact whereby these provisions can be invoked is that the properties sought to be attached and confiscated must be proceeds of crime. Theexpression "proceeds of the Crime"is defined in Section 2 (1)(u) of the Act as follows: 2(u):- "Proceeds of crime" means any property derived 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 [(3) or where such property is taken or held outside the country, then the property equivalent in value held within the country] [(4) or abroad]; [(5) Explanation.- for the removal of doubts, it is hereby clarified that "proceeds of crime" including 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;] (3) Inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden of proving facts to the contrary being on the person who so contends. 23. The same provision came up for interpretation before a Division Bench of the High Court of Punjab and Haryana in the case of Seema Garg v. The Deputy Director, Directorate of Enforcement decided on 06.03.2020 in PMLA No.1, 2 & 3 of 2019 (O&M). These are appeals filed against the order of attachment, which had been affirmed by the Appellate Tribunal. In these cases, the property had been purchased prior to the commission of the scheduled offence. The question that arose before the Court was whether such property could be brought within the definition of Section 2 (1)(u) and could be attached under Section 5 of the Act. The Division Bench, after considering the judgment of the erstwhile High Court for the State of Telangana and the State of Andhra Pradesh at Hyderabad in the case of Satyam Computers and the judgment of the Delhi High Court in Abdullah Ali Balsharaf&Anr., v. Directorate of Enforcement and Ors., 2019 (3) RCR (Criminal 798, had held that the properties purchased prior to the commission of the offence would not fall within the meaning of "proceeds of crime". The Division Bench also held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at was the mischief and defect for which the common law did not provide. 3rd. What remedy the Parliament hath resolved and appointed to cure the disease of the Commonwealth., and 4th. The true reason of the remedy; and then the office of all the Judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privatocommodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bona publico." In In re Mayfair Property Company [LR (1898) 2 Ch 28 at p. 35] Lindley, M.R. in 1898 found the rule "as necessary now as it was when Lord Coke reported Heydon case". In Eastman Photographic Material Company v. Comptroller General of Patents, Designs and Trade Marks [LR (1898) AC 571 at 576] Earl of Halsbury reaffirmed the Rule as follows: "My Lords, it appears to me that to construe the Statute in question, it is not only legitimate but highly convenient to refer both to the former Act and to the ascertained evils to which the former Act had given rise, and to the later Act which provided the remedy. These thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Act No.2 of 2019 also speaks only of properties derived or obtained from the proceeds of a crime and expands the scope of the definition to include properties obtained not only from the scheduled offences but also criminal activity relatable to the scheduled offence. The explanation did not expand the definition to include any other property of equivalent value where the proceeds of the crime are lost even by the offender. 30. In that view of the matter, the properties purchased before the commission of the offence, cannot fall within the definition of "proceeds of crime" and cannot be attached or confiscated under the Act. Consequently, the attachment and subsequent proceedings before the Adjudicating authority for confiscation of the properties in Table -I of the impugned order would be without jurisdiction and would have to be struck down. 31. The properties set out in Table -II of the impugned order would be within the jurisdiction of the 2nd respondent and the said attachment would require adjudication before the Adjudicating authority under Section 8 of the Act. 32. In view of the above discussion, the impugned order of provisional attachment passed by the 2nd responde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
