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TMI Blog2024 (6) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was, however, served with a show cause notice and aggrieved by it, a writ petition was preferred before Calcutta High Court. However, a reply to the show cause notice was submitted before the Adjudicating Authority. The order of seizure under Section 17(1) of the Act of 2002 was, however, confirmed by the Adjudicating Authority thus aggrieved by the order, this appeal has been preferred. 3. The learned counsel for the appellant submitted that the respondent has seized four documents from Rajkamal Apartment, Palm Avenue, Kolkata. They are basically the documents related to a Flat which came through a Gift to the appellant. It was given by none else but by his grandfather. The Flat was purchased by the grandfather in the year 1988 and thus, it could not have any nexus to the crime for which FIR was registered on 28.03.2017 by CBI, Kolkata. It was for the offence under Section 120-B read with Section 420 IPC and Section 13(2) read with section 13(1)(d) of Prevention of Corruption Act, 1988. The ECIR was recorded on 03.01.2020 i.e., much subsequent to the acquisition of property by the grandfather. Thus, it was prayed by the appellant that on the face of record, the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was made to dismiss the appeal. Appreciation of rival arguments : 8. It is a case where FIR was registered by the CBI on 28.03.2017 for the offence under IPC as well as the Prevention of Corruption Act,1988 against M/s Shree Mahalaxmi Corporation Pvt. Ltd. and others. The FIR was received by the Enforcement Directorate which recorded the ECIR on 03.01.2020 finding involvement of scheduled offence. The CBI filed the charge sheet on 30.12.2019 before the Special Judge Court No. 2, Kolkata. 9. It was given out that one Shri Gopal Kumar Agrawal, Director of M/s Shree Mahalaxmi Corporation Pvt. Ltd. and Shri Brahmanand Agrawal, ex-Director of the said Company along with Sanjeev Kejriwal, Director of M/s Rajputana General Commercial Corporation Pvt. Ltd. and authorized signatory of Arvind Trading Company along with Nirmal Kumar Kejriwal, Director of the said Company and Proprietor of Arvind Trading Company and others in collusion with each other have defrauded and cheated State Bank of India (SBI), IFB, Kolkata to the tune of Rs.164.99 crores by mis-utilising FB & NFB credit facilities availed from the Bank. Shri Gopal Kumar Agrawal and Shri Brahmanand Agrawal, both active Directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of property are not `proceeds of crime'. 13. To analyse the issue as to whether it is incumbent upon the respondents to first find out whether the documents of the property seized from the possession of the person is directly or indirectly the proceeds out of the crime. The issue can be dealt with after referring to provisions of the Act of 2002 as well as the object of the Act. The Act of 2002 was enacted out of the International convention to address the offence of money laundering. To curb the offence of money laundering, the enactment was brought and for the aforesaid, the Act of 2002 is divided into many Chapters. Chapter I refers to the Definitions. The definition of Section 2 (1) (u) `proceeds of crime' is relevant and is quoted thus: "(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 [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 proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty in that case would not be liable for attachment or seizure for the reason that the person holding the property has not been named as an accused, in that case, the very purpose and object of the Act would be frustrated. In view of the above, even if the appellant is not named as an accused but he is holding the `proceeds of crime' and even if the property if not directly or indirectly obtained out of the crime but is of the value thereof, it would fall in the definition of `proceeds of crime' and such property or document can be subjected to seizure. 16. In the instant case, serious allegations of fraudulent transactions to the tune of Rs.164.99 crores exists against many accused which includes appellant's grandfather. The appellant's grandfather purchased a property in the year 1988 but it was gifted to the appellant in the year 2020 after registration of the FIR in the year 2017 and even the ECIR. It was by way of gift the property was transferred to the appellant to overcome with the fraud committed by him with the bank and to save the property from seizure and attachment. It was not gifted bonafide but to save the property from seizure and attachment after registration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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". The Judgment of Axis Bank (Supra) was affirmed by the Delhi High Court in Prakash Industries Ltd. v. Directorate of Enforcement reported in 2022 SCC OnLine Del 2087 and in this regard, Para 105 of the judgment in the case of Prakash Industries Ltd.(Supra)are quoted hereunder: "105. It would be pertinent to recall that properties which were acquired prior to the enforcement of the Act may not be completely immune from action under the Act in light of what this Court had held in Axis Bank. As was explained by the Court in Axis Bank, the expression proceeds of crime envisages both ―tainted property as well as ―untainted property‖ with it being permissible to proceed against the latter provided it is being attached as equal to the "value of any such property" or "prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of section 5 or retention of property or [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 [investigation for a period not exceeding [three hundred and sixty-five days] or] 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 sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the [Special Court]; [Explanation.-For the purposes of computing the period of three hundred and sixty-five days under clause (a), the period during which the investigation is stayed by any court under any law for the time being in force shall be excluded.]" 20. It is stated that the prosecution complaint has not been filed against the appellant within 365 days thus, the seizure should lapse in view of Section 8(3)(a) of the Act of 2002. The pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein did not properly refer the provision of Section 8(3)(a) of the Act of 2002 to show that the words `accused' or `person' does not exist in the provision rather mandate is for the completion of investigation within 365 days apart from the continuance of the proceedings in the Court in reference to the offence. Thus, the prosecution complaint on completion of the investigation within 365 days is in reference to the offence and thereby, we are unable to accept the argument of the appellant going contrary to the provisions of the Act. The appellant is not an accused in the FIR or ECIR. 23. It is submitted that the appellant is not an accused in the FIR or ECIR thus the documents belonging to him could not have been subjected to seizure. The argument aforesaid has been raised in ignorance of the judgment of the Apex Court in Vijay MadanlalChoudhary(supra). While dealing with the issue in reference to the definition of `proceeds of crime', it was categorically held that the second proviso addresses the broad object of the Act of 2002 to reach the proceeds of crime in whosoever name they are kept or by whosoever they are holding it. Reference of the judgment in the case of Attorney G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering. 69. We find force in the stand taken by the Union of India that the objective of enacting the 2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence so as to combat the evil of money laundering. The second proviso, therefore, addresses the broad objective of the 2002 Act to reach the proceeds of crime in whosoever name they are kept or by whosoever they are held. To buttress this argument, reliance has been placed on the dictum in Attorney General of India (supra) and Raman Tech. and process Engg. Co. vs. Solanki Traders". The object of the Act is to freeze proceeds of crime and as discussed in the preceding paras, the property gifted to the appellant would fall within the realm of proceeds of crime. The use of the terms "any person" in Section 5(1)(a) read with "such proceeds of crime" in sub -clause (b) of Section 5(1) includes any person not necessarily an accused. In case, the argument of the appellant is to be accepted, the same would render to defeat intention of the legislature and frustrate the object of the Act. In light of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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