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TMI Blog2024 (10) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... ime to save the victim from crime committed by the accused. It would be for the reason that if the property acquired prior to commission of crime would not fall in the definition of proceeds of crime , then the accused would commit the crime and immediately proceeds would be siphoned off or vanished so that it may not remain available for attachment. If the definition of proceeds of crime is given interpretation by dividing it into two parts or by taking only two limbs, then it would be easy for the accused to siphon off or vanish the proceeds immediately after the commission of scheduled offence and in that case none of his properties could be attached to secure the interest of the victim till conclusion of the trial. This would not only frustrate the object of the Act of 2002, but would advance the cause of the accused to promote the crime of money laundering. It is reiterated that any other interpretation other than the one taken by Delhi High Court in the cases of Axis Bank [ 2019 (4) TMI 250 - DELHI HIGH COURT] and Prakash Industries [ 2022 (7) TMI 877 - DELHI HIGH COURT] for the definition of proceeds of crime would defeat the object of the Act of 2002. It is more especially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minal case was instituted by the Special Cell of CBI in the year 2018, in which all the persons related to the monetary transactions including Mr. Bhaben Maitra and the Appellant were made parties to the case. The bank accounts of the Appellant including his sons were frozen in the year 2018 by the CBI. The Appellant was, however, granted bail. 4. In July 2022, the Enforcement Directorate provisionally attached the properties (4 Scheduled Lands) of the Appellant vide Provisional Attachment Order dated 27.07.20222 in ECIR/BBZO/06/2020 which was later on confirmed by the Adjudicating Authority in O.C. No. 1796/2022. 3. The Ld. Counsel for the appellant submitted that four properties of the appellant have been attached out of which three properties were purchased by him prior to the commission of crime thus could not have been attached. It was not purchased out of the proceeds of crime, rather it was pursuant to the independent sources. The Adjudicating Authority failed to appreciate the aforesaid and erroneously confirmed the attachment even in reference to three properties which could not have been co-related with the commission of crime. The prayer was accordingly made to cause int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the ECIR. The respondent initially frozen the bank accounts of the appellant and his sons, which was followed by the provisional attachment of the properties vide order dated 27.07.2020. The Provisional Attachment Order has been confirmed by the Adjudicating Authority finding a case of money laundering. 10. The Ld. Counsel for the appellant did not raise argument in reference to registration of the FIR and recording of the ECIR, followed by investigation where the role of the appellant for commission of crime has been found. The only argument raised was to challenge the attachment of three properties out of four. However, no argument was raised for the property acquired subsequent to the commission of crime i.e., fourth Property. 11. It was submitted that the properties acquired prior to the commission of crime had no nexus with the crime and thus could not have been attached. It was not obtained or derived directly or indirectly out of criminal activities relating to the scheduled offence. The respondent could not show nexus of three properties with the crime out of four attached by them. 12. The reference of the judgment of the Apex Court in the case of Pavana Dibur (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. The second part of the definition is commonly considered to be attachment of property of equivalent value. The second part applies when the property obtained or derived directly or indirectly out of the criminal activities is not available or vanished and, therefore, to secure the proceeds of equivalent value till completion of trial, it would fall under the value of any such property which is commonly taken to be the property of equivalent value. The case in hand falls in the second category of the definition of proceeds of crime because proceeds are not available and, therefore, the property of equivalent value is attached. 15. The argument has been made in reference to the judgment of Kerala High Court in the case of Satish Motilal Bidri (supra) and the judgment of Apex Court in Pavana Dibur (supra) to hold that the properties acquired prior to commission of crime would not fall in the definition of proceeds of crime . We are unable to accept the arguments which may otherwise make second part of the definition of proceeds of crime to be redundant. It would be for the reason that if the definition is taken only in two parts leaving the middle part, then it would be diffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceeds of crime was given by the Delhi High Court in the case of Axis Bank (supra). The relevant paras are quoted herein. 106. Among the three kinds of attachable properties mentioned above, the first may be referred to, for sake of convenience, as tainted property in as much as there would assumable be evidence to prima facie show that the source of (or consideration for) its acquisition is the product of specified crime, the essence of money laundering being its projection as untainted property (Section 3). This would include such property as may have been obtained or acquired by using the tainted property as the consideration (directly or indirectly). To illustrate, bribe or illegal gratification received by a public servant in form of money (cash) being undue advantage and dishonestly gained, is tainted property acquired directly by a scheduled offence and consequently proceeds of crime . Any other property acquired using such bribe as consideration is also proceeds of crime , it having been obtained indirectly from a prohibited criminal activity within the meaning of first limb of the definition. 107. In contrast, the second and third kinds of properties mentioned above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibur (supra) has been given where the Ld. Counsel for the parties did not refer Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) decided by three judges of the Apex Court. In fact, elaborate arguments to define proceeds of crime on the issue were not raised by the parties after referring to the object of the Act of 2002 which was enacted out of the international convention. The Delhi High Court has discussed the issue elaborately and otherwise if we apply the judgement of Kerala High Court in the case of Satish Motilal Bidri (supra,) it would be making the second limb of the definition of proceeds of crime to be redundant. The counsel who appeared before the Kerala High Court did not argue that the definition of proceeds of crime has three limbs and unfortunately the view expressed by Delhi High Court in Axis Bank (supra) was not discussed elaborately while it was cited by the counsel. 20. The Ld. Single judge of Kerala High Court did not subscribe the judgment aforesaid, rather applied the judgment of Punjab and Haryana High Court in the case of Seema Garg Vs. Deputy Director, Directorate of Enforcement, reported in 2020 SCC OnLine Punjab Haryana 738. With d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the phrase value of any such property would not mean and include any property which has no link, direct or indirect, with property derived or obtained from commission of a scheduled offence. The Court observes that Section 2(1)(u) clearly and in unambiguous terms includes not only property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence but also the value of any such property. Seema Garg thus seems to gloss over the statutory imperatives underlying the deployment of the phrase ―or the value of any such property and the concept of deemed tainted properties enunciated in Axis Bank. On a plain textual interpretation of Section 2(1)(u) as well as in the backdrop of the amendatory history of that provision, this Court finds itself unable to agree with the line of reasoning adopted in Seema Garg. As held hereinbefore, affirmation of Seema Garg would amount to virtually deleting the phrase ―or the value of any such property from Section 2(1)(u). That would not only violate the well settled tenets of statutory construction but would clearly amount to the Court rewriting the provision itself in a manner that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced or found out. It is only where the respondents are unable to discover the tainted property that they can take the statutory recourse to move against properties which may fall within the ambit of ―value of any such property or ―property equivalent in value held within the country or abroad. To the aforesaid limited extent, properties purchased prior to 01 July 2005 may also become vulnerable and subject to action under the Act. However, enforcement action against such properties would have to satisfy the tests and safeguards as propounded in Axis Bank with the learned Judge observing that in such a situation it would have to be established that the person accused of money laundering had an interest in such property at least till the time that he indulged in the proscribed criminal activity. The learned Judge further observed that bona fide rights acquired by third parties prior to the commission of the predicate offense would stand saved. 21. The issue aforesaid was not raised in the case of Pavana Dibur (supra). The counsel appeared therein did not elaborately argue the issue by referring to the definition of proceeds of crime having three limbs to give meaning to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is for the reason that any property acquired subsequent to the commission of crime would be directly or indirectly proceeds of crime and then, it would fall in the first limb of the definition of proceeds of crime. In the second limb, which refers to the value of any such property would indicate any other property which was acquired prior to the commission of crime and it would be attached only when the proceeds directly or indirectly obtained or derived out of the criminal activity is not available. It may be on account of siphoning off or vanished by the accused. In those circumstances the property of equivalent value can be attached. The word the value of any such property signifies without any embargo that it should be the property purchased after the commission of crime or prior to it rather it would apply in both the eventuality in the given circumstance. Thus, we are not in agreement with the counsel for the appellant who has questioned the attachment in reference to the property acquired prior to commission of crime. We are not going even further that the properties have nexus with the proceeds out of the crime but even in given circumstances and scenario that the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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