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TMI Blog2024 (12) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance has been made on the judgment of the Apex Court in the case of Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT (LB) ] apart from the judgment of Delhi High Court in the case of Prakash Industries (supra). In the case of Prakash Industries [ 2022 (7) TMI 877 - DELHI HIGH COURT ], elaborate discussion to define the proceeds of crime has been made where the judgment of the Punjab and Haryana High Court in the case of Seema Garg was also referred but has been distinguished because Punjab and Haryana High Court taken only two limbs of the definition of proceeds of crime while it has three limbs. The specific argument raised before the Apex Court in the case of Vijay Madanlal Choudhary to make second and third limb together was not accepted i.e. other than the property acquired or derived directly or indirectly as a result of criminal activity, the property can be attached only when it is sent outside India. In that case, the property of equivalent value can be attached. The Adjudicating Authority committed grave illegality in taking narrow meaning or giving a different construction to the definition of proceeds of crime than legislated by the legislature. The courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 2022 SCC OnLine Del 2087, the impugned order is not sustainable, rather deserves to be set aside with the remand of the case. 3. The learned counsel for the appellant (ED) further submitted that the judgment of the Punjab and Haryana High Court in the case of Seema Garg (supra) has been challenged before the Apex Court and the same is still pending. 4. The counsel made a reference of the crime involved in the case which pertains to misappropriation of funds as well as abuse of power under Mahatma Gandhi National Rural Guarantee Scheme. The case was registered in pursuance to a direction of the Allahabad High Court (Lucknow Bench) in Writ Petition No.12802 (M/B) decided by the order dated 31.01.2014. Serious allegation exists against the respondents; however, elaborate argument is not required because attachment has not been confirmed by the Adjudicating Authority on the ground that the appellant (ED) were not authorized to attach the property other than which is involved directly or indirectly in the commission of crime and derived or obtained out of the criminal activity pertaining to scheduled offence. In view of the above, the limited argument has been raised because the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fence. The judgment of the Punjab and Haryana High Court in the case of Seema Garg (supra) and also of Adhra Pradesh High Court in the case of Satyam Computer Services (supra) has been relied. The Adjudicating Authority did not rely on the judgment of the Delhi High Court in the case of Axis Bank (supra). 9. The issue for our consideration is as to whether a property derived or obtained directly or indirectly out of the criminal activity relating to scheduled offence can alone be considered to be the proceeds of crime or in absence of the availability of such property, any other such property of equivalent value would also fall in the definition of proceeds of crime . The issue aforesaid has been recently decided by this Tribunal by an elaborate judgment in the case of Shri Sadananda Nayak Vs. Directorate of Enforcement, Bhubaneswar (Appeal No. 5612/2023), decided on 14.10.2024. Relevant paras of the said judgment are quoted hereunder: 8. We have considered the rival submissions raised by the counsel for both the parties and scanned the record carefully. 9. It is not in dispute that an FIR was registered for commission of the scheduled offence. It was followed by recording of the E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which are acquired directly or indirectly out of criminal activities would be termed to be the proceeds of crime. The properties can be acquired directly or indirectly with the use of proceeds of crime. The use of proceeds directly or indirectly would be relevant part to fall in first part of the definition of proceeds of crime . To clarify the definition, it may be illustrated. Assuming in a case of dacoit, the accused secured the money and it has been used for the purchase of property, then such a property would fall in the definition of proceeds of crime having been obtained out of proceeds of crime. In other case where the property was not acquired or derived by the accused himself but he passed on money out of the crime to another person and he acquired the property, then also it would be considered to be the proceeds of crime to acquire the property. In any case, there should be an element for use of the proceeds directly or indirectly obtained out of the crime and thereby the property would have nexus with the crime. 14. In second part the value of any such property the definition aforesaid starts with or after the first part referred and discussed in the para above. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of proceeds of crime is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of property as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering. The perusal of the para quoted above shows that the argument of the appellant that the value of any such property would be only when the proceeds have been taken out of India. The argument aforesaid was not accepted and it simplifies that the definition of proceeds of crime has three limbs and elaborate judgment to define the proceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Delhi High Court makes it clear that the definition of proceeds of crime has three limbs and in the second limb the properties of equivalent value to the proceeds obtained out of crime can be attached which may have been acquired prior to the commission of crime but it would be when proceeds of crime has been vanished and is not available. It is sought to achieve the object of the Act of 2002. 18. In the light of judgment of the Apex Court in Vijay Madanlal Choudhary (supra), we are unable to apply the judgment of Kerala High Court in the case of Satish Motilal Bidri (supra). The Ld. counsel did not refer the relevant para of the judgment in the case (supra), rather he referred Para 66 of the judgment of the Apex Court in Vijay Madanlal Choudhary (supra) which permits attachment only of the proceeds of crime. There cannot be any dispute that attachment can be only of the proceeds of crime but what would fall in the definition of proceeds of crime and clarified in Para 68 of the same judgment has not been taken into consideration whereas judgement of the Apex Court on the issue is binding on the High Court. 19. The reference to the judgment in the case of Pavana Dibur(supra) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation where a person who has obtained proceeds of crime by commission of a scheduled offence has managed to ensure that a property directly or indirectly connected to criminal activity is rendered untraceable. It is to confer authority upon the Directorate to proceed further in such a situation that Section 2(1)(u) uses the expression or the value of any such property. The safeguard which stands constructed in Section 2(1)(u) in such a contingency is that in case the Directorate does proceed against any other property, it must be equivalent in value to the illegal pecuniary benefit or gain that may have been obtained as a result of criminal activity. 80. In the considered opinion of this Court to tie the Directorate s power to move forward in this direction only in cases where property is taken or held outside the country would not only do violence to the plain language of Section 2(1)(u), it would clearly whittle down the scope and intent of the definition itself. It would essentially amount to erasing the expression value of any such property as appearing in Section 2(1)(u) altogether. The Court further notes that in Seema Garg the learned Judges themselves observed that the phra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the judgement of the Punjab and Haryana High Court in Seema Garg is concerned, although SLP (C) No.14713-14715/2020 preferred against the same came to be dismissed, while doing so the Supreme Court recorded that the petition was being rejected in the peculiar facts and circumstances of the case. The dismissal of the aforesaid Special Leave Petition cannot in any case be interpreted or understood as being an affirmation of the view as expressed by the Punjab and Haryana High Court. xxxx 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 envisage 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 property equivalent in value held within the country or abroad . However, both the italicised categories would be liable to be invoked in cases where the actual tainted property cannot be traced or found out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench. The issue has otherwise been dealt with by this Tribunal in the case of FPA- PMLA-2909/CHD/2019 M/s. Besco International FZE vs. The Deputy Director Directorate of Enforcement, Chandigarh dated 31.07.2024. The relevant para of the said judgment is quoted hereunder: It is not that only those properties which have been were derived or obtained directly or indirectly out of the crime can be attached rather in case of non- availability of the property derived or obtained directly or indirectly rather when it is vanished or siphoned off, the attachment can be of any property of equivalent value. It is necessary to clarify that the proceeds of crime would not only include the property derived or obtained directly or indirectly out of the criminal activity relating to the scheduled offence but any other property of equivalent value. The word or has been placed before the value of any such property and is of great significance. Any property of equivalent value can be attached when the proceeds directly or indirectly obtained out of the crime has been vanished or siphoned off. Here, the significance would be to the property acquired even prior to commission of crime. It is for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of Punjab and Haryana High Court in the case of Seema Garg (supra) but even other judgments of High Courts and Supreme Court. However, reliance has been made on the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra) apart from the judgment of Delhi High Court in the case of Prakash Industries (supra). In the case of Prakash Industries (supra), elaborate discussion to define the proceeds of crime has been made where the judgment of the Punjab and Haryana High Court in the case of Seema Garg (supra) was also referred but has been distinguished because Punjab and Haryana High Court taken only two limbs of the definition of proceeds of crime while it has three limbs. The specific argument raised before the Apex Court in the case of Vijay Madanlal Choudhary (supra) to make second and third limb together was not accepted i.e. other than the property acquired or derived directly or indirectly as a result of criminal activity, the property can be attached only when it is sent outside India. In that case, the property of equivalent value can be attached. The argument aforesaid was accepted by the Apex Court. At this stage, we may refer relevant Paras 66 68 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bs and has been detailed out by the Delhi High Court in the case of Prakash Industries (supra). Three limbs of the definition of proceeds of crime are independent and are applicable independently in the given situation. 11. We have also examined the judgment of the Supreme Court in the case of Pavana Dibur (supra) and in reference to it also the discussion has been made in the case of Shri Sadananda Nayak(supra) of which relevant para has been quoted. The Adjudicating Authority committed grave illegality in taking narrow meaning or giving a different construction to the definition of proceeds of crime than legislated by the legislature. The courts are having no authority to nullify any definition though Constitutional Court declared it to be ultra vires. We need not to reiterate the issue because it has already been discussed elaborately by this Tribunal in the case of Shri Sadananda Nayak (supra). 12. In the light of the discussion made above, we find reasons to cause interference in the impugned order of the Adjudicating Authority which is set aside with the remand of the case for a fresh consideration. It would be within the period specified in the statute and for that the parti ..... 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