9911796707
TMI Blog2025 (2) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... . Schedule: Plot No. 113 on Akashneem Marg Road measuring 420m2 situated in residential colony known as DLF Qutab Enclave, Phase II, Tehsil and Distt. Gurgaon, Haryana , butted and bounded as under- East: Plot No. Akashneem Marg-12 West: Plot no. Akshneem Marg-114 North: Plot No. P-10/06; South: Road at Rajouri Garden, N. Delhi. 32,50,000/- 2. Charanjit Singh Gandhi Sale No. 02DDJ6J254, Plot no. 10 in Block-Z, land measuring 99.7 sq.yards situated in area of village Darapur and the colony knowng as Rajouri Garden, N. Delhi and is bounded by: East: Road 40‟ wide West: Remaining portion of the said property North: remaining portion of the said property South: Remaining portion of the said property (Mortgaged with Canara bank, Vikaspuri branch, N. Delhi) 4,25,000/- Sale Deed No. 02DDJ6J252 , Plot No.10 in Block -Z measuring 99.7 sq.yards situated in the area of Basai Darapur and the colony known as Rajouri Garden, N. Delhi and is bounded as under-East: Road of 40‟ wide West: remaining portion of the said property North: remaining portion of the said property South: Property no. Z- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period from 06.09.2006 to 16.12.2010. 6. Out of the said amount of Rs. 9,48,33,330/- Rs. 58,65,265/- was received and utilized by the next DFO, Shri Shankar Hazarika, DFO. Investigations revealed no irregularity in utilization of the said amount of Rs. 58,65,265/-. The remaining amount of Rs. 8,89,68,035/- was received and is stated to have been utilized by Shri Dabiruz Jaman during his tenure as DFO. 7. Out of the said amount of Rs. 8,89,68,035/-, Shri Dabiruz Jaman had deposited Rs. 3,23,48,618/- into the account of the DFO, N.C. Hills Division, Haflong (A/c No. 4047) maintained at Langpi Dehangi Rural Bank, Haflong and the balance amount of Rs. 5,66,19,417/- was deposited into the DFO, N.C. Hills Division‟s account (A/c No. 0455050032300) at UBI, A.T. Road Branch, Guwahati on 06.03.2008, 08.03.2008, 29.03.2008 & 04.04.2008. The CBI, during its investigation, did not find sufficient evidence to indicate towards any criminality or misappropriation of the first-mentioned amount of Rs. 3,23,48,618/- which was deposited in Langpi Dehangi Rural Bank, Haflong. 8. However, out of the remaining amount of Rs. 5,66,19,417/- Shri Dabiruz Jaman deposited an amount of Rs. 100,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of roads under PWD, Mahur Division, Assam. However, for the purposes of these two appeals which have been filed by Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi, we are not concerned with that case. 12. Since some of the allegations against the accused under the IPC and the P.C. Act constituted scheduled offences under the PMLA, 2002, an ECIR numbered as ECIR No. 02/2013/KLZO/ GWZO/PMLA was registered by the Directorate of Enforcement on 23.08.2013. 13. Shri Charanjit Singh Gandhi was summoned under Sub-Section (2) and (3) of Section 50 of the PMLA, 2002 and on his appearance, made statements on 09.12.2013 and on 11.03.2016 wherein, he inter- alia stated that their partnership firms, viz., M/s Dimasa Associates and M/s Enn Cee Hills Traders had a legitimate claim from the N.C. Hills Autonomous Council arising out of the arbitration award in their favour under the direction of the Governor of Assam during Governor's Rule to compensate Rs. 18.08 Crores to them in accordance with the provisions of the Agreement made between them and the Council to supply bamboo to HPCL, Jagiroad and Panchgram on behalf of the Council. He also stated that following the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on his appearance, made a statement on 07.02.2014 wherein, he inter alia stated he was appointed as the Adviser to CEM, N.C. Hills Autonomous Council in February 2008 as an honorary post in the Council and Shri Depolal Hojai was the CEM, N.C. Hill Autonomous Council at that time. On being asked why he had advised Shri Depolal Hojai to issue instructions to UBI Bank, A.T. Road Branch to transfer the funds received from NHAI into the Principal Secretary (N)‟s account, he replied that he had not tendered such advice to Shri Depolal Hojai. Further, he had stated that, he was aware that the Gandhis, Shri Ranbir Singh Gandhi and his son Shri Charanjit Singh Gandhi who were engaged in the business of supplying bamboo, had claimed compensation and an arbitrator had awarded some compensation to them on account of damage caused to the bamboo already felled. 18. From the investigations conducted under the PMLA, 2002, the Ld. Joint Director concluded that withdrawing and utilizing funds without knowing the actual source and without receiving confirmation from the Council indicates that Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi had mala fide intention to misappropriate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC Online AP 721 (para 10-14); Niranjan Chatterjee & Ors, v. State of West Bengal & Ors. 2007 SCC Online Cal 283 (para 17,18,20) & Palaniswamy & Anr. v. State of AP Revenue Dept. & Ors. 2018 SCC Online Hyd 16 (para 13,16,19,20). Thus, it is contended, that the proposition laid down in J. Sekar v. Union of India, i.e., mere reproduction of words of statute will not suffice to show satisfaction of the authority before attachment, continues to hold the field. For the same proposition, it is contended that judgment of the Hon‟ble Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement was challenged before the Supreme Court and the SLP was dismissed vide order dated 30.4.2021. 23. It is next contended that the properties were purchased much before the alleged period of commission of the predicate offence. It is submitted that the relevant documents have been brought on the record by the Respondent No.2 (Canara Bank) along with their reply in the appeal. The period of the alleged crime is April 2008 whereas the properties have been purchased by the appellants between 1999 and 2003. The decision of Hon'ble Supreme Court, in Pavana Dibbur Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing the charges framed under section 409 IPC. A copy of the order is also submitted. Further, vide order dated 19.9.2023, the trial court has observed that trial would not proceed further without any specific order and disposal of the said Criminal petition before the Hon‟ble Gauhati High Court. A copy of the said order dated 19.9.2023 passed by the Special Judge, CBI, is also submitted. 27. Based on the above-mentioned arguments, it is prayed on behalf of the appellants that the present appeals be allowed. Arguments on behalf of the Respondent 28. The Respondents, in their submissions, have argued that the procedure under section 5 of PMLA, 2002 was duly followed, reasons to believe formed and recorded in writing and copy of reasons to believe recorded were duly forwarded by Ld. AA in terms of provisions of PMLA, 2002. As far as supply of reasons to believe to the appellant is concerned, it is submitted that there are no provisions under PMLA to supply copy of the reasons to believe to the concerned persons. 29. Similarly, the requirements of the section 8 of the PMLA,2002 have been duly followed in letter and spirit by the Ld. AA. After the detailed perusal of the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, North Cachar Hills Division, Haflong from 01.04.2003 to 24.03.2009. Shri Depolal Hojai (A-2) was elected as Member, N.C. Hills Autonomous Council in the year 2007 and was functioning as Chief Executive Member from 08.01.2008 to 27.11.2008. Shri Rnbir Singh Gandhi (A-3) established a firm namely M/s Hills Trade Agencies with its address at 407 P.B. Complex, AT Road, Guwahati- 781001 in partnership with his son Shri Charanjit Singh Gandhi @ Charanjeet Singh Gandhi (A-4) and other family members. The firm was dealing in the business of supply of bamboo to Hindustan Paper Corporation Ltd., Jagiroad, Nagaon and Panchgram, Silchar on contractual terms on behalf of N.C. Hills Autonomous Council, Haflong since the year 1993 onwards. He also established another three firms namely M/s Dimasa Associates, M/s Enn Cee Hills Traders and M/s Dimalik Forest Agencies in October 2006 for the same purpose. The partners of the said three firms are Shri Ranbir Singh Gandhi, Shri Charanjit Singh Gandhi and one local partner each from Haflong i.e. Shri Ringmanon Kemprai for Dimasa Associates, Shri Paijendra Hagier for Enn Cee Hills Traders and Shri Sumud Hojai for Dimalik Forest Agencies. The three lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sa) A/c of PS (N) vide No. 28063 (A/c Enn Cee) Details of Cheque Amount (in Rs.) Details of Cheque Amount (in cheque) 1 Cheque No. 015103 Dt. 10.03.2008 65,00,000/- Cheque No. 015105 Dt. 04.04.2008 2,91,00,000/- 2 Cheque No. 015102 Dt. 10.03.2008 35,00,000/- Cheque No. 015107 Dt. 04.04.2008 1,58,00,000/- Total 1,00,00,000/- Total 1,58,00,000/- Investigation further revealed that for facilitating the transfer of fund due to be received from HPCL account of supply of bamboo to HPCL by the contractor of NCHAC in the A/c of M/s Dimasa Associates and M/s Enn Cee (both the partnership Firms of Shri Ranbir Singh Gandhi & Charanjit Singh Gandhi), the above two A/cs of PS(N), NCHAC was opened/maintained with UBI, AT Road Branch. Investigation has also transpired that as per the Standing Instruction dated 24.11.2006 given to the bank, as issued at the time of opening of the aforesaid two Accounts. M.s Enn Cee Hills Traders & M/s Dimasa Associates, who were also having Accounts with the same branch of UBI. In this context, it may be further mentioned here that as per instruction, as issued by Shri Depolal Hojai (A-2), Shri D. Zaman (A- 1) and DFO, NC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in criminal conspiracy with each other and also with accused Shri Ranbir Singh Gandhi (A-3) and Shri Charanjit Singh Gandhi (A-4) had fraudulently and dishonestly misappropriated the fund of Rs. 5,49,00,000/- released by NHAI towards Compensatory Afforestation, Timber/Poles Operations etc. without implementing any schemes for which the fund was released and thereby caused huge wrongful loss to the Government of Assam to the tune of Rs. 5,49,00,000/- and corresponding wrongful gain to themselves to that extent. On the basis of the aforesaid information/ documents (s), a prima - facie case for an offence of money-laundering (section 3 of the Prevention of Money Laundering Act, 2002) punishable u/s 4 of the said Act appears to have been made out. A case is therefore, registered and is taken up for investigation under the provisions of the Prevention of money laundering Act, 2002 and the Rules framed thereunder." 35. Having perused the above reasons to believe recorded by the Investigating Officer (I.O.) with the approval of the Deputy Director, I do not find any substance in the contention of the appellants that the condition u/s 5(1) of recording the reasons was not met. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (which were duly recorded) or on account of non-communication of the reasons by the relevant authorities. 37. It is next contended that the properties were purchased much before the alleged predicate offence. It is also submitted that the relevant documents have been brought on the record by the Respondent No.2 Canara Bank along with their reply in the appeal. The alleged crime took place much later, in April 2008. The fact of the acquisition of the properties prior to the alleged period of offence has not been disputed by the respondents. The decision of Hon'ble Supreme Court, in Pavana Dibbur Vs. Directorate of Enforcement (2023) SSC Online 1856 is relied upon wherein it was held that the property sought to be attached by the Directorate was purchased prior to the dates of the alleged crime and the same cannot constitute proceeds of crime and, therefore, cannot be attached. It is also submitted that the respondent has relied upon two judgments passed by the High Court of Delhi, namely, Deputy Director, Directorate of Enforcement & Ors. v. Axis Bank & Ors and Prakash Industries Ltd. & Ors. v. Directorate of Enforcement to contend that appellants' property, even though un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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;" 13. The perusal of the definition aforesaid shows three limbs. In between every limb word "or" has been used to divide the definition into three parts. The first part refers to the property acquired or derived directly or indirectly out of the criminal activities relating to the scheduled offence. In the first part, all those properties 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word "the value of any such property" was inserted by the legislature to attach the property of equivalent value, if the proceeds out of commission of crime is not available or vanished. If the second limb of the definition is made dependent on the first limb, it would be literally re-writing the provision or making it redundant to a great extent and for this, jurisdiction does not lie with any court of law which includes even the Constitutional Court. They can declare any provision to be unconstitutional but till then there remains presumption of constitutional validity. 16. At this stage, we may refer to Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) which is quoted hereunder. "68. It was also urged before us that the attachment of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecuniary advantage thereby gained. This is why for such untainted properties (held in India or abroad) to be taken away, the rider put by law insists on equivalence in value. From this perspective, it is essential that, before the order of attachment is confirmed, there must be some assessment (even if tentative one) as to the value of wrongful gain made by the specified criminal activity 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". 17. The judgment of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are quoted hereunder: "76. Seema Garg principally holds that the phrase value of any such property and property equivalent in value held within the country or abroad cannot be ascribed the same meaning and effect. The learned Judges comprising the Division Bench then proceeded to hold that even if the intent of the legislature was to include any property in the hands of a person within the ambit of the expression proceeds of crime‖, there would be no need to create three limbs of definition of proceeds of crime. xxxx 79. Regard must also be had to the fact that the legislation itself is dealing with contingencies where proceeds of crime are layered and their origins camouflaged and masked enabling the accused to project or claim it to be untainted property. The Act clearly as does Axis Bank take into consideration a situation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in Axis Bank. The Court thus reiterates the interpretation accorded to Section 2(1)(u) by this Court in the aforesaid decision. Consequently, and for all the aforesaid reasons this Court finds itself unable to agree with the principles as laid down in Seema Garg as well as the subsequent decisions rendered by the Andhra Pradesh High Court in Kumar Pappu Singh Vs. Union of India and the Patna High Court in HDFC Bank Limited Vs Government of India, Ministry of Finance. 81. The Court also takes note of the position that although SLP (Crl) No. 28906/2019 is pending before the Supreme Court against the decision rendered in Axis Bank, the judgement of this Court has not been stayed or placed in abeyance. The interim order of 30 August 2019 passed in the aforesaid Special Leave Petition only requires parties to maintain status quo. Insofar 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 Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of "proceeds of crime" and, therefore, direction for the property acquired prior to commission crime is to be taken on facts of that case. 22. It has already been clarified by us that 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. The Judgment in the case of Vijay Madanlal Chaudhary (supra) is of three judges bench while the judgment in the case of Pavana Dibur (supra) is of two judges 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the definition of "proceeds of crime" would defeat the object of the Act of 2002. It is more especially when the arguments raised by the appellant that the property acquired prior to the commission of crime would not fall in the definition of "proceeds of crime". In that case, the task of the accused would become very easy to first commit the scheduled offence and after obtaining or deriving the property out of the criminal activities, immediately siphon off or vanish so that it may not remain available for attachment and otherwise the contingency aforesaid would satisfy only the first limb of definition of "proceeds of crime" leaving the second. We are thus unable to accept the argument raised by the appellant so as to make the middle part of the definition of "proceeds of crime" to be redundant. 24. In view of the above, we are unable to accept the only argument raised by the appellant and for that appeal fails and is dismissed." 40. Following the ratio of the Appellate Tribunal‟s own judgment in the above-mentioned case of Sadananda Nayak, the contention put forward on behalf of the appellants that the subject properties could not have been attached as they were acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon‟ble Guwahati High Court. It is also clarified by both the counsels that these proceedings before the Appellate Tribunal have not been stayed by any higher judicial authority. Thus, at this stage, when the criminal prosecution case against the appellants is still pending, the attachment of properties cannot be held to be invalid. The legal position is well-settled that attachment of property is a balancing arrangement to secure the interests of the person, as also ensure that the proceeds of crime remain available to be dealt with in the manner provided by the Act. Mere attachment of property does not alter the position with regard to the ownership or even possession/use of the properties which are the subject matter of such attachment. The Hon‟ble Supreme Court has held in the aforesaid case of Vijay Madanlal Choudhary, and further clarified in the case of Ganpati Dealcom Pvt. Ltd. Civil Appeal No. 5783 of 2022 (order dated 23.08.22) that possession of properties attached under the PMLA, 2002 can only be taken under exceptional circumstances, such as crimes involving terrorist activities, drug cartels or organized criminal activities. Therefore, at this stage, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scation of proceeds of crime which is the quintessence, so as to combat the evil of money- laundering, by reaching the proceeds of crime in whosoever‟s name they are kept or by whosoever they are held. Therefore, so long as the source of the money is alleged to be „proceeds of crime‟ within the meaning of the Act, it can be attached by the respondents regardless of whether the appellants herein themselves stood charged of any scheduled offences or the prosecution complaint filed under the PMLA, 1999 or not. In the present case, as already noted, the appellants have been named in the prosecution case filed under the PMLA, 2002. However, even if they were not accused in the PMLA case, the properties could have been attached so long as there was evidence to indicate that alleged proceeds of crime traveled from one or more persons who are so accused.
44. In light of the above discussion, the present appeals are hereby dismissed.
45. Pending applications, if any, shall also stand disposed of.
46. Nothing in this order shall be read as expression of opinion on the prosecution case pending in the matter before the Ld. Special Court.
47. No order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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