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TMI Blog2025 (2) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... eated the language of the statute and has not arrived at any independent satisfaction to the fact that the offence of money laundering has been committed under section 3 and if the property was not attached immediately, the proceedings under the Act will be frustrated. The decisions of the Hon'ble Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement [2020 (3) TMI 460 - PUNJAB & HARYANA HIGH COURT], and the judgment of the Hon'ble Delhi High Court in J. Sekar v. Union of India & Ors. [2018 (1) TMI 535 - DELHI HIGH COURT] are relied upon. It is also contended that though the judgment in the latter case has been stayed by the Hon‟ble Supreme Court, as per the settled legal position, its ratio would continue to apply. There are no substance in the contention of the appellants that the condition u/s 5(1) of recording the reasons was not met. It is found that detailed reasons for the action initiated under the provision have been recorded by the respondents before initiating the action. As regards, the reasons under section 8, it is seen that the language of the said provision is different insofar as section 8 does not specifically lay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case under the PMLA, 2002, have been stayed by the Ld. Special Judge following the stay granted by the Hon‟ble Guwahati High Court - at this stage, when the criminal trial of the appellants herein is still pending before a court of competent jurisdiction, even the balance of interests lies in favour of continued attachment of the subject properties. The same by itself does not disturb the ownership title of the appellants and does not deprive them of possession and enjoyment of the same. Thus, 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. Conclusion - i) The procedural requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nara Ban, Vikapuri Branch, N. Delhi) 4,25,000/- Facts in brief:- 2. The relevant facts briefly are that the Head of Branch, Central Bureau of Investigation, ACB, Shillong, under letter No. DPSHG2012/341/ RC1A2011SHG dated 23.01.2013, forwarded a copy of Charge Sheet No. 08 dated 21.01.2011 filed against Shri Depolal Hojai, Shri Dabiruz Jaman, Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi in the Court of Special Judge, CBI, Assam, Guwahati for offences punishable u/s 120-B, 409 of IPC and Section 13(2) r.w.13(1)(d) of the Prevention of Corruption Act, 1988 (P.C. Act, 1988), and under letter No. DPSHG2011/6103/N.C. Hills Cases dated 26.12.2011 forwarded a copy of Charge Sheet No. 08 dated 23.11.2011 filed against Shri Depolal Hojai, Shri Jayanta Kr. Ghosh @ Drubo Ghosh, Shri Pradip Kr. Roy, Shri Joythanon Thaosen, Shri Debabrata Seal, Shri Debasish Bhattacharjee, Shri Karuna Sindhu Das, Shri Hemadri Sekhar Das and Shri Keshab Bhattacharjee in the Court of Special Judge, CBI, Assam, Guwahati for offences punishable u/s 120(B), 420, 468, 471 of IPC and Section 13(2) r.w.13(1)(c) & (d) of P.C. Act, 1988. 3. The said Shri Depolal Hojai was functioning as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cretary (N) Dimasa Associates‟ account (A/c No. 0455050028055) vide Cheque No. 015103 dated 10.03.2008 & Cheque No. 015102 dated 10.03.2008 maintained at UBI, A.T. Road Branch, Guwahati. He also deposited an amount of Rs. 4,49,00,000/- into the Principal Secretary (N) Enn Cee Hill Traders‟ account (A/c No.0455050028063) vide Cheque No.015105 dated 04.04.2008, Cheque No. 015107 dated 04.04.2008 maintained at UBI, A.T. Road Branch, Guwahati. Out of the remaining amount of Rs. 17,19,447/-, it is alleged that Shri Dabiruz Jaman had misused Rs. 16,99,000/-. However, we are not concerned with the said amount of Rs. 16,99,000/- in the present appeal. 9. The further facts are that Standing Instructions had been issued to the Bank by the N.C. Hills Autonomous Councils Authority to automatically transfer the funds received in the above-mentioned account of the Principal Secretary (N) to the account of M/s Dimasa Associates (A/c No. 28020) and M/s Enn Cee Hills Traders (A/c No. 28047), the partnership firms of the appellants, Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi. Accordingly, an amount of Rs. 1,00,00,000/- was deposited into the account of M/s Dimasa Associate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the award by His Excellency, the Governor of Assam, N.C. Hills Autonomous Council had already paid Rs. 2,00,00,000/- to them from their revenue earning and that the amount of Rs. 5,49,00,000/- received by them from the NHAI funds from the N.C. Hills Autonomous Council was treated as part of the amount due under the compensation award. 14. On being asked, whether they are willing to refund back the money to the Council as it is alleged that the money they have received from the NHAI fund from the Council was illegitimate, he stated that they are willing to refund back the money to the Council provided the Council pays them through a proper/legitimate channel. Further, he had stated that they were unaware of the funds they have received from the Council were related to the compensatory fund given by NHAI to the Council as they have not been informed by the Council or by the DFO, N.C. Hills, Haflong Divisions. 15. Summons was also issued to Shri Ranbir Singh Gandhi under Section 50 of PMLA but did not respond to the same. 16. Shri Depolal Hojai was summoned under Sub-Section (2) and (3) of Section 50 of the PMLA, 2002 and on his appearance, he made statements on 28.01.2014 and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid finding, he held that the properties identified during PMLA investigation in respect of Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi, although such properties have been purchased before the commission of the offence, are liable for provisional attachment for the value thereof for, i.e. Rs.5,49,00,000/- for the proceeds of crime derived by them by committing scheduled offence. Accordingly, he passed a provisional attachment order attaching the properties of the appellants herein as mentioned in the Table in para-1 above. 19. An Original Complaint (O.C.) having been filed before the Ld. AA as per the requirement of Section 5(5) of the Act, the Ld. AA, vide the impugned order dated 16.09.2016, confirmed the attachment of the properties. 20. Aggrieved by the said order of the Ld. AA, the two appellants have filed these appeals challenging the same on various factual and legal grounds. Arguments on behalf of the Appellants 21. The first contention put forward on behalf of the appellants is that the conditions prescribed under sections 5 and 8 which provide for recording of satisfaction by the respective authorities was not met in the present case. The auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt (2023) SSC Online 1856 wherein it was held that the property sought to be attached by the directorate was purchased prior to the dates of the alleged crime the same cannot constitute proceeds of crime and therefore cannot be attached. It is also pointed out that the respondent has placed reliance 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 unconnected to the proceeds of crime and purchased much prior to the alleged commission of scheduled offence, can be attached. However, the aforesaid judgments on the said proposition are impliedly overruled in light of the judgment of the Supreme Court in Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586 (para 7 & 31-C). For the same proposition, it is also pointed out that the judgment of the Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement referred to above, was challenged before the Supreme Court but the SLP was dismissed vide order dated 30.4.2021. 24. It next contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in possession, a Show Cause Notice has been issued by the Ld. AA. 30. The Respondent has relied on the judgement on Deputy Director, Directorate of Enforcement and Ors. Vs. Axis Bank and Ors. (MANU/DE/1120/2019) and Prakash Industries Ltd and Ors. vs. Directorate of Enforcement (MANU/DE/2491/2022) to justify the attachment of the property as "value thereof". 31. The Respondent has further relied on the judgement in the case of Vijay Madanlal Choudhary vs. Union of India, to substantiate the view that the offence of money-laundering is not dependent on or linked to the date on which the scheduled offence has been committed, the relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. 32. Based on the above arguments, it is prayed on behalf of the Respondent that the present appeal be dismissed. Analysis & Findings 33. I have given careful consideration to the material on record and the rival submissions of the parties. The first contention of the appellant is that the conditions prescribed under sections 5 and 8, which provide for recording of satisfaction by the respective authorities, were not met in the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eping partners and were neither authorized to operate any bank account in the name of the firms. That out of the total amount of Rs. 9,48,33,330/- as received by Divisional Forest Officer, NCHD, Haflong from NHAI, an amount of Rs. 58,65,265/- vide cheque No. 166765 dated 16.12.2010 was received and utilized by Shri Sankar Hazarika, DFO, successor of Shri Debiruz Zaman (A-1) and in course of investigation, no irregularity could be detected in the utilization of this amount of Rs. 58,65,265/-. Whereas, the remaining amount of Rs. 8,89,68,035/- was received by Shri D. Zaman (A- 1) during his tenure as the Divisional Forest Officer, NCHD, Haflong. Shri Debiruz Zaman in criminal conspiracy with Shri Depolal Hojai, Shri Ranbir Singh Gandhi and Shri Charanjit Singh Gandhi has dishonestly deposited the remaining amount of Rs. 5,66,19,417/- in account No. 0455050032300 opened in the name of DFO, NCHD at United Bank of India, AT Road, Guwahati, as under:- Sl. No. Account No. 0455050032300 WITH UBI A.T. ROAD, GUWAHATI Date of Deposit Details of instrument Amount(in Rs) 1 06.03.2008 Cheque No. Dt. 23.02.2008 38,74,417/- 2 08.03.2008 DD No.808048 dt. 07.03.2008 78,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the fund to the A/c of PS NCHAC (A/c Dimasa) only and not to the A/c of PS NCHAC (A/c Enn Cee). However, the act of transferring of fund of Rs. 4,49,00,000/- to the A/c of PS NCHAC (A/c Enn Cee) by Shri D. Zaman (A-1) also indicate his criminal conspiracy with Shri Ranbir Singh Gandhi (A-3) & Shri Charanjit Singh Gandhi (A-4). The criminal conspiracy of Shri Debiruz Zaman (A-1), Shri Depolal Hojai (A-2), Shri Ranbir Singh (A-3) and Shri Charanjit Singh Gandhi (A-4) has been further substantiated by the fact that all the Credit Vouchers for depositing the amounts in the said A/c Dimasa and A/c Enn Cee were filling up and deposited in the Bank by Shri S. Pareek, an employee of Shri R.S. Gandhi and Shri Charanjit Singh on their instruction (A-3 & A-4). Further, one DD No. 808048 dated 07.03.2008, issued by Project Implementation Unit, NHAI, Silchar was personally collected by one S.k. Jha, an employee under Shri Ranbir Singh Gandhi (A-3) & Charanjit Singh Gandhi (A-4), based at Lanka, Assam, who operates one A/c of said Gandhi's maintained in the name of M/s Hills Trade Agency with UBI, Lanka Branch. Said draft, so collected, was deposited in the A/c of DFO, NCHD maintained w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons for the action initiated under the provision have been recorded by the respondents before initiating the action. As regards, the reasons under section 8, it is seen that the language of the said provision is different insofar as section 8 does not specifically lay down that the reasons to believe are to be recorded or that there should be any material in possession, other than the original complaint filed by the Directorate under section 5(5). Nor does the provision specifically necessitate recording of the reasons in writing. Nevertheless, a perusal of the impugned order itself provides the detailed reasons leading to the registration of ECIR by the Directorate, further investigations conducted by the Directorate and the complaint received by the Ld. AA from the Directorate u/s 5 (5). As such, there is little substance in this averment of the appellant either. As regards, the further contention that the reasons to believe were not conveyed to the appellant, I find that this legal issue remains to be finally settled. As pointed out, a Single Judge Bench of the Hon‟ble Delhi High Court in the case of J. Sekar (supra) has held that reasons have to be communicated to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of crime and purchased much prior to the alleged commission of scheduled offence, can be attached. However, the aforesaid judgments on the said proposition are impliedly overruled in light of the judgment of the Supreme Court in Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586 (para 7 & 31-C). For the same proposition, it is also pointed out that the judgment of the Punjab and Haryana High Court in Seema Garg v. Deputy Director, Directorate of Enforcement referred to above, was challenged before the Supreme Court but the SLP was dismissed vide order dated 30.4.2021. 38. I have considered the above contention of the appellants. At the outset, it may be mentioned that the Canara Bank was impleaded as respondent in the present case vide an order dated 04.12.2018 based on the finding that the Canara Bank was Defendant No. 7 in the complaint and the subject properties had been mortgaged with the Bank. With its reply on 31.01.2019 the Bank had submitted copies of the title deeds of the properties standing in the name of the appellants herein which had been offered as securities to the Bank. The same were taken on record. In subsequent proceedings, it was submitted on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 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 Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feguard 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 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 sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of crime is hereby rejected. In doing so, it is noted that the subject properties have been attached by the respondents in the present case as „value‟ of proceeds of crime as has been categorically noted in the last paragraph of page 17 of the Provisional Attachment Order. 41. The next contention of the appellants is that the amount in question had been utilized fully by the appellant in the month of April 2008 itself for the purposes of their business, more particularly, for payment of vehicle loan, overdraft facility, payment to labourers etc. As on the said date, none of the alleged scheduled offences, including section 409 and 120B of the IPC and Section 13 of P.C. Act were part of the Schedule to the PMLA, 2002. Further, the amount having already been utilized by the appellant there was no continuing offence nor the appellants were in possession of the alleged proceeds of crime on the date when the said offences were included in the Schedule. In this context, it is also submitted that there is constitutional ban on retrospective applicability of the criminal law and the same cannot be applied ex-post facto. 42. In this regard, it has been categorically he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants herein is still pending before a court of competent jurisdiction, even the balance of interests lies in favour of continued attachment of the subject properties. The same by itself does not disturb the ownership title of the appellants and does not deprive them of possession and enjoyment of the same. 43. On facts, it is submitted that that an amount of Rs. 18.08 crore, was owed by the NC Hills Autonomous Council to the appellants for supply of bamboo in consequence of the arbitration award. The said arbitration award had been duly accepted by the Government of Assam. Out of the said amount of Rs. 18.08 crore, an amount of Rs. 2.00 crore has been paid to them by the Council and the balance was still due. These facts have not been contested by the respondents. The contention of the appellants is that the amount of Rs. 5,49,00,000/- received by them from NHAI funds was treated by them as part of the compensation award. In this regard, as already noted, a prosecution complaint stands filed against the accused, including the present appellants in respect of the PMLA offence. Facts on record inter alia indicate that credit vouchers for depositing the amounts in the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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