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TMI Blog2025 (3) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... operty attached u/s 5(1). The contention of the respondents is that the appellant had no independent source of income and he was associated with his brothers, namely, Sh. Manish Jain and Sh. Rakesh Jain during the relevant period. Moreover, the presumptions u/s 23 and 24 are also against the appellant and it was for him to rebut the presumptions by presenting appropriate evidence before the Ld. AA which he failed to do. It is by now well-settled that the issue of retrospectivity or otherwise in so far as offence of money laundering is concerned has to be examined with reference to the act which constitutes 'money laundering' under Act, regardless of the time of occurrence of the scheduled offence. Further, the offence of money laundering is a continuing offence. A continuing offence is one which is susceptible of continuance and is distinguishable from one which is committed once and for all. A continuing offence occurs and reoccurs, and each time, an offence is committed. The decision of the Hon'ble Delhi High Court in Prakash Industries Limited [2022 (7) TMI 877 - DELHI HIGH COURT] may also be referred to in this context, wherein, it was held that it is well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s payment for import of computer parts and accessories. On further investigation by the DRI, it was revealed that Manish Jain and others had been remitting foreign exchange to Hong Kong through bogus firms/companies, namely, M/s Suntek Computers and M/s Shyam Trading Company (controlled by Sh. Manish Jain) adopting the same modus operandi and had remitted an amount of over Rs. 100 crores from 2012 till 2014. The DRI searched the residential and business premises of Sh. Manish Jain and associates on 07.08.2014 and seized incriminating material in the form of a large number of blank postal wrappers of Hong Kong Post, large number of bogus PAN cards (about 150) and Voter ID Cards (about 100) in the names of different fictitious identities. To accomplish this criminal activity of remitting foreign exchange from India, Sh. Manish Kumar Jain had opened a firm, namely, M/s Pacific Technology in Hong Kong, besides other entities. 3. Since offences under sections 420, 467, 471 of the IPC are the Scheduled Offences under the Prevention of Money Laundering Act, 2002 (PMLA, 2002), an ECIR (ECIR/03/LKZO/2015 dated 10.08.2015) was registered in the Lucknow Zonal Office of the Directorate of Enf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminal activities and laundering thereof as defined under section 3 of the Act. Accordingly, properties worth Rs. 2,19,36,954/- were traced and attached vide PAO dated 11.05.2016. Two Prosecution Complaints were filed before the designated Special Court, which has taken cognizance on the same against the accused persons, Sh. Manish Jain, Sh. Rajeev Wadhwa and others. 6. An Original Complaint (O.C.) dated 09.06.2016 having been filed before the Ld. AA as per the requirement of Section 5 (5) of the Act, the Ld. AA confirmed the provisional attachment of the properties vide the impugned order. Aggrieved by the said order of the Ld. AA, the appellants have challenged the same before this Appellate Tribunal. 7. It may not be out of place to mention here that Appeal No. FPA-PMLA-No.2476/DLI/2018 filed by Sh. Rajeev Wadhwa and other connected appeals against the order of the Ld. AA dated 09.07.2018 confirming the Provisional Attachment Order No. 03/2018 dated 18.01.2018 arising out of the same ECIR but a different O.C., namely, OC No. 891/2018, were disposed of by this Appellate Tribunal vide two orders dated 07.05.2024. During oral arguments on the present appeals, the Ld. Counsels f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id property was wrongly mentioned as 13.12.2012, while the correct date of the purchase of the said property is 13.11.2002 which can be duly verified from the regd. sale deed filed before this Appellate Tribunal. Thus, the said property was acquired in the year 2002 while the allegations with respect to the alleged offences made in the Original Complaint relate to period 2006 onwards. It was also pleaded by the appellant before Ld. Adjudicating Authority that the entire payment to acquire the said property was made in the year 2002 itself vide receipts dated 21.9.2002, 01.11.2002 and 13.11.2002 issued by GDA. Therefore, by no stretch of imagination can the said property be the result of crime proceeds. 11. With respect to the property, i.e., Shop No. FF-14, RDC, Raj Nagar, Ghaziabad in the name of the appellant, it is submitted that the said shop was acquired and purchased by the appellant from his own sources/funds in the year 2005 in terms of the letter of allotment No.254.COM.Dept./05 dated 2.3.2005 issued by GDA in favour of the appellant. The total sale consideration of Rs.6,70,000/- to acquire the said shop was paid by the appellant from his own sources of income and same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mselves were not scheduled offences before 01.06.2009, then the actions of the Appellant prior to the said date cannot be termed as scheduled offences and none of the properties acquired before the said date can be termed as proceeds of crime and be attached by the Respondent. However, in complete disregard to the said fact, the Complainant has blindly proceeded to attach even those properties that were acquired prior to 01.06.2009. Hence, it is stated that the properties which were acquired before 01.06.2009 could not have been attached by the Respondent and on this ground alone, the said Provisional Attachment Order deserves to be set aside. That even otherwise, the allegations and accusations that have been made against the Appellant do not disclose the commission of a Scheduled Offence under the PMLA, 2002 and thus, the present proceedings against the Appellant under the provisions of the PML Act, 2002, ought to be discontinued. 16. It is next contended that it is a well settled principle of law laid down by the Hon'ble Delhi High Court in its judgment titled as J. Sekar v. Union of India & Others wherein the Hon'ble Court has laid down that reasons to believe is a sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablished that the appellant was deeply involved in the offence of money laundering as defined u/s 3 of the PMLA. He, along with the coaccused, not only opened front companies in India through which he made fraudulent forex remittances but also opened companies in Hong Kong wherein he received such fraudulently remitted forex, which is a proceed of crime. He had earned proceeds of crime as defined in the PMLA, 2002 and, therefore, the attachment of the said properties was rightly done. It is contended by the respondents that the movable/immovable properties of the appellant were squarely covered under the definition of proceeds of crime as given u/s 2(1)(u) of the PMLA read with section 2(1)(v) of the Act. His role has been discussed in detail in the PAO No. 05/2016 and OC No. 606/2016. He and his brother, Rakesh Jain attempted to frustrate the proceeding under this Act by showing /transferring the said property in the name of his known person intentionally. 19. Similarly, the investment in purchasing of Shop No. FF-14, RDC, Raj Nagar, Ghaziabad UP by Neeraj Jain in his name, is squarely covered under the definition of proceeds of crime as defined under section 2(1)(u) of the PMLA, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been considered. In the case of Sadananda Nayak v Deputy Director, FPA-PMLA-5612/BBS/2023 (order dated 14.10.2024) this Appellate Tribunal has held as follows: "12.......... To analyze the issue, we may quote the definition of Proceeds of crime' given under Section 2(1) (u) of the Act of 2002, which 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 difficult for the enforcement agencies to protect the property till completion of the crime 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. In fact, the 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 refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "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 would ordinarily be "untainted property" that may have been acquired by the suspect legitimately without any connection with criminal activity or its result. The same, however, are intended to fall in the net because their owner is involved in the proscribed criminality and the tainted assets held by him are not traceable, or cannot be reached, or those found are not sufficient to fully account for the 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid, rather applied the judgment of Punjab and Haryana High Court in the case of Seema Garg v. Deputy Director, Directorate of Enforcement, reported in 2020 SCC OnLine Punjab & Haryana 738. With due respect, we are unable to apply the judgment of Kerala High Court going against Para 68 of the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra). The judgment of Seema Garg (supra) has been dealt with by the Delhi High Court in the case of Prakash Industries Ltd. v. Directorate of Enforcement reported in 2022 SCC OnLine Del 2087. The relevant paras 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 crimel, 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 contin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty 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 stands deprived of vital and purposive content. The Court further notes that Axis Bank had enunciated important safeguards which would apply in respect of third-party interests in deemed tainted property. Those caveats duly secure and protect bona fide third-party interests created for valid consideration. This Court, thus, reaffirms those defences as were culled 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 v. Union of India and the Patna High Court in HDFC Bank Limited v. 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 B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 each limb for the interpretation of the definition of the "proceeds of crime". The reference of Para 68 of the judgment of three judges Bench of the Apex Court in the case of Vijay Madanlal Choudhary (supra) was not cited and thus counsel for the respondent submitted that the judgment in the case of Pavana Dibur (supra) does not propound ratio on 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 property was acquired prior to commission of crime then, also under certain circumstances, it can be attached for "the value of any such property." 23. At this stage, it is reiterated that any other interpretation other than the one taken by Delhi High Court in the cases of Axis Bank (supra) and Prakash Industries (supra) for 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 una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntities belonging to the group. These have been discussed in paragraphs 2 to 4 above and are not repeated here in the interest of brevity. Considering the same as well as the legal position stated above, this contention of the appellant is also rejected. 26. It is next contended that the offences comprising 'Scheduled Offences' in the present case were not part of the Schedule to the PMLA, 2002 at the relevant time when they are alleged to have been committed. The argument is that when the alleged offences themselves were not scheduled offences, the actions of the appellant at that stage cannot be termed as scheduled offences so as to attract PMLA, 2002. 27. The above contention of the appellant has been considered. It is by now well-settled that the issue of retrospectivity or otherwise in so far as offence of money laundering is concerned has to be examined with reference to the act which constitutes 'money laundering' under Act, regardless of the time of occurrence of the scheduled offence. Further, the offence of money laundering is a continuing offence. A continuing offence is one which is susceptible of continuance and is distinguishable from one which is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated to the noticees. However, another single judge bench of the Hon'ble Madras High Court, in G. Gopalakrishnan v. Deputy Director WP (MD)Nos. 11454, 14860 & 14894 to 14899 of 2018 (Order Dt. 03.01.2019), has held that section 5 nowhere stipulates that there should be communication of reasons in the form of show cause notice before ordering provisional attachment. It was held that the validity period of provisional attachment is only for a period of 180 days, and therefore, the initial order has all the characteristics of a show cause notice and no further requirement is contemplated in the statute. Further, it was also noted that the language used in section 8(1) of the Act is different from the one used in section 5(1). The AA is not required u/s 8(1) to record reasons and on the basis of the complaint filed by the initial authority u/s 5(5) can proceed with the process on the basis of subjective satisfaction. 31. In view of the legal position discussed above, I do not find sufficient grounds to hold that the actions taken under sections 5 and 8 were not valid on account of non-communication of the reasons by the relevant authorities acting under the said provision. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the proceedings initiated by the Directorate and is not an accused in the prosecution case filed under PMLA, 2002. 37. The contention of the appellant has been considered. The legal position with regard to the issue raised is by now well settled. The Hon'ble Supreme Court, in the landmark case of Vijay Madanlal Choudhary SPECIAL LEAVE PETITION (CRIMINAL) NO. 4634 OF 2014 has held as below: "The sweep of Section 5(1) is not limited to the accused named in the criminal activity relating to a scheduled offence. It would apply to any person (not necessarily being accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime." 38. Furthermore, the Hon'ble Supreme Court in the cases has also held that the broad objective of PMLA, 2002 is to reach the proceeds of crime in whosoever's name they are kept or by whosoever they are held. In light of the legal position as above, there is no merit in the contention of the appellant that property relating to the present appellant could not have been attached since she is not accused in the PMLA case. The same is therefore rejected. 39. As already mentioned, the other argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso alleged to have got opened some accounts in Hong Kong which were operated by him and Manish Jain. 48. Consequently, in light of the factual and legal positions discussed above, this appeal is hereby dismissed. 49. Pending applications, if any, shall also stand disposed of in light of the above orders. 50. No order as to costs. FPA-PMLA-1560/DLI/2016 51. This appeal has been filed by M/s Swaran Overseas Pvt. Ltd. Two vehicles, namely, vehicle bearing No. DL -7CG-4714 Toyota Altis (2008) valued at 11,45,000/- (Ex. Showroom Price) and Vehicle no. DL-7CG/5865, Toyota Fortuner valued at Rs. 18,90,000/- (Ex. Showroom Price) relating to the appellant have been attached vide the impugned order. 52. Ld. counsel for the appellant pointed out that two cars were attached in the case of Swaran Overseas Pvt. Ltd. (FPA-PMLA-1560/DLI/2016) he submitted that one of the two cars attached had been destroyed in accident and insurance claim in respect of the same had already been realized by the appellant prior to the attachment. The records have been perused insofar as the present appellant is concerned, the allegations are that the prime accused Sh. Manish Jain and others had used the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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