2025 (6) TMI 364 - AT - Money Laundering

Money Laundering - provisional attachment order - manipulation in tender document - criminal conspiracy to award a contract for upgradation of street lighting admeasuring 101.56 Kms in Delhi - HELD THAT - A perusal of the Arbitration Award indicates deduction of amount of Rs. 1, 42, 83, 000/- in the Arbitration Award but it cannot satisfy the amount of proceeds of crime because claim is yet to be made good in favour of the appellant if at all an order passed by the Arbitrator is executed. What can be attached is the property of the appellant and not an amount yet to be received. Arbitration matter is not otherwise final nature because the appeal is pending for consideration before the High Court of Delhi in O.M.P. (COMM) No. 216 of 2023. The amount of Rs. 1, 42, 83, 000/- said to have been withheld but that amount is yet payable and cannot represent the proceeds of crime rather for that property of equivalent value of Rs. 1, 42, 83, 000/- has been attached. Withholding of the amount in the Arbitration Award would not mean that proceeds of crime are satisfied rather the High Court may modify the order at any time on consideration of the rival submissions of the parties. Thus to protect the proceeds the respondent has rightly attached the amount of Rs. 1, 42, 83, 000/- - the appellant failed to refer to the order of the District Judge quantifying the amount of proceeds to a sum of Rs. 1, 15, 00, 000/- and in the absence of it the plea raised by the appellant cannot be accepted. Conclusion - The Provisional Attachment Order attaching properties worth Rs. 1, 42, 83, 000/- is valid and justified. The attachment is in accordance with the Prevention of Corruption Act and supported by the charge-sheet quantification of pecuniary loss. There are no substance in appeal and it is accordingly dismissed.

Summary

The core legal questions considered by the Tribunal in this appeal include:

1. Whether the Provisional Attachment Order attaching properties worth Rs. 1,42,83,000/- was valid and justified, given that the pecuniary loss quantified by the Special Judge, CBI was Rs. 1,15,00,000/-.

2. Whether the attachment of properties exceeding the alleged pecuniary loss, including amounts withheld in arbitration and security deposits, was legally permissible.

3. The legal effect of amounts withheld by the Municipal Corporation of Delhi (MCD) pursuant to arbitration proceedings and whether such withholding satisfies the requirement of confiscating proceeds of crime.

4. The applicability and interpretation of the Prevention of Corruption Act, 1988, and relevant provisions of the Indian Penal Code (IPC) in relation to attachment of properties alleged to be proceeds of crime.

5. The evidentiary basis and procedural propriety of the attachment order, including the reliance on charge-sheet quantification and absence of certain court orders on record.

Issue-wise Detailed Analysis:

1. Validity of Attachment Order Relative to Quantified Pecuniary Loss

The legal framework governing attachment of properties as proceeds of crime is primarily derived from the Prevention of Corruption Act, 1988, and procedural safeguards under the relevant statutes. The charge-sheet filed by the prosecution quantified the alleged pecuniary loss at Rs. 1,42,83,000/-, while the appellant contended that the Special Judge, CBI had quantified the loss at Rs. 1,15,00,000/-, limiting the permissible attachment to that amount.

The Tribunal examined the record and noted the absence of any copy of the Special Judge's order quantifying the loss at Rs. 1,15,00,000/-. Mere pleadings by the appellant without documentary proof were held insufficient to challenge the attachment order. The Tribunal relied on the charge-sheet's quantification of Rs. 1,42,83,000/- as the operative figure for attachment.

The Court's reasoning emphasized that attachment of properties equivalent to the proceeds of crime is justified where there is credible quantification of loss, and in absence of contradictory documentary evidence, the charge-sheet's figure prevails. The appellant's contention on this ground was rejected.

2. Attachment of Properties Beyond Alleged Pecuniary Loss and Withheld Amounts in Arbitration and Security Deposits

The appellant argued that an amount of Rs. 3.6 crores was withheld by MCD pursuant to arbitration proceedings and that security deposits of Rs. 2,46,16,149/- were also held by MCD, which collectively exceeded the alleged proceeds of crime. Therefore, further attachment of properties was unnecessary and unjustified.

The Tribunal analyzed the arbitration award and related orders, noting that while the arbitration award deducted Rs. 1,42,83,000/-, this amount was not yet payable to the appellant but was subject to ongoing litigation, including a pending appeal before the High Court of Delhi. The Court observed that the arbitration matter was not final and that the withheld amount did not equate to actual proceeds of crime realized by the appellant.

The Tribunal further noted that the security deposit amount lying with MCD was distinct from proceeds of crime and could not substitute for attachment of properties. The Court held that attachment of properties equivalent to the quantified proceeds of crime is a protective measure to safeguard the State's interest pending final adjudication.

The Tribunal rejected the appellant's argument that withholding amounts in arbitration or security deposits negated the need for attachment of properties.

3. Legal Effect of Withholding Amounts in Arbitration Proceedings

The appellant relied on the arbitration award and the withholding of Rs. 1,42,83,000/- as satisfying the requirement of confiscating proceeds of crime. The Tribunal scrutinized the arbitration award and related High Court order, which stayed the operation of the award subject to deposit of the awarded amount.

The Court reasoned that the arbitration proceedings were ongoing and the award was not final or executable at the time of attachment. Therefore, the withheld amount did not constitute proceeds of crime already realized by the appellant but was contingent and subject to judicial review.

Consequently, the Tribunal held that attachment of properties equivalent to the alleged proceeds of crime was appropriate to protect the State's interest pending final resolution of arbitration and criminal proceedings.

4. Applicability of Prevention of Corruption Act and IPC Provisions to Attachment

The FIR registered under Sections 120-B (criminal conspiracy), 420 (cheating), 468 (forgery for purpose of cheating), 471 (using forged documents) of IPC, and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988, formed the basis for attachment of properties as proceeds of crime.

The Tribunal acknowledged the serious allegations of manipulation and forgery in tender documents to secure undue advantage, leading to wrongful loss to MCD. The attachment of properties was a preventive measure authorized under the PC Act to prevent dissipation of proceeds of crime.

The Court emphasized that the attachment order was consistent with the statutory mandate to protect public interest in corruption cases and was supported by the charge-sheet quantification of loss.

5. Evidentiary Basis and Procedural Propriety of Attachment Order

The appellant challenged the attachment order on the ground that the quantum of loss was overstated and that relevant court orders quantifying loss were not placed on record.

The Tribunal found that the appellant failed to produce the order of the Special Judge, CBI quantifying loss at Rs. 1,15,00,000/-. The absence of such critical evidence weakened the appellant's case.

The Tribunal also noted that the Adjudicating Authority had duly considered the allegations and evidence, including the charge-sheet and audit reports, before confirming the attachment.

The Court concluded that the attachment order was passed following due process and was supported by sufficient material on record.

Treatment of Competing Arguments

The appellant's arguments centered on limiting attachment to the lower quantified loss amount, reliance on arbitration withholding, and availability of security deposits as sufficient to cover alleged proceeds of crime.

The respondent emphasized the seriousness of allegations, ongoing criminal proceedings, and the need to safeguard State interest by attaching properties equivalent to proceeds of crime as quantified in the charge-sheet.

The Tribunal balanced these arguments by requiring documentary proof for any deviation from the charge-sheet quantification and recognizing the provisional nature of arbitration proceedings. It rejected the appellant's contentions due to lack of supporting evidence and ongoing litigation status.

Conclusions

The Tribunal concluded that the Provisional Attachment Order attaching properties worth Rs. 1,42,83,000/- was valid and justified. The attachment was in accordance with the Prevention of Corruption Act and supported by the charge-sheet quantification of pecuniary loss.

The withholding of amounts in arbitration proceedings and security deposits did not negate the necessity or legality of attachment of properties equivalent to proceeds of crime.

The appellant failed to produce relevant court orders to support their claim of lower pecuniary loss, and the Tribunal found no merit in the appeal, dismissing it accordingly.

Significant Holdings:

"In the absence of copy of the order, mere pleadings of the appellant would not serve the purpose. In fact, the charge-sheet quantified the amount of proceed for Rs. 1,42,83,000/- and accordingly attachment of the properties to the equivalent value has been made which could not have been for a sum of Rs. 1,15,00,000/-."

"The amount of Rs. 1,42,83,000/- said to have been withheld but that amount is yet payable and cannot represent the proceeds of crime rather for that property of equivalent value of Rs. 1,42,83,000/- has been attached."

"Withholding of the amount in the Arbitration Award would not mean that proceeds of crime are satisfied, rather, the High Court may modify the order at any time on consideration of the rival submissions of the parties. Thus, to protect the proceeds, the respondent has rightly attached the amount of Rs. 1,42,83,000/-."

Core principles established include the requirement that attachment of properties as proceeds of crime must be based on credible quantification supported by documentary evidence; provisional withholding of amounts in arbitration does not satisfy the requirement of confiscating proceeds of crime; and attachment orders serve as protective measures pending final adjudication in criminal and arbitration proceedings.

Final determinations on each issue affirm the validity of attachment of properties worth Rs. 1,42,83,000/-, reject the appellant's challenge based on lesser quantified loss and withheld amounts, and uphold the Adjudicating Authority's order confirming the Provisional Attachment Order.