TMI Blog2019 (12) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... ere derived from any criminal activity. The proceeds of crime are defined to mean any property derived or obtained directly or indirectly by any person, as a result of criminal activity relating to a scheduled offence. Indisputably, the properties involved in this petition were not derived or obtained as a result of any criminal activity as the same had been acquired much prior to commission of the alleged scheduled crime. The contention that the value of any property derived from criminal activity can also be attached as proceeds of crime, is misconceived in the facts of this case. It is an admitted fact that the properties, as sought to be attached by the appellant, had been acquired and mortgaged by respondent no.1 prior to the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (hereafter PMLA ), inter alia, impugning an order dated 22.11.2018 (hereafter the impugned order ) passed by the Appellate Tribunal. 2. By the impugned order, the appeal preferred by the respondent under Section 26 of the PMLA, against an order dated 13.09.2017 passed by the Adjudicating Authority, was allowed. By the said order dated 13.09.2017, the Adjudicating Authority had confirmed the order dated 26.04.2017 passed by the Directorate of Enforcement, whereby the attachment of certain immovable properties (B-42 Ashok Vihar Phase -I, New Delhi and the factory premises at 1703-04 HSIIDC, Rai, Sonepat, Haryana) was confirmed. 3. Before examining the present controversy, it is important to set out the relevant facts necessary to ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paragraph I to the Schedule to the PMLA, an ECIR was registered with the Lucknow Zonal Office of the appellant. 7. By the order dated 26.04.2017, Deputy Director, Enforcement Directorate, Ministry of Finance passed a provisional order of attachment, whereby the two following properties were attached: S. No. Details of Property Value (INR) 1. B-42, Ashok Vihar, Phase-I, New Delhi ₹17,11,42,000/- 2. Factory of M/s Surgicoin Medequip Pvt. Ltd., 1703-04, HSIDC, Rai, Sonepat, Haryana ₹5,50,00,000/- 8. On 13.09.2017, the Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs under the SARFAESI Act. 12. A tripartite agreement dated 14.09.2018 was entered into between respondent no.2 bank, the prospective buyer and the borrower (Surgicoin Medequip Pvt Ltd through its director respondent no.1), wherein it was agreed that the sale consideration of the factory premises and plot would be deposited in the CC account of the borrower. And, the amounts so received would be adjusted against the amounts due from the borrower. The outstanding amount was approximately ₹6,55,11,000/-. Thereafter, a part payment of ₹1,00,00,000/- was made by the prospective buyer and the balance payment was to be made in terms of the said tripartite Agreement. 13. By a judgment dated 22.11.2018, the Tribunal took note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the Tribunal accepted the contention that the said property, which was mortgaged to Bank of Baroda, could not be subject to attachment as proceeds of crime. Admittedly, the said properties had been acquired prior to the commission of the alleged crime, which is stated to be committed somewhere in 2011-12. Thus, the said properties could not be stated to be assets which were derived from any criminal activity. 16. Section 2(1)(u) of the PMLA, which defines the expression proceeds of crime , is set out below: 2. Definitions.- xxxx xxxx xxxx xxxx (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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having equivalent value derived or obtained from any criminal activity, the same can be attached only from the hands of a person who is guilty of committing a scheduled crime or otherwise holds proceeds of crime. 19. It is an admitted fact that the properties, as sought to be attached by the appellant, had been acquired and mortgaged by respondent no.1 prior to the commission of any scheduled offence. Thus, on the date of commission of the offence and on the date of the attachment order, the said properties did not vest with respondent no.1. Respondent no.1, being the mortgagor, was left with equity of redemption and all interest in the said property stood transferred to the mortgagee (respondent no.2), prior to the order of provisional ..... X X X X Extracts X X X X X X X X Extracts X X X X
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