TMI Blog2021 (4) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... y is taken or held outside the country, then the property equivalent in value held within the country were added - This amendment contemplates only one situation, namely the proceeds of the crime being moved out of India. In such a situation, the amended definition permitted the attachment of property, in India, equivalent to the value of the proceeds of thecrime, which were moved out of India. Later, by Act 13 of 2018 the words or abroad were added. By virtue of this amendment the property, which was moved abroad, could also be attached and confiscated. This amendment did not envisage a situation of dissipation of the property in the hands of the person holding the property. The amendments would be unnecessary if the term or the value of such property was understood to authorize the attachment of any property, when the actual proceeds of the crime are not available - The explanation to this provision which was brought in by Act No.2 of 2019 also speaks only of properties derived or obtained from the proceeds of a crime and expands the scope of the definition to include properties obtained not only from the scheduled offences but also criminal activity relatable to the sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint included scheduled offences under the Prevention of Money Laundering Act, 2002 (herein after referred as The Act ), the authorities under the Act had also registered a case bearing No.ECIR/VKSZO/02/2018 on 28.05.2018.In the course of the investigation of the said case, the 2 nd respondent, by way of provisional attachment order No.2 of 2019 dated 31.12.2019, had held that a sum of ₹ 69.46 crores had been diverted by the petitioner in W.P.No.9338 of 2020 and exercising his power under Section 5 of the Act the, 2nd respondent provisionally attached various properties belonging to the petitioners herein. These properties were enumerated in two tables. Table-I consists of properties acquired by the petitioners prior to September, 2010 and Table-II sets out the properties said to have been acquired by the petitioners after September, 2010 by using the proceeds of the crime. 4. The petitioners, who are aggrieved by the said attachment of their property, seek a writ in the nature of Certiorari for quashing the provisional attachment order passed by the 2nd respondent in attachment order No.2 of 2019 dated 31.12.2019 and to quash all consequential proceedings of the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in Aslam Mohd. Merchant v. Competent Authority and Ors., (2018) 14 SCC 186 , and Whirlpool Corporation v. Registry of Trade Marks, Mumbai and Ors., (1998) 8 SCC 1 to contend that the existence of an alternative remedy is not a bar to the jurisdiction of the High Court and is only a self imposed restriction. 8. In Raj Kumar Shivharev. Assistant Director, Director of Enforcements, a writ petition was filed before the Hon ble High Court against an order of pre-deposit in a penalty appeal before the Tribunal. The Hon ble High Court entertained the said writ petition and the same was challenged before the Hon ble Supreme Court. The Apex Court had taken note of the fact that an appeal was available against the order of the Tribunal before the High Court itself. The Hon ble Supreme Court also noticed the fact that a writ remedy is a part of the basic structure. However, the Hon ble Supreme Court taking into account the above facts had held that the High court had fallen in manifest error in hearing the Writ petition when the appeal, before the very same Court, was an adequate alternative remedy. 9. In P.Trivikram Prasad v. Enforcement Directorate the erstwhile High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res of an Act is challenged. The Hon ble Supreme Court had considered the judgments of two Constitutional Benches of the Hon ble Supreme Court in A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani AIR 1961 SC 1506 : (1962) 1 SCR 753 and Calcutta Discount Co. Ltd. v. ITO, Companies Distt.I AIR 1961 SC 372 : (1961) 41 ITR 191 wherein the very same principle had been set down. 13. In the circumstances it cannot be held that the present set of writ petitions are not maintainable, as the challenge to the impugned order of attachment is on the ground of lack of jurisdiction. 14. Coming to the impugned order, certain observations in the impugned order, which would clarify the facts, are:- Thus, from the foregoing, Mr. Kumar Pappu Singh had fraudulently obtained KCC loans from IDBI bank, Palangi Branch, West Godavari District, Andhra Pradesh in the names of 87 borrowers to the tune of ₹ 69.49 Crores from September 2010 and aggregated the entire amount of ₹ 69.49 Crores and utilized it for his own personal investments and business purposes and hence the total proceeds of crime in this case is ₹ 69.49 Crores. Enquiries conducted rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd category consists of properties purchased after the commission of offences and where doubt is expressed by the authority that these properties may have been purchased from the proceeds of the offences. 17. The authority, while attaching the properties in the first category, enumerated in Table-I of the impugned order, took the view that even though the properties were acquired prior to the commission of the scheduled offences, they are deemed tainted property, for the purposes of recovery of the proceeds of the crime which were lost in the pisciculture business. The petitioners contend that the properties enumerated under Table-I cannot be attached as these are no proceeds of crime and as such the 2nd Respondent would have no Jurisdiction to pass the impugned order. 18. Before going into the issue, a quick look at some of the provisions of the Act and judgments is necessary. Section 5 of the Act, which authorizes the initiation of the confiscation process, reads as follows: 5 Attachment of property involved in money-laundering.- Attachment of property involved in money-Laundering.- (1) Where the Director or any other officer not below the rank of Deputy Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order made under sub-section (2) of section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment Explanation.- For the purposes of this sub-section person interested , in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority. 19. After the attachment of the proceeds of the crime is carried out, the attachment order along with the material is forwarded to the adjudicating authority and the process of confiscation or release of the proceeds of the crime are conducted in the following manner, under section 8 of the Act: 8. Adjudication.- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under subsection (10) of section 18, if the Adjudicating Authority has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se may be; and (b) become final after an order of confiscation is passed under sub- section (5) or subsection (7) of section 8 or section 58B or sub-section (2A) of section 60 by the Adjudicating Authority (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached under section 5 or frozen under sub-section (lA) of section 17, in such manner as may be prescribed: Provided that if it is not practicable to take possession of a property frozen under sub-section (lA) of section 17, the order of confiscation shall have the same effect as if the property had been taken possession of. (5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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;] (3) Inserted by the Finance Act, 2015 (20 of 2015), Section 145(i) (w.e.f. 14-05- 2015); (4) Inserted by Act 13 of 2018, Section 208(a) (w.e.f. 19-04-2018), vide G.S.R. 383 (E) dated 19.04.2018) (5) Inserted by the Finance (No.2) Act, 2019, section 192(iii) (w.e.f. 01.08.2019) 21. This provision has been interpreted by a learned Single Judge of the Hon ble High Court of Delhi in Deputy Director, Directorate of Enforcement Delhi, Union of India v. Axis Bank Ors; State Bank of India Ors; IDBI Bank Ltd; Punjab National Bank Anr. The learned Single Judge held that the definition consists of 3 parts, viz., 104. The above definition may be deconstructed into three parts:- (i) property derived or obtained (directly or indirectly) as a result of criminal activity relating to scheduled offence; or (ii) the value of any such property as above; or (iii) if the property of the nature first above mentioned hs been taken or held abroad, any other property equivalent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of Enforcement and Ors., 2019 (3) RCR (Criminal 798 , had held that the properties purchased prior to the commission of the offence would not fall within the meaning of proceeds of crime . The Division Bench also held that there are three limbs to Section 2(1)(u), viz., i) Any property derived or obtained directly or indirectly as a result of criminal activity relating to scheduled offence; ii) Value of property derived or obtained from criminal activity; iii) Property equivalent in value held in India or outside where property obtained or derived from criminal activity is taken or held outside the country. 24. The Division Bench held that the property derived from the offence would be proceeds of the crime and as such any property purchased or acquired before the commission of the offence would not fall within the first limb of the definition of proceeds of crime . It also held that if such property is moved abroad, any property of the accused available within India, irrespective of the date of acquisition, can be attached as proceeds of crime, as the same would fall within the third limb of the definition. However, the Division Bench held, on the ambit of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that to construe the Statute in question, it is not only legitimate but highly convenient to refer both to the former Act and to the ascertained evils to which the former Act had given rise, and to the later Act which provided the remedy. These three being compared I cannot doubt the conclusion. It appears to us that this rule is equally applicable to the construction of Article 286 of our Constitution. In order to properly interpret the provisions of that article it is, therefore, necessary to consider how the matter stood immediately before the Constitution came into force, what the mischief was for which the old law did not provide and the remedy which has been provided by the Constitution to cure that mischief. 26. The original definition of Section 2 (1) (u) is: Proceeds of Crime: Proceeds of Crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to scheduled offences or the value of any such property. 27. At the inception, the legislative intent was to bring within the fold of the definition, such property, whose source of acquisition can be traced, directly or indirectly, to the benefits ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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