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TMI Blog2025 (3) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Khalek Biswas, Barik Biswas, Biswas Enterprise, Farida Begum Biswas, Toushif Biswas, M/s Toushif Enterprise, Por. Farida Begum Biswas, with a total balance of Rs. 1,12,23,460/-; (ii) Movable properties, being gold bars, gold biscuits, Indian currency, valued in all at Rs. 13,56,26,467/- and one pistol recovered and seized by the DRI to which no monetary value was ascribed; and (iii) A total of 34 immovable properties valued in all at Rs. 4,46,84,570/-. 2. Thus, the total value of movable and immovable properties is Rs. 19,15,34,497/-. It may be mentioned here that Account No. 3079669762 with a balance of Rs. 2,60,636.00 in respect of Barik Biswas maintained at SBI, Basirghat Branch (SI. No. 16 of Table-II under Para-10 of the PAO) was inadvertently repeated. Hence, the actual total figure in respect of bank accounts mentioned at Sl. No. (i) above comes to Rs.1,09,62,824.37, as has been clarified by the Ld. Adjudicating Authority while confirming the attachments made vide the above PAO. Facts in brief 2. The case forwarded vide letters dt. 08.10.2014 and 31.10.2014 by DRI to the Enforcement Directorate revealed that, on 08.03.2014, officers of DRI, Kolkata intercepted o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Customs Act, 1962 for the direct involvement of Shri Barik Biswas and Shri Moksed Mondal in the illicit activity of acquiring/ possessing, transporting and smuggling of gold of foreign origin in respect of the following articles, which were recovered and seized from the possession of Sh. Barik Biswas and Sh. Moksed Mondal on 08.03.2014. S. No. Particulars of items Value (Rs.) 1. 12 pcs. Of Gold Bars and280 pcs. Gold Biscuits of foreign origin weighing 44.659 kgs. Rs.13,55,99,091/- 2. One Toyota Fortuner Car, bearing registration No. WB 26S 2600 -- 3. The India currencies recovered and seized from the possession of Sh. Barik Biswas and Sh. Moksed Mondal (Rs. 23,100 + Rs. 4,275) Rs. 27,376/- 4. One Pistol marked 'P. BERETTA P.B - MOD 70 - Made in Italy loaded with one magazine with seven round of ammunitions and another separate magazine with seven round of magazine (Total 14 rounds) Value not mentioned TOTAL VALUE 13,56,26,467/- 7. A case having been registered by the Directorate of Enforcement (ED) under PMLA, 2002, investigations conducted under the said Act revealed that Shri Barik Biswas had opened and operated a number of bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oaded from ITD System. From the statements of Shri Barik Biswas recorded u/s. 50 of PMLA, 2002 and statement given before the officers of DRI u/s. 108 of Customs Act, it was concluded that he is actively involved in smuggling activities and he has acquired movable and immovable properties out of the proceeds of crime. Further, in a separate case, DRI had issued Show Cause Notice against Shri Barik Biswas in a case of smuggling of cylinders. 10. Further, from the findings of the DRI it was concluded that Shri Barik Biswas is a habitual offender and was actively involved in smuggling activities and the bank accounts mentioned above, were used to layer the proceeds of crime involved in money laundering. 11. Enquiries were made with the Additional District Sub-Registrar (ADSR) Office, Basirhat, DSR-II, Barasat and ADSR, Bidhannagar, Salt Lake, Kolkata which revealed that most of the immovable properties were purchased/acquired in the names of Shri Barik Biswas, his wife and his relatives on or after April, 2012. 12. It was believed that the cash was from criminal activity and the same was used for illegal transactions. The circumstances surrounding the conduct of Shri Barik Biswas a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in frustrating any proceedings relating to the confiscation of such proceeds of crime. In the instant case, 'proceeds of crime' is said to be a sum of Rs.89,68,000/- and was seized by the CBI. An order for it was passed by the CBI Court and thereby the amount is lying with it. Therefore, it could not be clarified how the said amount was likely to be concealed, transferred or dealt with in any manner so as to frustrate the proceedings of confiscation." 19. It is pointed out that a similar issue has also been dealt by this Appellate Tribunal in the case of Smt. Suma Sooraj Vs. The Deputy Director, Directorate dt. 17.08.2023, wherein it was held: 8. The counsel for the respondent has referred to the judgment in the case of Om Prakash Daulat Ram Nagoj (Supra) which permits attachment of the property. We have gone through the judgment. In that case, the argument in light of Section 5(1)(b) of the Act of 2002 was not raised. The attachment of the property is permitted when it is likely to be concealed, transferred or alienated to frustrate the proceedings of confiscation. Section 5(1)(b) thus puts an embargo on the attachment. In light of the rider of Section 5(1)(b), attac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the predicate offence, which is impermissible in the eyes of law. 22. It is contended that the Directorate of Enforcement cannot go beyond the scope of the scheduled offence, and the attachment cannot be more than the allegation in the scheduled offence as the Respondent has no authority under law to presume proceeds of crime. A bare perusal of Section 2(1)(u) of PMLA shows that "proceeds of crime" is property directly or indirectly derived or obtained by a person as a result of any criminal activity relating to the predicate offence. Therefore, it is emphasized that the commission of a scheduled offence is a sine qua non for attaching property on the ground that it constitutes proceeds of crime. Even the concept of 'value' would not be applicable, in as much as, in absence of proceeds of crime, the concept of value cannot be invoked. 23. In this regard, reliance is placed on the cases of Prakash Industries Vs. ED bearing W. P. (C) No. 13361 of 2018 decided on 24.01.2023 (Para No. 37, 57 61, 63, 68, 69, 70, 83 84 and 90) and Ehsan Ahmed Mirza Vs. ED bearing CRM (M) No. 160 of 2020 decided on 14.08.2024 (Para No. 14 and 15). 24. It is contended that there is no disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... torate of Enforcement, Crl. Appeal No. 4011 of 2024, wherein the Court has held as infra: "21. Hence, the existence of a scheduled offence is sine qua non for alleging the existence of proceeds of crime. A property derived or obtained, directly or indirectly, by a person as a result of the criminal activity relating to a scheduled offence constitutes proceeds of crime. The existence of proceeds of crime at the time of the trial of the offence under Section 3 of PMLA can be proved only if the scheduled offence is established in the prosecution of the scheduled offence. Therefore, even if the trial of the case under the PMLA proceeds, it cannot be finally decided unless the trial of scheduled offences concludes. In the facts of the case, there is no possibility of the trial of the scheduled offences commencing in the near future. Therefore, we see no possibility of both trials concluding within a few years." 27. In view thereof, in the present case there is no existence of scheduled offence for several Appellants, and despite the same their properties of have been attached by the Respondent and the same is contrary to the settled law. Therefore, any attachment done shall be viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority 2023 SCC Online Del 1147 (Para No. 15) ; Rajinder Singh Chadha Vs. Union Of India Ministry Of Home Affairs And Another (2023) 5 HCC (Del) 86 (Para No. 34-36). 30. It is contended that in the present appeals, no other persons are currently an accused either in the predicate offence or in the offence of money laundering. 31. It is also contended that the right to own a property is a Constitutional right as conferred by Article 300A of the Constitution of India. The said right cannot be taken away except by authority of law. In the present case, when the appellants are not facing any prosecution either for scheduled offence or for an offence under section 3 of PMLA. Therefore, the right to property cannot be curtailed by exercising power under section 5 of PMLA. It is submitted that it is a settled law laid down by the Hon'ble Supreme Court that the right to property is not only a statutory or constitutional right but a human right also. The Hon'ble Supreme Court in the case of Tukaram Kanna Joshi Vs MIDC reported in (2013) 1 SCC 353, has held as follows: The right to property is now considered to be, not only a constitutional or a statutory right, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Attachment Order was issued on 21.05.2015 and after filing of Complaint bearing O.C. No. 501/2015, the matter came up for hearing before the Ld. Adjudicating Authority from 19.08.2015 onwards. During the course of hearings, the accused persons suddenly filed revised ITRs showing their income several time more than that what was shown in their original ITRs and also paid taxes on 07.08.2015 prior to the date of filing of revised ITRs in August September, 2015. By this, the accused persons have attempted to legitimize their ill-gotten money which was nothing but proceeds of crime acquired out of commission of Scheduled Offence by paying taxes. On perusal of the ITRs, it appears that all the Balance Sheets were prepared on 07.08.2015, after the issuance of Provisional Attachment to escape from the clutches of law. Further, the Tax Payer Counterfoils reveal that taxes have been paid in cash. It is contended that the accused persons concealed the proceeds of crime from which they had paid those huge taxes in cash at a time. Further, they failed to produce the source of such properties and payment of tax, which clearly reveals that not only the properties have been acquired out of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful consideration to the material on record and the rival contentions of the parties. The first issue raised on behalf of the appellants is that when the alleged proceeds of crime already stand seized by another law enforcement authority, i.e., the DRI, and same are in its possession, and therefore wholly outside the control and reach of the appellants, how could the respondent Directorate have justifiably entertained the reason to believe under the Second Proviso to section 5(1) that if such property is not attached immediately, the non- attachment of the property is likely to frustrate any proceeding under the Act? The judgments of this Appellate Tribunal in the cases Suma Sooraj v. Deputy Director, Directorate of Enforcement and M/s. Venkateshwar Rail Nirman Pvt. Ltd. & Anr. v. Directorate of Enforcement are relied upon. 43. I have considered the above submission of the appellants carefully and find the cases cited are distinguishable on facts. In both the cases mentioned above, the property was in the custody of the court. In the present case, the seized property is in the custody of the relevant law enforcement agency, namely, the DRI. The possibility of release of the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e), if he is involved in any process or activity connected with the proceeds of crime. It has been so held by the Hon'ble Supreme Court in its landmark judgment in the case of Vijay Madanlal Choudhary, Special Leave Petition (Criminal) No. 4634 of 2014. In the said case, it was further held by the Apex Court that the objective of enacting the Act was the attachment and confiscation of proceeds of crime which is the quintessence, so as to combat the evil of money-laundering, by reaching the proceeds of crime in whosoever's name they are kept or by whosoever they are held. Therefore, so long as there is reason to believe that the property in question constitutes 'proceeds of crime' within the meaning of the Act, it can be attached by the respondents regardless of whether the persons to whom they relate stand charged of any scheduled offences or the prosecution complaint filed under the PMLA, 1999 or not. 46. As regards the further submission that if the law is to be interpreted to mean that property of a person who is neither an accused in the predicate offence nor an accused in the offence of money laundering, can still be attached pending trial under Section 8(6) of PMLA, then it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paul and Ors. vs. Union of India and Ors., MANU/KA/4442/2020, that the entire community is aggrieved if the economic offenders who are ruining the economy of the State are not brought to book and the cause of the community deserves equal treatment at the hands of the court in the discharge of its judicial function. The community or the State is not a persona-non-grata whose cause may be treated with disdain. 48. The next issue raised by the appellants is that there was no material in possession of the Directorate to have the reason to believe under Section 5(1), nor any reasons to believe were conveyed to the appellants. I do not find any merit in these contentions of the appellant either. The impugned PAO records at length the reasons to believe based on which the authority acted in the present case. It had received detailed information from the DRI, Kolkata regarding the seizure of gold and arrest of Sh. Barik Biswas and Sh. Moksed Mondal and the findings of the investigations conducted by the DRI. This was more than sufficient for the authority acting under PMLA, 2002 to have the reasons to believe as required under Section 5. The Hon'ble Madras High Court, in G. Gopalakrishnan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable properties out of proceeds of crime which have been derived or obtained as a result of criminal activity relating to an offence under Section 135 of the Customs Act, 1962. In this context, it is pertinent to state that the said offence under Section 135 of the Customs Act, 1962, which forms the genesis of the instant case, relates to the alleged smuggling of 44.659 Kgs. of gold which has since been seized by the officers of DRI on 8.3.2014 and is in the custody of the Customs authorities ever since. Moreover, the appellant has all through disowned the said gold and has never claimed the same as he is not the owner of the said gold. In the premises, the question of purchasing any property from the proceeds of such gold does not arise in the instant case. In this context, it is pertinent to state that it is not the case of the department that the appellant has been indulging in similar activities in the past and it is out of the said activities that he has derived and/or obtained the properties which have since been provisionally attached by the Enforcement Directorate, which attachment has since been confirmed by the learned Adjudicating Authority. The instant case under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly scheduled offence they stand accused of is the case of smuggling of 44.659 kg. of gold. A complaint bearing CS/405476/14 dated 12.08.2014 under Section 135 of Customs Act, 1962 stands filed in the Court of the Ld. Chief Metropolitan Magistrate, Calcutta by DRI, Kolkata, in the above matter. In this context I have perused the Prosecution Complaint (P.C.) filed by the DRI in the Scheduled Offence case as well as the P.C. filed by the respondent Directorate in the offence under the PMLA, 2002, copies of which have been brought on record. Perusal of the P.C. filed by the DRI reveals that the prayer made before the Court of the Ld. Chief Metropolitan Magistrate, Calcutta is as follows: "38. That from the facts and circumstances stated above, it is evident that the aforesaid accused persons were/are knowing concerned in the fraudulent evasion and/or attempt at evasion of duly chargeable on the said 292(two hundred ninety-two) pcs, of foreign Gold Bars and the foreign Gold Biscuits valued collectively at Rs. 13.56 Crores, smuggled into India from Bangladesh and were also knowingly concerned in the contravention of prohibition under the Customs Act, 1962 and thus, they have committed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Choudhary, the respondent Directorate could not have assumed that any other scheduled offence(s) were committed by the appellants and proceeds were derived therefrom and attached property over above the seized gold, even if the same were found to out of unexplained sources. Unexplained investment in properties may no doubt be actionable under the Income-tax Act or other laws, but no action under PMLA, 2002 could have been initiated against the same based on assumption that because they were found to in excess of the known sources of income, the same were necessarily derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. In Prakash Industries Limited Vs. Union of India and Ors. v. Union of India and Ors. [MANU/DE/0424/2023 - judgment dated 24.01.2023) the Hon'ble Delhi High Court has held that the ED stands empowered under the PMLA to try offences relating to money laundering. It neither stands conferred the authority nor the jurisdiction to investigate or to enquire into an offence other than that which stands comprised in Section 3. I, therefore, find merit in this argument of the appellant. Accordingly, I have no hesitation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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