Sadananda Nayak Vs Deputy Director Directorate of Enforcement (Appellate Tribunal under SAFEMA, Delhi)
Summary: The Appellate Tribunal under SAFEMA, Delhi dismissed Sadananda Nayak’s appeal challenging confirmation of attachment of four properties under the Prevention of Money Laundering Act, 2002. The appellant confined his challenge to three properties acquired before the alleged criminal activity, contending that they had no nexus with the scheduled offence and therefore could not constitute “proceeds of crime” under Section 2(1)(u) of PMLA. The Tribunal rejected this contention by interpreting the definition of “proceeds of crime” as containing three limbs. It held that apart from property directly or indirectly derived from criminal activity, the expression “the value of any such property” permits attachment of property of equivalent value when the actual proceeds of crime are unavailable, siphoned off or have vanished. Consequently, property acquired even before commission of the scheduled offence may, in appropriate circumstances, be attached as equivalent-value property.
The Tribunal relied principally upon Vijay Madanlal Choudhary Vs Union of India and the Delhi High Court decisions in Directorate of Enforcement Vs Axis Bank & Ors. and Prakash Industries Ltd. v. Directorate of Enforcement. It observed that treating pre-crime property as invariably outside Section 2(1)(u) would effectively render the middle limb—“the value of any such property”—redundant. The Tribunal reasoned that the provision enables authorities to secure property of equivalent value where property actually derived from criminal activity cannot be traced or has been dissipated.
The appellant relied upon Satish Motilal Bidri Vs Union of India and Pavana Dibur Vs Deputy Director, Directorate of Enforcement to contend that properties acquired prior to the commission of crime could not be attached. The Tribunal declined to apply that interpretation, observing that paragraph 68 of the three-Judge Bench decision in Vijay Madanlal Choudhary recognises the wider scope of “proceeds of crime,” including the value of such property. It also referred to its decision in M/s. Besco International FZE Vs Deputy Director Directorate of Enforcement, Chandigarh, reiterating that equivalent-value property can include property acquired before the crime when the directly or indirectly derived proceeds are unavailable.
The Tribunal accordingly held that the appellant’s sole challenge to attachment of the three pre-crime properties could not be accepted and dismissed the appeal.
Cases Discussed
- Satish Motilal Bidri Vs Union of India, WP(CRL) No. 406/2024, Kerala High Court, decided on 28.06.2024 — Relied upon by the appellant for the contention that property acquired before commission of crime would not fall within “the value of any such property” under Section 2(1)(u). The Tribunal declined to apply the decision in view of its interpretation of Vijay Madanlal Choudhary.
- Pavana Dibur Vs Deputy Director, Directorate of Enforcement, 2023 SCC OnLine SC 1586 — Relied upon by the appellant because property acquired before commission of crime had been released from attachment. The Tribunal distinguished the decision, observing that the three-limb interpretation of “proceeds of crime” and paragraph 68 of Vijay Madanlal Choudhary had not been considered on the issue before it.
- Vijay Madanlal Choudhary Vs Union of India, 2022 SCC OnLine SC 929 — Relied upon by the respondent and applied by the Tribunal, particularly paragraph 68, for the proposition that “proceeds of crime” includes not merely property derived or obtained from criminal activity but also the value of any such property.
- Directorate of Enforcement Vs Axis Bank & Ors., 2019 SCC OnLine Del 7854 — Relied upon for the three categories of attachable property and the concept of alternative attachable or deemed tainted property where actual tainted assets are untraceable, inaccessible or insufficient.
- Seema Garg Vs Deputy Director, Directorate of Enforcement, 2020 SCC OnLine Punjab & Haryana 738 — Considered in relation to the interpretation of “value of any such property”; the Tribunal declined to adopt the approach relied upon by the Kerala High Court.
- Prakash Industries Ltd. v. Directorate of Enforcement, 2022 SCC OnLine Del 2087 — Relied upon for the interpretation that Section 2(1)(u) permits recourse against equivalent-value property when the actual tainted property cannot be traced or found, subject to the safeguards recognised in Axis Bank.
- M/s. Besco International FZE Vs Deputy Director Directorate of Enforcement, Chandigarh, FPA-PMLA-2909/CHD/2019, decided on 31.07.2024 — Tribunal’s own earlier decision followed for the proposition that property of equivalent value, including property acquired before commission of crime, may be attached when the actual proceeds have vanished or been siphoned off.
FULL TEXT OF THE JUDGMENT/ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA
By this appeal under Section 26 of the Prevention of Money Laundering Act, 2002 (in short „the Act of 2002‟), a challenge has been made to the order dated 11.01.2023 passed by the Adjudicating Authority confirming the Provisional Attachment Order of the properties.
2. The Ld. Counsel for the appellant has given brief facts of the case, which are as under:
1. That the Appellant worked as a sub-contractor in Hindustan Aeronautics Limited, Sunabeda, Odisha, (hereinafter termed as `HAL‟) for a period of almost 40 years. The contract was for supply of the labourers for various ground works to different branches of HAL. In the year 2017, the then Finance Manager of HAL, Mr. Bhaben Maitra, while exercising his official functions had exceeded his authority and allotted a large sum of money to the Appellant along with other contractors on numerous occasions.
2. When the Appellant opposed the aforesaid, Mr. Bhaben Maitra, being a person in authority, threatened and intimidated the Appellant to revoke his license and to kill him if the Appellant did not cater to his demands. So, having no other option, the Appellant had to withdraw the amount which was deposited in his account by Mr. Maitra without his consent and gave it to Mr. Maitra. It is pertinent to mention here that the Appellant did not use a single rupee for the transactions.
3. That subsequent to transactions, a criminal case was instituted by the Special Cell of CBI in the year 2018, in which all the persons related to the monetary transactions including Mr. Bhaben Maitra and the Appellant were made parties to the case. The bank accounts of the Appellant including his sons were frozen in the year 2018 by the CBI. The Appellant was, however, granted bail.
4. In July 2022, the Enforcement Directorate provisionally attached the properties (4 Scheduled Lands) of the Appellant vide Provisional Attachment Order dated 27.07.20222 in ECIR/BBZO/06/2020 which was later on confirmed by the Adjudicating Authority in O.C. No. 1796/2022.
3. The Ld. Counsel for the appellant submitted that four properties of the appellant have been attached out of which three properties were purchased by him prior to the commission of crime thus could not have been attached. It was not purchased out of the proceeds of crime, rather it was pursuant to the independent sources. The Adjudicating Authority failed to appreciate the aforesaid and erroneously confirmed the attachment even in reference to three properties which could not have been co-related with the commission of crime. The prayer was accordingly made to cause interference in the impugned order on the aforesaid ground itself.
4. The Ld. Counsel for the appellant cited the judgment of Kerala High Court in the case of Satish Motilal Bidri Vs. Union of India (WP(CRL) No. 406/2024), decided on 28.06.2024. A specific reference of Para 13 was given to support the argument. It was submitted that the properties acquired prior to the commission of crime would not fall in the trap of “the value of any such property” given under the Act of 2002 defining “proceeds of crime” under Section 2(1)(u) of the Act of 2002. The properties which may fall in the trap of the definition of “proceeds of crime” would be those acquired or obtained directly or indirectly out of the criminal activities relating to the scheduled offence. In the light of the judgment aforesaid, the impugned order deserves to be set aside.
5. The Ld. Counsel for the appellant has made further reference of the judgment of the Apex Court in the case of Pavana Dibur Vs. Deputy Director, Directorate of Enforcement, reported in 2023 SCC OnLine SC 1586 where the property acquired prior to the commission of crime was released from attachment. Thus, in the light of the judgment aforesaid also, the appellant prayed that the impugned order deserves to be set aside qua three properties.
6. The Ld. Counsel for the appellant did not raise any other issue despite an opportunity for it and was even invited by the Tribunal but he restricted his arguments only in reference of the issues referred to above.
7. The appeal was contested by the Ld. Counsel for the Respondent. It is submitted that the only issue raised by the appellant is not made out in the light of the judgment of the Apex Court in the case of Vijay Madanlal Choudhary Vs. Union of India reported in 2022 SCC OnLine SC 929. A further reference of the judgment of Delhi High Court in the case of Directorate of Enforcement Vs. Axis Bank & Ors. reported in 2019 SCC OnLine Del 7854 was given. The arguments raised by the Ld. Counsel for the respondent would be referred while dealing with the arguments of the counsel for the appellant to avoid repetition of one and the same facts. Finding of Tribunal:
8. We have considered the rival submissions raised by the counsel for both the parties and scanned the record carefully.
9. It is not in dispute that an FIR was registered for commission of the scheduled offence. It was followed by recording of the ECIR. The respondent initially frozen the bank accounts of the appellant and his sons, which was followed by the provisional attachment of the properties vide order dated 27.07.2020. The Provisional Attachment Order has been confirmed by the Adjudicating Authority finding a case of money laundering.
10. The Ld. Counsel for the appellant did not raise argument in reference to registration of the FIR and recording of the ECIR, followed by investigation where the role of the appellant for commission of crime has been found. The only argument raised was to challenge the attachment of three properties out of four. However, no argument was raised for the property acquired subsequent to the commission of crime i.e., fourth Property.
11. It was submitted that the properties acquired prior to the commission of crime had no nexus with the crime and thus could not have been attached. It was not obtained or derived directly or indirectly out of criminal activities relating to the scheduled offence. The respondent could not show nexus of three properties with the crime out of four attached by them.
12. The reference of the judgment of the Apex Court in the case of Pavana Dibur (supra) and also of Kerala High Court in the case of Satish Motilal Bidri (supra) has been given. 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 or indirectly out of the criminal activities relating to the scheduled offence. In the first part, all those properties which are acquired directly or indirectly out of criminal activities would be termed to be the proceeds of crime. The properties can be acquired directly or indirectly with the use of proceeds of crime.
The use of proceeds directly or indirectly would be relevant part to fall in first part of the definition of `proceeds of crime‟. To clarify the definition, it may be illustrated. Assuming in a case of dacoit, the accused secured the money and it has been used for the purchase of property, then such a property would fall in the definition of `proceeds of crime‟ having been obtained out of proceeds of crime. In other case where the property was not acquired or derived by the accused himself but he passed on money out of the crime to another person and he acquired the property, then also it would be considered to be the proceeds of crime to acquire the property. In any case, there should be an element for use of the proceeds directly or indirectly obtained out of the crime and thereby the property would have nexus with the crime.
14. In second part “the value of any such property” the definition aforesaid starts with “or” after the first part referred and discussed in the para above. The second part of the definition is commonly considered to be attachment of property of equivalent value. The second part applies when the property obtained or derived directly or indirectly out of the criminal activities is not available or vanished and, therefore, to secure the proceeds of equivalent value till completion of trial, it would fall under “the value of any such property” which is commonly taken to be the property of equivalent value. The case in hand falls in the second category of the definition of “proceeds of crime” because proceeds are not available and, therefore, the property of equivalent value is attached.
15. The argument has been made in reference to the judgment of Kerala High Court in the case of Satish Motilal Bidri (supra) and the judgment of Apex Court in Pavana Dibur (supra) to hold that the properties acquired prior to commission of crime would not fall in the definition of “proceeds of crime”. We are unable to accept the arguments which may otherwise make second part of the definition of “proceeds of crime” to 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 refer to Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) which is quoted hereunder.
“68. It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of “proceeds of crime” is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of “property” as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money- laundering.”
The perusal of the para quoted above shows that the argument of the appellant that “the value of any such property” would be only when the proceeds have been taken out of India. The argument aforesaid was not accepted and it simplifies that the definition of “proceeds of crime” has three limbs and elaborate judgment to define the “proceeds of crime” was given by the Delhi High Court in the case of Axis Bank (supra). The relevant paras are quoted herein.
“106. Among the three kinds of attachable properties mentioned above, the first may be referred to, for sake of convenience, as “tainted property” in as much as there would assumable be evidence to prima facie show that the source of (or consideration for) its acquisition is the product of specified crime, the essence of “money laundering” being its projection as “untainted property” (Section 3). This would include such property as may have been obtained or acquired by using the tainted property as the consideration (directly or indirectly). To illustrate, bribe or illegal gratification received by a public servant in form of money (cash) being undue advantage and dishonestly gained, is tainted property acquired “directly” by a scheduled offence and consequently “proceeds of crime”. Any other property acquired using such bribe as consideration is also “proceeds of crime”, it having been obtained “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. For the sake of convenience, the properties covered by the second and third categories may be referred to as “the alternative attachable property” or “deemed tainted property”.
17. The judgment of the Delhi High Court makes it clear that the definition of “proceeds of crime” has three limbs and in the second limb the properties of equivalent value to the proceeds obtained out of crime can be attached which may have been acquired prior to the commission of crime but it would be when proceeds of crime has been vanished and is not available. It is sought to achieve the object of the Act of 2002.
18. In the light of judgment of the Apex Court in Vijay Madanlal Choudhary (supra), we are unable to apply the judgment of Kerala High Court in the case of Satish Motilal Bidri (supra). The Ld. counsel did not refer the relevant para of the judgment in the case (supra), rather he referred Para 66 of the judgment of the Apex Court in Vijay Madanlal Choudhary (supra) which permits attachment only of the proceeds of crime. There cannot be any dispute that attachment can be only of the proceeds of crime but what would fall in the definition of “proceeds of crime” and clarified in Para 68 of the same judgment has not been taken into consideration whereas judgement of the Apex Court on the issue is binding on the High Court.
19. The reference to the judgment in the case of Pavana Dibur (supra) has been given where the Ld. Counsel for the parties did not refer Para 68 of the judgment in the case of Vijay Madanlal Choudhary (supra) decided by three judges of the Apex Court. In fact, elaborate arguments to define “proceeds of crime” on the issue were not raised by the parties after referring to the object of the Act of 2002 which was enacted out of the international convention. The Delhi High Court has discussed the issue elaborately and otherwise if we apply the judgement of Kerala High Court in the case of Satish Motilal Bidri (supra,) it would be making the second limb of the definition of “proceeds of crime” to be redundant. The counsel who appeared before the Kerala High Court did not argue that the definition of “proceeds of crime” has three limbs and unfortunately the view expressed by Delhi High Court in Axis Bank (supra) was not discussed elaborately while it was cited by the counsel.
20. The Ld. Single judge of Kerala High Court did not subscribe the judgment aforesaid, rather applied the judgment of Punjab and Haryana High Court in the case of Seema Garg Vs. 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 crime‖, there would be no need to create three limbs of definition of proceeds of crime.
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79. Regard must also be had to the fact that the legislation itself is dealing with contingencies where proceeds of crime are layered and their origins camouflaged and masked enabling the accused to project or claim it to be untainted property. The Act clearly as does Axis Bank take into consideration a situation where a person who has obtained proceeds of crime by commission of a scheduled offence has managed to ensure that a property directly or indirectly connected to criminal activity is rendered untraceable. It is to confer authority upon the Directorate to proceed further in such a situation that Section 2(1)(u) uses the expression or the value of any such property. The safeguard which stands constructed in Section 2(1)(u) in such a contingency is that in case the Directorate does proceed against any other property, it must be equivalent in value to the illegal pecuniary benefit or gain that may have been obtained as a result of criminal activity.
80. In the considered opinion of this Court to tie the Directorate’s power to move forward in this direction only in cases where property is taken or held outside the country would not only do violence to the plain language of Section 2(1)(u), it would clearly whittle down the scope and intent of the definition itself. It would essentially amount to erasing the expression value of any such property as appearing in Section 2(1)(u) altogether. The Court further notes that in Seema Garg the learned Judges themselves observed that the phrase value of any such property would not mean and include any property which has no link, direct or indirect, with property derived or obtained from commission of a scheduled offence. The Court observes that Section 2(1)(u) clearly and in unambiguous terms includes not only property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence but also the value of any such property. Seema Garg thus seems to gloss over the statutory imperatives underlying the deployment of the phrase ―or the value of any such property and the concept of deemed tainted properties enunciated in Axis Bank. On a plain textual interpretation of Section 2(1)(u) as well as in the backdrop of the amendatory history of that provision, this Court finds itself unable to agree with the line of reasoning adopted in Seema Garg. As held hereinbefore, affirmation of Seema Garg would amount to virtually deleting the phrase ―or the value of any such property 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 Vs. Union of India and the Patna High Court in HDFC Bank Limited Vs 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 Bank, the judgement of this Court has not been stayed or placed in abeyance. The interim order of 30 August 2019 passed in the aforesaid Special Leave Petition only requires parties to maintain status quo. Insofar as the judgement of the Punjab and Haryana High Court in Seema Garg is concerned, although SLP (C) No.14713- 14715/2020 preferred against the same came to be dismissed, while doing so the Supreme Court recorded that the petition was being rejected in the peculiar facts and circumstances of the case. The dismissal of the aforesaid Special Leave Petition cannot in any case be interpreted or understood as being an affirmation of the view as expressed by the Punjab and Haryana High Court.
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105. It would be pertinent to recall that properties which were acquired prior to the enforcement of the Act may not be completely immune from action under the Act in light of what this Court had held in Axis Bank. As was explained by the Court in Axis Bank, the expression proceeds of crime envisage both ―tainted property as well as ―untainted property with it being permissible to proceed against the latter provided it is being attached as equal to the “value of any such property” or “property equivalent in value held within the country or abroad”. However, both the italicised categories would be liable to be invoked in cases where the actual tainted property cannot be traced or found out. It is only where the respondents are unable to discover the tainted property that they can take the statutory recourse to move against properties which may fall within the ambit of ―value of any such property or ―property equivalent in value held within the country or abroad. To the aforesaid limited extent, properties purchased prior to 01 July 2005 may also become vulnerable and subject to action under the Act. However, enforcement action against such properties would have to satisfy the tests and safeguards as propounded in Axis Bank with the learned Judge observing that in such a situation it would have to be established that the person accused of money laundering had an interest in such property at least till the time that he indulged in the proscribed criminal activity. The learned Judge further observed that bona fide rights acquired by third parties prior to the commission of the predicate offense would stand saved.”
21. The issue aforesaid was not raised in the case 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 the accused to promote the crime of money laundering. The Judgment in the case of Vijay Madanlal Chaudhary (supra) is of three judges bench while the judgment in the case of Pavana Dibur (supra) is of two judges bench. The issue has otherwise been dealt with by this Tribunal in the case of FPA-PMLA-2909/CHD/2019 M/s. Besco International FZE vs. The Deputy Director Directorate of Enforcement, Chandigarh dated 31.07.2024. The relevant para of the said judgment is quoted hereunder:
“It is not that only those properties which have been were derived or obtained directly or indirectly out of the crime can be attached rather in case of non- availability of the property derived or obtained directly or indirectly rather when it is vanished or siphoned off, the attachment can be of any property of equivalent value.
It is necessary to clarify that the proceeds of crime would not only include the property derived or obtained directly or indirectly out of the criminal activity relating to the scheduled offence but any other property of equivalent value. The word “or” has been placed before “the value of any such property” and is of great significance. Any property of equivalent value can be attached when the proceeds directly or indirectly obtained out of the crime has been vanished or siphoned off. Here, the significance would be to the property acquired even prior to commission of crime. It is for the reason that any property acquired subsequent to the commission of crime would be directly or indirectly proceeds of crime and then, it would fall in the first limb of the definition of proceeds of crime. In the second limb, which refers to “the value of any such property” would indicate any other property which was acquired prior to the commission of crime and it would be attached only when the proceeds directly or indirectly obtained or derived out of the criminal activity is not available. It may be on account of siphoning off or vanished by the accused. In those circumstances the property of equivalent value can be attached. The word “the value of any such property” signifies without any embargo that it should be the property purchased after the commission of crime or prior to it rather it would apply in both the eventuality in the given circumstance. Thus, we are not in agreement with the counsel for the appellant who has questioned the attachment in reference to the 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 unable to accept the argument raised by the appellant so as to make the middle part of the definition of “proceeds of crime” to be redundant.
24. In view of the above, we are unable to accept the only argument raised by the appellant and for that appeal fails and is dismissed.
