Pre-Offence Property Cannot Be Attached as PMLA Proceeds of Crime: AP HC

Kumar Pappu Singh Vs Union of India (Andhra Pradesh High Court)

Summary: The Andhra Pradesh High Court in Kumar Pappu Singh Vs Union of India considered whether properties acquired before commission of the scheduled offence could be provisionally attached under Section 5 of the Prevention of Money Laundering Act, 2002 when the alleged proceeds of crime had subsequently been dissipated or lost. The proceedings arose from Kisan Credit Card loans allegedly diverted by Kumar Pappu Singh. The Enforcement Directorate treated approximately Rs.69.49 crore as proceeds of crime and attached properties divided into two categories: Table-I properties acquired before September 2010, when the alleged scheduled offences commenced, and Table-II properties acquired thereafter.

The petitioners challenged the attachment, including on the ground that the authority lacked jurisdiction to attach properties acquired before commission of the scheduled offence. The High Court first rejected the objection based on availability of an alternative remedy, holding that a writ petition could be entertained where the challenge concerned absence of jurisdiction. On the meaning of “proceeds of crime” under Section 2(1)(u), the Court considered the competing interpretations in Deputy Director, Directorate of Enforcement Delhi v. Axis Bank and Seema Garg v. Deputy Director, Directorate of Enforcement. It agreed with the Punjab and Haryana High Court’s interpretation in Seema Garg.