Allowed

FPA-PMLA-2619/JL/2018 of Suresh Devi, W/o Brij Lal Garg v. The Deputy Director, Directorate of Enforcement, Jalandhar

ATFP6 Aug 2024FPA-PMLA-2619/JL/2018

Case brief

AI extract

What is this about?

This appeal under PMLA challenged the attachment of the appellant's house, purchased in 1998, alleging disconnect from alleged 2012-13 fraud. The appellate court upheld attachment, ruling that property acquired before the predicate offence can be attached to the value of proceeds of crime per Vijay Madanlal Choudhary.

What did the court decide?

The impugned order confirming the provisional attachment of the appellant's property was upheld.

FPA-PMLA-2619/JL/2018 of Suresh Devi, W/o Brij Lal Garg vs. The… — Money Laundering | ATFP (2024)

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APPELLATE TRIBUNAL UNDER SAFEMA; AT NEW DELHI.

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FPA-PMLA-2619/JL/2018 Suresh Devi, W/o Brij Lal Garg … Appellant

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Versus

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The Deputy Director, Directorate of Enforcement, Jalandhar, Pb. … Respondent

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Advocates/Authorized Representatives who Argued

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For the Appellant : Mr. Deepak Gupta, Adv. Ms. Gunjan Rathore, Adv. Mr. A. Karthik, Adv. For the Respondent : Mr. N.K. Matta, SPP along with Mr. Aditya Raj Sharma, Adv.

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CORAM SHRI G.C. MISHRA : MEMBER SHRI RAJESH MALHOTRA : MEMBER

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FINAL ORDER

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06.08.2024

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Dictated By: Rajesh Malhotra

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Present appeal u/s 26 of Prevention of Money Laundering Act, 2002 is filed by appellant against the order dated 13.09.2018 passed in Original Complaint No. 922/2018, by the Ld. Adjudicating Authority vide which attachment of the properties attached in PAO No. 02/2018 dated 27.03.2018 was confirmed for attachment, including the property of the appellant which is detailed as under:

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Sr. No.	Description	Value of the Property (Rs.)	Name of the Possessor/Owner
2.	House No. 64-A, Aggar Nagar, Ludhiana	Value to the Extent of Rs. 63,83,282/-	Smt. Suresh Devi (D-6)

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As per the facts of the case, Excise and Taxation Officer, Ludhiana-1, lodged a complaint vide No. 1323 dated 08.11.2013 before Police Commissioner, Ludhiana against M/s Yourk

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FPA-PMLA-2619 /JL/2018

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Suresh Devi v. E.D., Jalandhar

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International for showing export of readymade garments to the tune of Rs. 12.38 crores vide H-Forms to Bangladesh during the FY 2012-13, and on the basis of which, the firm claimed VAT refund of Rs. 0.74 crore from Punjab Government vide application dated 11.02.2013 on VAT-29 Form. After enquiry by Custom Authorities, Petrapol Land, West Bengal,it is reported that all the Shipping Bills produced by the firm were found to be forged and fabricated. On the basis of the said complaint, FIR No. 221 dated 14.11.2013 u/s 177, 420, 465, 467, 468 and 471 IPC was lodged against Ramesh Mehan Proprietor of M/s Yourk International and his son Rajeev Mehan. After completion of investigation, police filed charge-sheet against Rajeev Mehan. As per charge-sheet, during the third quarter of the year 2012-13, M/s Yourk International had shown trade of about Rs.16.37 Crores for which it has shown the purchase of readymade garments worth Rs. 16.31 crores from the State of Punjab.Out of the said purchase, the firm M/s Yourk International had shown exports made to Bangladesh to the tune of Rs. 12.38 crores indirectly vide H-Form through M/s Shreyas International. VAT on such goods in the State of Punjab is 6.05%, but as per the provisions, the tax on Export Goods is Nil, in the State of Punjab. Accordingly, M/s Yourk International moved an application dated 11.02.2013 vide VAT-29 Form for refund of VAT amounting to Rs. 0.74 croresalongwithUndertaking, H-Forms, Bill of Lading, Shipping Bills etc. On the basis of the same, the said amount was refunded to the firm on 02.04.2013. On verification of the said documents regarding exports, the same was found to be

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FPA-PMLA-2619 /JL/2018

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Suresh Devi v. E.D., Jalandhar

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forged and fabricated. As per the report received from Commission of Customs, Petrapol Land, Custom Station, Bangaon, West Bengal, Directorate of Enforcement also registered ECIR No. 09/JLZO/2013 dated 06.12.2013 for conducting investigation under Prevention of Money Laundering Act, 2002.

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During investigation, ED collected documents from various sources and also recorded statements of many persons u/s 50 of PMLA. Thereafter, Provisional Attachment Order No. 02/2018 was passed. After passing of the said Provisional Attachment Order, Original Complaint No. 922/2018 was filed before the Adjudicating Authority.

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After going through the Original Complaint, documents and statements of witnesses, Ld. Adjudicating Authority issued Show Cause Notice against the Noticee(s) for filing reply. After going through the replies and hearing the rival submissions, Ld. Adjudicating Authority passed the Order dated 13.09.2018. Aggrieved by the said order, appellant Suresh Devi, filed the present appeal.

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During the arguments, Ld. Counsel for the appellant submitted that appellant Suresh Devi purchased the subject house in the year 1998, vide sale agreement dated 02.04.1998 for amount of Rs.10,00,000/-. He argued that on 03.05.2013, alleged proceeds of crime i.e. Rs.74 lacs were stated to be credited into the account of M/s Yourk International.He argued that by stretch of no imagination the said house being purchased much prior to the alleged commission of offence could not said to have been

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FPA-PMLA-2619 /JL/2018

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Suresh Devi v. E.D., Jalandhar

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purchased from any proceeds of crime, and hence, same cannot be attached, even as value thereof, in absence of any business dealing between appellant and Sh. Ramesh Mehan Prop. of M/s Yourk International.In support of his contention, he relied upon the judgment of Hon’ble High Court of Kerala in case Satish MotilaBidri v. Union of India,2024 SCC Online Ker 3410, wherein in para 18, it is held that:

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“Viewed in the above perspective, as the provisionally attached immovable property was purchased in 2004- more than a decade and a half before the predicate offence was allegedly committed, the order attaching the immovable property is ex-facie ultra-vires the powers of the statute and totally illegal and arbitrary to the extent of the said attachment. Since ex-facie illegal acts can be interfered with under Article 226 of the Constitution of India, not withstanding the existence of an alternate remedy, this Court is of the view that the provisional attachment of the immovable property as seen from the Schedule A to Exhibit P-11, order dated 22.04.2024 is liable to be set aside. …”.

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He also relied upon the judgment of Hon’ble Supreme Court of India in case Pavana Dibbur v. E.D. 2023SCC online SC 1586, wherein in para 31 sub-para c., it is held that-The first property cannot be said to have any connection with the proceeds of crime as the acts constituting scheduled offences were committed after the property was acquired.

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Prayer is accordingly made to allow the present appeal as the said properties of the appellant cannot be attached, as value thereof, in absence of any link with the direct proceeds of crime.

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FPA-PMLA-2619 /JL/2018

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Suresh Devi v. E.D., Jalandhar

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On the other hand, Ld. Counsel for the respondent ED submitted that as per the case of respondent ED, Ramesh Mehan, Prop. of proprietorship concern M/s Yourk International, committed the fraud of VAT refund to the tune of Rs. 74,36,067/-, on the basis of forged documents. Out of the said proceeds of crime, M/s Shreya International received the proceeds of crime to the extent of Rs. 70,50,000/- in its Axis Bank account no. 0032191105790 vide two cheques no. 316354 & 316353 amounting to Rs.30,50,000/- and Rs. 44,00,000/- respectively on 03.05.2013. Thereafter, out of the said share of proceeds of crimeM/s Shreyas Internationaltransferred sum of Rs. 44,00,056/,to M/s JaldharaCotspin Pvt Ltd. Ludhiana in its Axis Bank account no. 911020022066586 on 03.05.2013. Out of the said share of proceeds of crime, sum of Rs. 5,95,050/- and Rs. 1,79,982/- (totalling to Rs. 7,75,032/-) were transferred to the account of appellant Suresh Devi Garg and remaining to the accounts of her other family members as mentioned in the flow chart at page 41 of the impugned order passed by the Ld. Adjudicating Authority. He pointed out that the accused persons Rejeev Mehan and his father Ramesh Mehan are related to the present appellant Smt. Suresh Devi, as Smt. Gyatri Garg is wife of Shri Anuj Kumar Garg and daughter of Shri Ramesh Mehan. Accordingly, he submitted that present appellant was part and parcel of the conspiracy for layering of the proceeds of crime within the family members as mentioned in the aforesaid flow chart. In support of his contention the statement of many witnesses

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FPA-PMLA-2619 /JL/2018

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Suresh Devi v. E.D., Jalandhar

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recorded u/s 50 of PMLA. He further argued that the judgments relied upon by Ld. Counsel for the appellant are not applicable in any manner, as the Hon’ble High Court of Kerala has not discussed about the judgment of Hon’ble Supreme Court of India in case of Vijay Madanlal Choudhary v. Union of India, MANU/SC/0924/2022; 2022 SCC Online SC 929. Further, the judgment of Hon’ble Supreme Court of India by D.B. in case of Pavana Dibbur v. E.D. (supra) is not applicable in absence of any discussion with respect to findings in para 68 & 69 of the judgment passed by three judges Bench of Hon’ble Supreme Court of India in

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case Vijay Madanlal Choudhary v. Union of India (supra).

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Accordingly, he submitted that property of the appellant is attached, as value thereof, in absence of any proceeds of crime and the said attachment cannot be set aside in view of the findings given in para 68 & 69 of the judgment in case Vijay Madanlal Choudhary v. Union of India (supra).

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After hearing the rival submissions, we have given our thoughtful consideration to the same. In the present case, appellant has raised only one ground to press the appeal that the property was acquired in 1998 i.e., much prior to the date of commission of offence, cannot be attached. We do not agree with the contention of learned counsel for appellant in this regard. The Hon’ble Supreme Court of India in case of Vijay Madanlal Chaudharyv. Union of India , (supra) held that the other assets of the culprit can be attached, as value thereof, in absence of nonavailability of direct proceeds of crime, as mentioned in para no. 62

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FPA-PMLA-2619 /JL/2018

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Suresh Devi v. E.D., Jalandhar

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of the said judgment wherein para no. 235 of the report titled as “Anti-Money – Laundering and Combating the Financing of Terrorism” dated June 25, 2010 was reproduced as under:

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“235. The definition of proceeds of crime and property in the PMLA are broad enough to allow for confiscation of property derived directly or indirectly from proceeds of crime relating to a scheduled (predicate) offence, including income, profits and other benefits from the proceeds of crime. These definitions also allow for value confiscation, regardless of whether the property is held or owned by a criminal or a third-party…”.

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Further, it is held that-

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“ 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.

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69 . We find force in the stand taken by the Union of India that the objectives of enacting the 2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence so as to combat the evil of money-laundering. The second proviso, therefore, addresses the broad objectives of the 2002 Act to reach the proceeds of crime in whosoever's name they are kept or by whosoever they are held. To buttress this argument, reliance has been placed on the dictum in Attorney General for India 17 and Raman Tech. & Process Engg. Co. and Anr. v. Solanki Traders MANU/SC/8119/2007: (2008) 2 SCC 302.”

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FPA-PMLA-2619 /JL/2018

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Suresh Devi v. E.D., Jalandhar

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In view of the legal position spelled out by the Hon’ble Supreme Court of India, in the above-mentioned case, we are of the view that the property of appellant is rightly confirmed for attachment by the Ld. Adjudicating Authority vide the impugned order, in absence of any direct proceeds of crime in possession of the appellant, as she received the share from the proceeds of crime along with her other family members as mentioned in the flow chart at page 41 of the impugned order. Therefore, in view of the said legal position the present appeal needs to be dismissed being devoid of any merits.

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Accordingly, in view of the judgment of Hon’ble Supreme Court of India as mentioned in the preceding para, the present appeal is hereby dismissed being devoid of any merits and thereby the impugned order dated 13.09.2018 confirming PAO No. 02/2018 is hereby upheld qua the immovable property of the appellant Smt. Suresh Devi, as mentioned in para no. 1 above.

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It is made clear that nothing expressed herein will affect the right of any party in criminal trials.

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Pending miscellaneous applications, if any, stands disposed of accordingly.

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Appeal Dismissed .

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Pronounced on this 06^th Day of August, 2024.

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(Rajesh Malhotra) (G.C. Mishra) Member Member ‘AB’

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FPA-PMLA-2619 /JL/2018