Dismissed

FPA-PMLA-1370/DLI/2016 of Mamta Jain w/o Sh. Manish Jain v. The Deputy Director, Directorate of Enforcement, Delhi

ATFP18 Feb 2025FPA-PMLA-1370/DLI/2016

Case brief

AI extract

What is this about?

Single Bench of the Appellate Tribunal under SAFEMA dismissed appeals against an order confirming property attachment under the PMLA. The Tribunal rejected arguments regarding retrospective application of PMLA amendments and held that properties acquired prior to predicate offences could be attached as proceeds of crime.

What did the court decide?

Property attachment confirmed; appeals dismissed for lack of merit.

FPA-PMLA-1370/DLI/2016 of Mamta Jain w/o Sh. Manish Jain Vs… — Customs and Excise | ATFP (2025)

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BEFORE RAJESH MALHOTRA, MEMBER, SINGLE BENCH; APPELLATE TRIBUNAL UNDER SAFEMA: AT NEW DELHI.

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I. FPA-PMLA-1370/DLI/2016 Mamta Jain w/o Sh. Manish Jain

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II. FPA-PMLA-1371/DLI/2016 Manish Jain S/o Surinder Nath Jain Both r/o R-12/40, Raj Nagar, Ghaziabad, UP. …Appellants

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Versus

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The Deputy Director, Directorate of Enforcement, Delhi … Respondent

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Advocates/Authorized Representatives who Argued

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For the Appellant : Mr. R.K. Rawal, A.R. For the Respondent : Mr. Abhimanyu Kaul, Advocate

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FINAL ORDER

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18.02.2025

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Present Appeal is filed by the appellants under Section 26 of the Prevention of Money Laundering Act, 2002 (in short `PMLA, 2002’) against the order dated 30.05.2016 passed by the Adjudicating Authority in Original Complaint No. 540/2016, whereby the properties attached by ED vide PAO No. 22/2015 dated 10.12.2015 were confirmed. The details of the said properties of the present appellants are as under:

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S.No.	Detail of property and Name of owner	Date of Purchase	Value of time & purchase (in₹)
1.	Flat No. K-UH/602, Urban Homes, Shahpur Bhambeta, Ghaziabad, in the joint names of Sh. Manish Jain&hiswifeMamtaJain	10.01.2015 Allotment letter	22,00,800/-
2.	Shop no. FF-22, RDC, Raj Nagar, Ghaziabad in the name of Sh. ManishJain	30.8.2000 18.79 Sq. Mts.	2,46,000/-

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As per the facts of the case, FIR No. 76 dated 18.01.2015 was registered at PS Kavi Nagar, District Ghaziabad, against the accused Manish Kumar Jain and others for commission of

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FPA-PMLA-1370 & 1371/DLI/2016 Mamta Jain & Manish Jain v. ED, Delhi

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offences under Section 420,467,468,469 & 471 IPC, wherein it is mentioned that during the search conducted by DRI under the Customs Act, it was found that Manish Kumar Jain was involved in making illegal foreign remittances to Hong Kong through banking channels by submitting fake import documents to the bank authorities. As per the report, Manish Kumar Jain and others operated through various fictitious firms/companies and remitted about more than Rs.380 crores to Hong Kong from India during the period 2007 to 2011, showing the same as payment for import of computer parts and accessories. On further investigation by the DRI, it was revealed that Manish Kumar Jain and others had been remitting foreign exchange to Hong Kong through bogus firms/companies, namely, M/s Suntek Computers and M/s Shyam Trading Company controlled by Manish Kumar Jain adopting the same modus operandi and had remitted an amount of over Rs.100 crores from 2012 till 2014. The DRI searched the residential and business premises of Manish Kumar Jain and associates on 07.08.2014 and recovered and seized certain incriminating material in the form of huge number of blank Postal Wrappers of Hong Kong Post, large number of bogus PAN Cards and Voter ID Cards in the names of different fictitious identities. To accomplish this criminal activity of remitting foreign exchange from India to abroad, Manish Kumar Jain had opened firm, namely, Pacific Technology in Hong Kong, besides others.

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FPA-PMLA-1370 & 1371/DLI/2016 Mamta Jain & Manish Jain v. ED, Delhi

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On the basis of said FIR, ED recorded ECIR No. 03/LKZO/2015 dated 10.08.2015. The said ECIR was transferred to Delhi Zonal Office and was assigned new ECIR No.21/DLZO/2015 dated 01.12.2015 for further investigation against the suspects/accused persons for commission of offence of money laundering under Section 3 read with Section 4 of PMLA, 2002.

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The investigation conducted by DRI, Lucknow Zonal Office against Manish Kumar Jain revealed that he had opened a large number of bank accounts in Oriental Bank of Commerce, Razapur, Ghaziabad and in Axis Bank, Razapur, Ghaziabad for import of computer parts. An amount of Rs.50 lakh to Rs.1 crore was deposited daily in various accounts and then were clubbed in 7 accounts and thereafter remitted to various overseas accounts. On the basis of forged import documents, about Rs.380 crores has been remitted abroad during the period 2007 to 2010. Accused Manish Kumar Jain had opened a firm in the name of Pacific Technology in Hong Kong and remittance was also made to this firm. Manish Kumar Jain created several bogus firms and also managed to procure blank postal wrappers of Hong Kong and after filling bogus details used to submit the same to the bank for remittance of foreign exchange, while no actual imports took place against those postal documents from Hong Kong. The major portion of foreign exchange remitted to Hong Kong was received in India from importers, namely M/s Brother Impex and M/s Sri Krishna Overseas of Delhi and

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FPA-PMLA-1370 & 1371/DLI/2016 Mamta Jain & Manish Jain v. ED, Delhi

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others. The foreign exchange remitted to M/s Pacific Technology at Hong Kong through various firms was further transferred to the actual Chinese supplier to settle the accounts of under valuation in import of goods.

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During investigation, DRI recorded the statements of different persons including Raj Narayan, Chandraveer, Ram Sagar Sahni, Puneet Agarwal, Naman Jain, Sushil Manocha, Manish Kumar Jain under Section 108 of Customs Act. ED also interrogated them and also recorded the statements under Section 50 of PMLA, 2002.

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CBDT/DRI also investigated the matter under FEMA, 1999, wherein Rakesh Jain admitted that his brother Manish Kumar Jain was holding 2 accounts in HSBC Bank, Hong Kong in the name of M/s Tanvi Enterprises and M/s Pacific Exim. He further stated that some FFMCs and persons were in touch with Manish Kumar Jain viz M/s P.R Forex, Duggal Forex, Shri Ajay Goel. He also named some persons who were working on behalf of several importers in India.

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During investigation, it was found that during the period 2006 to 2010, huge cash to the tune of approx. Rs.504 crores was deposited in the accounts of different fictitious entities opened by Manish Kumar Jain and others and was transferred in 11 accounts opened by Manish Kumar Jain in the name of fictitious entities. Manish Kumar Jain further remitted around Rs.557 crores approximately outside India to Hong Kong in

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favour of various entities. Manish Kumar Jain failed to appear before CBDT/DRI to join investigation under FEMA, 1999.

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During investigation under PMLA, DRI recorded the statements of various persons and also collected the details of bank accounts, which revealed that there were 66 bank accounts at Oriental Bank of Commerce, Razapur, Ghaziabad; 10 accounts of Axis Bank, Razapur, Ghaziabad, from which foreign remittances were sent during the period 2006-10 and 7 accounts of different banks from which foreign remittances were sent during the period 2012-14. Records of the said bank accounts were obtained and examined.

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Being satisfied with the material on record, ED passed the Provisional Attachment Order No. 22/2015 dated 10.12.2015 and thereafter filed Original Complaint No.540/2016 before the Adjudicating Authority for the confirmation of the said properties.

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Learned Adjudicating Authority being satisfied with the allegations mentioned in the OC and the relied upon documents, issued the show cause notice to the defendants. After receiving the replies and hearing the rival submissions, the Adjudicating Authority confirmed the Provisional Attachment Order vide its order dated 30.05.2016.

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Being aggrieved with the said order, appellants filed the present appeals. 3. During the arguments, learned counsel for the appellant submitted that the alleged scheduled/predicate offences were

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FPA-PMLA-1370 & 1371/DLI/2016 Mamta Jain & Manish Jain v. ED, Delhi

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included in the schedule of PMLA w.e.f. 01.06.2009, whereas the alleged offences were committed during the period 2006-12 and hence, the said amendment w.e.f. 01.06.2009 is not attracted in the present case with retrospective effect. He further argued that even bare perusal of the details of the property reflects that Property at Serial No.2 was purchased on 30.08.2000 i.e. much prior to the alleged commission of offence, and hence, by stretch of any imagination the said property cannot be presumed to be acquired out of the proceeds of crime from the alleged offences committed during the period 2006 onwards. Thus, the property at Serial No.2 also needs to be released on this ground. He further contended that even otherwise there is nothing on record that the property at Serial No.1 was purchased from any proceeds of crime. The prayer is accordingly to allow the appeals on these grounds.

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Ld. Counsel for the appellants has confined himself to the above issues only.

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On the other hand, learned counsel for the respondent/ED controverted the submissions made by the learned counsel for the appellants and the same will be discussed in my analysis in the following para.

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After hearing the rival submissions, I have given my thoughtful consideration on the same.

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5.1 I am not satisfied with the contention of Ld. Counsel for the appellants to restrict the quantum of proceeds of crime only for the post amendment period i.e. 1.06.2009 onwards. The whole

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FPA-PMLA-1370 & 1371/DLI/2016 Mamta Jain & Manish Jain v. ED, Delhi

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period of commission of schedule offence needs to be considered to quantify the POC. The issue aforesaid has been decided by Hon’ble Telangana High Court, in the case of Vem Krishna Keerthan vs Directorate of Enforcement in CRIMINAL PETITION No.9314 of 2022 vide order dated 13^th December, 2024. The relevant para is reproduced as under:-

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“38. In respect of the second argument, it should be borne in mind that the offence of money laundering is a continuous offence. The date of commission of the scheduled offence may not be relevant to prosecute a person for the offence of money laundering at a later point of time. Even after the date of commission of the scheduled offence, the accused might be in possession of the proceeds of crime. He/she may continue to use or conceal such proceeds of crime or project/claim them as untainted property. Therefore, if a person continues to deal with proceeds of crime, even after the commission of the scheduled offence, he/she may be prosecuted under the PMLA.”

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I further fortify my view in this regard, in light of the judgment of Hon’ble Supreme Court of India, in the case of Vijay Madanlal Chaudhary Vs. Union of India , in 2022 SCC OnLine SC 929, wherein it is held that-

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42. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form -- be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus,

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FPA-PMLA-1370 & 1371/DLI/2016 Mamta Jain & Manish Jain v. ED, Delhi

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involvement in anyone of such process or activity connected with the proceeds of crime would constitute offence of moneylaundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence -- except the proceeds of crime derived or obtained as a result of that crime.

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43. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of money-laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act -- for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of moneylaundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till 31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all.

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FPA-PMLA-1370 & 1371/DLI/2016 Mamta Jain & Manish Jain v. ED, Delhi

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Hence, the first issue is devoid of any merits.

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5.2 Now, coming to the second issue/contention of the appellants that- Whether the investments in properties made by the appellants prior to the alleged period of offence are not covered within the definition of proceeds of crime .

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To analyze this issue, it would be gainful to refer to the definition of “ proceeds of crime ” given under Section 2(1) (u) of the Act of 2002 and is quoted thus-

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Definitions -(1) In this Act, unless the context otherwise requires, -xx xx xx xx xx xx xx xx xx xx xx

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(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];

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[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].

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xx xx xx xx xx xx xx xx xx xx xx

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The perusal of this definition reveals three limbs of the definition out of which first part refers to the property acquired or derived directly or indirectly by a person relating to the criminal activity to a scheduled offence. The second part includes “ the value of any such property ”. The second part is generally

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mixed with third part for giving interpretation. However, an elaborate judgment on the issue has been given 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 para no. 105 of this judgment is reproduced as under:-

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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 envisages 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

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acquired by third parties prior to the commission of the predicate offense would stand saved.”

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Further, this Tribunal has also given an elaborate judgment on the issue in the case of Sadananda Nayak v. The Deputy Director, Directorate of Enforcement, Bhubaneswar

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in FPA-PMLA-5612/BBS/2023 on 14.10.2024, where all the judgments on the issue have been considered and thereby this issue was decided in favour of ED.

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Further, in view of the para 68 of the judgment of Hon’ble Supreme Court of India in the case of Vijay Madanlal Chaudhary Vs. Union of India (supra), wherein, it is held that- “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 moneylaundering.”

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The paras quoted above show a detailed discussion to the interpretation to the definition of “proceeds of crime”. The judgment of the Apex Court in the case of Smt. Pavana Dibbur

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vs The Directorate Of Enforcement reported in 2023 SCC OnLine SC 1586 has also been considered. However, findings

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given by three judges Bench of the Apex Court in the Vijay

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Madanlal Choudhary Vs. Union of India reported in 2022 SCC

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OnLine SC 929 has been relied to give interpretation to the definition. In the light of the above, I find no force in the argument. Thus, when the proceeds out of crime was not available with the appellant rather vanished and siphoned off, the property of equivalent value has been attached. In the present case, the proceeds of crime were siphoned off by diverting and by layering the proceeds. In the light of the aforesaid, second limb of the definition of “proceeds of crime” has been applied to attach the property as value thereof qua the property at S.No.2 of the appellant, purchased in the year 2000. Thus, the ground raised by the appellants cannot be accepted.

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In the light of the above, I find no force in the argument when the proceeds out of crime was not available with the appellants rather vanished and siphoned off, the property of equivalent value can be attached, even though it might have been purchased prior to the commission of schedule offence. In the light of the aforesaid, second limb of the definition of “proceeds of crime” has been correctly applied to attach the property though of very less value, not of equivalent value. Thus, this ground raised by the appellants cannot be accepted. 5.3 Further, as the property, at S.No.1 is purchased in the year 2015, it is clearly acquired from the proceeds of crime.

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