The Gauhati High Court has held that properties which have no nexus to a criminal activity relating to a scheduled offence cannot be regarded as proceeds of crime, and attachment of property acquired prior to the commission of the crime would not fall within the definition of the proceeds of crime.
However, in view of there being a disputed question of fact with regard to when the property had been purchased and keeping in mind the fact that the property had allegedly being registered in the name of the appellant only during the period of commission of the crime, the said disputed question of fact would have to be proved by way of evidence. Till the time it is proved that the property had been bought prior to the commission of the crime/offence, the Court is not inclined to allow the present petition.
The Division Bench comprising Justice Michael Zothankhuma and Justice Kaushik Goswami observed that the attached property is required to have a connection with the crime in question. The enforcement authority has to be able to trace the attached property to the criminal act relating to the scheduled offense, in terms of Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 (PMLA). Only a property which is connected with the proceeds of the crime can be attached and the only exception to the above, is when the property derived out of criminal activity is taken out of India and held outside India.
The Bench noted that the Appellate Tribunal (SAFEMA) had erroneously held that Section 2(1)(u) of the Act would include within its ambit the property of the appellant, even if it did not have any connection with the crime in question, and that even if the property was acquired prior to the crime, it was liable to be attached if the proceeds of crime had vanished and could not be traced.
The Bench observed that the pre-condition for being proceeds of crime is that the property has been derived or obtained directly or indirectly, by any person, as a result of criminal activity relating to a scheduled offence. The attachment must be only in respect of property which appears to be proceeds of crime and not all the property belonging to the person concerned.
Hence, the Bench concluded that only property which has been derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be attached.
Briefly, a written test for recruitment of 597 posts of Sub-Inspector of Police (UB) of Assam Police scheduled on Sep 20, 2020 had to be cancelled due to the leak of the question paper/s on WhatsApp. The appellant was one amongst the 42 persons named as an accused in the case, where the cash for question papers scam apparently resulted in the generation of crime proceeds amounting to Rs.6.13 Crores, out of which Rs.40 lakhs was the share of the appellant. The commission of the crime was between April 11, 2018 to Sep 10, 2020.
Accordingly, a case under the Prevention of Money Laundering Act, 2002 was initiated against the appellant pursuant to FIR registered by the CID, Assam Police, for offences under various sections of the IPC, Information Technology Act, and Prevention of Corruption Act, 1988. Therefore, the appellant prayed for setting aside the final order passed by the Appellate Tribunal under SAFEMA, New Delhi, which rejected the appellant’s challenge to the order passed by the Adjudicating Authority confirming the provisional attachment of the appellant’s residential house.
The appellant contended that the attached property, having an approximate value of Rs.16.60 lakhs, had been purchased by making payments between 2008 and 2011, prior to the commission of the offence, though it was registered in the name of the appellant on June 06, 2019. Opposing the same, the respondents contended that the property had been purchased by the appellant during the currency of the commission of the scheduled offence.
Appearances:
Advocate Dr. P. Agarwal, for the Appellant
Advocate L. Devi, for the Respondent/ ED
