Point of Law: Properties purchased before the commission of the offence, cannot fall within the definition of “proceeds of crime” and cannot be attached or confiscated under the Act. Consequently, the attachment and subsequent proceedings before the Adjudicating authority for confiscation of the properties in Table -I of the impugned order would be without jurisdiction and would have to be struck down.

ORDER :

1. The petitioners in W.P.Nos.11490, 11492 and14336 of 2020 are Private Limited Companies. The petitioner in W.P.No.11572 of 2020 is a partnership firm. The petitioners in W.P.No.9338 of 2020 and W.P.No.9362 of 2020 are individuals. All these petitioners are challenging the order or provisional attachment bearing No.2/2019 in File No.ECIR/VKSZ0/02/2018 dated 31.12.2019, passed by the 2nd respondent in all these cases.

2. The case of the petitioners is that M/s IDBI Bank had filed a complaint before the Central Bureau of Investigation, which was registered as FIR.No.RC03(A)/2018, dated 27.03.2018, against various persons including Sri Kumar Pappu Singh, the writ petitioner in W.P.No.9338 of 2020, who was arrayed as Accused No.3 in the said complaint. The complaint of the bank was that between the years 2009 and 2012 the bank had sanctioned Kisan Credit Card (KCC) Loans to 101 borrowers to the tune of Rs.74.99 crores without obtaining proper loan documents and without conducting pre-sanction and post-sanction inspections and without ensuring the end use of the loan. It is further stated in the complaint that these loan amounts were disbursed to the savings accounts of the beneficiaries, from where the money was transferred to the accounts of the aggregators and later misappropriated. The petitioner in W.P.No.9338 of 2020 was named as accused No.3 on the ground that he stood as guarantor for 87 KCC loans and diverted the sanctioned amounts to his savings account and bank account of his firms/companies. These diverted amounts are said to have been used, by the petitioner in W.P.No.9338 of 2020, to fund his Pisciculture business which ran into losses.

3. As the said complaint included scheduled offences under the Prevention of Money Laundering Act, 2002 (herein after referred as “The Act”), the authorities under the Act had also registered a case bearing No.ECIR/VKSZO/02/2018 on 28.05.2018.In the course of the investigation of the said case, the 2nd respondent, by way of provisional attachment order No.2 of 2019 dated 31.12.2019, had held that a sum of Rs.69.46 crores had been diverted by the petitioner in W.P.No.9338 of 2020 and exercising his power under Section 5 of the Act the, 2nd respondent provisionally attached various properties belonging to the petitioners herein. These properties were enumerated in two tables. Table-I consists of properties acquired by the petitioners prior to September, 2010 and Table-II sets out the properties said to have been acquired by the petitioners after September, 2010 by using the proceeds of the crime.

4. The petitioners, who are aggrieved by the said attachment of their property, seek a writ in the nature of Certiorari for quashing the provisional attachment order passed by the 2nd respondent in attachment order No.2 of 2019 dated 31.12.2019 and to quash all consequential proceedings of the impugned provisional attachment including notice issued by the 3rd respondent dated 06.02.2020 in O.C.No.1253 of 2020 and further prohibit respondents 2 and 3 from exercising jurisdiction on the basis of the impugned order dated 31.12.2019.

5. The 2nd respondent has filed a counter affidavit. A preliminary objection has been taken in the counter affidavit that the impugned provisional attachment order is pending before the Adjudicating Authority, New Delhi, and as such, the present writ petitions are not maintainable as there is an effective alternative remedy available to the petitioners. It is submitted that the petitioners had also responded to the notice of the adjudicating authority dated 06.02.2020 and had filed a reply before the adjudicating authority. Reliance is placed on the Judgment of the Hon’ble Supreme Court dated 12.04.2010 in Raj Kumar Shivharev. Assistant Director, Director of Enforcements, (2010) 4 SCC 772, a Judgment of this Court in the case of P.Trivikram Prasad v. Enforcement Directorate, 2015 (1) ALD 513 and the Judgment of the Hon’ble Supreme Court in Nivedita Sharma v. Cellula