Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(ATFP) 13052

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, G.C. Mishra, Member
Shri Mahesh Kumar Kejriwal Smt. Alka Kejriwal Shri Siddhartha Kejriwal – Appellant
Versus
The Deputy Director Directorate of Enforcement Kolkata – Respondent
FPA-PMLA-5396/KOL/2023

Advocates:
For the Appellants/Petitioners: (Counsel Appeared)
For the Respondents: Abhimanyu Kaul

Properties acquired prior to commission of scheduled offence can be attached under PMLA as 'value of any such property' when actual proceeds of crime are not traceable, based on three-limb definition of proceeds of crime.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 3, 4, 5, 26 - Proceeds of crime - Definition - Three limbs - Property acquired prior to commission of scheduled offence can be attached as “the value of any such property” when actual proceeds of crime are not traceable or have been siphoned off - Second limb of definition permits attachment of property of equivalent value even if untainted - Interpretation consistent with object of Act - Judgments of Supreme Court in Vijay Madanlal Choudhary and Delhi High Court in Axis Bank and Prakash Industries followed - Contrary views in Seema Garg and Pavana Dibur distinguished or held not good law. (Paras 20-23)

Facts of the case:
The appellants, borrowers of an overdraft facility from a bank secured by life insurance policies, defaulted on repayment. The bank recovered part of the amount but Rs.10.24 crores remained outstanding. The Enforcement Directorate provisionally attached properties of the appellants equivalent to that value, as the actual proceeds of crime were not traceable. The appellants contended that the attached properties were acquired prior to the alleged criminal activity and thus were not “proceeds of crime.” The Adjudicating Authority confirmed the attachment. In appeal, the Tribunal upheld the attachment.

Findings of Court:
The Tribunal held that the definition of “proceeds of crime” under Section 2(1)(u) contains three limbs. The second limb - “the value of any such property” - allows attachment of any property of equivalent value, including properties acquired before the commission of the scheduled offence, if the directly derived proceeds are unavailable or have been siphoned off. This interpretation is necessary to prevent money launderers from defeating the object of the Act. The Tribunal relied on the Supreme Court’s decision in Vijay Madanlal Choudhary and the Delhi High Court’s decisions in Axis Bank and Prakash Industries, and distinguished the contrary views in Seema Garg and Pavana Dibur as not binding or not properly argued.

Issues: Whether properties acquired prior to the commission of a scheduled offence can be attached under the Prevention of Money Laundering Act, 2002, as “proceeds of crime” when the actual proceeds are not traceable.

Ratio Decidendi: The definition of “proceeds of crime” comprises three distinct limbs. The second limb, introduced by the legislature, permits attachment of any property of equivalent value to the proceeds of crime, even if that property was acquired before the crime, when the directly derived proceeds have vanished or been siphoned off. This interpretation gives full effect to the statutory language and furthers the legislative intent to prevent money laundering.

Result: Appeals dismissed.

FINAL ORDER

02.12.2025

By a batch of three appeals under Section 26 of the Prevention of Money Laundering Act, 2002 (in short `the Act of 2002’), a challenge has been made to the order dated 23.09.2022 passed by the Adjudicating Authority confirming the Provisional Attachment Order dated 31.03.2022. The provisional attachment was caused for movable and immovable properties of the defendants before the Adjudicating Authority, finding their involvement in money laundering. Before we refer to the arguments of the respective parties, it would be relevant to give brief facts of the case:

Brief facts of the case:

2. It is a case where an FIR was registered on 30.03.2013 by CBI, ACB, SPE, Kolkata for offence under Section 120B & 420 of IPC, 1860 and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 against Shri Mahesh Kumar Kejriwal and others. Charge sheet was filed on 29.12.2013 by CBI, ACB, SPE, Kolkata for offence under section 120(B), 468, 471 & 420 of IPC and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988. The investigation was initiated by the Enforcement Directorate, Kolkata after recording ECIR on 13.02.2020 for alleged commission of offence under Section 3, punishable under Section 4 of the Act of 2002. The charge-sheet was filed finding that Shri Mahesh Kumar Kejriwal along with his wife Smt. Alka Keiriwal and his son Shri Siddhartha Kejriwal are involved in commission of offence. They took a loan from the Allahabad Bank, Kolkata but did not return the amount and had outstanding to the tune of Rs. 23,39,13,241/-. They had taken overdraft (OD) facility against 36 LIC Market Plus-1 policies in bank's favour, out of which payments of 13 LIC policies were not made.

3. It has come on record that Shri Abhijit Roy, the then Sr. Manager of the Allahabad Bank sanctioned OD limit beyond his discretionary powers without taking approval of the competent authority. He processed the loan without ensuring proper scrutiny for the OD limit. He did not follow the end use of funds and also did not examine the security in details and the risk involved with those securities. He also recommended reduction in the margin of the securities from 25% to 0%. The withdrawal from the OD account were allowed beyond the sanctioned limit, facilitating to perpetration of the fraud. Shri Bhaskar Kirtania (then Sr. Manager), together with Shri Anindya Guha (then Financial Service Executive of LIC), also conspired with the private persons, bank officials and LIC persons by way of forging the signatures of the Sr. Manager, Allahabad Bank. It was with the intention to deceive both the bank officials as well as LIC officials, which resulted in wrongful loss to the bank. Even the LIC officials issuing the policies did not exercise due care and caution and flouted the norms of LIC.

4. It was found that Shri Mahesh Kejriwal and Smt. Alka Kejriwal, after purchasing two LIC Market Plus-I polices for Rs. 15 lakhs each on 31.12.2009, jointly opened a Current Account with Allahabad Bank on 08.01.2010 and applied for OD loan of Rs. 25,00,000/- against the said LIC Market Plus-l policies of Rs. 30,00,000/-. Those policies were assigned by LIC in favour of Allahabad Bank on 08.01.2010 as confirmed by a letter dated 08.01.2010 informing the Bank that the LIC neither admit nor expresses any opinion whatsoever about the validity or effect of the policy. The bank must satisfy itself through its own legal advisor. As per the bank OD account, against the OD limit of Rs. 25 lakhs, an amount of Rs.2.10 crores were disbursed and Shri Abhijit Roy allowed the withdrawals for himself, which became clear from the handwritings on the body of the instruments together with other staff of the said bank namely Shri Gopal Kundu and Shri Kuntal Pandey. Shri Abhijit Roy on 17.02.2010 without any proper security sanctioned the enhancement of the said OD limit from Rs. 2.1 Crores to Rs. 8 crores against security of LIC Policies of Rs. 10,50,00,000/- (in

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2025 Supreme(Online)(ATFP) 13052

APPELLATE TRIBUNAL FOR FORFEITED PROPERTYMunishwar Nath Bhandari, Chairman, G.C. Mishra, MemberShri Mahesh Kumar Kejriwal Smt. Alka Kejriwal Shri Siddhartha Kejriwal – AppellantVersusThe Deputy Director Directorate of Enforcement Kolkata – RespondentFPA-PMLA-5396/KOL/2023

Properties acquired prior to commission of scheduled offence can be attached under PMLA as 'value of any such property' when actual proceeds of crime are not traceable, based on three-limb definition of proceeds of crime.

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, G.C. Mishra, Member
Shri Mahesh Kumar Kejriwal Smt. Alka Kejriwal Shri Siddhartha Kejriwal – Appellant
Versus
The Deputy Director Directorate of Enforcement Kolkata – Respondent
FPA-PMLA-5396/KOL/2023