2025 Supreme(Online)(ATFP) 13372

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman
Shri Partha Sarathi Ghosh Smt. Nabanita Ghosh Shri Sourish Ghosh Smt. Bithi Ghosh – Appellant
Versus
The Deputy Director Directorate of Enforcement Kolkata. – Respondent
FPA-PMLA-4186/KOL/2021

The definition of 'proceeds of crime' under PMLA includes the value of any such property, allowing attachment of untainted property of equivalent value when actual proceeds are not traceable, and the Covid-19 period is excluded for computing the 180-day confirmation period.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 5, 8, 26 - Provisional Attachment Order - Confirmation within 180 days - Effect of Covid-19 pandemic on limitation - Definition of 'proceeds of crime' - Three limbs - Property of equivalent value - Attachment of properties acquired prior to commission of scheduled offence - Right to property vs. personal liberty - Applicability of Supreme Court orders in Suo Motu Writ Petition No.3/2020.

(B) Limitation - The period from 15.03.2020 to 28.02.2022 is excluded for computing the 180‑day period under Section 5(3) of the PMLA, in view of the Supreme Court’s order in In re: Limitation, 2022 - The order of the Adjudicating Authority confirming the provisional attachment within the extended period is valid - The ratio in S. Kasi v. State (regarding personal liberty under Article 21) does not apply to property rights.

(C) Proceeds of crime - Definition under Section 2(1)(u) includes three limbs: (i) property derived or obtained directly or indirectly from criminal activity; (ii) the value of any such property; (iii) property equivalent in value held within the country or abroad where the original proceeds are taken or held outside - The second limb permits attachment of untainted property of equivalent value when the actual proceeds are not traceable, siphoned off, or vanished - Such attachment is permissible even if the property was acquired before the commission of the scheduled offence - This interpretation furthers the object of the Act and does not render the second limb redundant - Reliance placed on Vijay Madanlal Choudhary (three‑Judge Bench), Axis Bank (Delhi High Court) and Prakash Industries (Delhi High Court); views to the contrary in Satish Motilal Bidri (Kerala High Court) and Seema Garg (Punjab & Haryana High Court) not followed.

(D) Attachment of property of relatives - When the main accused transfers property to his son by way of gift after the commission of the scheduled offence, the property can be attached as a substitute for the value of the proceeds of crime - Similarly, property of a relative who was a director of the company involved in the predicate offence and whose source of funds is not satisfactorily explained can also be attached for equivalent value.

Facts of the case:
The appellants challenged the order dated 19.07.2021 of the Adjudicating Authority confirming the Provisional Attachment Order dated 15.04.2020 under PMLA. The predicate offence was a criminal conspiracy to defraud a bank of Rs.64.57 Crores by forging documents and using fictitious collateral securities. The loan was obtained from 2007‑2009. The proceeds of crime were siphoned off through related companies and personal accounts. The respondent attached various properties belonging to the appellants, including those of the main accused’s wife and son. The main accused’s son received the property as a gift from his father after the loan was obtained. The main accused’s wife claimed she purchased the property using a loan from her mother‑in‑law.

Findings of Court:
The Tribunal held that (i) the confirmation order was passed within the extended period of 180 days because the period from 15.03.2020 to 28.02.2022 is excluded due to the Covid‑19 pandemic; (ii) the definition of “proceeds of crime” includes the value of any such property, allowing attachment of untainted property of equivalent value when the actual proceeds are not traceable - therefore properties acquired prior to the crime can be attached; (iii) the property of the son was rightly attached as it was transferred by the main accused after the commission of the crime to shield it; (iv) the property of the wife, who was a director in the company, was also validly attached for equivalent value.

Issues: (1) Whether the confirmation order passed after 180 days from the provisional attachment is void in view of Section 5(3) of PMLA? (2) Whether properties acquired prior to the commission of the scheduled offence can be treated as “proceeds of crime” and attached? (3) Whether the properties of the relatives (wife and son) were liable to attachment?

Ratio Decidendi: (1) The 180‑day period under Section 5(3) is to be computed after excluding the Covid‑19 period as directed by the Supreme Court; the confirmation order was within time. (2) The second limb of the definition of “proceeds of crime” (the value of any such property) allows attachment of any property of equivalent value when the original proceeds are not available, irrespective of when the property was acquired - this prevents the accused from defeating the object of the Act by siphoning off proceeds. (3) Property transferred by the main accused to his son by way of gift after the commission of the crime, and property of a director who could not explain the source of funds, can be attached as substitute property.

Result: Appeals dismissed.