2026 Supreme(Online)(ATFP) 190

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, G. C. Mishra, Member
M/s Diamond Liquors Pvt. Ltd. Gautam Malhotra M/s Gautam Wines Pvt. Ltd. – Appellant
Versus
The Deputy Director Directorate of Enforcement Delhi – Respondent
FPA-PMLA-184/DLI/2024

Property used in the commission of a scheduled offence, even if not derived from that offence, can be treated as proceeds of crime under PMLA because the definition of 'property' includes such use. Giving a bribe also amounts to money laundering.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 2(1)(v), 3, 26 - Definition of proceeds of crime - Distinction between property derived from criminal activity and property used in commission of crime - Explanation to Section 2(1)(v) includes property used in commission of scheduled offence - Indian Penal Code, 1860 - Sections 120‑B, 477A - Prevention of Corruption Act, 1988 - Section 7 - Scheduled offences under PMLA - Validity of provisional attachment of property equivalent to value of proceeds of crime. (Paras 12‑26)

(B) Interpretation - The definition of “proceeds of crime” under Section 2(1)(u) requires property to be derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence - Property merely used in the commission of crime (e.g., a vehicle) does not qualify as proceeds of crime unless it is itself derived from criminal activity - However, the explanation to Section 2(1)(v) clarifies that “property” includes property of any kind used in the commission of an offence under PMLA or any scheduled offence - Thus, the investment amount used to further the conspiracy may still be treated as property involved in money laundering, even if not originally derived from the scheduled offence. (Paras 22‑24)

(C) Money laundering - Giving of bribe constitutes involvement in a process or activity connected with proceeds of crime - Even if the bribe amount is handed over, the bribe‑giver is guilty of money laundering under Section 3 of PMLA - The requisite intent to hand over money as bribe makes the amount proceeds of crime in the hands of the giver. (Paras 24‑25, relying on Directorate of Enforcement v. Padmanabhan Kishore)

(D) Appellate review - The tribunal will not interfere with the impugned order unless it is perverse, illegal, or contrary to law - Mere possibility of a different view is not a ground for interference. (Para 26)

Facts of the case:
A batch of three appeals was filed under Section 26 of the Prevention of Money Laundering Act, 2002 challenging an order of the Adjudicating Authority dated 20.12.2023 confirming the Provisional Attachment Order dated 03.07.2023. The underlying predicate offence was an FIR registered by CBI against a former Deputy Chief Minister and others for offences under IPC and PC Act in relation to the framing and implementation of an excise policy. The allegations against the appellants included giving bribes, cartelization, and transferring proceeds of crime. The Enforcement Directorate attached properties equivalent to Rs.24.25 Crores, which the appellants argued was money used to facilitate the conspiracy, not derived from it. The appellants relied on the judgment in Vijay Madanlal Choudhary and Nav Nirman Builders to contend that property used in crime cannot be treated as proceeds of crime.

Findings of Court:
The tribunal held that the explanation to Section 2(1)(v) of PMLA expressly includes property used in the commission of an offence under the Act or any scheduled offence. The investment of Rs.24.25 Crores was part of the conspiracy and used to give effect to the cartelization, and therefore it fell within the definition of property liable to attachment. The tribunal further found that even if the amount was not derived from the scheduled offence, its use in the criminal activity brought it within the ambit of proceeds of crime. Regarding the bribe amount of Rs.2.5 Crores, the court held that giving bribe is itself an offence under the PC Act, a scheduled offence, and the intent to hand over money as bribe makes the giver involved in money laundering. The appeals were dismissed.

Issues: (i) Whether the investment of Rs.24.25 Crores used to further the conspiracy qualifies as “proceeds of crime” under Section 2(1)(u) PMLA, or whether it is merely property used in the commission of crime and thus excluded? (ii) Whether the bribe amount given by the appellant can be treated as proceeds of crime in his hands, given that the recipient received the money? (iii) Whether the provisional attachment of properties equivalent to the value of the alleged proceeds of crime was valid?

Ratio Decidendi: The definition of “proceeds of crime” under Section 2(1)(u) must be read with the expansive definition of “property” under Section 2(1)(v), which includes property used in the commission of a scheduled offence. Hence, even if a sum of money is not derived or obtained as a result of a scheduled offence, if it is used as an instrumentality to commit the offence, it can be treated as proceeds of crime for the purpose of attachment. Further, the act of giving a bribe constitutes a process or activity connected with proceeds of crime, and the bribe-giver is liable for money laundering under Section 3 PMLA. Result : Appeals dismissed. The impugned order confirming the provisional attachment was upheld.

FINAL ORDER

12.03.2026

The batch of three appeals have been filed under Section26 of the Prevention of Money Laundering Act, 2002 (in short `the Act of 2002’) to challenge the order dated 20.12.2023 passed by the Adjudicating Authority confirming the Provisional Attachment Order dated 03.07.2023. The appellant M/s Diamond Liquors Pvt. Ltd. was earlier known as M/s Nova Garments Pvt. Ltd. and accordingly titled in the impugned order.

2. The CBI, ACB, New Delhi registered an FIR on 17.08.2022 against Shri Manish Sisodia, Deputy Chief Minister of Government of National Capital Territory of Delhi (GNCTD) for the offence under Section 120-B read with Section 477A IPC, 1860 and Section 7 of the Prevention of Corruption Act, 1988 (hereinafter referred to as `the Act of 1988’). It was finding irregularities in framing and implementation of the excise policy of GNCTD for the year 2021-22. The allegation was that Shri Manish Sisodia conspired with the members of the South Group through Shri Vijay Nair to receive kickbacks to the tune of Rs.100 Crores to pass on undue benefits to the private entities. The FIR was involving many other names which may not be so relevant for the present matter because the counsel for the appellants made reference of the allegations against the appellants and accordingly raised legal issues and, therefore, we would be referring to the gist of the allegations against the appellants which are as follows:

Shri Gautam Malhotra:

3. The allegation was for giving bribe to Shri Dinesh Arora through Shri Amit Arora which was part of the 6% kickbacks arising out of the conspiracy of Delhi Excise Policy 2021-22 for formulation and implementation. He participated in the transfer of proceeds of crime of Rs.2.5 Crores and gained profit to the tune of Rs.6.9 Crores. He invested Rs.24.25 Crores into M/s Nova Garments Pvt. Ltd. through its entities M/s Oasis Commercial Pvt. Ltd., M/s Oasis Overseas Exports Pvt. Ltd. and M/s Gautam Wines Pvt. Ltd. It has resulted in acquiring control of retail operations of liquor through M/s Nova Garments Pvt. Ltd. which was barred in the Delhi Excise Policy 2021-22. It otherwise resulted in cartelization which became possible because of conspiracy by Shri Gautam Malhotra.

4. Shri Gautam Malhotra acquired proceeds of crime to the tune of Rs.0.49 Crores from M/s Brindco Sales Pvt. Ltd. through excess credit notes and has taken out cash which was given to the South Group. He facilitated the kickback transfer in conspiracy with Shri Aman Dhall of M/s Brindco Sales Pvt. Ltd. In the aforesaid manner, Shri Gautam Malhotra had acquired, used and transferred proceeds of crime and otherwise projected tainted money as genuine business transaction.

M/s Gautam Wines Pvt. Ltd.

5. M/s Gautam Wines Private Limited is a company incorporated in April 2011. It was found involved in bidding and participating in Delhi Liquor business under the Delhi Excise Policy 2021-22 being controlled by Sh Gautam Malhotra. The shareholders and the Directors of this company had only dummy role in the operations.

6. By receiving profit of Rs. 6.9 Crores from the business operations during the year 2021-22, the accused had undertaken the activity of generation, acquisition, possession, use and projection of the proceeds of crime as untainted.

7. By transferring Rs. 20.65 Crores to M/s Nova Garments for acquiring L7 retail license and then acquiring L1 licnese itself while being beneficially owned and controlled by Shri Gautam Malhotra and being part of manufacturing, wholesale and retail operations as a result of a conspiracy, the accused company had transferred the proceeds of crime of Rs. 24.25 Crores and then projected the same as part of a business transaction and thus to be untainted.

M/s Nova Garments Pvt Ltd

8. M/s Nova Garments Private Limited is a company incorporated in May 1995. It was also involved in bidding and participating in Delhi Liquor business under the Delhi Excise Policy 2021-22. It was being controlled by Shri Gaut

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