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Court of India and Delhi High Court, Partner & Head of
Intellectual Property Laws Division, Vaish Associates Advocates,
India
As per Section 2(u) of the Prevention of Money Laundering Act,
2002 (“PMLA Act”), proceeds of crime means as beneath:
“proceeds of crime” means any
property derived or obtained, instantly or not directly, by any particular person
on account of felony exercise referring to a scheduled
offence or the worth of any such property [or
where such property is taken or held outside the country, then the
property equivalent in value held within the
country [or abroad]];
That by advantage of the Finance Act, 2019, an evidence has been
added to the definition of “proceeds of crime” beneath
Section 2(u) of the PMLA Act.
[Explanation.– For the removal
of doubts, it is hereby clarified that “proceeds of
crime” include property not only derived or obtained from the
scheduled offence but also any property which may directly or
indirectly be derived or obtained as a result of any criminal
activity relatable to the scheduled offence;]
By advantage of this Explanation, it has been made clear that the
proceeds of crime shall additionally embrace properties which have been
instantly or not directly derived or obtained on account of any
felony exercise relatable to the scheduled offence, will type
a part of the proceeds of crime.
However, the difficulty arises because of the phrases the worth of
any such property showing within the definition of
proceeds of crime which forged a doubt over the
attachment of different properties of the accused beneath the PMLA
Act.
The Enforcement Directorate relying upon the phrases the
worth of any such property showing within the definition of
proceeds of crime has been attaching the opposite
properties of the accused derived from legit supply beneath the
PMLA Act when the property derived from scheduled offence shouldn’t be
accessible for attachment. However, such attachment of the property
by the Enforcement Directorate has been subjected to judicial
scrutiny.
In the case of Seema Garg and Ors. vs. The Deputy
Director, Directorate of Enforcement (06.03.2020 – PHHC),
MANU/PH/0204/2020, the Hon’ble Punjab and Haryana High Court
has categorically held the ‘worth of such property’
showing within the definition of proceeds of crime doesn’t imply and
embrace any property which has no hyperlink direct or oblique with the
property derived or obtained from fee of scheduled offence,
i.e,. the alleged felony exercise and additional held property
acquired previous to fee of scheduled offence i.e. felony
exercise or introduction of PMLA can’t be connected except property
obtained or acquired from scheduled offence is held or taken
exterior the nation.
The Hon’ble Patna High Court within the case of HDFC
Bank Limited vs. Government of India and Ors., Criminal
Writ Jurisdiction Case No.2398 of 2017, 2021(226)AIC 780, noticed
that there are three limbs of Section 2(1)(u) of the PMLA Act:
- Any property derived or obtained, instantly or not directly, as a
results of felony exercise referring to the scheduled offence;
or - Value of property derived or obtained from felony exercise;
or - Property equal in worth held in India or exterior, the place
property obtained or derived from felony exercise is taken or
held exterior the nation.
And thereafter, held the property derived from legit supply
can’t be connected on the bottom that property derived from
scheduled offence shouldn’t be accessible for attachment. Limb No.
II above is confined to worth of property derived or obtained from
felony exercise and never any property of the particular person alleged to be
concerned in cash laundering. Otherwise the legislature
wouldn’t have outlined the “proceeds of crime”, which was
attachable beneath Section 5 of the PMLA.
Further, the Hon’ble Supreme Court within the landmark case of
Vijay Madanlal Choudhary and Ors. Vs. Union of India (UOI)
and Ors., Special Leave Petition (Criminal) No. 4634 OF
2014, additionally held that the property alleged to be ‘proceeds of
crime’ should have nexus, be it direct or oblique, with the
predicate (schedule ) offence.
In view of the above, the property which doesn’t have direct or
oblique relation with the schedule offence can’t be connected as
proceeds of crime except the property obtained or derived from
felony exercise is taken or held exterior India.
By
Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High
Court
Email id: vpdalmia@vaishlaw.com
Mobile No.: +91 9810081079
LinkedIn:
https://www.linkedin.com/in/vpdalmia/
Facebook: https://www.facebook.com/vpdalmia
Twitter: @vpdalmia
AND
Rajat Jain, Advocate
Email id: rajatjain@vaishlaw.com
Mobile No. 9953887311
LinkedIn:
https://www.linkedin.com/in/rajat-jain-75772398/
© 2020, Vaish Associates Advocates,
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Advocates, 1st & eleventh Floors, Mohan Dev Building 13, Tolstoy
Marg New Delhi-110001 (India).
The content material of this text is meant to offer a basic
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be sought about your particular circumstances. The views expressed in
this text are solely of the authors of this text.
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