Appellate Tribunal Upholds Seizure of Sale Deeds From Appellant’s Premises Tied to Alleged Crime Proceeds Under PMLA

Case Details: Anup Prakash Garg v. Deputy Director, Directorate of Enforcement - [2023] 156 taxmann.com 569 (SAFEMA-New Delhi)

Judiciary and Counsel Details

• • V. Anandarajan, J.
  • V. Govinda Ramanan & Vasu Kukriya, Advs. for the Appellant.
  • N.K. Matta, Mehul Prasad & Aaditya Raj Sharma, Advs. for the Respondent.

Facts of the Case

In the instant case, an FIR was filed by CBI alleging that Sterling Biotech group availed various credit facilities from a consortium of banks. The consortium was led by Andhra Bank. The Directors of the Company, in order to avail the maximum amount of loan from banks, connived with in-house Chartered Accountants and others, falsified material records. Based on said fabricated documents, manipulated balance sheets were prepared to induce banks to sanction higher amounts of loans which were later on diverted for personal purposes.

The appellant was the Director of Andhra Bank at the relevant time and the Group was supplying money to him. A search and seizure operation was conducted by ED at the premises of the appellant and certain incriminating documents and digital evidence were found and seized.

As a consequence thereof, an application (Original Application) was made to the Adjudicating Authority praying for the retention of seized material, which was allowed by the Adjudicating Authority. However, meanwhile, a supplementary complaint against the appellant was filed, in which four of six properties to which seized documents (sale deeds) pertain were alleged to have been acquired out of illicit money.

Subsequently, an order was issued by ED through which two of the properties that relate to documents seized from the appellant were attached provisionally.

It is pertinent to note that illicit money mentioned in the said complaint did not necessarily mean the same thing as proceeds of crime under PMLA.

In the prosecution complaint where the respondent has listed the value of properties alleged to be involved in money laundering, only two properties were mentioned which figure in the provisional attachment order and original complaint.

This leads to the inevitable conclusion that as things stand, only two of the documents seized during the search allegedly relate to properties involved in money laundering.

Appellate Tribunal Held

So far as seized records in respect of said two properties were concerned, order of the Adjudicating Authority was confirmed. However, whereas the other seized records and electronic devices were concerned, the order of the Adjudicating Authority was set aside by the tribunal.