Karnataka High Court
M/S Trishul Buildtech And ... vs Directorate Of Enforcement on 17 December, 2024
Author: Shivashankar Amarannavar
Bench: Shivashankar Amarannavar
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF DECEMBER, 2024
BEFORE
THE HON'BLE Mr. JUSTICE SHIVASHANKAR AMARANNAVAR
CRIMINAL APPEAL No. 2134/2024
BETWEEN :
M/s. Trishul Buildtech
and Infrastructures Pvt. Ltd.
Through its Office at 2/55
Outer Ring Road, Opp. Lumbini Garden
Veeranna Palya, Nagavara
Bangalore - 560 045.
... Appellant
(By Sri C V Nagesh, Senior Advocate for
Sri S Mahesh, Advocate)
AND :
Directorate of Enforcement
Rep by its Joint Director
Government of India
Ministry of Finance Dept of Revenue
3rd Floor, B Block, BMTC
Shanthinagar, K H Road
Bengaluru - 560 027.
... Respondent
(By Sri M Unnikrishnan, Advocate)
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This Criminal Appeal is filed under Section 374(2)
of Cr.P.C praying to set aside the impugned order dated
24.06.2024 in Special C.C.No.359/2019 passed by the
XXXII Additional City Civil and Sessions Judge and
Special Judge for CBI cases (CCH-34) at Bengaluru, so
far as it relates to confiscation of appellant's said
property which is shown at Sl.No.2 of the Schedule A
properties of the order/sentence Viz the land measuring
6 acres and 37 guntas located at Gunjur Village, Varthur
Hobli, Bengaluru East Taluk bearing Survey No.187/3 (28
guntas), Survey No.188/1 (3 Acres and 20 guntas) and
Survey No.210/2 (2 acres and 29 guntas) and grant the
custody of the same in favour of this appellant.
This Appeal having been heard and reserved for
Orders on 09.12.2024 coming on for pronouncement this
day, the Court delivered the following:-
CORAM: HON'BLE MR JUSTICE SHIVASHANKAR
AMARANNAVAR
CAV JUDGMENT
1. The appeal is filed seeking the following reliefs;
(i) to set aside the impugned Order dated 24.06.2024 in Spl.C.No.359/2019 passed by the XXXII Additional City Civil & Sessions Judge & Special Judge for CBI Cases (CCH-34) at Bangalore, so far as it relates to confiscation of the appellant's said properties which are 3 shown at Sl.No.2 of the Schedule 'A' properties of the order/sentence viz., the land measuring 6 acres and 37 guntas located at Gunjur Village, Varthur Hobli, Bengaluru East Taluk bearing Survey No.187/3 (28 guntas), Survey No.188/1 (3 acres and 20 guntas) and Survey No.210/2 (2 acres and 29 guntas) and grant the custody of the same in favour of the appellant, in the interest of Justice.
(ii) to pass any other order(s) as this Hon'ble Court may deem fit and proper.
2. Brief facts of the case is as under;
(i) The appellant is a company carrying on the business into real estate and hospitality activities.
(ii) The appellant had purchased the properties bearing Sy.No.187/3 measuring 28 guntas, Sy.No.188/1 measuring 3 acres 20 guntas and Sy.No.210/2 4 measuring 2 acres 29 guntas, totally measuring about 6 acres 37 guntas situated at Gunjur Village, Varthur Hobli, Bangalore East Taluk (for short hereinafter referred to as 'the said properties') from its owner late Sri.G.E.Veerabharappa for a valuable sale consideration, under a registered sale deed dated 07.06.2023.
(iii) Earlier to the above conveyance, late Sri.G.E.Veerabharappa and the appellant herein had entered into a Memorandum of Understanding for development of the said properties.
(iv) Since late Sri.G.E.Veerabharappa had not honored his commitment as per the terms of Memorandum of Understanding, the appellant had filed a suit for specific performance in OS No.1223/2017 which was decreed in his favour. Thereafter, he had entered into a Joint Development Agreement (for short 5 hereinafter referred to as 'JDA.) dated 14.06.2018 to develop the said properties.
(v) After entering into the JDA with said late Sri.G.E.Veerabharappa, the appellant came to know that the criminal proceedings were initiated against him by the Central Bureau of Investigation (for short hereinafter referred to as 'C.B.I') and also the respondent - Enforcement Directorate (for short hereinafter referred to as 'E.D') and that the said properties were subject matter of the said criminal proceedings among his other properties.
(vi) Upon enquiry with said late Sri.G.E.Veerabharappa, the appellant came to know that while late Sri.G.E.Veerabharappa was working as the Vice President in the Income Tax Appellate Tribunal, the C.B.I had filed a case against him on the allegation that he has possessed assets disproportionate to his known 6 source of income. The said case was before the Hon'ble XXXII Special Judge for C.B.I cases in Special CC No.56/2014. The respondent - E.D, pursuant to the above case by the C.B.I had initiated another criminal proceedings in Special CC No.359/2019 before the Hon'ble XXXII Special Judge for C.B.I cases. The E.D had initiated the proceedings for attachment of his properties including the said properties where the adjudicating authority had passed an order in OC No.996/2018 attaching the said properties. The attachment order was challenged by the appellant before the Appellate Tribunal for SAFEMA, FEMA, PMLA, NDPS and PBPT Act at New Delhi in FPA-PMLA-3482/BNG/2020 and as the Bench was not constituted before the said Appellate Tribunal, the appellant had approached the Hon'ble High Court of Delhi in W.P No.548/2022.
(vii) Late Sri.G.E.Veerabhadrappa was convicted by the Hon'ble XXXII Special Judge for the C.B.I cases in 7 Special CC No.56/2015 by order dated 14.02.2023 where he was found guilty of acquiring the disproportionate assets to the extent of Rs.1,72,40,951/-.
(viii) Since the properties belonging to late Sri.G.E.Veerabharappa including the properties of the appellant were subject matter of the criminal proceedings where the C.B.I had seized the original documents of the said properties and had submitted to the Hon'ble Court along with the charge sheet and as the respondent had attached the properties, late Sri.G.E.Veerabhadrappa was not able to comply with the terms and conditions of JDA of the said properties with the appellant herein.
(ix) Further, as the conviction of late Sri.G.E.Veerabharappa in the aforesaid C.B.I case was for disproportionate asset to the extent of Rs.1,72,40,951/- which was directed to be confiscated to 8 the Government, late Sri.G.E.Veerabharappa invoking Article 32 of the Constitution of India, had approached the Hon'ble Supreme Court with a plea that, value of his 7 assets which are attached are valued at an amount of Rs.1,72,40,951/- by the Hon'ble Special Court and is confiscated by the respondent, he sought for furnishing of the bank guarantee of the said amount in replacement of all his 7 properties.
(x) In the said petition, late Sri.G.E.Veerabharappa had made the C.B.I as respondent No.2, this appellant as respondent No.3 and the E.D. as respondent No.4. During the proceedings of the above case, the Hon'ble Supreme Court considering the plea of late Sri.G.E.Veerabharappa that he would furnish the bank guarantee in lieu of 7 properties, did not accept for the bank guarantee, but directed for furnishing of Fixed Deposit receipt in the Nationalized Bank of the entire 9 amount with a lien in favour of C.B.I and E.D as a pre-condition for lifting the attachment of the properties.
(xi) The Hon'ble Supreme Court passed order dated 21.04.2023 directing that incase late Sri.G.E.Veerabharappa furnish the Fixed Deport receipts of the Nationalized Bank for a sum of Rs.1,72,40,951/- with a lien in favour of C.B.I and E.D within a period of two weeks, the attachment of all the properties vide provisional attachment order dated 29.06.2018 by the E.D. i.e. the respondent herein shall be lifted. Further, it was also ordered that the said deposit receipts would be subject to the final outcome of the proceedings against the appellant in the pending C.B.I matters, as well as P.M.L.A matters. The Hon'ble Supreme Court, however, further clarified that the said order is only by way of interim arrangement and shall be subject to the final outcome of the proceedings.
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(xii) Pursuant to the above order passed by the Hon'ble Supreme Court, late Sri.G.E.Veerabharappa obtained Fixed Deposit receipt for an amount of Rs.1,72,40,951/- with a lien favoring C.B.I and E.D in the Canara Bank on 02.05.2023.
(xiii) After complying with the above order of the Hon'ble Supreme Court, late Sri.G.E.Veerabharappa communicated to the respondent Directorate vide letter dated 02.05.2023 informing them about the order passed by the Hon'ble Supreme Court and also informing that he has Fixed Deposit receipts for Rs.1,72,40,951/- with lien in favour of C.B.I and E.D and requested the E.D to lift the attachment over his properties which included the aforesaid properties of the appellant.
(xiv) In response to the aforesaid letter, the E.D by its letter dated 18.05.2023 in No.ECIR/BGZO/16/2015 acknowledging receipt of Fixed Deposit in its name which 11 was in compliance of the order passed by the Hon'ble Supreme Court, withdrew the attachment of the said properties which was attached pursuant to the provisional attachment order No.POA No.4/2018 and thus lifted the attachment. The same was sent by the E.D to the concerned Sub-Registrars. Thus, the properties of late Sri.G.E.Veerabharappa including the said properties of the appellant was without any encumbrance.
(xv) As the documents of the properties were with the C.B.I, by letter dated 22.05.2023, late Sri.G.E.Veerabharappa requested the C.B.I to release all the original documents pertaining to the said properties. On receipt of the said letter, C.B.I informed that as the said original documents filed along with charge sheet in Special CC No.56/2015, late Sri.G.E.Veerabhadrappa should seek for the return of the same from the Hon'ble Court.
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(xvi) Subsequent to withdrawal of attachment of the said properties by the respondent E.D, the entries showing the lien of the respondent over the said properties was also deleted.
(xvii) Thereafter, late Sri.G.E.Veerabhadrappa approached the appellant stating that due to certain reasons, he is not in a position to continue with the JDR and hence, offered to sell the said properties in favor of the appellant.
(xviii) Since the lien over the said properties was lifted, the offer made by late Sri.G.E.Veerabhadrappa to sell the said properties to the appellant herein was accepted, the appellant purchased the said properties under the valid sale deed dated 07.06.2023. Thereafter, the appellant had proceeded to develop the properties for construction of residential apartment. 13
(xix) By judgment dated 24.06.2024, the Hon'ble XXXII Special Judge for C.B.I cases in Special CC No.359/2019 has convicted wife of late Sri.G.E.Veerabharappa ie., Mrs.G.V.Radha who was accused No.2, while the case as against late Sri.G.E.Veerabharappa who was the first accused was abated since he had already expired.
(xx) The Trial Court holding that the properties acquired by late Sri.G.E.Veerabharappa including the said properties were procured out of proceeds of crime, directed that the properties to be confiscated to the Central Government of India as per Section 9 of the P.M.L.A Act. Thus, the said properties which were purchased by the appellant was also directed to be confiscated as shown at item No.2 of Schedule 'A', valuing the same at Rs.50,16,961/-.
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(xxi) The order passed by the Hon'ble Supreme Court as regards permitting late Sri.G.E.Veerabharappa to deposit the amount of Rs.1,72,40,951/- and on deposit of the same, the release of the said properties by the E.D was also brought to the notice of the Hon'ble Special Court. It was argued by the second accused that since the Hon'ble Supreme Court has permitted the accused to furnish the fixed deposits and as the same is deposited, the properties cannot be confiscated. The learned Special Judge holding that the said direction was solely for the purpose of interim measure, proceeded to confiscate the said properties.
3. Heard learned senior counsel Sri.C.V.Nagesh for the appellant and learned counsel for the respondent.
4. Learned senior counsel for the appellant would contend that the Special Court without issuing the notice to the appellant has passed the impugned order 15 confiscating the properties of the appellant. The said properties were not the subject matter of the criminal proceedings for which properties to be confiscated. Once late Sri.G.E.Veerabharappa deposited an amount of Rs.1,72,40,951/- alleged to be the disproportionate asset and once the lien over the properties was lifted, legally the appellant purchased the said properties. The appellant is the owner of the said properties which were directed to be confiscated by the Special Court. The said order of confiscation of the appellant's properties is illegal and requires to be set-aside. The order of confiscation over the said properties of the appellant amounts to disposal of the properties as per Section 452 of Cr.P.C and hence, the appeal is maintainable. As the appellant is the owner of the said properties which were confiscated, the appellant has locus standi to prefer this appeal. As on the date of purchase of the said properties, the attachment was lifted and late 16 Sri.G.E.Veerabharappa had right, title and possession over the said properties and accordingly, he had executed the sale deed in favour of the appellant. On these grounds, he prayed to allow the appeal.
5. Per contra, learned counsel for the respondent would contend that the procedure for trial has been provided under Section 45 of the Prevention of Money- Laundering Act, 2002 (for short hereinafter referred to as "P.M.L.A Act"). The properties of late Sri.G.E.Veerabharappa has been confiscated by exercising power under section 8(5) of the P.M.L.A Act and now, the properties are vested with the Central Government under section 9 of the P.M.L.A Act. The remedy for the appellant is under Sub Section (8) of Section 8 of the P.M.L.A Act and not by way of an appeal under Section 454 of Cr.P.C. The said remedy under Section 8 (8) of the P.M.L.A Act is before the Special Court. The order passed by the Hon'ble Apex Court for 17 furnishing the Fixed Deposit receipts keeping lien in favour of the C.B.I and E.D is an interim arrangement and considering the same aspect, the learned Special Court has ordered confiscation of the properties. On these grounds, he prayed for dismissal of the appeal.
6. In reply, learned senior counsel would contend that the confiscation is provided under Sub Section (5) of Section 8 of the P.M.L.A Act. The said confiscation order should be of such properties involved in the money laundering or it has been used for commission of the offence of money laundering. The immovable properties has now been converted into Fixed Deposit and there is a lien in favour of C.B.I and E.D. The E.D. is the party to the writ petition filed by late Sri.G.E.Veerabharappa before the Hon'ble Apex Court. The appellant was also a party - respondent No.3 in the said writ petition. The confiscation of the said Fixed Deposit was an option 18 before the Special Court. The Special Court was not justified in confiscating the properties of the appellant.
7. Having heard the learned counsels, this Court has perused the impugned order and the other materials placed on record.
8. The provision of the Criminal Procedure Code, 1973 (for short hereinafter referred to as "Cr.P.C") are made applicable to the Special Court while trying the scheduled offence or the offence of money laundering. The same has been provided under Clause (d) of Sub Section (1) Section 44 which reads thus;
"44. Offences triable by Special Courts. - (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),-
(a) XXXXXX
(b) XXXXX
(c) XXXXXX
(d) a Special Court while trying the scheduled offence or the offence of money-laundering shall hold trial in accordance with the provisions of the 19 Code of Criminal Procedure, 1973 (2 of 1974), as it applies to a trial before a Court of Sessions."
9. The provision of Cr.P.C are also made applicable to the proceedings before the Special Court. Section 46 of P.M.L.A Act, reads thus;
"46. Application of the Code of Criminal Procedure, 1973 to proceedings before Special Court. - (1) Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) (including the provisions as to bails or bonds), shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Sessions and the persons conducting the prosecution before the Special Court, shall be deemed to be a Public Prosecutor:
Provided that the Central Government may also appoint for any case or class or group of cases a Special Public Prosecutor.
(2) XXXXXXX.
(3) XXXXXXX."20
10. Considering the above said provision, except as otherwise provided in the P.M.L.A Act, the provision of Cr.P.C., are made applicable to the proceedings before the Special Court. The order of confiscation of the properties of the accused by the Special Court amounts to disposal of properties under section 452 of Cr.P.C. Against the order of said disposal of the properties passed under section 452 of Cr.P.C, the appeal shall lie to this Court under Section 454 of Cr.P.C. The provision of the P.M.L.A Act does not provide for filing of any appeal against the order of confiscation of properties. Therefore, the appeal shall lie under section 454 of Cr.P.C to this Court as appeal against conviction lie to this Court.
11. Late Sri.G.E.Veerabharappa has been convicted by the Court of XXXII Additional City Civil and Sessions Judge and the Special Judge for C.B.I cases, Bengaluru vide order dated 14.02.2023 in Special C.C.No.56/2015, 21 for the offence under Section 13(2) r/w Section 13(1)(e) of the Prevention of Corruption Act, 1988 (for short hereinafter referred to as "the P.C.Act") and sentenced to undergo simple imprisonment for a period of two years and fine of Rs.1,00,000/-. Though the C.B.I had alleged disproportionate assets to the tune of Rs.2,91,70,984/- however, the Court had only directed confiscation and disproportionate assets to the extent of Rs.1,72,40,951/- in favour of the Central Government. As the offence under section 13(2) r/w Section 13(1)(e) of the P.C.Act is a scheduled offence, the E.D, Bengaluru Zonal Office registered an ECIR bearing No.ECIR/BGZO/16/2015 dated 06.11.2015 to investigate the offence of money laundering of proceeds of crime derived from the said scheduled offence for having disproportional assets alleged by the C.B.I. The E.D has also passed an order dated 29.06.2018 for provisional attachment of various properties including the properties 22 involving third party interest as disproportionate assets alleged in the C.B.I case. Late Sri.G.E.Veerabharappa had filed an appeal against confirmation of attachment of disproportionate assets by the E.D before the P.M.L.A Tribunal. Late Sri.G.E.Veerabharappa filed W.P.(Crl.No.124/2023) seeking the following reliefs;
"(a) issue an appropriate Writ, Order or direction in the nature of mandamus or any other appropriate writ, order or direction(s) thereby permitting the petitioner to furnish a Bank Guarantee of Rs.1,72,40,951/- in lieu of and in replacement of all seven assets attached under PMLA and the confiscation ordered by the Special Court vide Order dated 14/02/2023 in Spl.CC.No.56/2015;
(b) and/or pass any other or further orders which Your Lordships may deem fit and proper in the interest of justice."
12. The C.B.I was respondent No.2, the appellant was respondent No.3 and the E.D, Bengaluru Zonal Office was respondent No.4 in the said writ petition. The 23 Hon'ble Apex Court has passed the order dated 21.04.2023 in the said writ petition. The said order reads thus;
"Heard learned counsel for the petitioner and Shri S.V.Raju, learned Additional Solicitor General for the respondents.
2. The main relief claimed in this petition is to permit the petitioner to furnish a bank guarantee of a sum of Rs.1,72,40,951/- in lieu of and in replacement of the proposed confiscation.
3. Undisputed facts are that the petitioner has been convicted by the Court of the XXXII Additional City Civil and Sessions Judge and Special Judge for CBI cases, Bengaluru, vide order dated 14.02.2023 in Special CC. No. 56/2015, for an offence under Section 13(2) read with Section 13(1)(e) of the Prevention of Corruption Act and sentenced to simple imprisonment of two years and fine of Rs,1,00,000/-. Though, the CBI had alleged disproportionate assets to the tune of Rs.2,91,70,984/-, however, the Court only directed confiscation of disproportionate assets to the extent 24 Rs.1,72,40,951/- in favour of the Central Government.
4. In pursuance to the registration of case by CBI, the Directorate of Enforcement, Bangalore Zonal Office also registered an ECIR bearing ECIR/BGZO/16/2015 dated 06.11.2015 to investigate offence of laundering of proceeds of crime derived from the said scheduled offence of having disproportional assets alleged by CBI.
5. Enforcement Directorate also passed an order dated 29.06.2018 for provisional attachment of various properties including properties involving third party interest as disproportionate assets alleged in the CBI case. Appeal filed by the petitioner against confirmation of attachment of disproportionate assets by the Enforcement Directorate is pending before the PMLA Tribunal. The pleadings further go to show that one of the properties under attachment situate in Karnataka under PMLA is subject matter of a decree drawn in favour of the respondent No. 3 herein, who is in possession of the attached properties, pursuant to MOU dated 15.05.2013 for development rights, entitlements and interest in that properties against valuable consideration.25
6. Learned counsel for the petitioner submits that without prejudice to the final outcome of the criminal proceedings for disproportionate assets, he may be permitted to give security of the said amount by way of a Bank Guarantee which may be made subject to final disposal of the proceedings and the attachment be lifted. In support of the contention, he has relied upon an order dated 16.09.2022 passed by this Court in the case of Esskay Properties and Investment Private Limited & Anr. Vs. Union of India & Ors., in SLP (c) No. 9335 of 2022.
7. Having considered the factual matrix of the matter and the arguments advanced by the learned counsel for the parties, we are not inclined to accept any bank guarantee. In the order relied upon by the petitioner passed in the case of Esskay Properties and Investment Private Limited (Supra), the offer made by the petitioner therein to furnish a bank guarantee was not accepted, rather, a direction was issued to furnish a fixed deposit receipt of a nationalized bank of the entire amount with a lien in favour of CBI and the enforcement directorate, as a pre-condition for lifting the attachment of the properties.26
8. Learned Additional Solicitor General has no objection in case the petitioner secures the amount by furnishing a fixed deposit receipt of a nationalized bank of the said amount with a lien in favour of the CBI and the Enforcement Directorate.
9. To secure the ends of justice, in the case at hands, we also direct that in case the petitioner furnishes a fixed deposit receipt of a nationalized bank for a sum of Rs.1,72 40,951/- with a lien in favour of the CBI and the enforcement directorate within a period of two weeks from today, the attachment of all the properties vide provisional attachment order dated 29.06.2018 by the enforcement directorate shall be lifted. The said fixed deposit receipt would be subject to the final outcome of the proceedings against the petitioner in pending CBI matters as well as PMLA mattes."
10. We further make it clear that this order is only by way of interim arrangement and shall be subject to the final outcome of the proceedings and is without prejudice to the contention of the respective parties.
11. The pending proceedings shall be decided strictly in accordance with law and on its own 27 merits without in any way influenced by the present interim arrangements.
12. With the aforesaid observations and directions, the matter stands finally disposed of.
13. Pending application(s), if any, shall also stand disposed of."
13. Pursuant to the said order of the Hon'ble Apex Court, late Sri.G.E.Veerabharappa obtained Fixed Deposit receipts for an amount of Rs.1,72,40,951/- with a lien favouring the C.B.I and E.D in the Canara Bank on 02.05.2023 late Sri.G.E.Veerabharappa communicated / directed vide letter dated 02.05.2023 informing about the order passed by the Hon'ble Apex Court and also he obtaining the Fixed Deposit receipts for Rs.1,72,40,951/- with a lien in favour of the C.B.I and E.D and requested the Directorate to withdraw lien of attachment over his properties which included the aforesaid properties of the appellant. Pursuant to the said letter, the E.D by its 28 letter dated 18.05.2023 in No.ECIR/BGIR/16/2020 acknowledging receipt of the Fixed Deposit receipts in its name which was in compliance of the order passed by the Hon'ble Apex Court, withdrew the attachment of the said properties which was attached pursuant to the provisional attachment order No.POA No.4/2018 and lifted the attachment. The said letter dated 18.05.2023 was sent by the E.D to the concerned Sub-Registrar. Therefore, the properties of late Sri.G.Veerabharappa including the said properties of the appellant was without any encumbrance. Subsequent to withdrawal of the attachment of the said properties by the respondent - E.D, the entries showing the lien of the respondent over the said properties were also deleted. Thereafter, late Sri.G.E.Veerabharappa offered to sell the said properties in favour of the appellant. As the lien over the said properties was lifted, the offer made by late Sri.G.E.Veerabharappa to sell the properties to the 29 appellant was accepted and the appellant purchased the said properties under the sale deed dated 07.06.2023. The appellant had proceeded to develop the said properties for construction of the residential apartment.
14. The said late Sri.G.E.Veerabharappa who was accused No.1 in Special C.C.No.359/2019 died during its pendency. The case against him was abated. The trial came to be proceeded against wife of late Sri.G.E.Veerabharappa ie., Mrs.G.V.Radha who was accused No.2. The Trial Court holding that the properties acquired by Late Sri.G.E.Veerabharappa including the said properties were procured out of the proceeds of crime, directed the properties to be confiscated to the Central Government of India as per the provision of P.M.L.A Act. The said properties purchased by the appellant were also directed to be confiscated and it is shown as item No.2 of Schedule 'A', valuing a sum of Rs.50,16,961/-.
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15. There was no attachment subsisting as on the date of sale deed ie., 07.06.2023 executed by late Sri.G.E.Veerabharappa in favour of the appellant. The appellant became the owner of the said properties under the sale deed dated 07.06.2023. The learned Special Judge has not issued any notice to the appellant as it had title over item No.2 of Schedule 'A' prior to confiscating the said properties. Sub Section (3) of Section 8 of the P.M.L.A Act, which provides for confiscation of properties reads as under;
"8. Adjudication.-
(1) xxxxxx
(2) xxxxx
(3) Where the Adjudicating Authority decides
under sub-section (2) that any properties is involved in money-laundering, he shall, by an order in writing, confirm the attachment of the properties made under sub-section (1) of section 5 or retention of properties or record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such 31 attachment or retention or freezing of the seized or frozen properties or record shall-
(a) continue during[investigation for a period not exceeding three hundred and sixty-five days or the pendency of the proceedings relating to any offence under this Act before a Court or under the corresponding law a of any other country, before the competent Court of criminal jurisdiction outside India, as the case may be; and
(b) become final after an order of confiscation is passed under sub- section (5) or sub-section (7) of section 8 or section 58-B or sub-section (2-A) of section 60 by the Special Court.
Explanation.- For the purposes of computing the period of three hundred and sixty-five days under clause (a), the period during which the investigation stayed by any Court under any law for the time being in force shall be excluded."
16. The words "such properties involved in money laundering or which has been used for commission of offence of money laundering" would indicate that the disproportionate assets acquired by the accused which 32 had been used for money laundering is subject to be confiscated to the Central Government under Sub Section (5) of Section 8 of the P.M.L.A Act. The scheduled offence alleged against late Sri.G.E.Veerabharappa has been tried in Spl.CC.No.56/2015. Even though the C.B.I had alleged disproportionate assets to the tune of Rs.2,91,70,984/-, the Court only directed confiscation of disproportionate asset to the extent of Rs.1,72,40,951/- in favour of the Central Government. Therefore, the proceeds of crime is to the extent of Rs.1,72,40,951/-. The said disproportionate assets to the extent of Rs.1,72,40,951/-
is alleged to have been used by late Sri.G.E.Veerabharappa in money laundering. Therefore, the properties to the extent of Rs.1,72,40,951/- requires to be confiscated to the Central Government under Sub Section (5) of Section 8 of the P.M.L.A Act. Late Sri.G.E.Veerabharappa had furnished the fixed deposit 33 receipts to the tune of Rs.1,72,40,951/- pursuant to the order of the Hon'ble Apex Court dated 21.04.2023 passed in WP (Crl.)No.124/2023 in favour of C.B.I and E.D. The said fixed deposit receipts in a sum of Rs.1,72,40,951/- is the properties involved in money laundering and it is said to have been used for commission of the offence of money laundering. The properties worth more than Rs.1,72,40,951/- cannot be confiscated under Sub Section (5) of Section 8 of the P.M.L.A Act. The option open for the Special Court was to confiscate the fixed deposit to the extent of Rs.1,72,40,951/- furnished by late Sri.G.E.Veerabharappa with a lien in favour of the C.B.I and E.D. Instead of that, the Special Court has confiscated the properties of the appellant. Therefore, the Trial Court has erred in ordering confiscation of the properties of the appellant which are at Sl.No.2 of schedule 'A' properties in Spl.CC.No.359/2019. 34 Therefore, the said order of confiscation of properties of the appellant requires to be set-aside. In the result, the following;
ORDER The appeal is allowed. The impugned order dated 24.06.2024 passed in Spl.C.C.No.359/2019 by the XXXII Additional City Civil and Sessions Judge and Special Judge for C.B.I cases, Bengaluru, sofar as it relates to confiscation of the appellant's properties ie., Sl.No.2 of the Schedule 'A' properties namely, the land measuring 6 acres 37 guntas, located at Gunjal village, Varthuru Hobli, Bengaluru East Taluk, bearing Survey No.187/3 (28 guntas), Survey No.188/1 (3 acres and 20 guntas) and Survey No.210/2 (2 acres and 29 guntas) is set-aside.
Sd/-
(SHIVASHANKAR AMARANNAVAR) JUDGE GH