Proceeds of crime: India
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Court rulings
HC, 2021: Assets acquired before offence
Sagar, March 30, 2021: The Times of India
In a significant ruling, Justice R Raghunandan Rao of the Andhra Pradesh high court has held that the Enforcement Directorate (ED) cannot call assets acquired by an accused as proceeds of crime if they were bought before the commission of such an offence.
The judge gave this ruling and ordered the release of the attached assets of an accused, which were bought before the commission of the alleged offence, on March 20. The judge pronounced this order after hearing Kumar Pappu Singh, a resident of Erramanzil Colony in Hyderabad, and some of his companies that challenged the attachment of their assets by ED.
In March 2018, the CBI had registered an FIR against Pappu Singh and his companies for allegedly defrauding IDBI Bank’s Palangi branch in West Godavari district to an extent of 75 crore.
CBI alleged that he availed kisan credit card (KCC) loans in the names of various borrowers and re-routed all the money into his savings account before siphoning of the same.
According to the ED, all money made through a crime is crime money or proceeds of crime. Coming to the issue of attachment, ED contended it had attached the old assets of the accused because he exhausted all the fraud money in pisciculture and suffered huge losses there. The judge did not agree with this interpretation and said that even the legislature did not intend this way while amending the Act in 2019 and said that ED might have a case for attaching equal worth of assets if the accused diverted the money to foreign shores. In the instant case, however, the accused had lost the money. Hence, the attachment of his pre-2010 assets cannot be justified, Justice Raghunandan said in his order.
The judge said that ED might have a case for attaching assets worth an equal amount if the accused diverted the money to foreign shores
