1. The instant criminal misc. petition has been filed for quashing the order dated 15.09.2022 by which the application of the Enforcement of Directorate under Section 8(7) of the Prevention of Money Laundering Act (hereinafter referred to PMLA) for confiscation of property has been allowed and the application of the petitioner under Section 8(8) of PMLA for release of property has been dismissed in ECIR No. 06/Pat/2009.

2. The prosecution complaint under Section 45 of PML Act in ECIR No. 06/Pat/2009 was filed on 13.03.2012 against the firm M/s Nav Nirman Builders and Developers Pvt. Ltd. (A1) and Mr. Dharmveer Bhadoria (A2) (since dead) under Sections 3 and 4 of PML Act and also for confiscation of the provisionally attached property.

3. The order of confiscation was passed on account of death of main accused Dharmveer Bhadoria in ECIR No. 06/Pat/2009.

4. The case of the prosecution in brief is that FIR No. RC-20(A)/2009 was registered by the CBI, Ranchi on 22.10.2009 under Section 120B read with Sections 420, 467, 468, 471 of IPC and Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act against Basudeo Tiwary, the then Executive Engineer, RCD, Chaibasa and M/s Nav Nirman Builders & Developers Pvt. Ltd. for criminal conspiracy, cheating, forgery of valuable security, forgery for the purpose of cheating, using as genuine, forged document and criminal misconduct.

5. After investigation, charge sheet was submitted on 03.12.2010 in the court of Special Judge, CBI, Ranchi against M/s Nav Nirman Builders, Mr. Dharmveer Bhadoria and others.

6. As offences under Section 120B of IPC & Section 13(2) r/w Section 13 (1) (d) of the P.C. Act were scheduled offences under PMLA so ECIR No. 06/Pat/2009 was recorded on 13.03.2012 under the provision of the PML Act.

7. Enforcement of Directorate submitted the prosecution complaint after conducting the investigation on 31.03.2018 under Sections 3 and 4 of PML Act. It also recommended for confiscation of proceeds of crime under Section 5(8) of P.C. Act.

8. Prosecution case in brief with regard to the predicate offence is that M/s Nav Nirman Builders, had been issued work order no.150 (Anu) dated 23.2.2007 by Basudeo Tiwari, the then Executive Engineer for special repair work in Km 61,62,63 and 64 of Sarikela-Chaibasa Road subject to the condition that bitumen would be purchased from IOC/Hindustan Petroleum/Bharat Petroleum. As per agreement, total 186.564 MT of packed bitumen of Grade 60/70, was required for execution of the aforesaid work, for which the Executive Engineer was required to issue 'authority letter' in favour of the Govt oil companies. It is alleged that Basudeo Tiwari in collusion with M/s Nav Nirman Builders, Jamshedpur did not issue any authority letter to the Oil Companies for the sale of the quantity and grade of packed bitumen to accused contractor M/s Nav Nirman Builders.

9. M/s Nav Nirman Builders did not procure any quantity of packed bitumen from any Govt. Oil Companies during the execution of work from 23.2.2007 to 29.4.2007 and got the bills passed without producing any invoices of bitumen, which were required as proof of procurement.

10. M/s Nav Nirman Builders submitted 37 invoices showing procurement of bitumen purportedly issued by Tata Nagar Depot of Indian Oil Corporation Ltd. (IOCL) for the purpose of contract awarded to it vide Agreement No. 5F2 of 2006-07 for special repair work in Km. 61, 62, 63 and 64 (763 m) of Seraikella Chaibasa Bypass Road. Out of 37 invoices, 6 were not found to be issued by IOCL Depot, Tatanagar and it was alleged that these were forged and fabricated and had been dishonestly and fraudulently submitted by M/s Nav Nirman Builders. The then executive engineer, RCD, Chaibasa by abusing his official position certified the bills of the contractor on the basis of which payment of Rs. 89,68,966/-was released to the said contractor.

11. During investigation under the provisions of PMLA statement of Dharamveer Bhadoria was recorded under Section 50 of PMLA in which he admitted that the Executive Engineer did not issue any authority letter for the procurement of the same from Govt. Oil Companies. It also came to light during investigation that although bitumen was not purchased from Govt Oil Companies, but Rs. 49,21,738/-was cost of bitumen with carriage from HPCL Godown to the Hot Mix Plant.

12. From the scrutiny of the accounts of M/s Nav Nirman Builders maintained with the State Bank of India, it is apparent that the proceeds of crime to the tune of Rs. 79,11,559.00/-was credited thereafter the same was layered and laundered by way of making of numerous payments to various parties thereby projecting the same as untainted.

13. After submission of prosecution complaint, charges were framed on 17.11.2018 and during pendency of trial before the Special Judge, Dharmveer Bhadoria died on 02.05.2021.

14. In the case for scheduled offences accused Dharmveer Bhadoria died and, therefore, the charge against him was dropped on 03.12.2021.

15. After the CBI Court dropped the charges against deceased Dharmveer Bhadoria, Special Court, PMLA also dropped the charges against him.

16. The provisional attachment order under Section 5 of PML Act was passed by the competent authority i.e. Deputy Director on 31.03.2017 which was confirmed under Section 8 by adjudicating the authority under Section 8(3) on 08.09.2017.

17. After the death of Dharmveer Bhadoria, Enforcement of Directorate filed a petition for confiscation of property on 31.03.2022 u/s 8(7) and the present petitioner also filed an application for release of the confiscated property under Section 8(8) of the Act. Aggrieved by the order of confiscation, instant petition has been filed.

18. It is argued on behalf of the petitioner that there is specific provision under Section 8(6) of PMLA that in the event of acquittal of the accused for the offence of money laundering the Special Court is mandated to release the property. The Hon'ble Supreme Court in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors. has held in para 215 that once the accused is acquitted of the charges of scheduled offence, per force, there cannot be any action for money laundering against the said accused. Further in para 281 of the Judgment that there is specific direction that the Court will return the attached property to the accused in the event of acquittal.

19. It is argued that in a similar fact situation where the accused died, Hon'ble Supreme Court in U. Subhadramma and others Vs. State of A.P. and others {(2016) 7 SCC 797 [LQ/SC/2016/817] } ruled that there is presumption of innocence in favour of the accused till the charges are proved, and in case of his death that will merge with respect to the accused and the property should be released in favour of the legal representative of the deceased against whom criminal trial has abated.

20. Learned counsel for the Enforcement of Directorate submits that the ratio laid down in U. Subhadramma case (supra) was with respect to Criminal Law Amendment Ordinance, 1944, which has no provision pari materia to Section 8(7) of PMLA to permit the confiscation of the property on the death of the accused.

21. Section 8(7) specifically provides that "where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money-laundering after having regard to the material before it.

Section 8(8) provides that "where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering:

Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering:]

Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed.]

Section 24-Burden of proof.--In any proceeding relating to proceeds of crime under this Act,--

(a) in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and

(b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering.

22. Prevention of Money Laundering Act, 2002 is a new Act and is in the process of growth and evolution by way of legislative amendments and Judicial pronouncements. The provision of attachment of crime proceeds in chapter III of the Act is many ways a leap forward in penal law to retrieve the loss caused to the victim, mostly public exchequer, by commission of the scheduled offence. Statement of objects and reasons of Money-Laundering (Amendment) Bill,2011 3 (d), provided to make provision for attachment and confiscation of proceeds of crime even if there was no conviction so long it was proved that money laundering had taken place and property in question was involved in money laundering. In cases involving large scale embezzlement of public fund, if after the death of the principal accused, crime proceeds are released in favour of his heirs and legal representatives, the very object of the Act will be defeated to a large extent.

23. Against the above back drop the provision of confiscation or release has been made that in appropriate cases even where the trial cannot be concluded on account of death of the accused, the confiscation is permissible.

24. In view of the express provision of confiscation in the event of death of the accused, the argument that there is a general presumption of innocence in favour of the accused and therefore death should be deemed to be acquitted is not tenable in view of the special provisions of the Act. Further, there is a reverse burden of proof against a person accused of an offence under Section 3 and unless the contrary is proved it shall be presumed that such proceeds of crime were involved in money laundering.

It has been held in Vijay Madan Lal Choudhary Vs. Union of India that the legal presumption in the context of Section 24(b) of the 2002 Act is attracted once the foundational fact of existence of proceeds of crime and the link of such person therewith in the process or activity is established by the prosecution. The stated legal presumption can be invoked in the proceeding before the Adjudicating Authority or the Court, as the case may be. The legal presumption is about the fact that the proceeds of crime are involved in money-laundering which, however, can be rebutted by the person by producing evidence within his personal knowledge.

25. In the above stated position of law, order of confiscation cannot be set aside merely on the ground that the accused had died before the trial could be held and the accused convicted of the charges. Whether there was merit in the plea for release of attached property is a question of fact which needs to be adjudicated by the Court concerned while hearing the petition under Sections 8(7) or 8(8).

26. There is definite finding of the investigation in paras 1.10, 1.11, 1.12 and 1.14 that embezzlement of Rs. 79,11,559/-was committed and was paid to the accused firm in utter violation of stipulated condition on the basis of 37 invoices. Investigation was found with respect to the bitumen purchased for procurement for the work of National High Way Division, Jamshedpur. During investigation, it was also found that accused Mr. Dharmveer Bhadoria had submitted bills and withdrawn Rs. 49,21,738/-for the cost of bitumen of HPCL. Proceeds of crime to the tune of Rs. 79,11,559/-was firstly credited in the account of M/s Nav Nirman Builders in which accused Dharmveer Bhadoria was the Director and thereafter it was transferred to different account although it was presented that he was merely a partner. In this manner loss of Rs. 79,11,559/-was caused to the government exchequer by M/s Nav Nirman Builders and therefore the proceeds of crime as aforesaid is liable for attachment under Section 5(1) of PML Act.

27. Here in the instant case, the subject matter of attachment is the alternate property since the crime proceeds could not be traced out. The following properties have been confiscated after provisional attachment and its confirmation by the adjudicating authority :-

28. At the time confiscation order was passed by the learned Court below, the appeal was pending under Section 26 before the appellate authority.

29. As discussed above accused no.2 Dharamveer Bhadoria died on 2.5.2021 during the pendency of the trial before the special court for offences under PMLA Act. He was also an accused before the Special Court CBI, Ranchi in RC 20/2009. The learned court below has noted that sufficient opportunity was given by the adjudicating authority to discharge the burden of proof u/s 24 of PMLA which it failed to discharge. The present petitioner Naveen Singh S/o of B.P. Singh claiming to the Managing Director of M/s Nav Nirman Builders and Developers Pvt Ltd was a third party failed to provide legitimate source of income or the receipts derived by the company from various sources. Accused no.2 was the person principally dealing with and control of the affairs of the company.

30. Admittedly the confiscated properties are not 'proceeds of crime' but are in lieu of the value of crime proceeds. Main contention of the petitioner is that the property in question was not acquired by the proceeds of crime, but was acquired by independent sources of the company.

31. It is significant note that prosecution complaint was filed against M/s Nav Nirman Builders (Represented through its partners), Dharamveer Bahdoria, Managing Partner and Power of Attorney Holder of M/s Nav Nirman Builders and Developers as well as Director of M/s Nav Nirman Builders and Developers Pvt Ltd. The main accused was not only the managing partner of the partnership firm but also its attorney holder and director after its incorporation. Both the entities although have been projected to be distinct, but in effect were the same. The later avtar in the form of company was also a creation of the Dharamveer Bhadoria and the shell of the corporate entity was artificial. The learned trial Court has rightly removed it to appreciate the nature of corporate personality.

32. Section 70 of PMLA provides that where a person committing a contravention of any provision of this Act, or of any rule, or order made thereunder is a company, every person who, at the time of the contravention was committed, was in charge of and was responsible to the company, for the conduct of the business of the company shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. As discussed above the principal accused (since dead) was not only the managing partner of the partnership firm, but was also a director and attorney holder of the subsequent company. The legislation provides penal consequences for the offence (Section 4) by deprivation of the "proceeds of crime" through confiscation. The latter measure continues irrespective of the developments like death of the accused, or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded.

33. With regard to the plea of the appeal being pending before appellate authority, this Court is in agreement with the position of law as enunciated in Deputy Director, Directorate of Enforcement Vs Axis Bank (2019) 259 DLT 500] wherein it has been held that the jurisdiction to entertain objections to attachment conferred on the appellate tribunal on the one hand and, on the special court on the other may be co-ordinate to an extent. If the order confirming the attachment has attained finality, or if the order of confiscation has been passed or if the trial of a case for the offence has commenced the claim of a party setting to have acted bonafide having legitimate interest will have to be enquired into and adjudicated upon only by the special court.

For the reasons discussed above, this court does not find any infirmity in the impugned order.

Criminal miscellaneous petition stands dismissed.