Sanchayita Lahkar

The High Court of Chhattisgarh Division Bench of Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru held that the Provisional Attachment Order (PAO) issued by the Directorate of Enforcement (ED), which was subsequently confirmed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA), was legally sustainable. The Court directed dismissal of all appeals challenging these attachment orders, explicitly stating that "the properties attached constitute proceeds of crime within the meaning of Section 2(u) of the Prevention of Money Laundering Act, 2002." Consequently, the attachment of multiple immovable properties involved in the alleged offences was affirmed by the Court, which refused to interfere with or modify the orders passed by the Appellate Tribunal and the Adjudicating Authority.

The present appeals arose from a common final order passed by the Appellate Tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) in relation to the attachment of multiple properties under the Prevention of Money Laundering Act, 2002 (PMLA). The Directorate of Enforcement (ED), Government of India, Raipur Zonal Office, initiated proceedings under the PMLA following allegations of large-scale extortion, conspiracy, and corruption linked to coal transportation and mining operations in Chhattisgarh.

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The initial FIR (Crime No. 129/2022) was registered on 12 July 2022 by Kadugodi Police Station, Bengaluru, Karnataka, for offences punishable under Sections 186, 204, 353, and 120B of the Indian Penal Code, 1860 (IPC). Subsequently, the Karnataka Police included the offence under Section 384 IPC (extortion) on 3 September 2022. Following an investigation, the Central Board of Direct Taxes (CBDT) issued an Office Memorandum on 13 September 2022, specifically mentioning the involvement of an individual named Suryakant Tiwari and his associates in operating an illegal syndicate. This syndicate allegedly collected unauthorized cash payments from coal transporters and entities associated with coal lifting operations within Chhattisgarh, in excess of amounts officially fixed under Coal Delivery Orders issued by South Eastern Coalfields Ltd. (SECL).

Following the CBDT memorandum, the ED registered an Enforcement Case Information Report (ECIR) on 29 September 2022, invoking provisions under Section 3 of the PMLA. Investigations revealed that substantial sums of money collected through this alleged extortion racket were systematically channelled into various properties and business investments by Suryakant Tiwari and his associates. The ED identified a number of accused individuals, including senior public officials, bureaucrats, and private entities allegedly involved in the extensive money laundering scheme. Key figures identified included Saumya Chaurasia, a Deputy Secretary in the Chief Minister's Office (Chhattisgarh), and Sameer Vishnoi, an officer of the Indian Administrative Services (IAS), alongside private persons such as Rajnikant Tiwari, Roshan Singh, Nikhil Chandrakar, Sheikh Moiunudeen Qureshi, Hemant Jaiswal, and Joginder Singh.

Subsequent searches and seizures conducted by Income Tax authorities and the ED led to the recovery of significant evidence in the form of handwritten diaries, papers, and digital records, indicating cash transactions connected to the syndicate’s activities. The investigative agencies alleged that this syndicate operated through a systematic network of agents spread across the coal belt of Chhattisgarh, collecting approximately Rs. 25 per ton as illegal levy on coal transported from various mines. This cash allegedly funded bribes to government officials and was further utilized to finance political election expenditures, besides being converted into ostensibly legitimate investments.

On 9 December 2022, the ED, invoking its powers under the PMLA, issued Provisional Attachment Order (PAO) No. 2/2022, attaching numerous immovable properties and assets belonging to accused individuals and associated entities. The attached properties included land, residential premises, commercial properties, and business establishments. The ED argued that these properties represented "proceeds of crime" derived from the alleged criminal activities, specifically offences under Section 384 IPC read with criminal conspiracy provisions.

The ED subsequently filed an Original Complaint (OC No. 1874/2023) dated 5 January 2023 before the Adjudicating Authority under Section 5(5) of the PMLA, seeking confirmation of the PAO. Notices were served upon all appellants under Section 8(1) of the PMLA, requiring them to explain their sources of income and justify the exemption of their properties from attachment. The appellants, including private individuals and corporate entities such as M/s Indermani Mineral India Pvt. Ltd. and KJSL Coal and Power Private Ltd., filed detailed replies contesting the allegations and attachments. They contended primarily that the attached properties were purchased through legitimate means, with transactions transparently conducted via banking channels, and argued that several properties had been acquired prior to the alleged commission of offences. Additionally, appellants argued procedural irregularities, violations of natural justice, and a lack of nexus between their properties and the alleged criminal activities.

On 1 June 2023, the Adjudicating Authority passed a Confirmation Order upholding the PAO, confirming that the attached properties represented proceeds of crime. This confirmation was based on statements recorded by the ED under Section 50 of the PMLA, diary entries, seized documents, and various corroborative evidences presented. Subsequent possession and eviction notices were also issued under Section 8(4) of the PMLA and the related 2013 rules.

Aggrieved by the Confirmation Order and subsequent possession notices, the appellants approached the Appellate Tribunal under Section 26 of the PMLA. Their appeals argued, inter alia, that the predicate scheduled offence (Section 384 IPC) was not sustained in the original Karnataka FIR, as the Karnataka Police eventually filed a charge-sheet excluding Section 384 IPC. They further argued that the Enforcement Directorate acted beyond jurisdiction by relying on a subsequent FIR registered by Chhattisgarh Police based on ED’s own referral under Section 66(2) of the PMLA.

The Appellate Tribunal, however, dismissed all appeals by its final order dated 5 December 2024, concurring with the findings of the Adjudicating Authority. The Tribunal observed that sufficient material existed to justify the attachment, holding explicitly that the properties indeed constituted proceeds of crime under the PMLA.

It is against this backdrop that the appellants approached the High Court of Chhattisgarh, challenging the Appellate Tribunal’s final order, claiming serious procedural lapses, improper invocation of presumptions under Section 24 of the PMLA, absence of a legally valid predicate offence, and lack of cogent evidence linking their attached properties directly or indirectly to the alleged criminal activities. The appeals were extensively argued, with appellants highlighting alleged misapplication of PMLA provisions and questioning the evidentiary basis for the attachment and subsequent confirmation orders.

The Court began by recording the presence of counsels: “Heard Mr. Harshwardhan Parganiha, Mr. Nikhil Varshney (through Video Conferencing), Ms. Palak Dwivedi and Mr. Sajal Kumar Gupta, Mr. Shashank Mishra, Mr. Gagan Tiwari and Mr. Sanjay Kumar Yadav, and Mr. Abhuday Tripathi, learned counsel for the respective appellants. Also heard Dr. Saurabh Kumar Pande, learned counsel for the respondent/Enforcement Directorate (for short, the ED).”

The appeals under Section 42 of PMLA challenged the orders of the Adjudicating Authority (AA) and the Appellate Tribunal, which had confirmed the attachment of several properties. The appellants contended that “the property/properties attached by the investigating authority have been purchased by the appellant's wife through her legitimate earnings and are neither PoC nor associated with any criminal activity much less than the predicate offences.” They argued that the attachment of 500 grams of gold, which had been declared in 2009, was “illegally regarded as 'PoC' by investigation authority, and the Appellate Tribunal also confirmed that without assigning any valid reason.”

Counsel for the appellants argued that property acquired prior to the alleged offence cannot be treated as proceeds of crime. As recorded, “It is trite law that property acquired prior to the commission of offence and having no connection with the offence cannot be attached under PMLA.” They relied on the Supreme Court’s ruling in Pavana Dibbur v. Directorate of Enforcement (2023) 15 SCC 91 where it was held that inclusion of properties acquired before the commission of offence in PoC would be “too far-fetched.”

The appellants further asserted that the Appellate Tribunal “failed to appreciate that the appellant is a bona fide purchaser and has purchased the properties using its accounted money. It is well settled that where a person is able to satisfy the AA by relevant material and evidence having a probative value that his acquisition is bona fide, legitimate and for fair market value paid therefor, the AA must carefully consider the material and evidence on record, and if satisfied to the bona fide acquisition of the property, relieve such property from provisional attachment.”

Another significant argument was that the ED failed to establish any “live link between the Karnataka FIR and the properties of the appellant attached by the ED either in the reasons recorded by the ED or the OC filed by the ED before the learned AA.” Counsel argued that the Appellate Tribunal’s reasoning was merely a reproduction of allegations from the provisional attachment order (PAO) without addressing the explanations provided.

The appellants also questioned the evidentiary basis, stating that “the entire case of the ED is based on uncorroborated diary entries which have no sanctity in law. Further, the ED has, against the Appellant-Anurag Chaurasia, relied on statements of co-accused under Section 50 of the PMLA... and it is well settled that statements of co-accused cannot be relied on as substantive evidence without any corroboration by reliable evidence.”

On the contrary, the ED argued that the appellants were part of a larger syndicate. It was stated that “Sameer Vishnoi stated in his statement under Section 17 of PMLA, 2002 that all the seized cash and jewellery pertains to his wife Preeti Godara who could not explain the source of the seized cash and valuables. In her statement under Section 50 of the PMLA, Preeti Godara stated the names of various false owners of the said seized cash and jewellery, which clearly was an afterthought to attempt the projection of tainted money as untainted money.”

The ED emphasized that money laundering often involves placement, layering, and integration: “Placement is the initial stage where illicit money (often called ‘dirty money’) is introduced into the financial system... The second stage, layering, involves complex layers of financial transactions to obscure the origin of the money... The third stage is the integration and in this final stage, the laundered money is reintroduced into the legitimate economy, appearing as clean, legitimate income.”

The Court recorded that “Section 24 of the PMLA provides that unless the contrary is proved, the Authority or the Court shall presume that proceeds of crime are involved in money laundering, and the burden to prove that the proceeds of crime are not involved lies on the appellant.” It referred to Supreme Court precedents including Vijay Madanlal Choudhary v. Union of India (2023) 12 SCC 1, noting that the scope of attachment extends even to properties of equivalent value if the actual PoC are not available.

On the issue of bail and statutory rigour, the Court cited Gautam Kundu v. Directorate of Enforcement (2015) 16 SCC 1 and Rohit Tandon v. Directorate of Enforcement (2018) 11 SCC 46, observing: “Section 45 of the PMLA starts with a non obstante clause which indicates that the provisions laid down in Section 45 of the PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them.”

The judgment also took note of arguments regarding benami transactions, observing that the Appellate Tribunal had “failed to consider that the Appellant-M/s IMIPL cannot be said to be Benamidar of Suryakant Tiwari as the money has been paid by the appellant through proper banking channel and it is not holding properties ostensibly on behalf of Suryakant Tiwari.”

Referring to economic offences, the Court recorded: “The consistent view taken by this Court is that economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.”

Regarding the interpretation of “proceeds of crime,” the Court quoted from the Tribunal’s reasoning in other cases: “It is not that only those properties which have been derived or obtained directly or indirectly out of the crime can be attached rather in case of non-availability of the property derived or obtained directly or indirectly, the attachment can be of any property of equivalent value.”

Summarizing the evidentiary findings, the Court noted: “Based on the material produced, including financial analysis, property acquisition timelines, and the absence of verifiable legitimate income, this Court is satisfied that there exists a prima facie nexus between the property and the PoC. There exists a reasonable belief, duly recorded and supported by material evidence, that the attached properties are involved in money laundering and further, the appellants have failed to rebut the statutory presumption under Section 24 of the PMLA.”

The Division Bench concluded its judgment by clearly affirming the legality of the Provisional Attachment Orders (PAO) and the subsequent Confirmation Order passed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA). After carefully analyzing the evidence and statutory framework, the Court held:

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“It is not essential for the enforcement authority to establish by direct evidence that the property in question is proceeds of crime. In a money laundering case, the modus operandi often involves circuitous and opaque financial transactions, making direct evidence inherently difficult to obtain. Based on the material produced, including financial analysis, property acquisition timelines, and the absence of verifiable legitimate income, this Court is satisfied that there exists a prima facie nexus between the property and the PoC. The PAO is therefore in consonance with the statutory scheme under PMLA and is liable to be upheld. There exists a reasonable belief, duly recorded and supported by material evidence, that the attached properties are involved in money laundering and further, the appellants have failed to rebut the statutory presumption under Section 24 of the PMLA. We do not find that any question of law arises in these appeals to be answered.”

The Court then issued its final order: “In view of the above discussion, we fully concur with the findings and reasoning given by the learned AA as well as the Appellate Tribunal and as such, these appeals being devoid of merit, are accordingly dismissed. However, the appellants are at liberty to take recourse to Section 8(8) of the PMLA, if so advised.”

Advocates Representing the Parties:
For the Petitioners: Mr. Harshwardhan Parganiha, Mr. Nikhil Varshney, Ms. Palak Dwivedi, Mr. Sajal Kumar Gupta, Mr. Shashank Mishra, Mr. Gagan Tiwari, Mr. Sanjay Kumar Yadav, Mr. Abhuday Tripathi

For the Respondents: Dr. Saurabh Kumar Pande, Special Public Prosecutor

Case Title: Suryakant Tiwari and Ors. v. Directorate of Enforcement and Ors.

Neutral Citation: 2025: CGHC:35298-DB

Case Number: MA No. 34 of 2025 and connected matters

Bench: Chief Justice Ramesh Sinha, Chief Justice; Justice Bibhu Datta Guru