Proceeds Untraceable: PMLA Appellate Tribunal Upholds ED Attachment Of Equivalent Value Property

The Appellate Tribunal under the Prevention of Money Laundering Act has upheld the attachment of properties worth about Rs 1.63 crore linked to the alleged Delhi Jal Board contract case, reiterating that when the proceeds of crime cannot be traced, authorities are within their rights to attach assets of equivalent value.

The ruling came while dismissing appeals filed by NKG Infrastructure Ltd., Anil Kumar Aggarwal, and Poonam Aggarwal.

The bench of Justice Munishwar Nath Bhandari and Member Gopal Chandra Mishra upheld an earlier order of the Adjudicating Authority, which had confirmed the Enforcement Directorate's provisional attachment made in March 2024.

The case traces back to a CBI FIR registered on July 6, 2022. It alleges a criminal conspiracy involving officials of the Delhi Jal Board and NBCC (India) Limited, acting in collusion with NKG Infrastructure Ltd. At the centre of the allegations is a contract for installing electromagnetic flow meters, awarded at around Rs 38 crore despite an estimated cost of roughly Rs 14 crore. ED say this was made possible through forged performance certificates and manipulated eligibility criteria.

According to the Enforcement Directorate, proceeds of crime were generated through the execution of the contract and its subsequent sub-contracting. The work awarded to NKG Infrastructure Ltd. was sub-contracted to Anil Kumar Aggarwal's proprietorship firm, Integral Screw Industries. Aggarwal earned Rs 4.26 crore under the sub-contract, of which Rs 1,62,95,503 was identified as proceeds of crime.

The tribunal noted that the said proceeds of crime had been dissipated and were no longer available. In such circumstances, the ED attached properties of equivalent value, including land owned by NKG Infrastructure Ltd. in Ghaziabad and a residential property in Delhi jointly held by Anil Kumar Aggarwal and his wife Poonam Aggarwal, to the extent of Rs 1,62,95,503.

Before the tribunal, the appellants argued that Poonam Aggarwal was neither an accused in the predicate offence nor a recipient of any proceeds of crime, and that the property had been acquired from legitimate sources prior to the alleged offence. It was further contended that there was no evidence linking Anil Kumar Aggarwal to the crime and that jointly owned property could not be attached.

Rejecting these submissions, the tribunal clarified that no attachment had been made on Poonam Aggarwal's independent share and that the attachment was confined to the extent of the alleged proceeds of crime attributable to Anil Kumar Aggarwal.

Explaining the law, the tribunal held that once proceeds of crime are not available, attachment can be made of property representing equivalent value, irrespective of the source of funds or the timing of acquisition.

“The property under provisional attachment is not acquired directly or indirectly out of the commission of crime, rather, it is attached for the value equivalent thereof. It was for the reason that the proceeds was not found available with the appellants Shri Anil Kumar Aggarwal and M/s NKG Infrastructure Ltd. having been vanished, thus, property for equivalent value was attached. In view of above, source to acquire the property becomes irrelevant so as to date of its purchase i.e. prior to commission of crime,” the tribunal observed.

The tribunal also referred to Supreme Court's ruling in Vijay Madanlal Choudhary and the Punjab and Haryana High Court's decision in Dilbag Singh to reiterate that the definition of “proceeds of crime” includes the value of such property where the original proceeds are not traceable.

“In the light of the judgment referred to above, there was no illegality to attach the property for value equivalent to the proceeds of crime. However, it can be when the proceeds of crime is not found available or vanished by the recipient of the proceeds.”

Finding no infirmity in the impugned order and noting that material on record linked the appellants with the proceeds of crime, the tribunal declined to interfere and dismissed the appeals.

For Appellant: Advocate Nagesh Behl, Sarthak Anand

For Respondent(s): Advocate Nidhi Raman