DELHI HIGH COURT : Interpretation of “proceeds of crime” under PMLA

The language of Section 2(u) of the PMLA expresses that the “proceeds of crime” refers to a property, which is “derived or obtained” by any person as a result of criminal activity and it is necessary to have reasons to believe that the property sought to be attached was “derived or obtained” from any criminal activity.

The Delhi High Court in the matter of Himachal Emta Power Limited (‘Petitioner’) and Union of India and Ors. observed that :

“A plain reading of Section 5(1) of the PMLA indicates that an order of provisional attachment can be passed only where the concerned officer has reasons to believe on the basis of material in his possession that: (a) any person is in possession of proceeds of crime; and (b) such proceeds are likely to be concealed, transferred, or dealt with any manner which would result in frustrating any proceedings relating to confiscation of such proceeds of crime. The expression “proceeds of crime” is defined under clause (u) of Section 2 (1) of the PML Act as under:

Section 2 (u) – “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property (or where such property is taken or held outside the country, then the property equivalent in value held within the country).

It is clear from the language of Section 2(u) of the PML Act that the expression “proceeds of crime” refers to a property, which is “derived or obtained” by any person as a result of criminal activity. Therefore, in order to pass an order of provisional attachment, it was necessary for the ED to have reasons to believe that the property sought to be attached was “derived or obtained” from any scheduled crime.”

Link : https://barandbench.com/wp-content/uploads/2018/09/Delhi-HC-PMLA-Aug-23-2018-1-1.pdf