State Of U.P. vs. Kamlesh Rai @ Chunnu Rai And Another

The present State appeal has been preferred against the judgment and order dated 04.10.2023, passed by the learned Additional Sessions Judge, Court No. 5, District Mau, in Criminal Case No. 175 of 2023, (Kamlesh Rai @ Chunnu Rai Vs. State of U.P.), whereby, pursuant to the order passed by the District Magistrate, the property attached in respect of the accused was directed to be released in his favour.

Heard Sri Jai Narayan Tripathi, learned A.G.A. for the State-appellant, and Sri Santosh Kumar Roy, learned counsel for the respondents.

The facts of the case, in brief, are that the S.H.O., Sarai Lakhansi, District Mau, filed a report stating that the accused, Kamlesh Rai s/o Praduman Rai, resident of Police Station Sarai Lakhansi, District Mau, had acquired landed properties and vehicles through illegally earned money and had constructed houses and a brick kiln in his name and in the name of his wife, Suman Rai, and recommended attachment of the said property under Section 14(1) of the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986 (hereinafter referred to as 'the Act of 1986'). The report states that Kamlesh Rai @ Chunnu Rai has a criminal history of four cases, namely:— (i) Criminal Case No.468 of 2022, under Section 147, 148, 149, 506, 507, 302 I.P.C. and Section 7 Criminal Law Amendment Act. (ii) Criminal Case No. 475 of 2022, under Section 3/25 Arms Versus Counsel for Appellant(s) : A. K. Sand, Ashutosh Kumar Sand Counsel for Respondent(s) : Santosh Kumar Rai State of U.P. .....Appellant(s) Kamlesh Rai @ Chunnu Rai And Another .....Respondent(s)

It was alleged that the accused was a person of criminal mentality and an active member of a gang and under the protection of the said gang, he himself and other members of the gang used to commit serious offences, including murder, extending threats and creating atmosphere of fear.

According to the said police report, the accused had acquired in his own name and in the name of his wife, the following properties :- (a) Village Hathini, Tehsil Sadar district Mau, area measuring 356.4 sq mtr. comprised in Gata No.53 is stated to have been purchased in the year 2021 from Vinod Rai, s/o Shiv Bachan Rai in the name of Smt. Suman Rai. The estimated value of the said property had been assessed as Rs. 9,63,000/-. (b) Village Biti, plot No.1022 an area measuring 113.4 sq mtrs. is stated to have been purchased in the year 2022 from Smt. Indira Rani, wife of Sunil Devrai in the name of accused's wife Smt. Suman Rai over which a residential house was subsequently constructed. The estimated value of the said property has been assessed Rs.2290410/-, while the estimated value of the house construction thereon has been assessed at Rs. 2809444/-. (c) Village Bhiti, plot No.775 an area measuring 85 sq mtrs. purchased in the year 2006 from Manoj Kumar Rai s/o Yogendra Rai in the name of Smt. Suman Rai. It's estimated value has been assessed at Rs. 22,90,410/- (d) Village Bhiti plot No.1022 an area measure 85 sq mtrs. purchased in the year 2013 from Laxmi Narayan s/o Ram Sakal in the name of Kamlesh Rai. The estimated value of the said property is stated to be Rs. 2,98,000/-. (e) Village Bhiti plot No.291, an area measuring 226.6 sq mtrs purchased in the year 2013 from Lal Bahadur and Veer Bahadur, sons of Ram Bali in the name of Kamlesh Rai. The estimated value of the said property had been assessed at Rs.9,53,000/-. (f) Village Bhiti plot No.1022 an area measuring 86 sq mtrs. purchased in the year 2012 from Sudarshan s/o Ram Sakal in the name of Kamlesh Rai. Its estimated value is stated to Rs. 2,67,000/-. (g) Village Bhiti plot No.1022 an area measuring 97.2 sq mtrs. is stated to have been purchased in the year 2013 from Laxmi Narayan s/o Ram Sakal in the name of Kamlesh Rai. The estimated value of the said property is stated to be Rs. 4,38,000/-.

Further at village Hathini a Brick Kiln/ Brick Manufacturing unit in the name of Rai Ent Udyog is stated to be owned and possessed by the accused. It's value is stated to be approximately 5,50,000/-. and the bricks lying there have an estimated value of Rs. 44,00,000/-.

In addition to the immoveable properties, the accused was also alleged to be the owner of vehicle bearing registration No.UP 54 W 0100 i.e. a Scorpio Mahindra vehicle value at Rs.6,35,000/- and vehicle bearing registration No.UP 54 Q 2032 i.e. a Bajaj Discover motorcycle value at Rs.15,000. 8. In addition thereto, it was reported that there was a brick kiln under the name of Rai Ent Bhatta, Mauja- Hathini and that approximately of Rs.5,50,000 bricks were lying within the premises of the said brick kiln. The total value of the aforesaid properties including their assessed value and the prevailing estimated market value was stated to be Rs.4,72,78,983/-.

On the basis of the aforesaid report, the properties were recommended to be attached in favour of the state government on the ground that the same had been acquired by the accused and his family members from the proceeds of criminal activities.

The District Magistrate having considered the police report and being satisfied with the allegations contained therein, passed an order dated 31.12.2022 whereby the aforesaid properties were attached on the ground that the same had been acquired from the procceds of crime by the accused.

Against the order of attachment dated 31.12.2022, passed by the District Magistrate, Mau, proceedings under Section 16 of Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986 were instituted before the learned Additional Sessions Judge, Court No.5, District Mau, being criminal Misc. Case No.175 of 2023. In the said proceedings, details and documents relating to the purchase of the attached properties were placed before the Court on behalf of the applicant/respondent.

The learned trial court, upon consideration of the material placed before it, recorded a finding that the applicant had acquired the properties through legitimate means and that the details furnished by him regarding the acquisition of the properties were satisfactory. The learned Court further held that the properties in question had not been established to have been acquired through the proceeds of criminal activities within the meaning of the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986. Consequently, by order dated 04.10.2023, the learned Additional Sessions Judge set aside the order of attachment dated 31.12.2022, passed by the District Magistrate and directed release of the attached properties in favour of the respondent.

Aggrieved by the aforesaid order, the State has preferred the present appeal, principally contended that the properties in question, comprising mode, immoveable properties, vehicles were acquired by the respondents from illegal and illicit sources of income. It has been submitted that the impugned order is illegal, arbitrary and contrary to the material available on record and that the attachment proceedings had been initiated and conducted strictly in accordance with the provisions of Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986. 14. The learned A.G.A. for the State has submitted that the learned trial court failed to consider the most material aspect of the matter, namely, that, but for the legitimate financial resources available to the respondent, he could not have acquired properties having a total value of approximately Rs. 4,72,78,967/-. The respondent failed to satisfactorily disclose the lawful sources of his income from which such substantial and valuable properties could have been acquired. Despite such failure, the learned trial court proceeded to accept the explanation furnished by the respondent and set aside the order of attachment passed by the District Magistrate.

It has further been submitted that the respondent sought to explain the acquisition of the properties by stating that he had ancestral agricultural land and agricultural assets and that he had also obtained financial assistance/loans from his uncles, aunt and other family members. However, no cogent documentary evidence was produced to establish either the alleged loans or the financial capacity of the persons stated to have advanced such amounts. No satisfactory particulars regarding the source of the alleged funds were brought on record.

The police report specifically recorded that the respondent was a criminal minded person and that he along with members of his gang, had been indulging in criminal and illegal activities and that the properties, vehicles and other assets in question had been acquired out of the proceeds generated from such criminal activities. In the circumstances, it was incumbent upon the respondent to satisfactorily establish the lawful source of acquisition of the properties.

It has also been submitted that the respondent failed to place on record his income tax returns or other relevant income tax documents which could demonstrate his declared income and his financial capacity to acquire properties of such substantial value. Although the respondent referred to income from a joint family, no specific details of the members of the alleged joint family, their respective sources of income, contribution or the manner in which such income was utilized for acquisition of the properties were furnished before the Court.

It has been argued that the learned Court below also failed to appreciate the statutory scheme contained in Section 16(5) of the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986, under which the burden lies upon the person claiming the attached property to establish that the property has been acquired through legitimate sources of income. According to the state, the respondent failed to discharge the said burden.

It is, therefore, contended that the explanation furnished by the respondent remained vague, unsupported by the documentary evidence and insufficient to discharge the statutory burden cast upon him. The mere assertion that the properties were acquired form ancestral agricultural income, joint family income or loans allegedly obtained from relatives without furnishing cogent evidence of the quantum and source of such income or loans could not, according to the state, constitute sufficient proof of lawful acquisition.

Learned A.G.A. has accordingly submitted that, having regard to the nature and extent of the properties, their aggregate value, the criminal antecedents of the respondent, the specific allegations contained in the police report, and the failure of the respondent to establish the lawful source of funds utilized for the acquisition of the properties, the finding recorded by the learned trial court that the properties had been acquired through legitimate means is unsustainable.

It is, therefore, prayed on behalf of the state that the impugned judgment and order dated 04.10.2023, passed by the learned Additional Sessions Judge, Court No.5, District Mau, in Criminal Misc. Case No.175 of 2023 be set aside and the order dated 31.12.2022 passed by the District Magistrate attaching the properties in question be restored and maintained in accordance with law.

Per contra, learned counsel for the respondent has submitted that the properties were acquired over a long period of time and several of them had admittedly been purchased much prior to the criminal cases relied upon in the gang chart. It is submitted that the respondent had disclosed specific sources of income including agricultural income, dairy income and income from the brick kiln business. Documentary evidence relating to the brick kiln, taxation, GST, bank loans and vehicle finance etc. were also produced before the learned trial court. It is further submitted that there is no material whatsoever demonstrating that the properties standing in the name of respondent were acquired from the proceeds of any criminal activity.

This Court has carefully considered the rival submissions and has perused the material available on record. Section 14, 15, 16 and 17 of the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986 are read hereinunder- "

Attachment of property.-(1) If the District Magistrate has reason to believe that any property, whether movable or immovable, in possession of any person has been acquired by a gangster as a result of the commission of an offence triable under this Act, he may order attachment of such property whether or not cognizance of such offence has been taken by any Court. (2) The provisions of the Code shall mutatis mutandis apply to every such attachment. (3) Notwithstanding the provisions of the Code the District Magistrate may appoint an Administrator of any property attached under sub-section (1) and the Administrator shall have all the powers to administer such property in the best interest thereof. (4) The District Magistrate may provide police help to the Administrator for proper and effective administration of such property.

Release of property .- (1) Where any property is attached under Section 14, the claimant thereof may, within three months from the date of knowledge of such attachment, make a representation to the District Magistrate showing the circumstances in and the sources by which such property was acquired by him.(2) If the District Magistrate is satisfied about the genuineness of the claim made under sub-section (1) he shall forthwith release the property from attachment and thereupon such 6 property shall be made over to the claimant.

Inquiry into the character of acquisition of property by court .- (1) Where no representation is made within the period specified in sub-section (1) of Section 15 or the District Magistrate does not release the property under sub-section (2) of Section 15 he shall refer the matter with his report to the Court having juri iction to try an offence under this Act. (2) Where the District Magistrate has refused to attach any property under sub-section (1) of Section 14 or has ordered for release of any property under sub-section (2) of Section 15, the State Government or any person aggrieved by such refusal or release may make an application to the Court referred to in sub-section (1) for inquiry as to whether the property was acquired by or as a result of the commission of an offence triable under this Act. Such court may, if it considers necessary or expedient in the interest of justice so to do, order attachment of such property. (3) (a) On receipt of the reference under sub-section (1) or an application under sub-section (2), the Court shall fix a date for inquiry and give notices thereof to the person making the application under sub-section (2) or, as the case may be, to the person making the representation under Section 15 and to the State Government, and also to any other person whose interest appears to be involved in the case. (b) On the date so fixed or on any subsequent date to which the inquiry may be adjourned, the Court shall hear the parties, receive evidence produced by them, take such further evidence as it considers necessary, decide whether the property was acquired by a gangster as a result of the commission of an offence triable under this Act and shall pass such order under Section 17 as may be just and necessary in the circumstances of the case (4) For the purpose of inquiry under sub-section (3), the Court shall have the power of a Civil Court while trying a suit under the Code of Civil Procedure, 1908 (Act No. V of 1908), in respect of the following matters, namely: (a) summoning and enforcing the attendance of any person and examining him on oath ; (b) requiring the discovery and production of documents; (c)receiving evidence on affidavits; (d) requisitioning any public record or copy thereof from any court or office ; (e) issuing commission for examination of witnesses or documents; (f) dismissing a reference for default or deciding it ex parte; (g) setting aside an order of dismissal for default or ex parte decision. (5) In any proceedings under this section, the burden of proving that the property in question or any part thereof was not acquired by a gangster as a result of the commission of any offence triable under this Act, shall be on the person claiming the property, anything to the contrary contained in the Indian Evidence Act, 1872 (Act No. 1 of 1872), notwithstanding.

Order after inquiry.- If upon such inquiry the Court finds that the property was not acquired by a gangster as a result of the commission of any offence triable under this Act it shall order for release of the property of the person from whose possession it was attached. In any other case the Court may make such order as it thinks fit for the disposal of the property by attachment, confiscation or delivery to any person entitled to the possession thereof, or otherwise.

The power of attachment under the Act is undoubtedly intended to prevent a gangster from enjoying the property acquired through criminal activity; however, the power is not an absolute power to attach every property standing in the name of a person merely because he is an accused in a case under the Act. The statutory scheme necessarily requires consideration of the question as to whether the property sought to be attached was acquired by the gangster or on his behalf from the proceeds of criminal activity.

In proceedings under Section 16 of the Act, the claimant is required to furnish an explanation regarding the source from which the property was acquired. Once a specific and plausible explanation, supported by material, is brought on record, the same has to be considered objectively. The proceedings cannot be decided merely on the basis of the fact that the claimant has criminal antecedents or that he has been implicated in cases referred to in the gang chart.

In the present case, the claimant had furnished a detailed explanation regarding the source of acquisition of the properties. It has been stated that his uncles were employed in different occupations, one being a police constable, another a teacher, and the wife of another uncle being employed as a staff nurse. The agricultural land belonging to the family was cultivated and managed by the claimant and his father, with the consent of the other family members. According to the explanation furnished, the claimant's father had substantially assisted his brothers in their education and employment and, in return, the income from the agricultural operations was permitted to be retained by the claimant and his father.

The claimant has further disclosed income from dairy activities and, most importantly, from the brick kiln business established in the year 2010 under the name and style of Rai Ent Udyog. It is stated that the business was being carried on openly and was subject to taxation. The claimant produced before the learned trial court the GST certificate, TIN-related documents, the certificate issued by the Assistant Commissioner, Commercial Tax, Sector-2, Mau, treasury forms, GST records, and other documents relating to the business.

The explanation regarding the properties standing in the name of Smt.

Likewise, with regard to the property purchased in the year 2021, the claimant explained that Smt. Suman Rai had accumulated savings from household expenditure and other amounts received from her husband and father and that the property was purchased through a registered sale deed for a consideration of Rs. 3,00,000/-. The subsequent acquisition of another parcel of land and the construction of a house thereon was also explained by reference to the sale of previously acquired properties and financial assistance obtained through banking channels.

The explanation regarding the property standing in the name of Kamlesh Rai assumes greater significance because several of the transactions relied upon by the claimant admittedly pre-date the criminal proceedings forming the basis of the gang chart. The claimant has referred to purchases made in the years 2012 and 2013, including the property purchased from Sudarshan, the property purchased from Laxmi Narayan, and the property purchased from Lal Bahadur and others. It has also been stated that loans were obtained for the construction of the houses.

The aforesaid explanation cannot be said to be inherently improbable. More importantly, the State has not been able to demonstrate before this Court any material establishing that the consideration paid under the respective sale deeds was, in fact, generated from criminal activity. The mere difference between the valuation subsequently attributed to the properties and the consideration mentioned in the registered sale deeds, by itself, does not establish that the property represents proceeds of crime.

There is another important aspect of the matter. The estimated value of the properties has been substantially relied upon in the attachment proceedings. However, as noticed by the learned trial court, the claimant specifically challenged the manner in which such valuation was made. It was contended that no rate list or other material showing the prevailing market value had been placed on record and that the basis or methodology of the assessment was not disclosed.

In proceedings having serious consequences upon the proprietary rights of a person, the valuation cannot be founded upon a bare assertion unsupported by foundational material. If the prosecution seeks to rely upon the alleged disproportion between the value of the property and the legitimate income of the claimant, the valuation itself must have a reasonable evidentiary foundation.

The explanation regarding the vehicles also finds support from documentary material. The Mahindra Scorpio bearing registration No. U.P. 54 W 0100 is stated to have been purchased through finance obtained from Mahindra Finance Corporation. The claimant produced the relevant loan documents. Similarly, the Bajaj Discover motorcycle was claimed to have been acquired from legitimate sources. The existence of finance documentation is a relevant circumstance which could not have been ignored while determining the source of acquisition.

The learned Additional District and Sessions Judge has also taken note of the documentary material relating to the brick kiln business. The claimant produced documents relating to GST registration, tax assessment, and other statutory compliances, besides records relating to banking transactions and loans. These documents lend independent support to the plea that the claimant was carrying on an identifiable business activity from which income was being generated.

This Court is conscious that in proceedings under the Act, the standard of proof is not identical to that applicable in a criminal trial. Nevertheless, the statutory power of attachment cannot be sustained merely on suspicion or on the basis of criminal antecedents. There must be material which reasonably connects the property with the proceeds of criminal activity. The existence of criminal cases against the respondent may justify initiation of proceedings under the Act, but it does not, by itself, establish the source of acquisition of every property owned by him or his family members.

So far as the properties standing in the name of Smt. Suman Rai are concerned, the material placed before the learned court below does not disclose any independent evidence showing her involvement in criminal activity or demonstrating that the consideration for the purchase of those properties was paid out of the proceeds of any offence. A property cannot be attached merely because it stands in the name of the wife of a person against whom proceedings under the Act have been initiated, unless the statutory ingredients for attachment are otherwise satisfied.

The learned Additional District Judge has examined the explanation furnished by the claimant and has recorded a finding that the source of acquisition had been satisfactorily explained. Such a finding is based upon the documentary material produced before it and cannot be characterised as perverse or based upon irrelevant considerations.

It is also significant that the respondent, Kamlesh Rai, did not rest his case merely upon a general assertion of having a legitimate income. Specific sources were disclosed, such as agricultural income, dairy income, brick kiln business, savings, and institutional finance. Relevant documents relating to taxation, GST, bank loans, and vehicle finance were also brought on record.

In these circumstances, the burden placed upon the claimant under the statutory scheme stood sufficiently discharged by furnishing a plausible and supported explanation. Thereafter, the State was required to demonstrate, from the material on record, that, notwithstanding such explanation, the properties were acquired from the proceeds of criminal activity. No such cogent material has been shown.

The argument of the learned A.G.A. that the District Magistrate had recorded his satisfaction for attachment and, therefore, the learned Additional District Judge ought not to have interfered, cannot be accepted in its absolute form. The satisfaction of the District Magistrate is subject to the statutory scrutiny contemplated under Section 16 of the Act. The very purpose of providing a remedy to the affected person is to enable the court to examine the legality and correctness of the attachment and the explanation regarding the source of acquisition.

This Court is, therefore, of the considered opinion that the learned Additional Sessions Judge has committed no illegality in setting aside the attachment order dated 31.12.2022 passed by the District Magistrate. The findings recorded by the learned Additional District and Sessions Judge are supported by the material on record and do not suffer from perversity or manifest error of law.

Consequently, the present appeal, being devoid of merit, is dismissed.

The judgment and order dated 04.10.2023, passed by the learned Additional District and Sessions Judge, Court No. 5, in Case No. 175 of 2023, is hereby affirmed. The order of attachment dated 31.12.2022, passed by the District Magistrate, Mau, is set aside, and the properties covered by the said attachment shall stand released in accordance with the order of the learned court below. The record of the proceedings shall be transmitted back to the court concerned forthwith. August 25, 2026 P. Pandey (Mrs. Vani Ranjan Agrawal,J.) PUSHPENDRA PANDEY High Court of Judicature at Allahabad