M/S Santosh Construction Through Its One Of The Partner Santosh Kumar Singh vs. Union Of INDIA Through The Superintendent Of Police National Investigation Agency
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The appellants, M/s Santosh Construction and its partners, are appealing an order that confirmed the attachment of their bank accounts. The case originated from an FIR lodged after a Maoist attack on a police party in Chandwa, Jharkhand, resulting in the death of four police personnel and the looting of arms. The investigation was taken over by the NIA. During the investigation, Rs. 2,64,42,000 was recovered from the bedroom of Santosh Kumar Singh. Subsequently, the NIA directed the freezing of M/s Santosh Construction's bank accounts. The firm's writ petition to unfreeze the accounts was disposed of with liberty to avail other remedies. The Supreme Court directed the NIA to complete the investigation regarding the bank accounts within two months and take appropriate steps under Section 25 of the UAPA Act. Following this, an order of property attachment was issued, and the appellants' representation was rejected by the Designated Authority. This rejection was upheld by the Special Judge, NIA, Ranchi, leading to the present appeal.
Held
The Court held that the learned Special Judge correctly considered the evidence and the law while affirming the order of attachment. The Court found no perversity in the order. Regarding the definition of 'proceeds of terrorism,' the Court noted that the Designated Authority was prima facie satisfied that the attached property represented such proceeds, as defined under Section 2(1)(g) of the UAPA Act, 1967. The Court reasoned that the appellants failed to establish the source of the funds, and their explanations were not corroborated by their Income Tax Returns or by the persons from whom they claimed to have received loans. The Court also referred to Section 33 of the Act, which allows for attachment of property during the trial if there is reason to believe it is proceeds of terrorism. The Court rejected the argument for segregation of funds at this stage, stating it would amount to a 'mini trial' and is not permissible. The Court concluded that the Special Judge had considered all aspects and affirmed the Designated Authority's order, and therefore, the impugned order requires no interference.
Key Issues
1. Whether the learned Special Judge erred in not considering the definition of 'Proceeds of terrorism' under Section 2(g) of the UAPA Act, 1967, when confirming the attachment of property? The appellants argued that the attached amount of Rs. 2,64,42,000 was not 'proceeds of terrorism' as defined, as it was not directly linked to any terrorist act or funding. They contended that the definition requires a direct nexus between the property and the commission of a terrorist act. The revenue (NIA) argued that the Designated Authority and the Special Judge had prima facie satisfied themselves that the attached property represented proceeds of terrorism, based on the investigation and the appellants' failure to establish a legitimate source for the funds. They relied on the fact that the funds were recovered from the premises of an accused and that the appellants could not corroborate the source of funds with their Income Tax Returns or loan/credit explanations.
Sections Cited
Section 2(g), Section 25(1), Section 25(3), Section 25(6), Section 33
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
impugned order.
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Before proceeding further, this Court deems it fit and proper to deal with some provisions of the Unlawful Activities (Prevention) Act, 1967 vis-à-vis National Investigation Agency Act, 2008. 18. The U.A. (P) Act is now the primary anti-terrorist law in force in India. It was enacted by Parliament in 1967. The original Act was targeted at unlawful activities of a general nature, and stringent provisions on terrorism were added only later through various amendments starting in 2004, following POTA’s s repeal. It was subsequently amended in 2008 in response to the Mumbai terrorist attacks. The amended UAPA incorporated the definition of a “terrorist act” under Section 15 and created new terrorist offence. The most recent amendments were made in 2013, which dealt largely with the economic and financial aspects of terrorism. By virtue of Unlawful Activities (Prevention) of Amendment Act, 2012, the “terr orist act” h has been defined under U.A.(P) Act, 1967 under Section 2(k) which reads as under : “2(k) “terrorist act” has the meaning assigned to it in section 15, and the expressions “terrorism” and “terrorist” shall be construed accordingly.”
The “terrorist g ang” h has been defined under Section 2(l) which reads as under :- “(l) “terrorist gang” means any association, other than terrorist organisation, whether systematic or otherwise, which is concerned with, or involved in, terrorist act.”
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The “terrorist organizat ion” h has been defined under Section 2(m) which reads as under : “(m) “terrorist organisation” means an organisation listed in the Schedule or an organisation operating under the same name as an organisation so listed.”
The “un unlawful activity has been defined under Section 2(o) which reads as under :- “(o) “unlawful activity”, in relation to an individual or association, means any action taken by such individual or association (whether by committing an act or by words, either spoken or written, or by signs or by visible representation or otherwise),— (i) which is intended, or supports any claim, to bring about, on any ground whatsoever, the cession of a part of the territory of India or the secession of a part of the territory of India from the Union, or which incites any individual or group of individuals to bring about such cession or secession; or (ii) which disclaims, questions, disrupts or is intended to disrupt the sovereignty and territorial integrity of India; or (iii) which causes or is intended to cause disaffection against India.”
It is evident from the definition of “terrorist organization” that it means an organisation listed in the Schedule or an organisation operating under the same name as an organisation so listed, meaning thereby, the applicability of penal offence as mandated under the provision of U.A.(P) Act, 1967 will only be applicable to a terrorist organization which has been listed in Schedule-I.
The “terrorist g ang” m means any association, other than terrorist organisation, whether systematic or otherwise, which is concerned with, or involved in, terrorist act.
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If the definition of “te rrorist organization” a as contained under Section 2(m) and “terrorist gang”, as , as stipulated under the provision of Section 2(l) are read conjointly, it would be evident that if the organization has not been listed in Schedule as contained in U.A.(P) Act, 1967, even then the penal offence would be attracted against a gang which is concerned with, or involved in, terrorist act.
The “terrorist act” h has been defined under Section 2(k) has the meaning assigned to it in Section 15. Section 15 contains the activities which will be treated to be a “terrorist act”. . Section 15 reads as under :
“15. Terrorist act.—4(1) Whoever does any act with intent to threaten or likely to threaten the unity, integrity, security, economic security, or sovereignty of India or with intent to strike terror or likely to strike terror in the people or any section of the people in India or in any foreign country,— (a) by using bombs, dynamite or other explosive substances or inflammable substances or firearms or other lethal weapons or poisonous or noxious gases or other chemicals or by any other substances (whether biological radioactive, nuclear or otherwise) of a hazardous nature or by any other means of whatever nature to cause or likely to cause— (i) death of, or injuries to, any person or persons; or (ii) loss of, or damage to, or destruction of, property; or (iii) disruption of any supplies or services essential to the life of the community in India or in any foreign country; or (iiia) damage to, the monetary stability of India by way of production or smuggling or circulation of high quality counterfeit Indian paper currency, coin or of any other material; or]
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(iv) damage or destruction of any property in India or in a foreign country used or intended to be used for the defence of India or in connection with any other purposes of the Government of India, any State Government or any of their agencies; or (b) overawes by means of criminal force or the show of criminal force or attempts to do so or causes death of any public functionary or attempts to cause death of any public functionary; or (c) detains, kidnaps or abducts any person and threatens to kill or injure such person or does any other act in order to compel the Government of India, any State Government or the Government of a foreign country or an international or inter-governmental organisation or any other person to do or abstain from doing any act; or commits a terrorist act. [Explanation.—For the purpose of this sub-section,— (a) “public function ary” m means the constitutional authorities or any other functionary notified in the Official Gazette by the Central Government as public functionary; (b) “high quality counterfeit Indian curre ncy” m means the counterfeit currency as may be declared after examination by an authorised or notified forensic authority that such currency imitates or compromises with the key security features as specified in the Third Schedule.] (2) The terrorist act includes an act which constitutes an offence within the scope of, and as defined in any of the treaties specified in the Second Schedule.
As per the provision of Section 15, whoever has acted with intent to threaten or likely to threaten the unity, integrity, security, economic security, or sovereignty of India or with intent to strike terror or likely to strike terror in the people or any section of the people in India or in any foreign country would be covered under the definition of “te terrorist
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act”. . This provision, therefore, stipulates that any activity with an intent to strike terror or likely to strike terror will come under the fold of terrorist act if done to threaten the unity, integrity, security, sovereignty of India or economic security, which has been inserted by way of Act 3 of 2013 with effect from 01.02.2013. 27. Section 17 provides punishment for raising funds for terrorist act which reads as under :
“17. Punishment for raising funds for terrorist act.—Whoever, in India or in a foreign country, directly or indirectly, raises or provides funds or collects funds, whether from a legitimate or illegitimate source, from any person or persons or attempts to provide to, or raises or collects funds for any person or persons, knowing that such funds are likely to be used, in full or in part by such person or persons or by a terrorist organisation or by a terrorist gang or by an individual terrorist to commit a terrorist act, notwithstanding whether such funds were actually used or not for commission of such act, shall be punishable with imprisonment for a term which shall not be less than five years but which may extend to imprisonment for life, and shall also be liable to fine. Explanation.—For the purpose of this section,— (a) participating, organising or directing in any of the acts stated therein shall constitute an offence; (b) raising funds shall include raising or collecting or providing funds through production or smuggling or circulation of high quality counterfeit Indian currency; and (c) raising or collecting or providing funds, in any manner for the benefit of, or, to an individual terrorist, terrorist gang or terrorist organisation for the purpose not specifically covered under section 15 shall also be construed as an offence.
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It is evident from the contents of Section 17 of the Act, 1967 that whoever, in India or in a foreign country, directly or indirectly, raises or provides funds or collects funds, whether from a legitimate or illegitimate source, from any person or persons or attempts to provide to, or raises or collects funds for any person or persons, knowing that such funds are likely to be used, in full or in part by such person or persons or by a terrorist organisation or by a terrorist gang or by an individual terrorist to commit a terrorist act, notwithstanding whether such funds were actually used or not for commission of such act, the same would be covered under the aforesaid provision. Meaning thereby, raising of funds directly or indirectly to commit a terrorist act by a terrorist organization or by terrorist gang or by an individual terrorist, irrespective of the fact whether this was actually used for commission of such act, would be punishable under Section 17. 29. Sub-section (c) of Section 17 of the Act, 1967 enlarges the scope of the terrorist act since the same provides that any act for the benefit of an individual terrorist, terrorist gang or terrorist organisation even if not specifically covered under Section 15 shall also be construed as an offence.
Section 22(A) of the Act, 1967 stipulates about the provision for commission of offence by companies which reads as under :
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“22A. Offences by companies.—(1) Where an offence under this Act has been committed by a company, every person (including promoters of the company) who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person (including promoters) liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised reasonable care to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any promoter, director, manager, secretary or other officer of the company, such promoter, director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this section,— (a) “comp any” m means any body corporate and includes a firm or other association of individuals; and (b) “direc tor”, , in relation to a firm, means a partner in the firm.”
It is evident from the aforesaid provision that where an offence under this Act has been committed by a company, every person (including promoters of the company) who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be
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deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Meaning thereby, the main ingredient for attracting the aforesaid provision will be in the case when the offence has been committed by a company and in those circumstances, whoever is connected with the affairs of the company shall be deemed to be guilty of the offence.
Section 25 of the Act, 1967 confers power upon the investigating officer and designated authority that if there is a reason to believe that any property in relation to which an investigation is being conducted, represents proceeds of terrorism, he shall, with the prior approval in writing of the Director General of the Police of the State seize such property.
Sub-Section (3) thereof provides power to the designated authority either to confirm or revoke the order of seizure or attachment so issued within a period of sixty days
For ready reference, Section 25 of the Act, 1967 is quoted hereunder as:
Powers of investigating officer and Designated Authority and appeal against order of Designated Authority.— (1) If an officer investigating an offence committed under Chapter IV or Chapter VI, has reason to believe that any property in relation to which an investigation is being conducted, represents proceeds of terrorism, he shall, with the prior approval in writing of the Director General of the Police of the State in which such property is situated, make an order seizing such property and
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where it is not practicable to seize such property, make an order of attachment directing that such property shall not be transferred or otherwise dealt with except with the prior permission of the officer making such order, or of the Designated Authority before whom the property seized or attached is produced and a copy of such order shall be served on the person concerned. (2) The investigating officer shall duly inform the Designated Authority within forty-eight hours of the seizure or attachment of such property. (3) The Designated Authority before whom the seized or attached property is produced shall either confirm or revoke the order of seizure or attachment so issued within a period of sixty days from the date of such production: Provided that an opportunity of making a representation by the person whose property is being seized or attached shall be given. (4) In the case of immovable property attached by the investigating officer, it shall be deemed to have been produced before the Designated Authority, when the investigating officer notifies his report and places it at the disposal of the Designated Authority. (5) The investigating officer may seize and detain any cash to which this Chapter applies if he has reasonable grounds for suspecting that— (a) it is intended to be used for the purposes of terrorism; or (b) it forms the whole or part of the resources of a terrorist organisation: Provided that the cash seized under this sub-section by the investigating officer shall be released within a period of forty-eight hours beginning with the time when it is seized unless the matter involving the cash is before the Designated Authority and such Authority passes an order allowing its retention beyond forty-eight hours. Explanation.—For the purposes of this sub-section, “cash” means— (a) coins or notes in any currency; (b) postal orders; (c) traveller’s s cheques;
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[(ca) credit or debit cards or cards that serve a similar purpose;] (d) banker’s s drafts; and (e) such other monetary instruments as the Central Government or, as the case may be, the State Government may specify by an order made in writing. (6) Any person aggrieved by an order made by the Designated Authority may prefer an appeal to the court within a period of thirty days from the date of receipt of the order, and the court may either confirm the order of attachment of property or seizure so made or revoke such order and release the property.
Section 33 thereof pertains to forfeiture of property of certain persons which provides that where any person is accused of an offence under Chapter IV or Chapter VI, it shall be open to the court to pass an order that all or any of the properties, movable or immovable or both, belonging to him, shall, during the period of such trial, be attached, if not already attached under this Chapter. For ready reference, the provision of Section 33 is referred hereunder as :- “33. Forfeiture of property of certain persons.—(1) Where any person is accused of an offence under Chapter IV or Chapter VI, it shall be open to the court to pass an order that all or any of the properties, movable or immovable or both, belonging to him, shall, during the period of such trial, be attached, if not already attached under this Chapter.
(2) Where a person has been convicted of any offence punishable under Chapter IV or Chapter VI, the court may, in addition to awarding any punishment, by order in writing, declare that any property, movable or immovable or both, belonging to the accused and specified in the order, shall stand forfeited to the Central Government or the State Government, as the case may be, free from all
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encumbrances.
(3) Where any person is accused of an offence concerning high quality counterfeit Indian currency, the court may pass an order directing attachment or forfeiture, as the case may be, of property equivalent to the value of such high quality counterfeit Indian currency involved in the offence including the face value of such currency which are not defined to be of high quality, but are part of the common seizure along with the high quality counterfeit Indian currency.
(4) Where a person is accused of an offence punishable under Chapter IV or Chapter VI, the court may pass an order directing attachment or forfeiture, as the case may be, of property equivalent to or the value of the proceeds of terrorism involved in the offence.
(5) Where any person is accused of an offence under Chapter IV or Chapter VI, it shall be open to the court to pass an order that all or any of the property, movable or immovable or both, belonging to him shall, where the trial under the Act cannot be concluded on account of the death of the accused or being declared a proclaimed offender or for any other reason, be confiscated on the basis of material evidence produced before the court.”
The reference of the National Investigation Agency Act, 2008 is also required to be made since further investigation has been directed to be conducted by the NIA in the instant case.
The NIA Act, 2008 has come into being in order to constitute an investigation agency at the national level to investigate and prosecute offences affecting the sovereignty, security and integrity of India, security of State, friendly relations with foreign States and offences under Acts enacted
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to implement international treaties, agreements, conventions and resolutions of the United Nations, its agencies and other international organisations and for matters connected therewith or incidental thereto.
The constitutional validity of the NIA Act was challenged before the Bombay High Court by an accused in the Malegaon bomb blast case on the ground of lack of legislative competence of Parliament to enact such law. The Bombay High Court upheld the constitutional validity of the NIA Act and while doing so, it has been held that the NIA has been created as an investigating agency at the national level to investigate and prosecute offences affecting the sovereignty, security and integrity of India and other matters such as friendly relations with the foreign States. This was not akin to setting up of a police force.
Further, the court concluded that Parliament had the legislative competence to enact the NIA Act and the Parliament can enact the laws in matters not covered under the list.
The court looked at several entries that would enable the Parliament to enact such a law from List-I that allows the Parliament to set-up CBI and two of the concurrent lists dealing with the criminal law and criminal procedure respectively.
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Further, the court has held that since the Parliament is not incompetent for enacting law for the police force in the union territories it could also set up and agency as NIA to deal with the offences which include offences that are within the domain of the Centre related to hijacking and weapons of mass destruction.
Section 6 of the NIA Act, 2008 contains provision pertaining to investigation of Scheduled offences which reads as under :
“6. Investigation of Scheduled Offences.—(1) On receipt of information and recording thereof under section 154 of the Code relating to any Scheduled Offence the officer-in-charge of the police station shall forward the report to the State Government forthwith. (2) On receipt of the report under sub-section (1), the State Government shall forward the report to the Central Government as expeditiously as possible. (3) On receipt of report from the State Government, the Central Government shall determine on the basis of information made available by the State Government or received from other sources, within fifteen days from the date of receipt of the report, whether the offence is a Scheduled Offence or not and also whether, having regard to the gravity of the offence and other relevant factors, it is a fit case to be investigated by the Agency. (4) Where the Central Government is of the opinion that the offence is a Scheduled Offence and it is a fit case to be investigated by the Agency, it shall direct the Agency to investigate the said offence. (5) Notwithstanding anything contained in this section, if the Central Government is of the opinion that a Scheduled Offence has been committed which is required to be investigated under this Act, it may, suo motu, direct the Agency to investigate the said offence.
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(6) Where any direction has been given under sub- section (4) or sub-section (5), the State Government and any police officer of the State Government investigating the offence shall not proceed with the investigation and shall forthwith transmit the relevant documents and records to the Agency. (7) For the removal of doubts, it is hereby declared that till the Agency takes up the investigation of the case, it shall be the duty of the officer-in-charge of the police station to continue the investigation.
It has been provided in the provision of Section 6 that on receipt of information and recording thereof under section 154 of the Code of Criminal Procedure relating to any Scheduled Offence the officer-in-charge of the police station shall forward the report to the State Government forthwith and on receipt of report from the State Government, the Central Government shall determine on the basis of information made available by the State Government or received from other sources, within fifteen days from the date of receipt of the report, whether the offence is a Scheduled Offence or not and also whether, having regard to the gravity of the offence and other relevant factors, it is a fit case to be investigated by the Agency. Where the Central Government is of the opinion that the offence is a Scheduled Offence and it is a fit case to be investigated by the Agency, it shall direct the Agency to investigate the said offence.
The Central Government has also got power in view of the provision of Sub-Section (5) or Sub-Section (6) that if the Central Government is of the opinion that a Scheduled
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Offence has been committed which is required to be investigated under this Act, it may, suo motu, direct the Agency to investigate the said offence. In such circumstances, the State Government and any police officer of the State Government investigating the offence shall not proceed with the investigation and shall forthwith transmit the relevant documents and records to the Agency.
Section 7 provides power to transfer investigation to the State Government as also Section 8 provides power to investigate connected offences.
Section 21 provides provision for appeal whereunder an appeal shall lie from any judgment, sentence or order, not being an interlocutory order, of a Special Court to the High Court both on facts and on law. Therefore, in pursuance to the provision of Section 21, the appellate court is to exercise its appellate power both on facts and law. Issues
In the background of the facts/legal position stated hereinabove, the issues which require consideration are – (i) Whether the order of the designated authority rejecting the representation filed by the appellants under section 25(3) of the UP(A) Act, 1967, on being prima facie satisfied that 152 bank account including Special Term Deposit Receipt (STDR) account and one Mutual Fund Account etc. containing the total amount of Rs.
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20,65,20,496.41 represents the ‘proceeds of terrorism’ , confirmed the order of attachment, can be said to suffer from an error? (ii) Whether order passed by the learned Special Judge declining to interfere with the order dated 27.05.2024 passed by the designated authority suffers from an error?
Both the issues since are interlinked with each other, therefore, the same are being answered together.
The fact of this case is that initially Chandwa P.S. Case No.158 of 2019 was instituted in which charge-sheet has also been submitted but subsequent thereto, the Central Government, in exercise of power conferred under Section 6(5) of the NIA Act, 2008, has taken over the investigation in order to hand over it to the NIA.
The NIA has started the investigation by re-registering the case being RC 25/2020/NIA/DLI dated 24.06.2020 under Sections 147, 148, 149, 452, 302, 353 and 379 of the Indian Penal Code, Section 27 of the Arms Act, Section 17(i) & (ii) of Criminal Law Amendment Act and Sections 10, 13, 17 and 18 of Unlawful Activity (Prevention) Act, 1967 against 18 named accused persons and others.
In course of investigation, the role of son of the appellant no. 2-Santosh Kumar Singh, namely Mrityunjay Kumar Singh (A-8) emerged since his involvement has been acknowledged that since 2012, he was in contact with
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Maowadi-Ravindra Ganjhu, a banned terrorist organization, and he used to provide financial assistance to proscribed terrorist organization.
Immediately after the appellant has been made an accused, the house was searched and in course thereof cash amounting to Rs.2,64,42,000/- was recovered and seized.
After conclusion of the investigation supplementary charge sheet was submitted by NIA on 30.04.2021, inter-alia arraying one of the partners of the Firm namely Mrityunjay Kumar Singh as an accused.
However, when M/s Santosh Construction approached the banks, namely, Sate Bank of India and Punjab National Bank, it came to know that as per the instructions of National Investigation Agency, the entire accounts of M/s Santosh Construction have been frozen as the National Investigation Agency is investigating the case bearing RC25/2020/NIA/DLI in this regard. Thereafter, M/s Santosh Construction was served with a letter by the banks regarding the freezing of the bank accounts on 08.02.2021 and 11.02.2021, which was challenged by filing Writ Petition bearing W.P.(Cr.) No. 205/2021 with a prayer for defreezing/unfreezing the bank account of M/s Santosh Construction. The said writ petition was disposed vide order dated 02.08.2022 with a liberty to avail appropriate remedy as available under the law.
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Aggrieved thereof, M/s Santosh Construction preferred S.L.P. bearing S.L.P.(Crl.) No. 9998/2022 before the Hon'ble Supreme Court which was disposed of vide order dated 03.01.2023 observing that let the investigating agency under the 1967 Act complete the Investigation with respect to bank accounts in question/transactions in question with a period of two months from today and thereafter may take appropriate steps/actions as per Section 25 of 1967 Act.
In the light of order dated 03.01.2023, passed in S.L.P.(Crl.) No. 9998/2022 the respondent authority proceeded under section- 25 (1) of the UAPA Act and issued order of property Attachment on 03.03.2023. Thereafter vide its order dated 16.03.2023, the respondent authority proceeded under section 25 (3) of the UAP Act and allowed 10 days’ time from the date of issue of this order, for filing representation before Designated Authority.
Pursuant thereto, on 23.03.2023 representation was filed in terms of order dated 16.03.2023 by the applicant firms and its partners before the Designated Authority, which was rejected vide order dated 28.04.2023, against which, Criminal Appeal being Cr. Appeal No. 96 of 2023, under Section 25(6) of U.A.P.A. Act was preferred by the appellants before the Special Judge, NIA, Ranchi, which was rejected vide order dated 27.05.2024. Hence, the present appeal.
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The ground under which the order passed by the appellate authority [Special Judge] has been challenged is that the learned court below has failed to take into consideration that the NIA has not been able to prove that the seized accounts is proceeds of terrorism, therefore, the action taken under Section 25 of Act 1967 is bad in law. Further ground has been taken that the appellants have disclosed the source of money in seized/attached bank accounts but without considering these facts into consideration the impugned orders have been passed.
Further, there is no bank transaction with any of the accused, except Mrityunjay Kumar Singh, who was erstwhile partner of M/s Santosh Construction and no money has been received from said Mrityunjay Kumar Singh in seized/attached bank accounts and even no material has been found by the NIA to justify the claim of proceeds of terrorism in its charge-sheet.
But there is no active consideration of these facts by the designated authority or by the appellate authority as such impugned order is perverse in law.
Further, ground has been taken that case of the prosecution is based upon the cash received from the house of said Mrityunjay Kumar Singh, but, the co-ordinate Bench of this Court vide order dated 30.01.2023 in Cr. Appeal (DB) No. 380 of 2021, on being come to the conclusion that prima
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facie case under Section 43-D(5) of the U.A.(P) Act is not made out against the appellant granted bail. But, no consideration has been made to these facts and impugned order has been passed.
On perusal of the record, it is evident that during investigation and on the basis of confession of co-accused persons search was conducted on 10.10.2020 at eight different places wherefrom large quantity of incriminating materials and documents were recovered. Further, during search in the house of accused Mritunjay Singh [A-8] unaccounted money Rs.2,64,42000/- and other incriminating materials were seized. On being asked about source of money recovered from the house of said Mritunjay Singh [A-8], it was revealed that the money was income from vehicle pertaining to M/s Santosh Construction, Santosh Kumar Singh and Mritunjay Singh A-8 had withdrawn the money from the bank account of M/s Santosh Construction and sum of money were taken as loan from their family members and business entities.
But after verification by the CIO, who examined seventeen persons from whom appellant firm had taken loan. fourteen persons have stated that they had given money as loan credit. But, on being asked and as to why they had given money in cash and not through cheque, no satisfactory answer was provided.
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One Vachaspati Sharma accountant of M/s Santosh construction has denied that he has given cash loan Rs.1,95,000/- to either Santosh Kumar Singh or his son Mrityunjay Kumar Singh. Another person Yogendra Kumar Singh stated that Mrityunjay Kumar Singh stated that Mrityunjay Kumar Singh has never asked for any loan nor he had given any loan to him. However, he gave Rs.19,8000/- to his daughter namely Priya Singh wife of Manish Kumar another son of appellant. One person Bhola Khan contractor denied that he had given cash Rs.19,2000/- as loan either to petitioner/ appellant Santosh Kumar Singh or Mrityunjay Kumar Singh.
The investigating officer, during investigation verified the ITR [income tax return] and capital account of appellant M/s Santosh construction and its partners, wherefrom it is evident that Rupees 1.15 crores were infused in the account of M/s Santosh construction as capital on behalf of appellants Akhilesh Kumar Singh, Amresh Kumar Singh and Lal Bipin Nath Sahdev, all are partners of M/s Santosh construction in the assessment year 2019-20; and Rs.3.32 crore were infused in the account of firm as capital of the partners in the assessment year 2018-19, it is surfaced that huge amount was shown as expenses under the head sub- contractors.
On examination of the sub-contractors namely
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Vachaspati Sharma, Bhola Khan and Wasim have denied work as sub-contractors and not paid any money. Investigation has also revealed that Amresh Kumar Singh had 5% share in M/s Santosh construction. He invested capital of Rs.94,80,500/- in the account of the firm from year 2018-19 to 2019-20 on the analysis of the Individual ITR Amresh Kumar Singh it is revealed to investigating officer that gross total income of Amresh Kumar Singh is 33 lakhs from assessment year 2018-19 to 2019-20, most of the income comes from M/s Santosh construction when he was asked about capital infusion about 95 lakh he could not give satisfactory answer.
Further when the role of Akhilesh Kumar Singh was investigated by the investigating officer, who found that 10% share in partnership of M/s Santosh construction belongs to him. He infused capital of Rs.1.17 crores in the account of company from assessment year 2018-19 to 2019-20. On the analysis of the instant ITR of Akhilesh Kumar Singh it is surfaced that his gross total income in the assessment year 2018-19 and 2019-20 was Rs.35 lakhs which also mostly come from the M/s Santosh construction and he also could not explain properly. In the same manner, Lal Bipin Nath Sahdeo one of the partners of Santosh construction who got 5% share in the appellant firm infused Rs.93 lakhs in the account of the firm in the year 2018-19 to 2019-20. - 46 - Cr. Appeal (DB) No. 850 of 2024
On analysis of the individual ITR by CIO, it was found that his income was Rs.30 lakhs from the year 2018-19 to 2019-20 and most of the part of the income comes from M/s Santosh Construction and he did not explain properly.
During investigation it was also found that huge amount was deposited in the bank account of the M/s Santosh construction and also in the bank account of his partners and money was transferred from one bank account of the firm or partners to other accounts of the firm and partners and several other accounts of the various persons and on the request of CIO six Bank accounts of appellant Firm have been frozen.
From the above factual aspects, it is evident during search in the house of accused Mritunjay Singh [A-8] unaccounted money Rs.2,64,42000/- and other incriminating materials were seized and on being asked about source of money though it was revealed that the money was income from vehicle pertaining to M/s Santosh Construction, Santosh Kumar Singh and Mritunjay Singh and some amount of money were taken as loan from their family members and business entities but the same was found to be incorrect and false statement.
The investigation further reveals that Mritunjay Kumar Singh was helping operatives of CPI Maoist financially and was involved in funding banned terrorist organisation CPI
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(Maoist) and, as such, the nature of allegation which has been emerged in course of investigation of cooperating with the Maoist, a banned terrorist organization, and the explanation so furnished justifying the retention has not been found corroborated by the investigating agency, since the persons from whom the loan said to have been taken have denied to have given such loan.
Further, even the investigating agency has considered the income tax returns of the appellant(s) and other related persons and does not find satisfactory entry therein and was not explained properly by the concerned.
For the reasons aforesaid, the bank accounts of the firm, namely M/s Santosh Construction was freezed, which was challenged by the appellant firm being WP (Cr.) No. 205 of 2021 with a prayer for defreezing/unfreezing the bank account, which was disposed of with liberty to avail remedy as available under the Code of Criminal Procedure. Against which, the appellant moved the Supreme Court by filing SLP (Crl) No. 9998 of 2022, which was disposed of vide order dated 03.01.2023. 74. In the light of order passed by the Hon'ble Supreme Court, the respondent authority proceeded under section- 25 (1) of the UAPA Act and thereafter vide order dated 16.03.2023, the respondent-authority proceeded under section 25 (3) of the UAPA Act and allowed 10 days’ t time for
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filing representation, before Designated Authority. Pursuant thereto, on 23.03.2023 representation was filed which was rejected vide order dated 28.04.2023, against which, the appellants preferred Criminal Appeal being Cr. Appeal No. 96 of 2023, which was also rejected vide order dated 27.05.2024. 75. This Court has gone through the order dated 27.05.2024 passed by the learned Special Judge in Cr. Appeal No. 96 of 2023 and found therefrom that the learned court has taken note of the fact that from the order of attachment of bank dated 03.03.2023, it is evident that the CIO has found the seized amount to be ‘ proceeds of terrorism’ that is deposited in the 152 bank accounts including STDR accounts and one mutual fund account (SBI dynamic bond fund regular growth, unit balance Rs.15,15,33,003.921/- and SBI balance advantage fund regular growth unit balance 9,99,950.002/- as per details mentioned in annexure A containing total amount of Rs.20,65,20,496.41/- (Rupees twenty crore, sixty five lakh, twenty thousand four hundred ninety six and 41 paise) of the firm M/s Santosh construction chandwa Latehar and its partners Sri Santosh Kumar Singh, accused Mrityunjay Kumar Singh @ Mrityunjay Kumar, Smt Pratima Devi, Smt Aruna Devi, Sri Akhilesh Kuamr Singh, sri Amresh Kumar Singh and Sri Lal Bipin Nath and as such seized/ attached under provision 65(1) of UA(P) Act.
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It further appears that the seizure so made was presented before the designated authority who upon perusal of the explanation so furnished has found the explanation to be not satisfactory, has affirmed the seizure.
Thus, the conduct of the appellant, discrepancies in the bank accounts, non-disclosure of the source of income, fabrication of ITRs, books of account and other business records, non-production of all the requires documents, connection with the members of banned terrorist organisation and deal to provide funds to the CPI(moist) frequently have stated to be sufficient reasons to believe and amount held in 152 bank accounts of appellant M/s Santosh construction appears to be proceeds of terrorism.
The learned designated authority, based upon the aforesaid facts has reached to the conclusion that cash amount Rs.20,65,20,496.41/- prima facie represents proceeds of terrorism as such rejected the representation filed by the appellants under Section 25(3) of the UA(P) Act, 1967 on being prima facie satisfied that 152 bank accounts including sTDR and mutual fund accounts represents the proceeds of terorism, which has been affirmed by the appellate authority i.e., AJC-XVI-cum-Special Judge, NIA, Ranchi vide impugned order dated 27.05.2024 in Cr. Appeal No. 96 of 2023. 79. From the discussions made herein above, it is evident
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that the amount of cash amounting to Rs.2,64,42,000/- has been seized and, as such, the investigating officer has prima facie considered the said amount to be the proceeds of the terrorism on the basis of the definition of Section 2(g) of the Act, 1967 which defines the proceeds of terrorism, which means all kinds of properties which have been derived or obtained from commission of any terrorist act or have been acquired through funds traceable to a terrorist act, irrespective of person in whose name such proceeds are standing or in whose possession they are found or any property which is being used, or is intended to be used, for a terrorist act or for the purpose of an individual terrorist or a terrorist gang or a terrorist organization.
It needs to refer herein that the very purport and object of the Act is to deal with the menace of terrorism and, therefore, the Unlawful Activities (Prevention) Act although is of 1967 but from time to time amendments have been incorporated by making insertions of various provisions like Section 15 having been inserted by virtue of the Act 35 of 2008 with effect from 31.12.2008 defining therein the terrorist act.
Likewise, the punishment for raising funds for terrorist act has also been inserted by virtue of the Act 3 of 2013 making it effective with effect from 01.02.2013 whereby and whereunder it has been provided that whoever, in India or in
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a foreign country, directly or indirectly, raises or provides funds or collects funds, whether from a legitimate or illegitimate source, from any person or persons or attempts to provide to, or raises or collects funds for any person or persons, knowing that such funds are likely to be used, in full or in part by such person or persons or by a terrorist organisation or by a terrorist gang or by an individual terrorist to commit a terrorist act, notwithstanding whether such funds were actually used or not for commission of such act, shall be punishable with imprisonment for a term which shall not be less than five years but which may extend to imprisonment for life, and shall also be liable to fine.
The aforesaid provision, thus, suggests that for any reason whatsoever, if the funds are being raised for terrorist act, the same will be covered under the provision of Section 17 of the Act, 1967. 83. The Section 25(1) provides power to the investigating officer whereby and whereunder if the investigating officer has reason to believe that any property in relation to which an investigation is being conducted, represents proceeds of terrorism, he shall, with the prior approval in writing of the Director General of the Police of the State, make an order of attachment directing that such property shall not be transferred or otherwise dealt with except with the prior permission of the officer making such order.
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The insertion of the word “reason to believe” is is having paramount importance. Such word assume importance by conferment of power upon the investigating officer that if any investigation is being conducted and if the investigating agency has reason to believe that any property in relation to which an investigation is being conducted represents proceeds of terrorism, the same is available to be seized by the investigating agency.
At this juncture this Court deems it fit and proper to discuss the contention of the learned counsel for the petitioner that there is no active consideration of the aforesaid discussed facts and the settled proposition of law as referred above by the designated authority or by the appellate authority as such impugned order is perverse in law.
The definition of perversity has been taken note of in the judgment rendered in Arulvelu v. State (2009) 10 SCC 406 at para 27, which is quoted hereunder: (SCC p, 217, para 27)
The expression “perverse” has been defined by various dictionaries in the following manner:
Oxford Advanced Learner's Dictionary of Current English, 6th Edn. “Perverse.—Showing deliberate determination to behave in a way that most people think is wrong, unacceptable or unreasonable.”
Longman Dictionary of Contemporary English, International Edn. Perverse.—Deliberately departing from what is normal and reasonable.
The New Oxford Dictionary of English, 1998 Edn. Perverse.—Law (of a verdict) against the weight of evidence or the direction of the Judge on a point of law.
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The New Lexicon Webster's Dictionary of the English Language (Deluxe Encyclopedic Edn.) Perverse.—Purposely deviating from accepted or expected behavior or opinion; wicked or wayward; stubborn; cross or petulant.
Stroud's Judicial Dictionary of Words and Phrases, 4th Edn. “Perverse.—A perverse verdict may probably be defined as one that is not only against the weight of evidence but is altogether against the evidence.”
Further, the Hon'ble Supreme Court in yet another judgment rendered in Kuldeep Singh v. Commr. of Police (1999) 2 SCC 10 has held under para 10 which reads as under : (SCC p. 14, para 10):
A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.”
Further, the meaning of “perverse” has has been examined in Excise Commr. v. Gopi Nath & Sons wherein, at para 7, the Hon'ble Supreme Court has observed as under : (SCC p. 317, para 7) “7.— It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law.”
Thus, it is evident that the perversity means if a decision is arrived at on no evidence or evidence which is thoroughly
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unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.
Further, the meaning of “consideration” is is the active application of mind of the factual aspect, as per the definition of “ consideration” g given by the Hon'ble Supreme Court in LIC v. A. Masilamani (2013) 6 SCC 530, wherein, at para 19, it has been held by the Hon'ble Supreme Court as under: (SCC p. 537, para 19) “19. The word ‘consider’ is of great significance. The dictionary meaning of the same is, ‘to think over’, ‘to reg to regard as’, or ‘deem to b e’. . Hence, there is a clear connotation to the effect that there must be active application of mind. In other words, the term ‘co consider’ p postulates consideration of all relevant aspects of a matter. Thus, formation of opinion by the statutory authority should reflect intense application of mind with reference to the material available on record. The order of the authority itself should reveal such application of mind. The appellate authority cannot simply adopt the language employed by the disciplinary authority and proceed to affirm its order.”
From the interpretation made by the Hon'ble Supreme Court with respect to meaning of “co consideration”, , it would be evident that consideration can only be said to be
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proper consideration if there is active application of mind.
Herein, in the instant case, it is not in dispute that the appellant is an accused under Sections 10, 13, 17 and 18 of Unlawful Activity (Prevention) Act, 1967 and in course of investigation when the house of the appellant has been searched, huge amount of Rs.2,64,42,000/- has been recovered and seized and, as such, it cannot be said that the investigating agency, while conducting the search in the house of the appellant, was having no reason to believe about the aforesaid huge amount in cash representing as proceeds of terrorism and if in that circumstances the said amount has been seized, the same cannot be said to suffer from an error.
It is evident from the paragraphs of the counter affidavit that in compliance, with the directions of the Hon'ble Supreme Court passed in SLP (Crl) No. 09998/2022 dated 03.01.2023, the Respondent-NIA has conducted the investigation into the bank accounts in question with the assistance of a chartered accountant for this sole purpose. From the analysis of these bank accounts as well as the ITRs of the appellant firm M/S Santosh Construction and its partners, NIA has found huge assets highly disproportionate to the income during the period from FY 2013-14 to 2021-22
It is further evident that, after considering all the facts and evidence collected during the course of investigation, NIA came to the conclusion/reasonable suspicion that there are
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enough reasons to believe that the whole or part of the balance amount of Rs 20,65,20,496.41/- found in the 152 bank accounts including STDR accounts and 01 SBI Mutual Fund folio account are part of “proceeds of terrorism” and and accordingly have been attached under Section 25 (1) of the UA(P) Act, 1967 on 03.03.2023 and order of attachment has been duly served to all concerned.
Thereafter, Designated Authority (as defined under section 2(1)(e) of the UA(P) Act, 1967) vide order dated 16.03.2023 had given an opportunity to the appellant firm M/S Santosh Construction and its partners, in terms of proviso to section 25 (3) of the UA (P) Act, 1967 for making representation on the bank accounts attached by the NIA. Accordingly, the appellant firm M/S Santosh Construction and its partners had filed representation on 23.03.2023. The Designated Authority sought comments on the said representation from NIA and accordingly, NIA submitted its reply to the representation filed by the appellant firm and its partners before the Authority. After taking into Designated account all materials on records, and on being prima facie satisfied that the property attached by the Investigation Officer under section 25 (1) of the UA (P) Act, 1967 represents proceeds of terrorism as defined under section 2(1)(g) of the UA (P) Act, 1967, the Designated Authority confirmed the order of attachment made by the Investigating Officer, in full
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accordance with section 25 (3) of the UA(P) Act, 1967 vide order dated 28.04.2023. 96. Thus, it is evident from the aforesaid facts that the Designated Authority has given full opportunity to the petitioner to put forward its grievances and consequently taking into consideration the evidence collected by the NIA has confirmed the order of attachment. Since it is apparent from the order dated 28.04.2023 that the Designated Authority while considering the order of attachment has given due weightage to all relevant facts as well as law, thus this Court is of the view that there is no perversity in the order confirming the attachment.
Further Learned Special Judge, NIA, Ranchi vide order dated 27.05.2024 passed in Cr. Appeal No. 96 of 2023 arising out of Special (NIA) Case No. 02 of 2020 Designated Authority stating that the Designated Authority's order did not suffer from any infirmities and was made with due application of a judicial mind. The appellate court has taken note that the appellant firm and its partners have failed to prove the source from where they generate funds to that extent and from the analysis of their Individual accounts, no other source of income is found. The current accounts of these partners have operated by the key partners accused Mrityunjay Singh @ Sonu Singh (A-8) and the appellant Santosh Kumar Singh. The investigation has established that the accused
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Mrityunjay Kumar Sing @ Sonu Singh (A-B) had a long association with the top Maoist cadres and he was utilizing competition them to eliminate/reduce in his business/contract work.
Further, Section 33 of the Act, 1967 is also having implication in the facts and circumstances of the case by which power has been conferred upon the court to pass an order that all or any of the properties, movable or immovable or both, belonging to him, shall, during the period of such trial, be attached, if not already attached under this Chapter, meaning thereby, that if in course of investigation any property, moveable or immoveable, has not been seized, it can be seized even in course of trial under the provision of Section 33 by the learned trial court.
The provision as contained under Section 33 of the Act, 1967 does imply that if there is reason to believe that it is proceeds of the terrorism, the same can either be seized in course of investigation by the investigating agency under the provision of Section 25 or in course of trial by the court under the provision of Section 33 of the Act, 1967 i.e., for the purpose of not allowing the said proceeds to be used in the terrorist activities so as to achieve the very object and intent of the Act.
The argument, which has been advanced that there is no segregation of the account, which is said to be used for
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terror funding or represents the ‘pr proceeds of terrorism, and having no exercise having been taken in this regard by the designated authority or the appellate authority, as such the order needs to be interfered with, this Court is not in agreement with the said argument reason being that the question of segregating of the amount as has been kept in the 152 suspicious bank accounts which has been freezed, is concerned, the same cannot be looked into at this stage, rather, by appreciating the documents it is to be looked into at the time of trial by putting specific question to the investigating officer.
Further, if such endeavor will be taken either at the appellate stage or at this stage before this Court, it will amount to conducting mini trial, which is not permissible in the eye of law.
This Court, on consideration of the factual aspect as per the discussion made hereinabove and after going through the contents of the order impugned, has found therefrom that the learned Special Judge has considered the fact which has been brought to its notice by the investigating agency showing the culpability of the appellant under the provision of the Unlawful Activities (Prevention) Act, 1967 and the explanation so furnished has not been found to be supported by the persons concerned from whom the amount said to have been taken as loan/credit by the appellant and further,
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the said amount has also not found in corroboration with the Income Tax Returns and if in that circumstances the learned Special Judge has refused to interfere with the decision of the designated authority dated 23.06.2022 in order to maintain the object and intent of the Act, depending upon the outcome of the trial, the same, according to our considered view, cannot be said to suffer from any perversity and further the appellate court has taken care of each and every aspect of the matter by actively considered all the aforesaid discussed fact while affirming the order of designated authority.
Accordingly, and for the reason stated hereinabove, this Court is of the view that the order requires no interference.
Accordingly, the instant appeal fails and is dismissed.
I Agree
(Sujit Narayan Prasad, J.)
(Navneet Kumar, J.)
(Navneet Kumar, J.)
Alankar/ A.F.R
Reproduced from the public record of the Jharkhand High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.