R. Raghunandan Rao, J
1. The appellants herein have preferred the present appeal against the order of the Special Judge for trial of SPE and ACB Cases, Kurnool, dated 04.08.2022 in Crl.M.P.No.707 of 2022.
2. The appellants 1 to 3 are accused Nos.1, 2 and 12 in Crime No.1 of 2020 registered in the CID Regional office, Tirupati. The other appellants are not arrayed as accused in the case. A charge sheet has also been filed after investigation, before the Special Judge for trial of ACB cases in Rayalaseema Region, Kurnool, for offences punishable under Sections420, 406, 408, 409, 465, 468, 120-B read with Sections 34 & 109 IPC and Sections 79(1)(a), 79(l)(f) read with Sections 79(2), 79(A) (1)(b), 79A (1) (e), read with Sections 79A (2) and 79(3)(i) read with Section 79(1)(h) of the A.P. Cooperative Societies Act, 1964 and Section 13(1)(c) of the Prevention of Corruption Act, 2018. Cognizance of this case has been taken by the trial Court as C.C.No.9 of 2022.
3. Even while the case was pending investigation, authorisation was sought, from the State Government, for invoking the provisions of the Criminal Law Ordinance, 1944 for attachment of assets standing in the name of the appellants herein. The Government had authorised filing of an application for attachment of the properties before the Special Judge for trial of ACB Cases in Rayalaseema Region by way of G.O.Ms.No.51, dated 25.07.2022. The Deputy Superintendent of Police, CID Regional Office, Tirupati, had then moved Crl.M.P.No.707 of 2022 in Crime No.1 of 2020 before the Special Judge for Trial of SPE and ACB Cases, at Kurnool for attachment of Properties set out in Annexures 1 to 6 of the application. The Special Judge, by an order dated 04.08.2022 had granted ad interim order of attachment of the assets enumerated in Annexures 1 to 6, by an order dated 04.08.2022. Aggrieved by the said order, the appellants have moved the present appeal.
4. The grounds of appeal and the contentions raised in support of the said grounds, urged by Sri N. Ashwani Kumar, learned counsel for the appellants, are as follows:
a) The 1st appellant is accused of having misused his position as Chairman of APCO and as the person controlling the society known as Dayankhanpalli Handloom Weavers Co-Operative Production and Sales Society Ltd., between the period 2005 to 2019 to divert huge funds, by way of various underhand means which would amount to various offences mentioned above. Appellants 2 and 3 were also shown as accused, who had assisted and abetted the 1st appellant in these activities. The application for attachment is said to have been filed under the provisions of the Criminal Law Ordinance, 1944, for the purpose of attaching those assets and properties which were acquired by the 1st appellant, with the monies which had been earned by the 1st appellant on account of the commission of various offences falling under the provisions of law mentioned above. However, the assets of appellants 4 to 6, who are not accused in the said case have also been attached under the order in appeal.
b) The provisions of the Criminal Law Ordinance only provide for attachment of property or assets of the accused themselves and the said provisions cannot be used to attach the properties which are in the name of the persons who are not accused in the underlying offences.
c) The 1st appellant had approached this Court by way of W.P.No.8027 of 2019, contending that the ACB cannot investigate into any of the offences alleged against the 1st appellant as they fall within the purview of the A.P. Cooperative Societies Act, 1964 and on account of the fact that the Director General of Police, ACB, had issued a circular directing that the ACB should not investigate the offences in the nature of offences alleged against the petitioner. This Court, by an order dated 15.10.2019, had accepted the said contention and had held that the ACB cannot investigate any of the offences alleged against the 1st appellant herein. However, the case has been filed before the Special Judge for ACB Cases and the same is contrary to the judgment of the learned Single Judge mentioned above.
d) The 4th appellant had passed away, even before the filing of the application before the Special Judge. Consequently, the application itself has to fail as the application cannot be made against a dead person.
e) The learned counsel relies upon the judgments of the Hon’ble Supreme Court in the case of Ravi Sinha and Ors., vs. State of Jharkhand (2018)11 SCC 242, U. Subhadramma and Ors., vs. State of Andhra Pradesh and Anr, (2016) 7 SCC 797 and a judgment of the learned Single Judge of the erstwhile High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh, dated 28.04.2015 in C.R.P.No.1136 of 2015 reported in MANU/AP/0237/2015.
f) The Criminal Law Ordinance, 1944 does not apply to the family members of accused and the provisions of the Ordinance can be used only against the accused. The learned counsel relies upon the judgment of the learned Single Judge of the Hon’ble High court of Telangana decided on 17.03.2021 in Criminal Appeal No.544 of 2020 in the case of Vidya Aditya vs. The State ACB reported in MANU/TL/0158/2021.
g). The trial judge directed ad interim attachment of the assets of the appellants who are not arrayed as accused also without verifying whether the assets, which were attached, were acquired from the funds provided by the 1st Appellant or whether they had been acquired by the other Appellants from their own funds.
5. Smt. Y. Sivakalpana Reddy, learned Standing Counsel for CID, rebuts the aforesaid grounds by way of the following contentions.
a) The investigation was carried out by the CID Department of the Police and not the ACB. As such the contention of the appellants that the registration of the crime and further investigation and other proceedings are in violation of the directions of the learned Single Judge in W.P.No.8027 of 2019, is incorrect. Mere filing of a case before the ACB Court does not in any manner amount to violation of the orders of the learned Single Judge. She contends that the order of the learned Single Judge was passed on the circular of the Director General of Police, ACB, which directed that only trap cases and disproportionate assets cases would be investigated by the ACB and all other cases should be left to the local police to investigate. She would submit that since the investigation in the present case was carried out by the CID Department, there can be no objection to the filing of the case before the Special Judge for ACB Cases.
b) The language of the Ordinance makes it clear that the investigating agency or the State Government would be entitled to trace and attach all assets which have been obtained out of the ill-gotten gains of criminal activity undertaken by an accused person. This would mean that the State would be entitled to attach not only the property in the name of the accused but also the other property which can be traced to the money acquired by the accused in a crime. In such a situation, the provisions of the Criminal Law Ordinance cannot be read down to exonerate the persons, who are holding the property acquired in their names by the accused persons.
c) The judgment of the learned Single Judge in the case of K. Soma Sekhar Reddy vs. State ACB has been overruled by the Hon’ble Supreme Court in U.Subhadramma and Ors., vs. State of Andhra Pradesh. The findings of the Hon’ble Supreme Court in the above case can be distinguished on the facts. In the case of U. Subhadramma, the accused person had passed away during the course of the trial. However, the trial Court continued with the case and convicted a dead person. Thereafter, the application under the Criminal Law Ordinance was taken up and an order of attachment was passed against the property of the dead accused person. In such a situation, the Hon’ble Supreme Court had held that there was a gross miscarriage of justice at several levels and had then set aside the orders of the criminal Court attaching the property of the deceased accused in that case. She also submitted that the property that is sought to be attached from the deceased 4th appellant was the property acquired by the 1st appellant in the name of his father, who is the deceased 4th appellant. The proceedings are actually against the 1st appellant and the 4th appellant was only a proforma party as the properties were bought in the name of 4th appellant. The provisions of the Criminal Law Amendment Ordinance provide for objections being raised before the trial Court which has granted attachment. In the present case, no such objections have been raised by the appellants, who have approached this Court without availing of the said remedy of objections being raised before the trial Court.
Consideration of the Court:
6. The first objection raised by the appellants is that the investigation into the main application as well as filing of the application for attachment of the assets of the appellants are barred by the observations of the learned Single Judge of this Court in W.P.No.8027 of 2019. A perusal of the said order would show that the learned Single Judge had held that the ACB would not have jurisdiction to investigate the allegations against the 1st appellant, as the circular of the ACB had specifically restricted the investigation of offences, in relation to co-operative societies, to trap cases and cases of disproportionate assets to known sources of income. These observations would apply if the Anti-Corruption Bureau had taken up investigation of the case. As the CID Department has taken up investigation, it cannot be said that the said investigation is barred on account of the judgment of the learned Single Judge.
7. A subsidiary contention has been that the Special Judge for ACB Cases could not have taken cognizance of the charge sheet nor considered the application filed for attachment of the assets of the appellants. This objection is again on the basis of the judgment of the learned Single Judge in W.P.No.8027 of 2019. This objection cannot be sustained as the restriction placed by the learned Single Jude was only to the extent of investigation by the ACB.
8. Section 3 of the said ordinance reads as follows:
3. Application for attachment of property .(1) Where the [State Government or, as the case may be, the Central Government], has reason to believe that any person has committed (whether after the commencement of this Ordinance or not) any scheduled offence, the [State Government or, as the case may be, the Central Government]may, whether or not any Court has taken cognizance of the offence, authorise the making of an application to the District Judge within the local limits of whose jurisdiction the said person ordinarily resides or carries on business, for the attachment, under this Ordinance of the money or other property which the [State Government or, as the case may be, the Central Government] believes the said person to have procured by means of the offence, or if such money or property cannot for any reason be attached, or other property of the said person of value as nearly as may be equivalent to that of the aforesaid money or other property.
(2) The provisions of Order XXVII of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), shall apply to proceedings for an order of attachment under this Ordinance as they apply to suits by the Government.
(3) An application under sub-section (1) shall be accompanied by one or more affidavit, stating the grounds on which the belief that the said person has committed any scheduled offence is founded, and the amount of money or value of other property believed to have been procured by means of the offence. The application shall also furnish
(a) any information available as to the location for the time being of any such money or other property, and shall, if necessary, give particulars, including the estimated value, of other property of the said person;
(b) the names and addresses of any other persons believed to have or to be likely to claim, any interest or title in the property of the said person.
9. The scheme of the Criminal Law Amendment Ordinance, 1944, set out in section 3 and other provisions, is that where a Government is satisfied that a person has procured by means of an offence enumerated under the schedule, money or other property, it can authorise an application to be filed before the District Judge, within whose limits the accused person ordinarily resides or carries on his business, for attaching the said money or other property procured by means of a scheduled offence. Such an application can be filed along with the necessary affidavits and other material, after the Government grants authorisation.
10. As and when an application is made on this authorisation, the District Judge, after considering the material placed before him and after such enquiry as the District Judge may think fit, can direct ad interim attachment of the assets set out in the application for such attachment. Thereafter, the District Judge would issue notices, to the persons whose money or property is being attached accompanied by copies of the order, the applicants affidavits and evidence, if any recorded, calling upon the persons to show cause as to why the order of attachment should not be made absolute. Any person including the persons to whom such notices have been issued, can raise an objection before the District Judge as to why the attachment should not be continued and why the properties should be released form the said attachment. The District Judge after receipt of these objections, may conduct such investigation or enquiry as he deems fit and can make an order either withdrawing the order or releasing a part of the property from attachment or by making the order of ad interim attachment absolute. The above scheme requires the satisfaction of the Government that there is money or property which has been procured by the persons through commission of offence mentioned in the schedule. The second requirement would be that the District Judge upon receiving an application for attachment should be satisfied that the property or money which is sought to be acquired was procured by a person through commission of a schedule offence.
11. The stipulation in the ordinance is that all money or property procured, by a person, by means of the offence can be attached. The language of the Ordinance does not restrict the operation of the Ordinance only to the property which is in the name of the person who is said to have committed the offence. The Ordinance would cover all those assets or money which can be traced to the commission of the schedule offence. This would mean that attachment of properties in the name of persons other than the accused in a crime, is permissible, as long as the applicant/Government is able to demonstrate, to the court, that the source of money for the acquisition of the asset is the money procured from the crime. The burden of demonstrating this fact would be on the authority seeking attachment of the property or money. Further, where such money or assets are not available, other property of the person, who is suspected of committing the offence, can be attached. The other property of persons, who are not within the zone of suspicion, cannot be attached.
12. These principles can be summarised in the following manner:
A. Where the Government has reason to believe that a person or persons have committed a scheduled offence and had used the money procured from the schedule offence to acquire assets or retained the money as it is, it may authorise the filing of an application, before the District Judge, within whose local jurisdiction, the said person ordinarily resides or carries on business, to attach the said assets or money.
B. The application, after obtaining authorisation, would have to be filed before the District Judge where the person resides or carries on business. The Jurisdiction of the District judge is on the basis of the location of the person and his business only. An application filed before the court where the crime is registered may not be maintainable, if the person does not reside or carry on business within the territorial jurisdiction of that Court.
C. An application, for attachment, can be filed even before cognisance of the case is taken by the competent court or a charge sheet is filed. Such an application can be filed, at any prior stage, and the satisfaction of the Government, that the person in question could have committed the offence and has used the proceeds of the offence to procure property, is sufficient.
D. An application, for attaching the property or money procured by a person from the proceeds of a scheduled offence, can be filed against persons other than the person committing the offence. The jurisdictional fact is the question of source of funds and not the person, in whose name, these assets are acquired or in whose hands the money is presently held.
E. Where attachment is sought against a person, other than the person suspected of the offence, the burden of demonstrating that the source of the money or the assets acquired, in the name of third parties, is the money procured from the scheduled offence, would be on the applicant.
F. Where, the money or assets procured from the scheduled offence can not be attached, it would be open to the applicant to seek attachment of the other money or assets held in the name of the accused person/s only. This would include a situation where the authorities are unable to trace the money or assets that may have been acquired from the money procured from the scheduled offence.
G. No application, for attachment, can be filed against the property, held by a person other than a person suspected of a scheduled offence, on the ground that the money or assets procured from the offence are unavailable for attachment.
13. In the present case, the assets of the appellants have been attached. Three of these persons have been arrayed as accused in the main case. Appellants 4 to 6 are the family members of accused Nos.1 to 3. The allegation against the appellants is that the properties in the name of the six persons were the properties acquired on account of commission of an offence. In such circumstances, it cannot be held that the attachment of the properties of appellants 4 to 6 is out side the scheme or the Criminal Law Ordinance, 1944. However, the question of whether the said assets have been acquired from the funds procured from the scheduled offence is a question of fact which has not yet been answered by the trial court.
14. It is the admitted case on both sides that the 4th appellant had passed away even before the application for attachment was made.
15. The Hon’ble Supreme Court in the case of Ravi Sinha and Ors., vs. State of Jharkhand (2018)11 SCC 242, U. Subhadramma and Ors., vs. State of Andhra Pradesh and Anr. (2016) 7 SCC 797 had taken the view that the institution or continuation of proceedings against a dead person under the Criminal Law Amendment Ordinance is not permissible and all such proceedings would have to be set aside. Even though, there are certain differences on the facts, the principle laid down by the Hon’ble Supreme Court, that such proceedings against dead persons are not permissible,is binding on this Court.
16. In the circumstances, the attachment of the assets of the 4th appellant is not permissible and the order of ad interim attachment passed by the trial Court on 04.08.2022, to the extent of the 4th Appellant, is set aside.
17. Smt. Y. L. Sivakalpana Reddy, learned Special Standing Counsel for CID, had contended that the appeal itself is not maintainable as the appellants were required to raise necessary objections before the trial Court itself and in the absence of such objections, the appellants ought not to have approached this Court by way of an appeal. Further, the Appellants have also raised a ground of appeal that the Trial judge ought to have verified, before directing ad interim attachment, whether the assets in the name of the Appellants 4 to 7 had been acquired with the funds of the 1st Appellant or not. In these circumstances, Appellants are at liberty to raise this issue and any other issue falling within the purview of section 3 of the criminal law amendment Ordinance, 1944, before the trial Court, by way of objections, and the same shall be considered by the trial court while confirming/ varying or withdrawing the ad interim order of attachment.
18. Accordingly, the appeal is partly allowed by setting aside the attachment of the properties of the 4th appellant and granting liberty to the respondents, in the manner mentioned above, to raise objections before the trial court. However, this would not preclude the authorities from initiating fresh proceedings in the name of the persons to whom properties have devolved from the 4th appellant.
As a sequel, pending miscellaneous petitions, if any, shall stand closed.
