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Assets acquired before crime, not proceeds of crime: HC to ED | India News

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HYDERABAD: In a significant ruling, Judge R. Raghunandan Rao of the Andhra Pradesh High Court has held that the Directorate of Enforcement (ED) cannot classify assets acquired by a defendant as proceeds of crime if they were purchased prior to the commission of said crime.
The judge issued this ruling and ordered the release of the seized assets of a defendant, which were bought before the commission of the alleged crime, on March 20. The judge issued this order after hearing from Kumar Pappu Singh, a resident of Erramanzil Colony in Hyderabad, and some of his companies who challenged ED’s seizure of their assets.
In March 2018, the CBI had filed an FIR against Pappu Singh and his companies for allegedly defrauding the Palangi branch of IDBI Bank in the West Godavari district up to an amount of 75 million rupees.
CBI alleged that it used kisan credit card (KCC) loans on behalf of several borrowers and redirected all the money to their savings account before diverting it.
Under the ED, all money made through crime is crime money or proceeds of crime. Addressing the subject of the embargo, ED maintained that it had seized the defendant’s old assets because it exhausted all the money from the fish farm fraud and suffered huge losses there.
The judge disagreed with this interpretation and said that even the legislature did not intend in this way when amending the Act in 2019 and said that ED could have a case to seize assets of the same value if the defendant diverts the money to foreign shores. In the present case, however, the defendant had lost the money. Therefore, the seizure of his pre-2010 assets cannot be justified, Judge Raghunandan said in his order.

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