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TMI Blog2019 (10) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... ll presume that such proceeds of crime are involved in money laundering until the contrary is proved. Therefore, the burden of proof by discharging the presumption lies upon the persons charged. Hence, investigation by the Central Bureau of Investigation and the respondent are totally distinct and different. Petition dismissed. - Crl. O.P. No. 9796 of 2019 and Crl. M.P. No. 5129 of 2019 - - - Dated:- 4-10-2019 - M.M. Sundresh and R.M.T. Teekaa Raman, JJ. For Appellant: Mukul Rohatgi, Sr. C. and P.S. Raman, Sr. C. for P.R. Raman for C. Seethapathy For Respondents: G. Rajagopal, Addl. Solicitor General Asst. by G. Hema, SCGSC ORDER M.M. Sundresh, 1. This Criminal Original Petition has been filed by the petitioners, who are the Private Limited Company and the Managing Director respectively, to quash the proceedings in C.C. No. 56 of 2018 pending on the file of Principal Sessions Judge, City Civil Court, Chennai, under Section 45(1) of the Prevention of Money-Laundering Act, 2002. 2. Heard Mr. Mukul Rohatgi, learned Senior Counsel appearing for the first petitioner and Mr. P.S. Raman, learned Senior Counsel and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.4. The Central Bureau of Investigation ( CBI ) has registered a complaint for the offences under Sections 120(B) and 420 IPC and 13(2) and 13(1)(d) of Prevention of Corruption Act in RC 50(A)/2016 against the SBI Manager, Chief Manager of SBI, Manager of HTL and the petitioners. Based on the said First Information Report filed by the CBI., the Enforcement Directorate has registered a case on 06.01.2017 and proceeded with the investigation thereafter under Prevention of Money Laundering Act, 2002. 3.5. Seeking an order to quash the First Information Report, the petitioners have filed Crl. O.P. No. 21905 of 2017. As the petitioner could not get any favourable orders in their challenge to the complaint registered by the Central Bureau of Investigation, a Final Report was filed before the jurisdictional Court on 29.04.2019. During the pendency of the proceeding before the Court qua the complaint of the respondent, the final report filed by Central Bureau of Investigation was accepted by XI Additional Special Court for CBI Cases, Chennai, on 30.04.2019 in Crl. M.P. No. 4018 of 2019. In the meanwhile, the attachment order as confirmed by the Adjudicating Authority was set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences as defined under Section 2(1)(x) and (v) of PMLA. After thorough investigation of CBI, it has filed its final report stating that the allegations are not substantiated with prosecutable evidences and hence recommended for closure of the case. Therefore, Money Laundering is dependant on the crime of Predicate offence or schedule Offence , the proceeds of which are made the subject matter of crime of money laundering. In this case, there is no crime established under the scheduled offences as evidenced by the final report of the CBI dated 29.04.2019 and hence no proceeds of crime defined under PMLA would follow or act independently against the petitioners. (vi) The funds derived out of the sale of residential units as a consequence of criminal activities are proceeds of crime as defined under PMLA: When there is no criminal activity as shown against the petitioners during the purchase of property and the entire transaction of purchase of the property was done only under due process of law that too after obtaining a loan, the subsequent development of the said land with the funds of proposed buyers are to be treated as untainted money and can i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase value of the landed property of 10.46 Acres works out to ₹ 5970/Sq. Ft. (10.46 Acres = 455638 Sq.Ft) as the entire property of 10.46 Acres had been purchased for ₹ 272 Crores. The details of the project VGN FAIRMONT, income earned from the project as on date and to be earned in future by M/s. VGN Developers P Ltd. Are detailed hereunder: 5. Thus, the allegations are to the effect that the lands, which would fetch higher value in the public auction, were purchased by the petitioners in connivance with the other accused resulting in a huge loss. It was done through the illegal gratification. A private sale was effected, land was sold for a lesser price, thereafter sold for a higher price and the mortgage was also for a higher price as against the practice that only 80% of the total value would be released. To substantiate the same, witnesses have been examined. 6. The learned Senior Counsels appearing for the petitioners would contend that there is no malpractice involved. When once the predicated offence itself was closed by the order of the Court, the pending proceedings will have to be quashed. Payments were made through cheques. The pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 22.03.2017); 3. Sri Sachin Narayan V. The Income Tax Department, by its Deputy Director of Income Tax (W.P. No. 5299 of 2019 etc batch dated 29.08.2019); 4. Soodamani Dorai Vs. The Joint Director of Enforcement (PMLA) Directorate of Enforcement (W.P. Nos. 8383 and 8384 of 2013 dated 04.10.2018); 5. Rakesh Manakchand Kothari V. Union of India (Spl. Crl. Appln.(Direction) No. 4496 of 2014 dated 16.01.2015); and 6. Usha Agarwal V. Union of India through its Secretary (WP (C) No. 23 of 2015 dated 29.08.2017); 8. As we do not have any quibble over the facts narrated, let us go into the issues raised. As rightly submitted by the learned Additional Solicitor General, the definition of proceeds of crime under Section 2(u) of the Act is very exhaustive and elaborate. It speaks of any property derived or obtained, directly or indirectly, by any person. It is no doubt true that the complaint has been made by the respondent only in pursuant to the scheduled offence. However, the object, rationale and the scope enshrined under the Prevention of Money Laundering Act, 2002, being a special statute is distinct and different from the one enshrined u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fence. For, the expression used is whosoever . The offence of money-laundering under section 3 of the Act of 2002 is an independent offence. It is committed if any person directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property. Further, it would create a piquant situation as a person who is not charged of having committed a scheduled offence even if can be proceeded for offence of money laundering and even if such person is in possession of any proceeds of crime, no action of attachment and 37 fa527-529.sxw confiscation of the proceeds of crime can be resorted to qua him albeit the proceeds of crime are in his possession. If the argument of the appellants were to be accepted, even the expression whosoever appearing in section 3 and 4 of the Act will have to be limited to person who has been charged of having committed a scheduled offence. The object of the enactment of 2002 would be completely defeated by such approach. Besides, the view that we propose to take is reinforced also from the purport of section 8 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure mainly to prevent the act of money-laundering and connected activities. Furthermore, the Respondent has issued only summons dated 10.04.2013 to the Petitioners and the issuance of summons cannot be categorized as an act of prosecuting the petitioners twice. As such, the plea of 'double jeopardy' taken on behalf of the petitioners is not acceded to by this Court. 12. In Sri Sachin Narayan V. The Income Tax Department, by its Deputy Director of Income Tax (W.P. No. 5299 of 2019 etc batch dated 29.08.2019), the High Court of Karnataka has stated as follows: 25. The PML Act being a special enactment contemplates a distinct procedure at the initial stage and thereafter provide for initiation of prosecution in order to achieve the special purpose envisaged under the Act and as such, it cannot be construed that proceedings under the PML Act is to be equated with prosecution initiated under the criminal proceedings for the offence punishable under the Indian Penal Code. Thus, initiation of action under the PML Act cannot have any implication or impact in respect of registration of other cases either under the Indian Penal Code or any other penal laws. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge and thereafter prosecution. The Act has got certain special purposes and therefore, the initiation of proceedings under the Prevention of Money Laundering Act, 2002 can never be compared with the initiation of criminal proceedings under the Indian Penal Code. The enactment is a distinct one wherein separate procedures are contemplated in order to protect the interest of the alleged offenders also. The authorities under the Prevention of Money Laundering Act, 2002 cannot jump into the conclusion that the offenders are arrested at the first instance. An administrative procedure of verifying the records, recording statements of the offenders and other persons are provided under the Act. The method of adjudication, investigations are absolutely different and distinct and no way connected with the regular criminal cases registered under the Indian Penal Code either by Central Bureau of Investigation or by the other Investigation Agencies. Thus, the initiation of action under the Prevention of Money Laundering Act, 2002 cannot have any implications in respect of the registration of other cases under the Indian Penal Code or under any other Penal Laws. 14. The High Court of G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey Laundering Act, 2002. 17. Section 24 of the Act places the burden of proof on a person charged with an offence of money laundering under Section 3 of the Act. Resultantly, either an Authority or a Court shall presume that such proceeds of crime are involved in money laundering until the contrary is proved. Therefore, the burden of proof by discharging the presumption lies upon the persons charged. Hence, investigation by the Central Bureau of Investigation and the respondent are totally distinct and different. Sub Section 1 of Section 44(1) of the Act has been amended by way of an insertion through The Finance (No. 2) Act, 2019 No. 23 of 2019 dated 01.08.2019. Explanation which has been inserted states as follows. Explanation-For the removal of doubts, it is clarified that-- (i) the jurisdiction of the Special Court while dealing with the offence under this Act, during investigation, enquiry or trial under this Act, shall not be dependent upon any orders passed in respect of the scheduled offence, and the trial of both sets of offences by the same court shall not be construed as joint trial; (ii) the complaint shall be deemed to include any s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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