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2017 (7) TMI 1304 - HC - Money LaunderingPurchase of property from the proceeds of crime - Scheduled offences - alleged offences under Sections 120(B), 406, 419, 420 r/w Section 34 IPC, 1860 - Rule 5 of the Prevention of Money Laundering (Appeal) Rules, 2005 - Is the Rule 5 of the Rules ultra vires Section 26 of the Act? - HELD THAT:- The Court will not pass upon a constitutional question although properly presented by the record if there is also present some other ground upon which the case may be disposed of. Standing or Mootness: the Court will not pass upon the validity of a statute upon complaint of one who fails to show that he is injured by its operation. Constitutional Avoidance: when the validity of an act of the Congress is drawn in question, and even if a serious doubt of constitutionality is raised, it is a cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the question may be avoided - No particular, genuine grievance remains to be ventilated - we pass up the validity of Rule 5 of the Appeal Rules. Did the Authority under Section 5(1) of the Act have "reason to believe" that Kavitha possessed any proceeds of crime and that she is likely to conceal, transfer, or deal with the property to frustrate any proceedings concerning the confiscation of the crime proceeds? - HELD THAT:- The reasonable belief is a plausible belief. If we think of the synonyms to "reasonable", we find these: acceptable, moderate, tolerable, equitable, fair, feasible, honest, impartial, judicious, justifiable, modest, plausible, proper, prudent, rational, sensible, understandable, conservative, just. It is, we may note, farfetched to insist that the officer should have had a third-party information about the person's efforts, for example, to secret away the property. Hot on the heels of crime, with investigation in full vigour, the authority must take sensible steps to ensure that the property is preserved provisionally for a very limited period before a proper hearing takes place on whether the properties can be attached--for a longer period--until the trial of the underlying crime - Once Section 8 adjudication takes place, the provisional attachment loses its identity; even otherwise, beyond 180 days it becomes a spent-force. Does the order under Section 8(3) merely affirm the provisional attachment under Section 5(1) of the Act? - Does the legality of the Adjudicating Authority's order under Section 8 depend on the validity of the provisional attachment under Section 5 of the Act? - HELD THAT:- The adjudicating proceedings under Section 8 are independent proceedings, not appellate proceedings. By the same token, we must also hold, and we do, that the orders under Section 5(1) and Section 8(3) are not interconnected but independent. Does the Act cast reverse onus (Sec. 24) and compel the property holder to testify against himself or herself (Sec. 50)? - HELD THAT:- Section 24 does not affect the predicate offences. It applies to "any proceeding relating to proceeds of crime" under this Act. Then comes the legislative mandate that "in the case of a person "charged with the offence of money-laundering" under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering." First, even without a formal charge, which only follows the proceedings under Sections 5 and 8 of the Act, Section 24 operates. Second, the reverse onus which this Section casts on any person relates only to the "proceeds of crime." The further presumption is that the proceeds of crime--if exist, we emphasize--are "involved in money laundering." But pertinently there is no presumption--rebuttable as it is--that the very proceeds are ill-gotten. The proceeds relate to the predicate offence, and only the proof of the predicate offence determines the ill-gotten nature of the proceeds. In a case of money laundering, the proceeds of crime are the means; their laundering is the end: legitimation of ill-gotten money. If the first exists, the second must be presumed. Appeal dismissed.
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