2023 (7) TMI 1300 - HC - Money Laundering

Constitutional Validity of Section 19 (1) of the Prevention of Money Laundering Act, 2002 - money diverted to M3M group of companies by IREO group companies after layering of funds - all the companies through which funds were routed by IREO group to M3M group were shell companies owned/controlled/managed by M3M group and its controller only - HELD THAT - The act of directing remand of an accused is a judicial function. The orders of remand passed by the Special Court/Additional Sessions Judge on duty reveal that the merits of the matter as well as the question that the detention of the petitioners was justified or not, had been dealt with while remanding them to custody. As such, in our considered opinion, it is not open to the petitioners to challenge correctness of these orders at this stage. More so, the question as to legality of initial detention of the petitioners might be examined on the dates on which they were remanded to custody of respondent No.2 or to judicial custody as on the specific dates on which the orders (Annexures P-18, P-20 and P-21) were passed and their present confinement cannot be held to be invalidated on the ground that the orders detaining them in custody initially were illegal - no ground has been made out for setting aside the orders (Annexures P-18, P-20 and P-21) respectively as passed by learned Duty/Additional Sessions Judge, Panchkula whereby the petitioners have been remanded to the custody of respondent No.2 and then to judicial custody on 15.06.2023, 20.06.2023 and 26.06.2023. On perusal of the material placed on record, it has been revealed that the allegations as levelled against Judicial Officer namely, Mr. Sudhir Parmar who is alleged to have taken undue favours from the present petitioners and other key persons of M3M group of companies and Managing Director of IREO company are being investigated by respondent No.2. The same are quite serious in nature. Keeping in view the gravity of the same, the prayer as made by the petitioners for grant of release from custody at this stage does not deserve to be accepted. Petition dismissed.

Summary

Issues Involved:
The validity of Section 19(1) of the Prevention of Money Laundering Act, 2002 (PMLA) and the legality of remand orders issued against the petitioners challenging the procedure followed during their custody.

Judgment Summary:

Challenge to Section 19(1) of PMLA:
The petitioners contested the constitutionality of Section 19(1) of the PMLA and sought to quash remand orders against them. The petitioners were implicated in money laundering activities involving IREO and M3M groups. The court rejected the challenge to Section 19(1) and upheld the remand orders due to the serious nature of the allegations and ongoing investigations.

Legality of Remand Orders:
The petitioners argued that their arrest and remand violated procedural safeguards under PMLA. They were remanded to custody without proper compliance with the Code of Criminal Procedure. However, the court found that the remand orders were validly issued by the competent court after due consideration of the merits. The petitioners failed to demonstrate any illegality in the remand process, leading to the rejection of their plea for release on bail.

Investigation into Allegations against Judicial Officer:
Allegations were made against a judicial officer for favoritism towards individuals linked to IREO and M3M groups. These serious allegations were under investigation by respondent No.2. Due to the gravity of the accusations, the court denied the petitioners' request for release from custody. The court ordered the respondents to provide a status report on the investigation progress by a specified date.

In conclusion, the court dismissed the writ petitions, emphasizing the ongoing investigation's importance in determining the petitioners' involvement in the alleged crimes. The court upheld the legality of the remand orders and rejected the petitioners' plea for release based on the seriousness of the accusations and the need for further investigation.