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2023 (9) TMI 185 - HC - Money LaunderingMoney Laundering - scheduled offence - proceeds of crime - Freezing of Bank Accounts of petitioner - Constitutional Validity of Section 6(5)(b) and Section 6(7) Prevention of Money Laundering Act, 2002 - constitution of Bench of the Adjudicating Authority by the Chairperson with two or more Members including one Judicial Member - transfer of the case by a chairperson - HELD THAT:- The Prevention of Money Laundering Act, 2002 (PMLA) is an Act to prevent money laundering and to provide for confiscation of property derived from, or involved in, money laundering and for matters connected therewith or incidental thereto - a person would be guilty of committing an offence of money laundering under Section 3 of PMLA if he directly or indirectly or knowingly attempts to indulge or assist or is a party or is involved in any process or activity connected with such proceeds of crime including its concealment etc., and projecting it as untainted money. There is a distinct difference in the reason to believe appearing in Section 17 and the reason to believe in respect of Section 5. While the reason to believe is for the purpose of attachment under Section 5(1), the reason to believe is for the purpose of search and seizure under sub- section (1) of Section 17. The reason to believe in Section 5(1) is that a person must be in possession of any proceeds of crime and such proceeds of crime are likely to be concealed etc., thereby frustrating any proceeding for confiscation then the Director or the authorised officer may provisionally attach such property - the requirement or the standard of reason to believe in Section 17(1) is on a higher plane than in Section 5(1) inasmuch as the Director or the authorised officer must have reason to believe that the person concerned has committed the offence of money laundering or is in possession of any proceeds of crime involved in money laundering etc., instead of being in possession of any proceeds of crime etc. The “proceeds of crime” has been defined to mean any property derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence - the definition of “proceeds of crime” is intrinsically related to property derived or obtained directly or indirectly as a result of any criminal activity relatable to the scheduled offence. In Ramesh Chandra Mehta [1968 (10) TMI 50 - SUPREME COURT] a Constitution Bench of the Supreme Court opined that the customs officer under the Customs Act is not a police officer within the meaning of Section 25 of the Indian Evidence Act, 1872 (Evidence Act) and that the statements made before him by a person who is arrested or against whom an enquiry is made are not covered by Section 25 of the Evidence Act. There are no hesitation in holding that impugned order dated 25.07.2022 is wholly without jurisdiction. It is trite law that if an order is without jurisdiction, the aggrieved party can approach the High Court under Article 226 of the Constitution of India notwithstanding availability of alternative remedy. This settled proposition needs no elaboration - the impugned order is without jurisdiction there being no scheduled offence against the petitioners, it is not necessary to delve into the question as to what would be the impact of not passing an order under sub- section (2) of Section 20 of PMLA on the PMLA proceedings. Petition allowed.
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