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Money Laundering - Case Laws
Showing 201 to 220 of 1547 Records
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2023 (7) TMI 1392
Seeking grant of pre-arrest bail - Money Laundering - proceeds of crime or not - criminal conspiracy - forgery with valuable security - breach of confidentiality and privacy under the I.T. Act - HELD THAT:- Having regard to the facts and circumstances of the case, the materials available on the record showing the gravity of the offences alleged against the petitioners, the recovery of 36 ATM Cards of various banks from the petitioners and the allegation that he used to receive various phone calls from a Pakistani national and on his instruction he used to withdraw money from various ATMs and the allegation that from the proceeds of crime the petitioners had acquired immovable property as well and now a charge-sheet has been filed against them, this Court is not inclined to grant privilege of pre-arrest bail to these petitioners.
Prayer for anticipatory bail of the petitioners is, thus, refused.
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2023 (7) TMI 1381
Seeking grant of bail - Money Laundering - proceeds of crime - predicate offences - irregularities in framing and implementation of the excise policy of GNCTD of Delhi for the year 2021-22 - HELD THAT:- It is settled proposition Section 45 PMLA do not impose an absolute restraint on the grant of bail and the court at this stage is to prima facie consider whether applying the standard of broad probabilities the material against the applicant would result in conviction. It is also a settled proposition that at this stage the Court is only required to examine the matter to find out whether the accused was possessed of the requisite mens rea. It is also no longer res integra that the court is not required to record a positive finding that the accused had not committed the offence under the Act. It is also a settled proposition that the court at this stage is not required to weigh the evidence meticulously. The court is only required to arrive at a finding on the basis of broad probabilities. It is also a settled proposition that the court is not required to hold a mini trial at this stage and is required to examine the case on the basis of broad probabilities. It is also to be kept in mind that while exercising the jurisdiction under Section 45 of PMLA, the court is required to take into consideration the limitations prescribed under Section 439 Cr.P.C.
The bare reading of Section 3 of PMLA would make it clear if a person is involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty offence of money laundering. Therefore, it is not necessary to attribute section 3 of the PMLA that the alleged person must have acquired or in possession of the proceeds of the crime. If a person has actually been involved in any process or activity connected with the proceeds of crime, it would be sufficient to prosecute him under Section 3 of PMLA. The argument that the proceeds of crime have not been received or the proceeds of crime has not been recovered and therefore section 3 of the PMLA will not come into operation is totally fallacious and is liable to be rejected.
The present case is very peculiar in nature and may not have any parallel factual matrix. In brief, the initial allegation in the predicate offence was that the conspiracy was hatched between the political head and certain persons which included an individual allegedly representing the government with the manufacturer, liquor wholesaler and retailer. The conspiracy allegedly was hatched to introduce a new excise policy to benefit certain individuals who had given advance kickbacks to the AAP.
Presently, this court is considering the bail application of the abovesaid accused persons namely Mr.Manish Sisodia, who was arrested for the offence under Section 3 of the PMLA. The allegations against the petitioner Manish Sisodia is he being the Deputy Chief Minister and Excise Minister formulated the excise policy in such a manner that undue advantage goes to the manufacturer, wholesaler and retailer so as to recoup the advance kickbacks and to further gain undue advantage from the profit so earned by virtue of the provision in the new excise policy - The plea raised by the defence is the ED has no material other than an inconsistent and unreliable statement of either co-accused or the public servants. The defence has raised a plea that in absence of any independent corroboration or material on record to substantiate such statements under Section 50 PMLA, the court on the basis of probability should record a finding that accused persons are not guilty of such offence.
In the present case allegedly the excise policy was framed as a special purpose vehicle to generate the proceeds of crime and with the same motive, M/s Indo spirit was also constituted for regular generation of proceeds of crime. There may not be any recovery of the proceeds of crime. However, if the excise policy has been framed for the purpose of generation of proceeds of crime or M/s Indo Spirits has been constituted in a manner to continuously generate the proceeds of crime then all the stakeholders who instrumental in framing, drafting and formulating of excise policy are covered under Section 3 of PMLA as their acts and conducts amount to involvement in any process of activity connected with the proceeds of crime.
This court has also gone through the order of the learned Special Judge dated 28.04.2023 and do not find infirmity or illegality in the said order. Learned Special Judge has passed a reasoned order on the basis of material available on record - This court inter alia was of the view that in view of the high political positions held by the accused and his position in the party in power in Delhi possibility of influence the witnesses cannot be ruled. The twin conditions under Section 45 of PMLA are in addition to the triple test. This Court is of the considered view that the petitioner has not only been able to pass the twin conditions as provided under Section 45 of PMLA, but he has also not been able to cross the triple test.
Petition dismissed.
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2023 (7) TMI 1314
Seeking grant of bail - Money Laundering - Conspiracy - proceeds of crime - predicate offence - irregularities in the framing of the Excise Policy - case of Revenue is that petitioner Benoy Babu had prior knowledge of liquor policy 2021 before it was made public which enabled Pernod Ricard to arrange finances even before the public announcement of the policy to create vehicle which was later on used for generating parking and use of proceeds of crime.
HELD THAT:- Section 45 of PMLA provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973, no person accused of an offence under this Act shall be released on bail or on his own bond unless—(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. It is also pertinent to mention here that Section 45 also provides that this condition is in addition to the limitations imposed under Section 439 of the Code of Criminal Procedure, 1973 or any other law for the time being in force on granting of bail. It is settled proposition Section 45 PMLA do not impose an absolute restraint on the grant of bail and the court at this stage is to prima facie consider whether applying the standard of broad probabilities the material against the applicant would result in conviction.
The bare reading of Section 3 of PMLA would make it clear if a person is involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use and projecting or claiming it as an untainted property shall be guilty of offence of money laundering. Therefore, it is not necessary to attribute section 3 of the PMLA that the alleged person must have acquired or in possession of the proceeds of the crime - The present case is very peculiar in nature and may not have any parallel factual matrix. In brief, the allegation in the predicate offence was that the conspiracy was hatched between the political head and certain persons which included an individual allegedly representing the government with the manufacturer, liquor wholesaler and retailer. The conspiracy allegedly was hatched to introduce a new excise policy to benefit certain individuals who had given advance kickbacks to the AAP.
Presently, this court is considering the bail application of the abovesaid accused person namely Mr.Benoy Babu, who was arrested for the offence under Section 3 of the PMLA. For the purpose of clarity Mr.Bonoy Babu was an employee of M/s Pernod Recard. Similarly, the allegations against Benoy Babu, an employee of M/s Pernod Recard is that he was also in a deep conspiracy from the stage of formulation of policy and extended corporate guarantee of 200 crores to enable the other stakeholders to generate the proceeds of crime.
It is correct that extending a corporate guarantee per se may not be a crime. However, if it is connected with any activity or process connected with the proceeds of crime, it would inevitably come within the purview of money laundering under section 3 of PMLA. In this regard, a reference can also be made to Vijay Madanlal Chaudhary [2022 (7) TMI 1316 - SUPREME COURT] wherein it has inter alia been held that while construing the expression “and” in Section 3 as “or”, to give full play to the said provision so as to include “every” process or activity indulged into by anyone, including projecting or claiming the property as untainted property to constitute an offence of money-laundering on its own.
Further, it was observed by the Ld. Special Judge that the applicant namely Benoy Baby was the signatory in the capacity of attorney of M/s Pernod Ricard to the documents pertaining to the grant of licenses to M/s Indospirit, and it was the applicant/accused who performed all the operations in respect to the appointment of wholesaler, furnishing corporate guarantees. Even though he was not the Director or major shareholder in the M/s Pernod Ricard, it was observed that in terms of the provisions contained under section 70 (2) of the PMLA he is equally liable for the offence of money laundering committed in the present case, apart from the company itself or any of its Directors, Secretaries or other Managers connected with the commission of the said offence, directly or indirectly - Allegedly applicant/accused is further being associated with some other amounts of proceeds of crime and the total proceeds being attributed to him are stated to be around Rs. 563 crores.
The accused persons in the present case acting in furtherance of the conspiracy circumvented the policy and got framed the policy in such a manner to continuously generate and channel illegal funds. The allegations are that deliberate loopholes were left to facilitate illegal and criminal activities.
There is sufficient material on the record that the petitioner was indulging or knowingly assisting in process or activity connected with the proceeds of crime and it cannot be said that there are reasonable grounds for believing that petitioner is not guilty of such offence and he is not likely to commit any offence well. It was allegedly a well spun conspiracy to generate P.O.C. In such cases every person who is connected with any process or activity relating to P.O.C. cannot avoid his/her responsibility. The allegations are very serious in nature.
Bail application dismissed.
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2023 (7) TMI 1312
Seeking grant of bail - Money Laundering - Conspiracy - proceeds of crime - irregularities in the framing of the Excise Policy (excise policy of GNCTD of Delhi for the year 2021-22) in a manner which permitted formation of cartels and windfall profits for certain preferred persons who had paid kickback/bribes in exchange thereof - connection with various branches of this entire liquor scam - HELD THAT:- Section 45 of PMLA provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973, no person accused of an offence under this Act shall be released on bail or on his own bond unless—(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. It is also pertinent to mention here that Section 45 also provides that this condition is in addition to the limitations imposed under Section 439 of the Code of Criminal Procedure, 1973 or any other law for the time being in force on granting of bail. It is settled proposition Section 45 PMLA do not impose an absolute restraint on the grant of bail and the court at this stage is to prima facie consider whether applying the standard of broad probabilities the material against the applicant would result in conviction.
The bare reading of Section 3 of PMLA would make it clear if a person is involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use and projecting or claiming it as an untainted property shall be guilty of offence of money laundering. Therefore, it is not necessary to attribute section 3 of the PMLA that the alleged person must have acquired or in possession of the proceeds of the crime - The present case is very peculiar in nature and may not have any parallel factual matrix. In brief, the allegation in the predicate offence was that the conspiracy was hatched between the political head and certain persons which included an individual allegedly representing the government with the manufacturer, liquor wholesaler and retailer. The conspiracy allegedly was hatched to introduce a new excise policy to benefit certain individuals who had given advance kickbacks to the AAP.
Presently, this court is considering the bail application of the accused person namely Mr.Vijay Nair who was arrested for the offence under Section 3 of the PMLA. The allegation against Vijay Nair is that though he did not hold any position in the government but he was representing the government and was interacting with all the stack holders including manufacturers, wholesalers and retailers - The allegation against Manish Sisodia and Vijay Nair was also that M/s Indospirit was created as a special purpose vehicle to generate the proceeds of crime.
The present case arises out of an alleged conspiracy wherein the government framed an excise policy with a mala fide intention to recoup the kickbacks received in advance from certain individuals and to further generate the ill money from the liquor trade - The analysis of provisions of PMLA has already been made herein before and has thus not been repeated herein for the sake of gravity. However, it may be reiterated that the Court at the stage of bail is required to confine itself to the settled principles as contained in Section 439 of Cr. PC and Section 45 of PMLA. It may also be stated that Section 3 of the PMLA has a wider reach and anybody who is actually involved in knowingly assisting directly or indirectly in any process or activity with the proceeds of crime including assisting in the generation of proceeds of crime would be guilty of offence of money laundering.
The accused person in the present case acting in furtherance of the conspiracy circumvented the policy and got framed the policy in such a manner to continuously generate and channel illegal funds. The allegations are that deliberate loopholes were left to facilitate illegal and criminal activities. It has also come on the record that accused Vijay Nair was a close associate of Chief Minister, GNCT of Delhi and Sh. Manish Sisodia, Deputy Chief Minister. The investigation has further revealed that Vijay Nair arranged a video call through face time between Chief Minister, Government of NCT of Delhi and Sameer Mahendru where Chief Minister said that Vijay Nair is his boy and they should trust him.
The allegations are extremely serious in nature. The alleged conspiracy has been well spun and there are prima facie credible materials on record. This Court also does not find any illegality or perversity in the order of learned Trial Court. Learned Special Judge has correctly gone through the entire material and has given an opinion which seems to be in accordance with law. There is no reason to interfere in the bail order.
Bail application dismissed.
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2023 (7) TMI 1311
Seeking grant of Bail - Money Laundering - existence of proof of identification of proceeds of crime or not - absence of transcripts to alleged transfer of Rs. 30 crores - Section 45 of PMLA - HELD THAT:- It is settled proposition Section 45 PMLA do not impose an absolute restraint on the grant of bail and the court at this stage is to prima facie consider whether applying the standard of broad probabilities the material against the applicant would result in conviction. It is also a settled proposition that at this stage the Court is only required to examine the matter to find out whether the accused was possessed of the requisite mens rea. It is also no longer res integra that the court is not required to record a positive finding that the accused had not committed the offence under the Act. It is also a settled proposition that the court at this stage is not required to weigh the evidence meticulously.
The bare reading of Section 3 of PMLA would make it clear if a person is involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money laundering. Therefore, it is not necessary to attribute section 3 of the PMLA that the alleged person must have acquired or in possession of the proceeds of the crime. If a person has actually been involved in any process or activity connected with the proceeds of crime, it would be sufficient to prosecute him under Section 3 of PMLA.
The present case is very peculiar in nature and may not have any parallel factual matrix. In brief, the allegations in the predicate offence is that the conspiracy was hatched between the political head and certain persons which included an individual allegedly representing the government with the manufacturer, liquor wholesaler and retailer. The conspiracy allegedly was hatched to introduce a new excise policy to benefit certain individuals who had given advance kickbacks to the AAP.
The present case arises out of an alleged conspiracy wherein the government framed an excise policy with a malafide intention to recoup the kickbacks received in advance from certain individuals and to further generate the ill money from the liquor trade. There are witnesses and witnesses on record to show that certain outsiders were actively participating from the stage of drafting and formulation of the policy - The allegation regarding generating of the emails in support of the excise policy also raises the red flag that everything was being done in a transparent and bonafide manner.
It is correct that the case of ED is based on the statements under Section 50 PMLA cannot be taken as gospel truth but at the same, the court has to take into account the probabilities and the legislative intent behind enacting Section 50 PMLA. The bare perusal of Section 50 makes it clear that these are deemed to be judicial proceedings. There are consequences for making a false statement or not complying to the summons under Section 50 of PMLA as provided under Section 63 of the PMLA. Thus, statements under Section 50 PMLA cannot be brushed aside. This court at this stage cannot go into the probative value of the witnesses nor can it meticulously examine those facts.
It is settled position that the statement recorded under Section 50 of PMLA is admissible evidence though the evidentiary value of the same is to be seen after the trial. However, at this stage, the court cannot ignore the statements under Section 50 PMLA which the statue provides to have been recorded as part of the judicial proceedings. In such cases of conspiracy, the present case is of peculiar nature where Excise policy was formed with illobjective of illegal earning money through illegal means - the accused person in the present case acting in furtherance of the conspiracy circumvented the policy and got framed the policy in such a manner to continuously generate and channel illegal funds. The allegations are that deliberate loopholes were left to facilitate illegal and criminal activities. It is also pertinent to mention here that investigation has revealed that 65% stake was given to South Group in Indo Spirits to make it a mechanism for continuous generation and channelisation of Proceeds of Crime.
Taking into account the seriousness and gravity of the allegations and credible material on record, the bail application along with pending application stands dismissed.
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2023 (7) TMI 1307
Money Laundering - predicate offence is quashed by the Court of competent jurisdiction - HELD THAT:- In paragraph 187 (v)(d) of the decision in the case of VIJAY MADANLAL CHOUDHARY & ORS. VERSUS UNION OF INDIA & ORS. [2022 (7) TMI 1316 - SUPREME COURT], it is held that even if predicate offence is quashed by the Court of competent jurisdiction, there can be no offence of money laundering against the accused.
Appropriate proceedings can be always filed by the concerned parties for challenging the order by which predicate offence was quashed. If the said order is set aside and the case is revived, it will be always open for the petitioner to revive the proceedings under the Prevention of Money Laundering Act, 2002.
SLP disposed off.
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2023 (7) TMI 1301
Seeking grant of Anticipatory Bail - delay in handing over/delivery of possession of apartments/ commercial units - concurrent jurisdiction casted upon the Court of Session and High Court - it was held by HC [2023 (6) TMI 503 - DELHI HIGH COURT] that This Court is of the view that this Court has the jurisdiction to entertain the bail application under Section 438 even when the applicant has not approached the Court of Sessions first - HELD THAT:- The proceedings filed before the High Court is listed for consideration on 05.07.2023.
Appropriate Forum - seeking release from illegal detention - It was held by High Court [2023 (6) TMI 1315 - DELHI HIGH COURT ] that once the order of remand has been passed by the competent court at Panchkula, the appropriate remedy for the petitioners is to approach the High Court of Punjab and Haryana at Chandigarh challenging the order of remand. Any order passed by this court once an order of remand has been passed by Panchkula Court would be improper - HELD THAT:- The petitions are disposed of as withdrawn with liberty to approach the High Court of Punjab and Haryana.
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2023 (7) TMI 1300
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.
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2023 (7) TMI 1299
Constitutional Validity of section 19 of PMLA - release on interim bail - HELD THAT:- Since the constitutional validity of Section 19 of the PMLA has been upheld by Hon’ble Supreme Court in Vijay Madanlal Choudhary’s case [2022 (7) TMI 1316 - SUPREME COURT], therefore, prayer of the petitioners with regard to challenge to the same cannot be considered only because of the fact that a review petition before Hon’ble Supreme Court is pending. Therefore, the prayer as made by the petitioners to this effect is rejected.
The petitioners have further sought quashing of orders Annexures P-18, P-20 and P-21 whereby they were remanded to custody of the respondent No.2 and then to judicial custody and have further prayed for their release by way of granting them interim bail - Arguments on this point have been heard.
Order on these point stands reserved.
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2023 (7) TMI 1241
Money Laundering - Whether an Online Payment Gateway Service (OPGSP) could be said to be a Reporting Agency under the PMLA? - It is the case of the respondents that PayPal is a payment system operator and thus a reporting entity.
Money Laundering - Global Experiences - HELD THAT:- The FIU-IND essentially acts as the central nodal agency for receiving, processing and analysing information relating to suspicious financial transactions. It is thus tasked with the collection of information, analysis thereof and the consequential sharing of information with other national intelligence and law enforcement agencies. FIU-IND represents the coordinated mechanism adopted by nations aimed at strengthening the collection and sharing of financial intelligence by the creation of a national, regional and a global network to detect illicit financial flows and combat money laundering - The extent and reach of payment facilitation platforms and the exponential increase in transactions accomplished thereon is also evident from the disclosures made by FIU-IND in these proceedings. FIU-IND had, with the aid of data disclosed on the record of these proceedings drawn the attention of the Court to the increase in the value of transactions completed on the PayPal platform between 2020 to March 2022 and stated that the transactional value which stood at Rs. 9951 crores in 2020 had increased to Rs. 12327 crores in 2021 and as of March 2022 that figure stood at Rs. 3048 crores.
While the Court has taken note of the global trends and the multifaceted complexities which emerging technologies and tools have brought on in the fight against money laundering and terror financing, it has done so only to broadly note the scenario which prevails and which appears to have prompted FIU-IND to require the petitioner to comply with reporting obligations under the PMLA.
Central Theme of Payments and Settlements System Act 2007 (PSS Act) - HELD THAT:- The PSS Act essentially appears to regulate the functioning of Intermediaries and PAs’ who are directly engaged in handling funds and acting as a conduit between customers and e-commerce sites/merchants. This is also evident from the activities relating to settlement and netting which are spoken of in Section 23 of the Act, the opening of separate and independent import/export collection accounts by AD Category I Banks, the opening of NOSTRO accounts, all of which deal with the range of activities which are undertaken by Intermediaries and PAs’ while being directly engaged in the handling of funds received from customers.
The aforesaid conclusion is further fortified from Para 8 of the Guidelines which obligates non-bank PAs’ to maintain a separate escrow account to which all monies collected by them would be credited. The said escrow account is to be opened and maintained with a scheduled commercial bank. This is apart from the requirement of an additional escrow account being maintained with a different scheduled commercial bank at the discretion of the PA. Paras 8.4 and 8.5 also indicate that the aforenoted directions and guidelines principally regulate the activities of Intermediaries and PAs’ who directly receive funds from customers in their accounts before they are transmitted onwards to merchants or other beneficiaries.
The Court thus comes to the firm conclusion that the PSS Act is concerned with PAs’ and Intermediaries who are engaged in the direct handling of funds received from customers and the various aspects connected therewith including the settlement and netting of such funds. The PSS Act does not appear to control technology platforms, interfaces and facilitators, who though not directly concerned with the handling of funds, may yet constitute an intermediary in the movement of funds, though a “cog in the wheel” yet constituting a critical functional element in the remittance of funds.
Pari materia question - HELD THAT:- The Court also finds itself unable to accept the submission that the similarity of the definition clause in the two enactments would lead to PayPal being held to fall outside the ambit of Section 2(1)(rb) of the PMLA. The conclusions aforenoted, however, do not rest merely on the interpretation accorded on the provisions of the PSS Act, its discernible scheme, the regulatory regime embodied therein or the circulars and directions issued by the RBI noticed hereinabove. This since the Court is of the considered opinion that the answer to the principal question posited must necessarily be answered bearing in mind the objectives and the legislative policy underlying the PMLA and the various provisions incorporated therein. What the Court seeks to underline is that the meaning to be ascribed to the phrase “payment system” must necessarily be ascertained bearing in mind the theme and ethos of the PMLA as opposed to an answer that is beclouded by how that subject is treated under the PSS Act. Approaching the issue from any other angle would in fact fall foul of certain well accepted tenets of statutory interpretation as would be manifest from the discussion which follows in the latter parts of this decision.
Payment system under PMLA - HELD THAT:- The PMLA constructs various regulatory measures and safeguards to aid and assist the jurisdictional authorities in uncovering proceeds of crime. It must be remembered that the said enactment is not concerned merely with meting out punishment for commission of the crime created by Section 3 thereof. The various declarations, disclosures and reporting measures put in place by Sections 11A, 12, 12A, 12AA are all aimed towards discovery and prevention of fraudulent and suspicious transactions. Those provisions are concerned with collation of data, a centralized analysis thereof all of which would then enable the authorities to detect patterns of suspicious financial flows and assist in eradicating the scourge of money laundering. Of equal significance are the provisions comprised in Chapter IX which deals with reciprocal arrangements and gives teeth to the collaborative resolve of nations to tackle the complexities surrounding money laundering - The aforesaid discussion indubitably brings to the fore the regulatory aspects of the legislation and establishes that the PMLA goes far beyond being intended to be a mere penal statute. This aspect has also been noticed by the Supreme Court in VIJAY MADANLAL CHOUDHARY & ORS. VERSUS UNION OF INDIA & ORS. [2022 (7) TMI 1316 - SUPREME COURT]. It is these salutary objectives of the statute which must be borne in mind while seeking to unravel the intent and scope of its various provisions.
Undoubtedly, the technology on which the platform of PayPal rests enables the transfer of money between parties at different ends. The mere fact that the said platform also interacts with AD Category Banks or other PAs’ would not detract from the platform of PayPal being otherwise understood and recognised to be a system which enables payment and one which is concerned with money transfer operations. The Court deems it apposite to emphasise that bearing in mind the objectives underlying the promulgation of PMLA and the activity that it seeks to regulate and penalise, there appears to be no legal justification to interpret Section 2(1)(rb) to embrace only those entities which are directly engaged in the handling, retention or transfer of funds.
In terms of the Amending Act, clauses (ra) to (rc) came to be inserted in Section 2(1). If it was the intent of Parliament to accord an identical meaning upon the phrase “payment system” as already defined in the PSS Act, it could have conveniently adopted the tool of legislation by reference/incorporation. Notwithstanding such recourse being available, it appears to have consciously introduced Section 2(1)(rb) as well as the other amendments embodied in the 2009 Amending Act being aware of the distinct scheme and objective of the PMLA. This too leads the Court to come to the irresistible conclusion that the meaning of the term “payment system” as contained in the PSS Act was not intended by Parliament to be directly infused or blindly transposed in the PMLA.
Paypal's Global Compliances - HELD THAT:- The Court finds merit in the submission so addressed and is of the considered opinion that the question of whether PayPal is liable to be treated as a payment system operator must fundamentally be answered on a construction of Section 2(1)(rb) and (rc) of the PMLA alone and not by its conduct in other jurisdictions where the gamut of services provided by it range far wider than those that are ordinarily extended by an OPGSP. Ultimately the question of whether it is liable to be recognised as a payment system operator would have to be answered solely on the anvil of the statutory provisions embodied in the PMLA. This is precisely what the Court has attempted to focus upon and has hopefully achieved. Its ultimate conclusions, as would be evident from the body of this decision, have remained uninfluenced by the conduct of PayPal in foreign jurisdictions.
PAYPAL AND TPAPs’ - HELD THAT:- The National Payments Corporation of India is an organisation that owns and operates the Unified Payments Interface and is essentially charged with the authority of prescribing rules for and approving the participation of Customer Banks, PSPs, TPAPs and Prepaid Payment Instrument issuers in the UPI. More fundamentally in terms of the UPI structure, all details relating to the remitter as well as the beneficiary are captured end to end. In fact, in order to participate on that system both the remitter as well as the beneficiary have to be pre-enrolled. Appropriate particulars of individuals and entities are thus fully captured quite apart from the transactions themselves being conducted through banking channels.
Penalty unjustified - HELD THAT:- The Court finds merit in the challenge raised by PayPal in this regard for the following reasons. On first principles, the Court notes that undisputedly the levy of penalty is imbued with a quasi- criminal characteristic. It is this aspect which was highlighted by the Supreme Court in Hindustan Steel when it observed that penalty would be justified provided it is established that a party had failed to comply with legal obligations deliberately, in defiance of the law or be guilty of contumacious or dishonest conduct. The Supreme Court pertinently observed that penalty would not be leviable merely because it was lawful to do so. Hindustan Steel went further to hold that the imposition of penalty would also not be justified where a person is found to have proceeded on the bona fide belief that it was not covered by the provision or legally obliged to effect compliance.
It is manifest that the imposition of penalty is clearly unjustified in the facts of the present case. As the record would bear out, PayPal had consistently taken the position that it could not be held to be a payment system operator under the PMLA. The stand taken by the petitioner in this regard cannot possibly be said to be wholly specious or in wilful disobedience to abide by a legal obligation which was either apparent or free from doubt. The issue was further compounded by the affidavit filed by RBI in the Abhijit Mishra proceedings. PayPal can thus be justifiably said to have been proceeding under the bona fide belief that its operations did not fall within the ambit of the PMLA.
The Court also cannot lose sight of the fact that the stand of PayPal as evident from its communications with FIU-IND was essentially collaborative and a testament to its intent to arrive at a mutually acceptable solution. This is also manifest from its approach of both parties identifying a “mutually acceptable mechanism” and the suggestion of three models of information sharing forming part of their letter dated 20 December 2019.
It was, in the considered opinion of this Court, imperative for FIU-IND to have recorded reasons in justification of the levy of the maximum penalty provided under the statute. For all the aforesaid reasons, the Court finds itself unable to be sustain the imposition of penalty as embodied in the impugned order.
Deeming fiction argument - HELD THAT:- The Court also finds itself unable to sustain the impugned order insofar as it proceeds to observe that PayPal would be “deemed” to be a payment system operator. A deeming fiction must stand specifically engrafted in a statutory provision. A legal fiction would be available to be invoked only in a situation where the Legislature engrafts such a measure or frames the provision in language which justifies the existence of such a fiction being recognised to operate.
The Court holds that PayPal is liable to be viewed as a “payment system operator” and consequently obliged to comply with reporting entity obligations as placed under the PMLA. The imposition of penalty in terms of the impugned order dated 17 December 2020 is quashed.
The instant writ petition is partly allowed.
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2023 (7) TMI 1124
Money Laundering - proceeds of crime - scheduled offence - it is alleged that a part of the laundered money was parked with the husband of the petitioner in his account - HELD THAT:- The proceeds of crime means not only a property derived or obtained directly, but also indirectly as a result of criminal activity relating to a scheduled offence. The explanation to the provision would make it further clear that the proceeds of crime would also include property derived or obtained as a result of criminal activity relatable to a scheduled offence - In the present case, it is alleged that a part of the laundered money was parked with the husband of the petitioner in his account. This was, in turn, used by the petitioner and her said husband for purchasing a property. Therefore, the monetary trail would make it abundantly clear that the altered form of such tainted money can fairly be termed as proceeds of crime.
Section 3 of the PMLA Act, 2002 practically brings within the ambit of money laundering any activity or process connected to an act of money laundering. A person can be hauled up for money laundering if he either directly or indirectly attempts to indulge in or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime. So far as the present petitioner is concerned, she could come within its swipe, if not for directly or indirectly attempting to indulge, at least for knowingly assisting or knowingly being a party or for actually getting involved in a process or activity connected to the proceeds of crime - The explanation to Section 3 of the said Act sets out the process or activities connected with the proceeds of crime that could attract the offence of money laundering, their concealment or possession or acquisition or use or projecting as untainted property or claiming as untainted property. In the present context, the petitioner could be held responsible for any of the above referred processes or activities.
Thus, it cannot be said that no prima facie case is made out against the petitioner, more particularly in the peculiar circumstance that not only was the tainted money used for purchasing a property in the joint names of the petitioner and the husband, but the petitioner had also been a shareholder in the company the transfer of whose shares was itself a subject matter of the case of money laundering - Even if the petitioner wants to deny any knowledge of the money used being obtained by fraudulent means, she has to do the same if and once a trial commences. Before that, on the present facts it may have to be presumed, in terms of Section 24 of the PML Act, that such proceeds of crime were involved in money laundering.
The decision of the Hon’ble Apex Court in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] only further strengthens the case against the petitioner. There, Section 24 of the PML Act was held to be constitutionally valid.
As prima facie case is made out against the present petitioner in the facts and circumstances of the present case, she cannot be exonerated from the charges at this stage and before a full-fledged trial commences - the revisional applications are dismissed.
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2023 (7) TMI 1025
Grant of Regular Bail - money laundering - proceeds of crime - predicate offence/scheduled offences - acquittal of the accused - recording of statements under Section 50 of the PMLA, 2002 - HELD THAT:- Considering the judgment of High Court of Karnataka in case of LAXMIKANTH TIWARI VERSUS STATE OF KARNATAKA BY CHIEF SECRETARY, STATE OF KARNATAKA BY KADUGODI POLICE STATION, PAKKIRESH BADAMI S/O KR BADAMI [2022 (11) TMI 1381 - KARNATAKA HIGH COURT], wherein Hon’ble High Court of Karnataka has categorically recorded its finding that no case has been registered against the petitioner in Crime No. 129/2022 and prosecution initiated any proceeding based upon this crime number and the petitioner is not an accused in Crime No. 129/2022, as such, offence took place at Bengaluru in Crime No. 129/2022 cannot be predicated offence for registering case under PMLA, 2002 by the ED at Chhattisgarh wherein the applicant along with co-accused Suryakant Tiwari and others are being charged for involving in a money laundering case and the present applicant has been arrested in money laundering case along with co-accused, therefore, even if it is presumed (not accepting it in absence of any better material on record or order from the competent court) that no predicate offence has been levelled, therefore, the applicant is entitled to get bail under PMLA, 2002, is not acceptable and deserves to be rejected and also considering the case diary and other material placed on record, which prima facie shows involvement of the applicant in crime in question, therefore, considering entirety of the matter, this Court is of the opinion that the applicant is unable to satisfy twin conditions for grant of bail under Section 45 of the PMLA, 2002, as such, it is not a fit case for grant of bail to the applicant.
The bail application filed under Section 439 of the Cr.P.C. is liable to be and is hereby rejected.
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2023 (7) TMI 957
Seeking grant of bail - Money Laundering - aiding in fraudulent increase of inventory/stock in the account books of M/s Shakti Bhog Foods Limited [SBFL] which helped in increasing the borrowings - twin requirements of section 45 of PMLA complied with or not - reliaibility of statements u/s 50 of PMLA - HELD THAT:- In order to grant bail, this Court, in view of the twin conditions has to record a finding that there are reasonable grounds for believing that the applicant/accused is not guilty of the offence of money laundering. It is a settled proposition that “reasonable grounds” is something more than “prima facie”.
Although the email dt. 22.11.2013 does not bear the signatures of the Applicant and that the invoices are signed by Vijay Kumar Malhotra, CFO, the statements of witnesses as well as co-accused persons, recorded under Section 50 of PMLA, point out to the Applicant’s active participation in procuring fake invoices from shell companies. It also reveals that the Applicant assisted in transferring proceeds of crime to shell companies without any genuine business transactions - The Applicant cannot feign ignorance to these transactions as these transactions relate to purchase of material for SBFL and the Applicant admittedly was VP (Purchases).
Apart from fake invoices, fake transport invoices for these LCs were arranged under the applicant and others. Investigations revealed that total payment of Rs 342.05 crores (Rs. 111.26 crores in the form of L/C and Rs. 229.79 crores in the form of direct payments made from bank accounts) were made to 05 vendors of SBFL. On verification of (TAN and PAN) numbers of these vendors and their transporters, 02 of these vendors were found having invalid TAN and PAN of the non-existent transporters - the emails show the involvement of the applicant in the running of the affairs and business dealings of SBFL as he was either the originator or primary recipient. In view of such clear emails, at this stage a finding cannot be given that there are reasonable grounds for believing that the accused/applicant is not guilty of offence of money laundering. The emails categorially lead one to infer that the applicant was directly involved in process/activity connected to the proceeds of crime.
As per the statements given by AH Ansari, Sandeep Mishra, Vijay Kumar Malhotra, Ewin Ahuja, the Applicant was not merely an employee of the company who was bound by the decisions taken by Sh. Kewal Krishna Kumar. The defence of the Applicant that the applicant had no such knowledge of any illegal transactions by Sh. Kewal Krishna Kumar and his family members does not seem probable - The statements prima facie also lend credence to the fact that the applicant was not merely the paper director but was a director who was actively involved in the working of the SBFL.
In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], the Hon’ble Supreme Court has also held The Court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad, the words used in Section 45 of the 2002 Act are “reasonable grounds for believing” which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt.
The fact that the applicant is a 12th passed individual does not mean that he was not mentally adept to commit the alleged offense. The court at this stage is not required to delve deep into the evidence collected by the investigating agency or to make any findings about its authenticity or relevance to the applicant. It is also not required to make a finding of guilt, conduct a mini-trial, or meticulously examine the evidence. It only needs to be determined whether the applicant has successfully made out a case for me to state that there are reasonable grounds for believing that applicant is not guilty of the offence of money laundering - that there is sufficient incriminating evidence about the involvement of the accused/applicant in the offence of money laundering.
It is not only the statements u/s 50 PMLA which show the involvement of the applicant but other material such as emails as well as documents containing the signatures of the applicant which are also indicative of involvement of the applicant in the offence of money laundering. The statements have not been retracted.
The applicant is not guilty of the offence of money laundering - the application for bail of Mr. Tarun Kumar is dismissed.
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2023 (7) TMI 956
Condonation of delay in filing appeal before tribunal - availability of alternative remedy of appeal - Provisional attachment of multiple immovable properties - HELD THAT:- There is no disputation or disagreement that the writ petitioners have an alternate remedy by way of an appeal to Hon'ble Appellate Tribunal, PMLA, New Delhi under Section 26 of PMLA.
As regards alternate remedy, law is well settled that alternate remedy is not a bar for exercise of writ jurisdiction and that alternate remedy qua writ jurisdiction is a self imposed restraint. In other words, alternate remedy rule is not a absolute rule and it is a rule of discretion. Be that as it may, as regards the alternate remedy rule which is not a absolute rule and a rule of discretion, Hon'ble Supreme Court in a long line of authorities has repeatedly held that in fiscal law, the rigor of application of alternate remedy rule is very high.
In the present case, the writ petitioners have raised several points on merits in their campaign against the impugned common order made by the first respondent but as this Court is not entertaining captioned WPs by applying the alternate remedy rule, it is deemed appropriate to not to embark upon the exercise of examining the same - It should be recorded that learned counsel for petitioners submitted that he is conscious of the alternate remedy rule and therefore, predicated his admission board campaign on the aforementioned 180 days point for consideration and in this view of the matter also, it is deemed appropriate to not to discuss the merits of the writ petitioners' campaign against the impugned common order.
There is no cap as regards condonation. By saying no cap, it is meant that the Appellate Tribunal is not stifled when it comes to condonation of delay and any length of delay can be condoned. However, in the case on hand, adverting to the case file, learned counsel submitted that the impugned order has been received by the writ petitioners only on 06.02.2023 and captioned writ petitions have been filed in this Court on 20.03.2023.
The captioned writ petitions are disposed of as closed albeit preserving all the rights and contentions of the writ petitioners to approach the Appellate Tribunal under Section 26 of PMLA - Appeal disposed off.
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2023 (7) TMI 921
Seeking grant of bail - respondent is a ‘flight risk’ - HELD THAT:- Impugned order need not be interfered with.
Revenue would point out that the conditions imposed in the impugned order are insufficient in as much as the contention that the respondent is a ‘flight risk’, ought to have been taken note, and the passport of the respondent, ought to have been directed to be deposited - having perused the conditions, it is opined that it would be appropriate for the petitioner to file an appropriate application in the High Court seeking incorporation of the said condition and if such application is filed, the same may be considered in accordance with law.
Petition disposed off.
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2023 (7) TMI 920
Seeking grant of Regular Bail - Scheduled offence - laundering of black money and political money - these companies are used as Shell Companies by politicians - It was held by High Court that Considering all these aspects of the matter including the duration of custody of the petitioner in the present case, as he is in jail custody since 18.08.2022, the court comes to a conclusion that he is entitled to be granted bail.
HELD THAT:- There are no reason to interfere with the impugned judgment and hence, the special leave petition is dismissed.
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2023 (7) TMI 886
Validity of supplementary complaint under the provisions of Prevention of Money Laundering Act, 2002 - HELD THAT:- There are no reason to interfere with the impugned judgment, which dismisses the petition for quashing of the supplementary complaint under the provisions of Prevention of Money Laundering Act, 2002.
Accordingly, the present special leave petition is dismissed.
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2023 (7) TMI 885
Discontinuation of further proceedings under the PMLA Act - closure report in the predicate offence - HELD THAT:- Liberty may be reserved to the petitioner herein to take further steps under the said Act, including reviving these proceedings. The submission of learned ASG is placed on record.
The Special Leave Petitions are disposed of.
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2023 (7) TMI 757
Money Laundering - attachment of properties - petitioner submits that the amount deposited in the Adarsh Credit Cooperative Society Limited and their claim for such amount ought to be settled by the respondents on count of the fact that the assets of the such society ought to be utilized for reimbursing the lawful depositors - HELD THAT:- This Court in the case of DIPESH MISHRA, DR. RAKHI KHANNA, MAN MOHAN RATHI, MUKESH NAHATA, ASHA GUPTA, SURENDRA KUMAR VERMA, SUBHASH GUPTA, RAJA RAM SINGH, SHEEFALI SARASWAT AND OTHER VERSUS UNION OF INDIA, THE DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT AND OTHER [2022 (7) TMI 1437 - RAJASTHAN HIGH COURT] has held that it is not the correct remedy at this stage to approach this Court in the writ jurisdiction, as there is an appropriate remedy under Section 26 of the PLMA.
Upon such submissions having been made, this Court is conscious of the fact that earlier orders were being passed for making representation to the liquidator by the depositors for their respective claims, but the turn of events and particularly, the judgment of this Hon’ble Court as well as the proposition under the PMLA, which includes attachment and the adjudication before the appellate Tribunal, does not call for any interference at this stage.
The present petition is disposed of with liberty to the petitioners to take-up all their issues before the appellate Tribunal under the PMLA and also make their claim before the liquidator and such claim can be decided by the appellate Tribunal and in consequence of the same the liquidator may act strictly in accordance with law.
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2023 (7) TMI 720
Money Laundering - conspiracy - misappropriation and diversion of the food grains meant for persons below poverty line, mid-day meal and Antyoday scheme in Varanasi district - HELD THAT:- It is significant to note that the offence under Section 37 of the Air (Prevention and Control of Pollution) Act, 1981 was not mentioned in the Schedule of Offences appended to PMLA originally. It was inserted in paragraph 24 of Part B of the schedule by Act 21 of 2009. Thus the offence under Section 37 of the Air (Prevention and Control of Pollution) Act, 1981 was not a Scheduled Offence under PMLA during the period 12.09.1984 to 17.07.2007, which it was committed, yet the accused was charged with commission of offence under Section 3 of the PMLA. The co-ordinate Bench rightly did not interfere with the proceedings on the Ground that on the date of commission of the predicate offence, it was not a Scheduled Offence.
The offence of money laundering is an offence separate and distinct from the Scheduled offence. The complaint alleges that the petitioners have derived proceeds of crime and they have siphoned off the same. The petitioners have been involved in possession, acquisition and use of the proceeds of crime and they have enjoyed the proceeds of crime by it’s possession, acquisition and use.
The trial Court has ignored that the minimum threshold for all cash transaction or any transaction is given as per Rule 3 is ₹ 8,27,711/-.10 Lakh is concerned, although the ground does not specify as to which set of Rules is being referred by the petitioners, it appears that the petitioner is referring to Rule 3 of Prevention of Money-laundering (Maintenance of Records) Rules, 2005, which have been framed for regulating “maintenance of records of the nature and value of transactions, the procedure and manner of maintaining and time for furnishing of information and verification of records of the identity of the clients of the banking companies, financial institutions and intermediaries”.
Rule 3 has no relevance for deciding as to whether a person needs to be tried for commission of an offence under section 3 of PMLA - the trial Court has rightly rejected the application for discharges of the petitioners and there appears to be no illegality in the orders. In any case, the orders do not suffer from any such illegality as calls for interference of this Court in exercise of its revisional jurisdiction.
The revisions lack merit and the same are dismissed.
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