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Money Laundering - Case Laws
Showing 461 to 480 of 1544 Records
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2022 (10) TMI 737
Money Laundering - Provisional attachment order - third party property, having nexus with the proceeds of crime or not - Section 5 (1) of the Prevention of Money Laundering Act, 2002 as well as proceedings initiated under Section 8 (1) of the PMLA - effect of quashing of an order under Section 5 (1) - Whether the present challenge is maintainable/ entertainable under Article 226 of the Constitution of India? - Whether a third party property, having no nexus with the proceeds of crime, can be provisionally attached under Section 5 (1) of the PMLA? -HELD THAT:- In the present case, a portion of the property of the petitioner no.1-company and shares in the names of Mahesh and Alka in the company have been attached. The respondents allege that such fraction corresponds with the shareholding ratio of the accused Mahesh, Alka and their family in the petitioner no. 1-company - It is nobody’s case that any of the accused persons are directors of the petitioner no. 1-company. The respondents’ best case is that they are shareholders in the company. Hence, there is no scope of lifting the legal fiction of corporate veil in the present case, since, in their capacity as mere shareholders of the petitioner no. 1-company, the accused persons have no right, title and/or interest whatsoever in the assets of the company.
It seems a mere childish whim and paranoid fancy of the respondent no. 2 agency and its officials to apprehend a ghost where there is none to attach a fraction of the assets of the company “in proportion with the shares held" by the accused person in the company, without considering the rudiments of Company Jurisprudence - Even if only the shares in the name of the accused persons in the company (although acquired much prior to the alleged crime) were sought to be attached provisionally under Section 5 of the PMLA, some reason could be laboriously attributed to the same. Here, the respondent no. 2 goes one step further and calculates the share of the company’s assets in ratio with the number of shares held in the company by the accused and attaches the said “share” in the property provisionally. This would tantamount not to law enforcement but unwarranted muscle-flexing by the respondent no. 2-agency.
In the present case, the immovable property attached provisionally is owned by the petitioner no. 1-company and was purchased by the company much prior to the chain of events leading to the alleged money laundering. The petitioners are not even “suspects”, although some of them were summoned under Section 50 of the PMLA merely as persons who may be possessing relevant records or having knowledge of the circumstances of the commission of crime by the accused persons. Such circumstances, by themselves, are not sufficient to justify even provisional attachment of a portion of the petitioner no. 1-company’s assets - In the absence of such correlation between the company’s assets and the alleged scheduled offence in any manner whatsoever, the respondent no. 2 acted in gross abuse of the process of law in passing the provisional attachment order in respect of the company’s property.
What is the effect of quashing of an order under Section 5 (1) on a connected adjudication under Section 8 of the PMLA? - HELD THAT:- The effect of a quashing on technical ground and consequential remand, and that of prospective setting aside of the provisional order of attachment under Section 5 (1) on merits (hence, no question of remand arises), with regard to the provisional attachment of immovable property, as in the present case, on a proceeding or adjudication under Section 8 of the PMLA stand on entirely different footings. Thus, an ultimate quashing of a portion of the provisional attachment order under Section 5 (1) itself, with regard to a portion of the immovable property, would nullify the very premise of any resultant proceeding or adjudication under Section 8.
The petitioners have made out a strong prima facie triable case to go for final hearing in the writ petition, at least as far as the immovable properties of the petitioner no.1 is concerned.
Petition disposed off.
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2022 (10) TMI 635
Territorial jurisdiction to entertain the writ petition under Article 226 (2) of the Constitution of India - Criminal conspiracy - defrauding and cheating the Consortium of Banks led by the Central Bank of India - in furtherance of the criminal conspiracy induced the Central Bank of India, Corporate Finance Branch, Chennai by submitting fraudulent Letter of Credit documents without any physical movement of goods and unlawfully availed credit facilities for which they were not eligible.
Whether this court is having territorial jurisdiction to entertain the writ petition under Article 226 (2) of the Constitution of India? - HELD THAT:- The High Court of Madras in A. John Kennedy and Ors. v. Joint Director, Directorate of Enforcement, Cochin Zonal Office [2020 (12) TMI 1351 - MADRAS HIGH COURT] extracting the judgment of the Hon’ble Apex Court in KUSUM INGOTS & ALLOYS LTD. VERSUS UNION OF INDIA [2004 (4) TMI 342 - SUPREME COURT] observed that, even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be a determinative factor to decide the matter on merit.
All these cases would show how the legal position under Article 226(2) is evolving, how the concept of cause of action is incorporated in Article 226, the history behind it and though initially it is stated that even if a small fraction of the cause of action arises within the jurisdiction of the Court, that Court would have territorial jurisdiction to entertain the suit/petition to the extent that the petition is not maintainable before the Court where a small part of cause of action had arisen and the major part of cause of action shall be considered for applicability of territorial jurisdiction of the Court and had taken a full circle in observing that the concept of part of cause of action is irrelevant and had no application in criminal proceedings and only that High Court could entertain a prayer for quashing which has the supervisory jurisdiction over the jurisdictional court which is monitoring the investigation as per Cr.P.C.
The issue whether a writ petition under Article 226 is maintainable against a Criminal Court situated outside the territorial jurisdiction of the Court as well as whether the Court could judicially review the action of the Magistrate in taking cognizance of the offence located outside the territorial jurisdiction of the court is considered by the High Court of Kerala in Augustine Babu P.M. Vs. Mohd. Samiur Rahman Ansari and Ors. [2017 (8) TMI 1680 - KERALA HIGH COURT]. It held that There cannot be any dispute that the complaint before the Coimbatore court and taking cognizance of the same by the said court cannot be challenged under S.482 of the Cr.P.C or under Art.227 of the Constitution of India, before this Court. The only contention raised is that a Writ Petition under Article 226 will lie, in view of clause (2) thereof, as part of the cause of action in the transaction regarding issuance of the cheque, its dishonour etc., arose in Kerala.
Thus, even though a part of cause of action arises in this State, as the investigation was culminated in filing the charge sheet and the case is also taken cognizance by a competent court situated outside the territorial limits of this State, this Court cannot exercise its jurisdiction to entertain the writ petition under Article 226(2) of the Constitution of India.
Whether taking cognizance of the offence under PMLA by the Principle Session Judge, Chennai in CC 1 of 2021 against the petitioner is in accordance with law? - HELD THAT:- Since the question of territorial jurisdiction is answered against the petitioner, it is considered not appropriate to deal with the merits of the matter to answer this question.
The writ petition is dismissed.
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2022 (10) TMI 634
Money Laundering - proceeds of crime - seeking enlargement on Bail - fudging its debtors list with inflated receivables from non-existing entities or related parties or companies floated by its own employees to avail loan facility fraudulently - diversion of funds without actual trade/sales - HELD THAT:- As on the date of expiry of 90th day, no report under Section 173 Cr.P.C. was on record with the Magistrate. On expiry of 90 days, the accused filed an application for bail invoking Section 167(2) Cr.P.C. The Judicial Magistrate rejected to extend the benefit under Section 167(2) Cr.P.C.
Article 21 of the Constitution of India says that no person shall be deprived of his life or personal liberty except according to procedure established by law. Referring this provision, it is time and again enunciated by the Hon’ble Apex Court in series of decisions that it is the heart of the Constitution of India and that it is one of the prominent provisions which safeguards the life and personal liberty of the citizens of the country. One may not dispute the fact that the indefeasible right to default bail under Section 167(2) Cr.P.C. is an integral part of right to personal liberty under Article 21 of the Constitution of India.
It is clear that in a case, which relates to an offence punishable with death, imprisonment for life or imprisonment for a term of not less than ten years, the investigation is required to be completed within 90 days, and in all other offences within 60 days. It is specifically mentioned that on expiry of the said period i.e., 90 days or 60 days as the case may be, the accused shall be released on bail - There is no provision in the entire Code of Criminal Procedure authorizing any of the Courts to extend such period. The above provisions in the Code of Criminal Procedure are aimed at ensuring expeditious investigation, fair trial and more so, to safeguard the life and personal liberty of the citizens against whom accusation is made.
This Court is of the view that the investigating agency has not completed its investigation within the statutory period i.e., within 60 days as required under Section 167(2) Cr.P.C. Filing of some set of papers by giving a title “charge sheet” does not mean that the same is filed as a final report on completion of investigation. The mandate of law is that on completion of investigation, the final report/charge sheet has to be filed within the statutory period in the format as laid down under Section 173 Cr.P.C. - it is clearly brought on record that only to get over the obligation of filing of the charge sheet within the statutory period so that the accused would not raise plea of grant of statutory bail under Section 167(2) Cr.P.C., it appears that the respondent has filed a formal charge sheet without any material.
The order that is rendered by the Court of Metropolitan Sessions Judge-cum-Special Court under the Prevention of Money Laundering Act, Hyderabad is hereby set aside - Petition allowed.
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2022 (10) TMI 633
Validity of proceeding pursuant to Annexures-2, 3 & 8 (series) - seeking de-freezing the Bank account - HELD THAT:- From the nature of proceeding undertaken pursuant to Annexure-8 page 69 of the brief, this Court finds, this document is in shape of attachment of property of the Petitioners upon prima facie opinion of existence of offence under the provisions of the Act, 2002 and Annexures-2 & 3 are all consequential outcomes pursuant to development through Annexure-8.
As appears from Annexure-8 the proceeding is still in U/s.17(A) of the Act, 2002 stage and prayer so far it relates to take-out the proceeding U/s.17(A) of the Act, 2002 and the consequential freezing order of attachment to Annexure-8, for not passing of time fixed through the provision at Section 5 and 8 as well, cannot be considered at this stage of the matter. Surprisingly the Petitioners even not filed their objection to the notice vide Annexure-8. For leaving no scope for considering the validity of the notice vide Annexure-8 for its prematureness, this Court dealing with the ultimate prayer of the Petitioners for de-freezing the amount involving the notice under Annexures-2(series) & 3, since finds, the development through Annexures-2(series) & 3 since not arising out of the subject involving Section 17(1-A) of the Act, 2002, the notice at Annexure-8 (series) cannot be considered in the present proceeding.
Petition disposed off.
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2022 (10) TMI 518
Demand of bribe by Insolvency Professional - Rejection of application for dispensing with the personal appearance of the petitioner - Section 205 of the Code of Criminal Procedure (Cr.P.C.) - Applicability of Section 44 and 45 of the PMLA Act, 2002 - HELD THAT:- On perusal of the proviso of section 45 of the PMLA Act, it transpires that if the allegation is of money laundering of a sum of rupees less than rupees one crore, the learned special court can release on bail if the person is of age of 16 years or a woman or sick or infirm. In the case in hand, it has been submitted that the petitioner has suffered from Covid-19 twice and he is having ailments and on that ground, he has filed a petition before the learned court. In the petition filed under section 205 Cr.P.C before the learned court and certified copy of which is on the record, it has been disclosed in paragraph no.12 that the petitioner undertakes in it that he will not dispute his identify during trial if he is allowed exemption. The undertaking in that particular paragraph is also there to the effect that he will appear in person as and when deemed fit by the learned court.
On the record, there is nothing to suggest that due to the petitioner at any point of time, the investigation has been delayed. It has been disclosed that the petitioner has cooperated under section 50 of the PMLA Act. Admittedly, the allegation against the petitioner is of taking bribe of Rs.5 lakhs and proviso to section 45 of the PMLA Act speaks of that if the proceed is less than of rupees one crore, the bail can be granted. The law is well settled that as per sub-section 1 of section 205 Cr.P.C., whenever a Magistrate issues a summons, he may, if he sees reason so to do, dispense with the personal attendance of the accused and permit him to appear by his pleader. As per sub-section 2 of section 205 of the Cr.P.C, the Magistrate in inquiring into or trying the case may, in his discretion, at any stage of the proceedings, direct the personal attendance of the accused, and, if necessary, enforce such attendance in a manner hereinbefore provided. Thus, the learned Magistrate has a discretion to dispense with the personal attendance of the accused and to permit him to appear by the pleader.
The purpose of exemption under section 205 Cr.P.C is that the order of the learned magistrate should be such which does not make any unnecessary harassment to the accused and at the same time does not cause any prejudice to the complainant and the learned court is required to ensure that exemption from personal appearance granted to the accused is not an abuse or delay the trial.
The order dated 09.05.2022 passed in Misc. Criminal Application No.362 of 2022 by learned Additional Judicial Commissioner-XVIII-cum-Special Judge, Prevention of Money Laundering Act, Ranchi whereby the petition filed by the petitioner under Section 205 of the Code of Criminal Procedure (Cr.P.C.) for dispensing with the personal appearance of the petitioner has been rejected in connection with ECIR 05/2021, corresponding to CNR-JHRN01-002561-2022, pending in the same learned court is set-aside.
Application allowed.
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2022 (10) TMI 198
Seeking grant of bail - money laundering - proceeds of crime - creation of various assets in the name of his family members out of unaccounted money - twin conditions under Section 45 of the PMLA - HELD THAT:- As the starting point of the alleged demand to collect money from the bars and restaurants was allegedly in the meeting in the month of October 2020 in which Mr. Karunakar Shetty had given the list of 1750 bars and restaurants, during the course of hearing, the Court inquired as to whether the statement of Mr. Karunakar Shetty was recorded. Mr. Anil Singh fairly tendered a copy of the statement of Mr. Karunakar Shetty which was recorded on 8th November, 2021. It would be suffice to note that Mr. Karunakar Shetty had a different tale to tell. He claimed to have met Mr. Sachin Waze once and, in the said meeting, the latter demanded Rs.10 lakhs for unhindered functioning of his restaurants and bar till late hours - In the confession before the learned Magistrate, Mr. Sachin Waze stated that he received call from Mr. Kundan Shinde and, thereupon, went to the designated places and delivered the cash. No call was thus attributed to the Applicant before the delivery of the cash amount. This omission, prima facie, cannot be said to be innocuous. In a sense this runs against the claim of Mr. Sachin Waze of direct instructions by the Applicant to Mr. Sachin Waze, immediately before the alleged delivery of cash to Mr. Kundan Shinde.
Without delving into the aspect of the alleged inconsistent statements made by Mr Sachin Waze before the other forums including Justice Chandiwal Commission of Enquiry, where Mr. Sachin Waze, allegedly disowned everything, in my view, the aforesaid material, prima facie, renders it unsafe to place reliance on the statement of Mr. Sachin Waze, a co-accused, that cash amount was collected and delivered to Mr. Kundan Shinde at the instructions of the Applicant.
The material on record does indicate that the Applicant has been suffering from multiple ailments. He is 73 years of age. Few of the ailments may classified as de-generative. The medical reports/certificates also show that the Applicant is suffering from chronic ailments, as well. In the light of the material on record, it would be audacious to observe that the Applicant is not a sick person - Evidently, the exercise of discretion on medical ground is rooted in facts of a given case. In the case at hand, the Court has considered the entitlement of the Applicant for bail on merits as well, and found a prima facie case for exercise of discretion is made out. As the proviso empowers the Court to exercise the discretion in favour of an accused who is otherwise sick or infirm, the Court has considered the material on record and finds, in the totality of the circumstances, a case for exercise of the discretion under the proviso as well.
The Applicant appears to have roots in society. The possibility of fleeing away from justice seems remote. The apprehension on the part of the prosecution of tampering with evidence and threatening the witnesses can be taken care of by imposing appropriate conditions - Application allowed.
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2022 (10) TMI 197
Seeking grant of anticipatory bail - Money Laundering - proceeds of crime - siphoning off of funds of partnership firm - HELD THAT:- In view of the statement of applicant under Section 50 of the Act, 2002, it cannot be denied that he was not involved in the alleged offence. The applicant was not the dormant partner of the firm, rather he had actively participated on behalf of the firm in commission of the alleged offence being in direct contact with another partner Sanjay Kumar Tiwary. In view of the Section 25 of the Indian Partnership Act, 1932 every partner of a firm is jointly along with other partners and also severally liable for all acts of the firm done, while he is a partner. Therefore, even if the charge-sheet was not filed against the applicant in the scheduled offence in individual capacity; but substantially and materially the allegations are against M/s. Bhanu Construction firm and the authorized signatory Sanjay Kumar Tiwary against whom the charge-sheet was filed in the scheduled offence being in individual capacity also. But for the act of the firm both partners are liable and it cannot be accepted that the applicant Suresh Kumar was not involved in the alleged offence.
In the case in hand, though the charge-sheet was not filed in individual capacity against the applicant but all the allegations are against the M/s. Bhanu Construction, a partnership firm and the applicant is the partner of the said firm and he is jointly and severally liable for the act of the said firm.
The anticipatory bail is nothing; but a bail granted in anticipation of arrest, hence it has been held in various judgments by Hon’ble Apex Court that the principles governing the grant of bail in both cases are more or less on same footing. Thus ordinarily anticipatory bail is granted in the exceptional cases where the accused has been falsely implicated in an offence with a view to harass and humiliate him. Therefore it would not be logical to disregard the limitation imposed on granting bail under Section 45 of the 2002 Act, in case of anticipatory as well.
Thus, the plea raised by the learned counsel for the applicant is not accepted that the applicant was not involved in commission of the alleged offence, rather in capacity of a partner of M/s. Bhanu Construction his involvement is prima facie made out and there are reasonable grounds for believing that he has committed the aforesaid offence and is likely to commit offence, if enlarged on bail.
The applicant’s prayer for anticipatory bail is, hereby, rejected.
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2022 (10) TMI 11
Freezing of proceeds of crime - reasons to believe recorded for retention of the property under Section 20 of the PMLA - HELD THAT:- The appellants are entitled to an opportunity before the learned Single Judge and to file the requisite documents along with affidavit-in-opposition. The order of the learned Single Judge is interlocutory in nature, therefore, the conclusions drawn therein and findings recorded therein are only tentative in nature.
The appeal is disposed off by setting aside the last sentence of paragraph 21 of the order of the learned Single Judge which states “WPA 17454 of 2022 is disposed of in terms of the above” and permit the appellants to file affidavit-in-opposition within two working weeks from today before the learned Single Judge in WPA 17454 of 2022 and thereafter, affidavit-in-reply be filed within two working weeks - appeal disposed off.
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2022 (10) TMI 10
Money Laundering - proceeds of crime - reverse burden on the suspect - offence under section 3 punishable under Section 4 of Prevention of Money Laundering Act, 2002 - HELD THAT:- Money laundering is the process of conversion of such proceeds of crime, “dirty money” to make it appear as legitimate money. As the Act deals with socio-economic offence, it deviates from the beaten track of the common law on the burden of proof. In fact Section 24 of the Act casts a reverse burden on the suspect. In any proceeding relating to the proceeds of crime under the Act, the Authority or Court shall presume that “such proceeds of crime are involved in money laundering” unless the person charged with the offence of money laundering under Section 3 proves to the contrary.
The offence of money laundering is threefold including the stages of placement, whereby the criminals place the proceeds of crime to the general and genuine financial system, layering, whereby such proceeds of crime are spread into various transactions within the financial system and finally, integration, where the criminals avail the benefits of crime as untainted money.
There are serious allegation of proceeds of crime and transferring the money to one company to another, the case is made out against the petitioners. There is no illegality in the orders by which the petitioners have been summoned - Petition dismissed.
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2022 (9) TMI 1527
Grant of bail - Money Laundering - siphoning off of funds to purchase properties in the name of his wife Nisha, and subsequently she gifted a few properties to their daughter - HELD THAT:- There is prima facie evidence which points out embezzlement and laundering of massive sum of money and there is clear cut evidence of the gift amount of around Rs.26.42 crores. The statement made in the reply mentioned above corroborated by the digital and documentary evidence - The frauds of crime are approximately Rs.155.21 crores.
Given the fact that there is prima facie sufficient evidence connecting the petitioner with the aforesaid amount and also considering the massive amount involved, the petitioner is not entitled to bail - the petition is dismissed.
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2022 (9) TMI 1498
Money Laundering - proceeds or crime - stand-alone offences or not - preceding the trial under scheduled offence - Seeking a correction in the appropriate procedure to be followed while conducting enquiry and trial of offences classified as "scheduled offences" under the Prevention of Money Laundering Act, 2002 - HELD THAT:- The proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. The Explanation clarifies that proceeds of crime would include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence - Scheduled offence is defined in Section 2(1)(y) to mean offences specified under Part A of the Schedule; or offences under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or offences specified under Part C of the Schedule. Schedule means the Schedule to the PMLA (Section 2(1)(x)).
In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR [2017 (11) TMI 1336 - SUPREME COURT], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA.
Thus, Supreme Court has expressed the view that expression proceeds of crime which is the very essence of the offence of money laundering needs to be construed strictly. Only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. On the above basis, Supreme Court has held that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction either on account of discharge or acquittal or quashing of the criminal case (scheduled offence), there can be no action for money laundering against such a person or a person claiming through him in relation to the property linked to the stated scheduled offence. No other view is possible.
The Supreme Court posed the question as to whether the offence under Section 3 is a standalone offence? - Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him.
Section 44 of PMLA clarifies that notwithstanding anything in Cr.P.C., any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering, the authority authorized under the PMLA to file complaint shall file an application before the Special Court trying the scheduled offence and on such application being filed, the Special Court shall commit the case relating to the scheduled offence to the Special Court, which shall thereafter proceed with the case from the stage at which it is committed. The purpose behind this provision is to ensure that the scheduled offence and the offence of money laundering under PMLA are not tried by two different Courts which may lead to contrary/conflicting verdicts - The investigation, enquiry or trial under PMLA would not be dependent upon any "order" in respect of the scheduled offence. An "order" as is understood in Cr.P.C. is not a conclusive pronouncement at the end of the trial. Section 235 of Cr.P.C. says that after hearing arguments and point of law, the judge shall give a judgment in the case, which may either be of acquittal or of conviction. It is on this basis, Supreme Court has observed that conviction under Section 4 of PMLA for committing offence under Section 3 is dependent upon conviction for a scheduled offence; if there is no crime there cannot be any proceeds of crime. And if there are no proceeds of crime, the offence of money laundering cannot be sustained. It is on this logic, Supreme Court has held as above in Vijay Madanlal Choudhary.
Thus, the position which emerges is that existence of scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA, but also for continuation thereof. In the absence of these two conditions, the Special Court dealing with the offence under PMLA would not be competent to pronounce on the guilt or otherwise of the person concerned accused of money laundering.
Petition allowed.
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2022 (9) TMI 1497
Money Laundering - proceeds or crime - stand-alone offences or not - preceding the trial under scheduled offence - Seeking a correction in the appropriate procedure to be followed while conducting enquiry and trial of offences classified as "scheduled offences" under the Prevention of Money Laundering Act, 2002 - HELD THAT:- The proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. The Explanation clarifies that proceeds of crime would include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence - Scheduled offence is defined in Section 2(1)(y) to mean offences specified under Part A of the Schedule; or offences under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or offences specified under Part C of the Schedule. Schedule means the Schedule to the PMLA (Section 2(1)(x)).
In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR [2017 (11) TMI 1336 - SUPREME COURT], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA.
Thus, Supreme Court has expressed the view that expression proceeds of crime which is the very essence of the offence of money laundering needs to be construed strictly. Only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. On the above basis, Supreme Court has held that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction either on account of discharge or acquittal or quashing of the criminal case (scheduled offence), there can be no action for money laundering against such a person or a person claiming through him in relation to the property linked to the stated scheduled offence. No other view is possible.
The Supreme Court posed the question as to whether the offence under Section 3 is a standalone offence? - Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him.
Section 44 of PMLA clarifies that notwithstanding anything in Cr.P.C., any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering, the authority authorized under the PMLA to file complaint shall file an application before the Special Court trying the scheduled offence and on such application being filed, the Special Court shall commit the case relating to the scheduled offence to the Special Court, which shall thereafter proceed with the case from the stage at which it is committed. The purpose behind this provision is to ensure that the scheduled offence and the offence of money laundering under PMLA are not tried by two different Courts which may lead to contrary/conflicting verdicts - The investigation, enquiry or trial under PMLA would not be dependent upon any "order" in respect of the scheduled offence. An "order" as is understood in Cr.P.C. is not a conclusive pronouncement at the end of the trial. Section 235 of Cr.P.C. says that after hearing arguments and point of law, the judge shall give a judgment in the case, which may either be of acquittal or of conviction. It is on this basis, Supreme Court has observed that conviction under Section 4 of PMLA for committing offence under Section 3 is dependent upon conviction for a scheduled offence; if there is no crime there cannot be any proceeds of crime. And if there are no proceeds of crime, the offence of money laundering cannot be sustained. It is on this logic, Supreme Court has held as above in Vijay Madanlal Choudhary.
Thus, the position which emerges is that existence of scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA, but also for continuation thereof. In the absence of these two conditions, the Special Court dealing with the offence under PMLA would not be competent to pronounce on the guilt or otherwise of the person concerned accused of money laundering.
Petition allowed.
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2022 (9) TMI 1496
Money Laundering - proceeds or crime - stand-alone offences or not - preceding the trial under scheduled offence - Seeking a correction in the appropriate procedure to be followed while conducting enquiry and trial of offences classified as "scheduled offences" under the Prevention of Money Laundering Act, 2002 - HELD THAT:- The proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. The Explanation clarifies that proceeds of crime would include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence - Scheduled offence is defined in Section 2(1)(y) to mean offences specified under Part A of the Schedule; or offences under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or offences specified under Part C of the Schedule. Schedule means the Schedule to the PMLA (Section 2(1)(x)).
In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in NIKESH TARACHAND SHAH VERSUS UNION OF INDIA AND ANR [2017 (11) TMI 1336 - SUPREME COURT], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA.
Thus, Supreme Court has expressed the view that expression proceeds of crime which is the very essence of the offence of money laundering needs to be construed strictly. Only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. On the above basis, Supreme Court has held that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction either on account of discharge or acquittal or quashing of the criminal case (scheduled offence), there can be no action for money laundering against such a person or a person claiming through him in relation to the property linked to the stated scheduled offence. No other view is possible.
The Supreme Court posed the question as to whether the offence under Section 3 is a standalone offence? - Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him.
Section 44 of PMLA clarifies that notwithstanding anything in Cr.P.C., any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering, the authority authorized under the PMLA to file complaint shall file an application before the Special Court trying the scheduled offence and on such application being filed, the Special Court shall commit the case relating to the scheduled offence to the Special Court, which shall thereafter proceed with the case from the stage at which it is committed. The purpose behind this provision is to ensure that the scheduled offence and the offence of money laundering under PMLA are not tried by two different Courts which may lead to contrary/conflicting verdicts - The investigation, enquiry or trial under PMLA would not be dependent upon any "order" in respect of the scheduled offence. An "order" as is understood in Cr.P.C. is not a conclusive pronouncement at the end of the trial. Section 235 of Cr.P.C. says that after hearing arguments and point of law, the judge shall give a judgment in the case, which may either be of acquittal or of conviction. It is on this basis, Supreme Court has observed that conviction under Section 4 of PMLA for committing offence under Section 3 is dependent upon conviction for a scheduled offence; if there is no crime there cannot be any proceeds of crime. And if there are no proceeds of crime, the offence of money laundering cannot be sustained. It is on this logic, Supreme Court has held as above in Vijay Madanlal Choudhary.
Thus, the position which emerges is that existence of scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA, but also for continuation thereof. In the absence of these two conditions, the Special Court dealing with the offence under PMLA would not be competent to pronounce on the guilt or otherwise of the person concerned accused of money laundering.
Petition allowed.
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2022 (9) TMI 1492
Money Laundering - the Settlement Commissioner completed the work that was assigned to him and submitted a report to this court, based on which, the prosecution in C.C. No. 3876 of 2009 was quashed by this Court - HELD THAT:- Reliance placed in the case of [2022 (7) TMI 1316 - SUPREME COURT], where it was held that The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.
In view of the aforesaid categorical pronouncement of the Supreme Court, the quash petition deserves to be allowed since the prosecution of the accused in the predicate offence has already been quashed by this court - petition allowed.
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2022 (9) TMI 1478
Money Laundering - scheduled offence - illicit money or not - inclusion of Sections 467, 468 and 471 of IPC subsequently in the FIR, can be a cause of action for the Enforcement Directorate to maintain the complaint or not - HELD THAT:- It may be relevant to state that the an officer of the Enforcement Directorate is not a police officer within the meaning of Section 25 of The Evidence Act. As observed by the Supreme Court in a catena of decisions including Ramesh Chandra Mehta vs State of West Bengal [1968 (10) TMI 50 - SUPREME COURT], a person becomes an accused in an economic offence investigated by non-police officials so as to avail of the protection under Article 22(1) of the Constitution of India only when there is a formal accusation laid against him. In this case, the Enforcement Directorate registered the case on 19.03.2012 and Nagarajan (A1) was only considered as a suspect. No formal accusation was laid against him as the enquiry had only then begun.
Applicability of Section 420 IPC, in the absence of any person complaining that he was cheated - HELD THAT:- On a scrutiny of the facts alleged in the police case, it is seen that this group appears to have printed the lottery tickets of other States and sold to public in Tamil Nadu. Are not the ingredients of cheating and dishonestly inducing delivery of property inbuilt in this allegation? True, that those who had purchased the lottery tickets from this group have not been identified by the police. But, that cannot be a reason to hold that there is no material in the police case to prosecute the offenders under Section 420 IPC.
The impugned complaint is bereft of prima facie materials for quashing the same - this Criminal Original Petition is dismissed.
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2022 (9) TMI 1449
Money Laundering - Criminal Conspiracy - applied for a loan with fake documents - siphoning off of funds - cheating - predicate offence - statutory presumption - HELD THAT:- In Rajendra Singh v. State of U.P. & others [2007 (8) TMI 752 - SUPREME COURT], the Supreme Court has held that the the statements of the witnesses under Section 161 Cr.P.C. being wholly inadmissible in evidence could not at all be taken into consideration. - It was also held that mere fact that trial of co-accused Daya Singh has concluded cannot have the effect of nullifying or making the order passed by the learned Sessions Judge on 26.5.2005 as infructuous.
Rajendran [A6] had voluntarily lent his name for the purchase of the property under the sale deed dated 09.09.2009 with the tainted money that was generated by G.Srinivasan [A1] and R.Manoharan [A2] by committing a scheduled offence. Under Section 24 of the PMLA, there is a statutory presumption which can be discharged only during trial.
The trial Court shall proceed with the trial of the case without in any manner influenced by what is stated are only for the limited purpose of disposing of this quash petition - Petition dismissed.
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2022 (9) TMI 1448
Money Laundering - scheduled offence - proceeds of crime - Seeking a correction in the appropriate procedure to be followed while conducting enquiry and trial of offences classified as “scheduled offences” under the Prevention of Money Laundering Act, 2002 - HELD THAT:- In Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT], Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in Nikesh Tarachand Shah v. Union of India [2017 (11) TMI 1336 - SUPREME COURT], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA.
Supreme Court has expressed the view that expression proceeds of crime which is the very essence of the offence of money laundering needs to be construed strictly. Only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. On the above basis, Supreme Court has held that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction either on account of discharge or acquittal or quashing of the criminal case (scheduled offence), there can be no action for money laundering against such a person or a person claiming through him in relation to the property linked to the stated scheduled offence. No other view is possible - Supreme Court expressed the view that it is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of acquittal or discharge of the person in connection with the scheduled offence. The above decision of the Supreme Court has now cleared the legal position. It succinctly sums up that offence under Section 3 is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. In the event of acquittal of the person concerned or being absolved from the allegation of criminal activity relating to scheduled offence and if it is established that crime property in the concerned case is rightly owned and possessed by the concerned person, such a property by no stretch of imagination can be termed as crime property.
Thus, Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him.
Section 44 of PMLA clarifies that notwithstanding anything in CrPC, any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering, the authority authorized under the PMLA to file complaint shall file an application before the Special Court trying the scheduled offence and on such application being filed, the Special Court shall commit the case relating to the scheduled offence to the Special Court, which shall thereafter proceed with the case from the stage at which it is committed. The purpose behind this provision is to ensure that the scheduled offence and the offence of money laundering under PMLA are not tried by two different Courts which may lead to contrary/conflicting verdicts - Section 235 of CrPC says that after hearing arguments and point of law, the judge shall give a judgment in the case, which may either be of acquittal or of conviction. It is on this basis, Supreme Court has observed that conviction under Section 4 of PMLA for committing offence under Section 3 is dependent upon conviction for a scheduled offence; if there is no crime there cannot be any proceeds of crime. And if there are no proceeds of crime, the offence of money laundering cannot be sustained.
The position which emerges is that existence of scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA, but also for continuation thereof. In the absence of these two conditions, the Special Court dealing with the offence under PMLA would not be competent to pronounce on the guilt or otherwise of the person concerned accused of money laundering.
Petition allowed.
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2022 (9) TMI 1437
Seeking defreezing of Bank Accounts - HELD THAT:- Bearing in mind the interim directions which were passed on the writ petition as well as the orders passed on the writ petitions preferred by other dealers of VIVO MOBILE INDIA PVT. LTD, M/S GRAND PROSPECT INTERNATIONAL COMMUNICATION PVT LTD VERSUS DIRECTORATE OF ENFORCEMENT [2022 (9) TMI 1435 - DELHI HIGH COURT], the Court provides in the interim that while the petitioner shall be permitted to operate the bank accounts which stand freezed pursuant to the impugned orders, it shall ensure that a credit balance of Rs. 10,45,94,868.9/- is maintained at all times.
Additionally, the petitioner shall furnish statement of accounts of all the bank accounts forming subject matter of the freezing order every 48 hours to the Enforcement Directorate. The Court further restrains the petitioner from repatriating any proceeds which may come to be credited to the subject bank accounts outside the country till the next date of listing.
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2022 (9) TMI 1435
Seeking defreezing of Bank Accounts of petitioner - HELD THAT:- In view of the matter the Court leaves it open to the petitioner to bring the aforesaid facts to the attention of the concerned Financial Institution. The Financial Institution shall proceed further in terms of the order of 01 September 2022. The Court further reserves liberty to the petitioner to approach in case further directions are warranted.
List on 02.11.2022.
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2022 (9) TMI 1433
Locus of the petitioner-ED in a closure report filed by the State of Maharashtra before the Magistrate, in a case registered at the behest of respondent No.2-Akbar Travels (India) Pvt. Ltd. - HELD THAT:- There are no reason to interfere with the same. However, question of law, if any raised, is kept open.
Petition disposed off.
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