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Money Laundering - Case Laws
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2024 (2) TMI 772
Money Laundering - scheduled offences - Illegal arrest/detention - Non-application of mind and non-recording of compliance of the conditions/stipulations contained in Section 19 by the Special Court while passing the impugned orders - Illegal detention/wrongful restraint of the petitioners from 04.01.2024 to 08.01.2024 amounting to arrest on 04.01.2024 itself and consequential violations of Section 19 of PMLA read with Section 167 CrPC on account of non-production of petitioners within 24 hours - Violation of the provisions of Section 19(2) of the 2002 Act - Non-compliance of Section 19(1) of the 2002 Act.
Non-application of mind and non-recording of the conditions/stipulations contained in section 19 by the Special Court while passing the impugned remand orders - HELD THAT:- A perusal of the Section 19 of PMLA would show that the same contains three Sub-Sections. Under Sub-Section 1, the concerned officer who could be the Director, Deputy Director, Assistant Director or any other officer authorized in this behalf by the Central Government, may arrest a person after, on the basis of the material in his possession, he has reason to believe, which belief has to be recorded in writing, that any person is guilty of an offence punishable under the Act. Sub-Section 1 further provides that after the arrest, the person so arrested, is required to be informed about the grounds of such arrest "as soon as may be" - Sub-Section 3 further provides that the person arrested shall within 24 hours be taken to the Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be having jurisdiction.
The Hon'ble Supreme Court in the case of V.Senthil Balaji [2023 (8) TMI 410 - SUPREME COURT] had observed that the provisions of Section 19 are mandatory and the compliance of the said provisions is a solemn function of the arresting authority which brooks no exception and that the officer concerned is to strictly comply with the mandate of Section 19 in its letter and spirit, failing which he would be visited with the consequences as have been mentioned under the 2002 Act.
It is incumbent upon the Special Court/concerned Court at the time of remanding the accused to the custody of ED, to peruse the order of arrest and to see due compliance of provisions of Section 19 of the 2002 Act and also reflect the same in the order of remand by making a specific observation regarding the same.
Whether the Special Court, in the present case, has passed the order of remand in accordance with law and in accordance with the provisions of Section 19? - HELD THAT:- Since, the petitioners were produced before the Special Court at Gurugram on 09.01.2024 thus, it was incumbent upon the said Court to consider the material to see as to whether as on 09.01.2024, any cause had arisen so as to produce the petitioners before the said Court and in case any such cause had arisen then to specifically state so in the order of remand. In the instant case, the same has not been done by the Court concerned.
Importantly, the Special Court has also not made any observations with respect to the due compliance by the authority of Section 19(1). There is no reference in the order of remand to state that the Court had perused the order, if any, recording the reason to believe that the petitioners are guilty of the offence punishable under the 2002 Act or the grounds of arrest in writing and had satisfied itself that the arresting officer, on the basis of material in his possession, had reason to believe that the petitioners were guilty of the offence punishable under the Act. No such fact has been recorded in the impugned order. On the said aspect, it has only been observed in the impugned order that once ECIR has been registered and during investigation, a prima facie case for the commission of the offence under the 2002 Act has been found, then the Directorate of Enforcement is bound to trace the money for which it required to interrogate the petitioners in custody. The said order is thus, illegal and deserves to be set aside on the said ground alone.
Illegal detention/wrongful restraint of the petitioners from 04.01.2024 to 08.01.2024 amounting to arrest on 04.01.2024 itself and consequential violations of section 19 of PMLA read with section 167 CrPC on account of non-production of petitioners within 24 hours - HELD THAT:- It is apparent that respondent authorities had illegally confined/unlawfully restrained the petitioners in the premises in question from 04.01.2024 to 08.01.2024 and thus, in effect had arrested the petitioners on 04.01.2024 itself but had not produced the petitioners before the concerned Court within 24 hours from the date of their actual arrest i.e. 04.01.2024 nor had complied with the other conditions mentioned in Section 19(1), 19(2), 19(3) and thus, arrest and all subsequent orders including remand orders are illegal and against law and deserve to be set aside.
The judgment of the Single Bench of the Delhi High Court in case of Gautam Thapar (supra) relied upon by the counsel for the respondents would not further the case of the respondents. The facts in the said case were completely different from the facts in the present case inasmuch as the said case was not a case where there was unlawful restraint/illegal detention for a period of more than four days nor there was any averment of the respondent authorities in the said case in the reply as is there in the present case which clearly shows that the petitioners, in the present case, were confined to the four walls of the premises in question from 04.01.2024 to 08.01.2024. The judgments relied upon on behalf of the petitioners, relevant portion of which is reproduced hereinabove, are on the other hand fully applicable to the facts of the present case.
The order of arrest and the impugned orders of remand and all the subsequent proceedings arising thereto deserve to be set aside on this ground also.
Violation of provisions of section 19(2) of the Act, 2002 - HELD THAT:- In paragraph 311 of Vijay Madanlal Chaudhary [2022 (7) TMI 1316 - SUPREME COURT] while considering the provisions of Section 5 (2) and 17(2) of the 2002 Act, which also require the competent officer to immediately after attachment under Section 5(1) and after search and seizure under Section 17(1), to forward a copy of the order along with material in his possession to the Adjudicating Authority, the Hon’ble Supreme Court of India was pleased to use the term “contemporaneously” and had observed that the reasons to believe were required to be recorded in writing and contemporaneously forwarded to the Adjudicating Authority along with the material in possession in the sealed envelope.
In the present case, admittedly, the compliance of Section 19(2) was not done till 09.01.2024, and the orders of remand dated 09.01.2024 of both the petitioners do not even remotely show that the Special Court had observed anything regarding its compliance. Even the order dated 16.01.2024 passed by the Special Court extending the remand of both the petitioners does not even remotely mention that there was any compliance of Section 19(2).
It is apparent that compliance of Section 19 including Section 19(2) is mandatory and brooks no exception. Accordingly, in view of the facts and circumstances, it is held that there is violation of the provisions of Section 19(2) of the 2002 Act on account of which also the impugned action is bad in law and is liable to be set aside.
Non-compliance of section 19(1) of Act, 2002 - HELD THAT:- In the present case it is the admitted case of the parties that both the petitioners are not accused till date in the 8 FIRs which have been reproduced in the grounds of arrest of both the petitioners. It is further the admitted case of the parties that no notice under Section 50 which empowers the competent authority to summon any person and also to produce the documents as required, has been issued to either of the two petitioners. From the discussion made hereinabove, it is also clear that the petitioners were in the premises where the search was being conducted from 04.01.2024 to 08.01.2024. A perusal of the grounds of arrest of both the petitioners would show that although it has been stated by the competent officer that the petitioners have adopted an attitude of non-cooperation by evading the queries and by giving misleading answers but no specific instance regarding the same has been mentioned.
By filing the said additional reply dated 29.01.2024, respondent no.2 has tried to show the sequence of events in order to explain the delay in compliance of Section 19(2) but a closer perusal of the said paragraph would show that in case the preliminary scrutiny of documents had been done on 10.01.2024, subsequent to 08.01.2024 when the petitioners were arrested, then the question of the arresting officer having formed the reason to believe in writing that the petitioners were guilty of an offence under the 2002 Act on the basis of the material in his possession, becomes highly doubtful. Moreover, no reference has been made in the sequence of events as to when the reasons to believe as required under Section 19(1) of the 2002 Act were reduced into writing.
The argument raised on behalf of the petitioners to the effect that such vague grounds of arrest violate the fundamental right of the petitioners as it is very difficult for the petitioners to prepare their defence in view of the provisions of Section 45 of the 2002 Act is also weighty. In the said circumstances, it cannot be said that respondent no.2 has rendered full compliance of the mandatory provisions of Section 19(1) of the Act.
Since in the present case, the order of arrest, arrest memo and the remand order dated 09.01.2024 are held to be illegal and against law, thus, the subsequent order of remand and other consequential orders are also liable to be set aside. Moreover, this Court is of the view that even the order dated 16.01.2024 is illegal and thus, deserves to be set aside.
Petition allowed.
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2024 (2) TMI 734
Money Laundering - commission of eight predicate offences - proceeds of crime were derived or obtained as a result of any criminal activity relating to scheduled offences or not - HELD THAT:- Prima facie, it is found that nothing is stated therein to even indicate that the proceeds of crime were derived or obtained as a result of any criminal activity relating to scheduled offences. The existence of proceeds of crime as defined in Section 2(u) of the PMLA Act is a condition precedent for the commission of offence of money laundering under Section 3 of the PMLA Act.
Therefore, on the basis of material placed on record, as of today, as far as the appellant is concerned, it is found that both the grounds in clause (ii) of sub-section 1 of Section 45 of the PMLA Act have been satisfied in this case. Therefore, the appellant deserves to be enlarged on bail, pending the disposal of the complaint under the PMLA Act - no adjudication made as regards the role played by any other accused in the same complaint. At highest, the allegation against the appellant is of possession of unaccounted money and illegal acquisition of immovable properties. But, prima facie, there is nothing to link the assets of the appellant with the predicate offences.
Appeal allowed.
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2024 (2) TMI 733
Rejection of anticipatory bail - Money Laundering - Bike Bot Scam - Funds were diverted to shell companies for concealing the true purpose of collecting it and for rotation - proceeds of crime - economic offence - trial not joined by applicant despite issuance of summons - HELD THAT:- Admitted case of the applicant is of receipt of Rs. 61 crore in the company account of Bhasin Group from company account of GIPL and Independent TV Ltd., both belong to Sachin Bhati. Subsequently Rs. 25 crore from the same was transferred to the personal account of the applicant on the very next date from the account of Bhasin Group. The applicant has been summoned by the trial court vide order dated 28.05.2022. Since then without proceeding to appear before the court concerned, he has been absconding till date. The said property as stated to have been sold out to GIPL is under attachment by Enforcement agency.
In Pokar Ram v. State of Rajasthan and others [1985 (4) TMI 341 - SUPREME COURT], the Apex Court had observed that relevant considerations governing the court's decision in granting anticipatory bail under Section 438 Cr.P.C. are materially different from those when an application for bail by a person who is arrested in the course of investigation. It further held that courts must be cautious and circumspect in exercising powers of anticipatory bail as it intrudes the sphere of investigation.
In Vijay Madanlal Choudhary and Others Vs. Union of India and Others [2022 (7) TMI 1316 - SUPREME COURT] the Apex Court observed we have no hesitation in observing that in whatever form the relief is couched including the nature of proceedings, be it under Section 438 of the 1973 Code or for that matter, by invoking the jurisdiction of the Constitutional Court, the underlying principles and rigors of Section 45 of the 2002 must come into play and without exception ought to be reckoned to uphold the objectives of the 2002 Act, which is a special legislation providing for stringent regulatory measures for combating the menace of money-laundering.
Looking to the nature of case, gravity of offence, the facts that the present matter relates to an economic offence, the fact that the applicant has not joined the trial court concerned despite issuance of summons to him, the law as laid down by the Apex Court, the fact regarding receipt of money from the companies and transfer of it in his personal account, the magnitude of offence, the fact that the property in question stands attached by the Enforcement authorities as a part of laundered money and the rigours of the twin conditions of Section 45 of the PMLA, 2002, the applicant being charge sheeted in the predicate offence and the long criminal antecedents of the applicant, this Court does not find it to be a fit case to grant anticipatory bail to the applicant.
The present anticipatory bail application under Section 438 Cr.P.C. is, accordingly, rejected.
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2024 (2) TMI 732
Validity of provisional order of attachment and SCN - Composition of Adjudicating Authority under PMLA and its Jurisdiction - grounds for questioning such validity is that single member cannot pass an order of attachment, as Section 6 of PMLA contemplates the constitution of adjudicating authority by a chairperson and two members - another ground attack is that the adjudicating authority was not a judicial member, and as such cannot perform quasi-judicial function of passing of the provisional order of attachment.
Whether the power under Section 8 of PMLA conferred on an Adjudicating Authority can be exercised only by a member having experience in the field of law? - HELD THAT:- If the functions of Adjudicating Authority under Section 8 of PMLA, which is a creature of statute under Section 6 of PMLA, are considered, it is evident that it has authority to determine the questions which affects the rights of the persons and is required under PMLA to comply with the mandate contained in Section 8(2) of PMLA, undoubtedly performs quasi-judicial function.
Whether the aforesaid quasi-judicial function under Section 8 of PMLA can be performed by an Adjudicating Authority, which can be exercised only by a member having experience in the field of law? - HELD THAT:- The Adjudicating Authority, is an authority constituted by a statute, namely PMLA, which confers the power on it under Section 8 of PMLA. An adjudication is a function which is performed by several statutory authorities under different enactments, namely under the Foreign Exchange Regulation Act, 1973; the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976; the Narcotic Drugs and Psychotropic Substances Act, 1985 and the Foreign Exchange Management Act, 1999. Thus, when legislature confers the function of adjudication on an authority under the statute, the same can be performed by such authority within the four corners of the power conferred on it. It is pertinent to note that under PMLA, the Adjudicating Authority neither has power to decide on the criminality of offence nor does it have power to impose punishment.
In ROJER MATHEW VERSUS SOUTH INDIAN BANK LTD. & OTHERS [2019 (11) TMI 716 - SUPREME COURT], the Constitution Bench dealt with the challenge made to the constitutional validity of Part XIV of Finance Act, 2017 and Rules made thereunder and held that whenever Parliament decides to divest the traditional courts of their jurisdiction and transfer the same to other analogous court/tribunal, the qualification and acumen of member in such a tribunal must be commensurate with that of court from which adjudicatory function is transferred.
Thus, it is evident that whenever the traditional Court is divested of its jurisdiction and the same is transferred to any other analogous Courts/tribunal, the qualification and acumen of such a member in the tribunal must be commensurate with that of the court from which such an adjudicatory function is transferred. In the instant case, it is noteworthy that Adjudicating Authority is neither a tribunal constituted under Article 323A or under 323B of the Constitution of India. None of the adjudicatory functions which are being performed by the Court had been transferred to the Adjudicating Authority.
Thus, powers under Section 6 can be exercised by an Adjudicating Authority comprising single member. Therefore, the proposition that powers under Section 8 of PMLA can be exercised by the Adjudicating Authority comprising only from member in the field of law does not deserve acceptance as the same would render provisions of Section 6(5) and 6(7) of PMLA nugatory and ineffective.
Appeal allowed.
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2024 (2) TMI 731
Discharging the accused from the case upon allowing the petition u/s 227 of the Code of the Criminal Procedure, 1973 - fraudulent act of encashment of Railway Cheques - proceeds or crime - criminal activity relating to a scheduled offence - proceeds of crime and scheduled offence - parallel proceedings or not - benefit of Section 132 Evidence Act. - The accused was previously made an approver in a related CBI case.
It is submitted by the petitioner that the Ld. Spl Court while passing the impugned order failed to consider that the two proceedings were independent of each other and dependent on two separate enquiry and complaint under two separate offence having separate effects and it has no binding with other proceedings.
HELD THAT:- Though the proceeds of crime may be an independent offence, the total case under Section 3 of the PLMA Act rests on the case registered in respect of a scheduled offence in which the opposite party turned approver. If the case for a scheduled offence fails, the case under PLMA Act also fails, as the case under PLMA Act has been prima facie made out of the materials and evidence on record in the case in respect of a scheduled offence (herein registered by the CBI).
Without the evidence provided by the opposite party as an approver, the case under PLMA would have not been made out and thus the opposite party is entitled to the relief provided under the law to an approver, not only in the case registered in respect of a scheduled offence but also in respect of all cases which are dependent on the materials and evidence in the case registered in respect of a scheduled offence, in which the accused has turned approver.
Admittedly, the opposite party herein turned an approver in the case registered by CBI in respect of scheduled offences and was examined by the Court under Section 306(4)(a) of Cr.P.C. as a witness.
Thus keeping with the observation of the Supreme Court in VIJAY MADANLAL CHOUDHARY & ORS. VERSUS UNION OF INDIA & ORS. [2022 (7) TMI 1316 - SUPREME COURT] and the materials on record in the present case, it is clear that the present case against the opposite party, under Section 3 of the PMLA 2002, Act is dependent on the process and activity in a scheduled offence (CBI) and thus directly connected.
The total case under Section 3 of the PLMA Act rests on the case registered in respect of a scheduled offence in which the opposite party turned approver. If the case for a scheduled offence fails, the case under PLMA Act also fails, as the case under PLMA Act has been prima facie made out of the materials and evidence on record in the case in respect of a scheduled offence (herein registered by the CBI).
In view of the fact that the two cases have a direct connection, the opposite party is entitled to the benefit of Section 132 Evidence Act and Section 307 of Cr.P.C. in the present case.
The findings of the learned Trial Court in the order under revision being in accordance with law requires no interference - Revision dismissed.
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2024 (2) TMI 730
Money Laundering - predicate offence - seeking grant of regular bail for second time - earlier bail application of the petitioner was rejected on merits - main ground for renewal of the bail application by the petitioner is that after earlier rejection, bail applications of the similarly situated co-accused persons have been allowed by Hon’ble the Supreme Court as well as by this Court - HELD THAT:- It is apparent that case of this Petitioner cannot be equated with that of coaccused, Bachu Yadav or co-accused, Krishna Kumar Saha who have been granted bail. Petitioner is the main accused and Bachhu Yadav was his henchman as the per the prosecution case. Accused, Krishna Kumar Saha was not named in the earlier two prosecution complaints and his name came up in the 3rd supplementary prosecution complaint submitted by the ED. Petitioner being the political representative of the then Chief Minister enjoys political and administrative connection. Matter involves crime proceed being generated by large scale illegal mining activity being carried out, and the Petitioner appears to be the king pin. There are prima facie materials to suggest his pivotal role in laundering of the crime proceed generated in illegal mining activity. Trial is at its nascent stage with charge being framed on 03.03.2023 and out of 42 only 10 witnesses having been examined. Petitioner’s health condition is monitored by the Jail doctors and was referred to and treated in higher centre at Delhi.
There are no change of circumstance to enlarge the petitioner on regular bail and accordingly, the same is again rejected.
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2024 (2) TMI 720
Money Laundering - proceeds of crime - Constitutional Validity of Sections 6 (2), 6 (3)(a)(ii) and 6 (5)(b) of the Prevention of Money Laundering Act, 2002 - violation of Article 14 of the Constitution of India - HPZ token, an application based token promised users, of large gains against investment by investing in mining machines for Bitcoin and other crypto currencies - application stopped working and the investors were not allowed to withdraw the money.
Whether the composition of Adjudicating Authority is bad in law, in as much as it is not manned by a Judicial Officer/person eligible to be appointed as Judicial Officer? - HELD THAT:- Originally Section 6 (1) of the Act envisaged more than one Adjudicatory Authority to exercise jurisdiction, powers and authority conferred under this Act. The said provision has been amended to make the Adjudicating Authority as a single entity and the current provision is extracted in paragraph No.7, which establishes now a single Adjudicating Authority for the entire country.
Any law providing for the constitution of any authority would be legal if only it is manned by Judges/Judicial Officers or persons who were or eligible to be appointed as Judicial Officers (i) if it is a Judicial Tribunal created under Article 323A or 323B of the Constitution of India; (ii) if it transfers any adjudicatory functions hitherto exercises by the Courts in India; (iii) if it adjudicates the rights of parties has the trappings of a Court/Tribunal - In the instant case, the Adjudicating Authority is constituted under Section 6 of the PMLA. Admittedly, the said authority is not a Tribunal, constituted under Article 323-A or 323-B of the Constitution of India. It cannot also be said that any power which was being hitherto exercised by the Courts are transferred to the authority. The submission made on behalf of the petitioner is that since a complaint is filed and the authority hears the aggrieved person whose properties are attached, decides the lis and as such discharges judicial function.
It can be seen that the function of the Adjudicatory Authority is that of the original authority exercising the administrative function under the Act, that is, formation of an opinion as to ‘reason to believe’ and making the orders absolute after satisfying as to the correctness of its opinion after hearing the parties. It can be seen that the Adjudicating Authority itself is in place as a check and balance so that the power is not exercised solely by the investigating officer - It is trite that even in an administrative actions, principles of natural justice are to be followed. The Administrative Authority conducts a statutory hearing and in that process, it only deals with the ‘administrative case’. The enquiry is limited to confirmation of prima facie opinion / reason to believe. The same does not manifest into a lis.
In the scheme of PMLA, it transforms the issue into a ‘lis’ only from the stage of appeal to the Appellate Tribunal, thus, the Adjudicating Authority remains the Original Authority which makes the decision. Accordingly, the question answered that constitution of Adjudicating Authority as such by Section 6 is not illegal for want of Judicial Officers/persons qualified to be appointed as Judicial Officers or who were Judicial Officers.
When the Adjudicating Authority is considered to be a single entity / institution, whether the power conferred on the Chairman to constitute single / two member Benches which an be even without a legal Member is illegal? - HELD THAT:- The provisions of a statute have to be read harmoniously. A careful reading of Section 6, would make it clear that the statute creates one Adjudicating Authority with a Chairperson and two members. All the three of them have to be from the three different fields of expertise. The provision only envisages that in a given case, that the expertise of the persons in these fields, namely, law, administration and finance/accountancy would be relevant in forming an opinion. The Chairperson is given the discretion as to whether in a given case, the authority would make its decision with a full quorum or in Benches including single member Bench would decide the matter. Such discretion does not make the provisions incongruous or self contradictory.
Since the petitioner has ample opportunity to contest before the Adjudicating Authority and even if the ad-interim order of attachment is made, a right of appeal is provided to a Appellate Tribunal and ultimately all contentions that the properties or materials are not the proceeds of the crime are not involved in money-laundering etc., has to be established and finally determined only by the Special Court and when such remedy is wide open to the Writ Petitioner herein, we do not find any reason to grant any other relief to the petitioner. Accordingly the question is answered that merely because there is power to the Chairman to constitute Single Member Bench, the same will not render the provision unconstitutional.
Thus, finding no merits, the Writ Petition stands dismissed.
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2024 (2) TMI 674
Seeking grant of bail - money laundering - offence punishable under Section 3 of the Prevention of Money-laundering Act, 2002 - HELD THAT:- The appellant is entitled to be enlarged on bail in accordance with Section 45(1)(ii) of the PMLA on appropriate terms and conditions, till the disposal of the complaint case filed by the first respondent/Directorate of Enforcement under the PMLA. In view of the fair stand taken by the learned ASG, the detailed reasons not recorded.
Appeal allowed.
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2024 (2) TMI 673
Violation of principles of natural justice - order was passed without giving opportunity to the petitioner – Enforcement Directorate to file a reply - on seeking of bail, high court held that the petitioner qualifies the triple test under Section 45 of the Act and, therefore, the present application is allowed - HELD THAT:- Though there are some reservations with the impugned order, as it appears that the order was passed without giving opportunity to the petitioner – Enforcement Directorate to file a reply, the impugned order need not be interfered with.
Hence, the special leave petitions are dismissed.
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2024 (2) TMI 672
Illegal detention of the petitioners in Tihar Jail for want of judicial order remanding them to judicial custody - it was held by the High Court that the learned ASJ-04 has rightly issued production warrants against the petitioners on 07.12.2023 for production of the petitioners and the petitioners remain in lawful custody of learned ASJ-04 - HELD THAT:- There are no reason to interfere with the impugned order - SLP dismissed.
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2024 (2) TMI 620
Maintainability of petition - Seeking cancellation of bail which is granted by the High Court - High Court in [2021 (12) TMI 78 - KARNATAKA HIGH COURT] earlier held that The petitioner is not required to be detained in custody for any other purpose except to ensure his presence before the Trial Court and to see that he will not commit such offence while on bail. Under such circumstances, his further detention in custody would amount to infringement of his valuable right to life and personal liberty. Therefore, the petitioner is entitled to be enlarged on bail.
HELD THAT:- Since the petitioner seeks cancellation of bail which is granted on 28th October, 2021 by the High Court and there is no allegation against the respondent that he is misused the liberty after granting the bail, we are not inclined to entertain the present petition.
The special leave petition is, accordingly, dismissed.
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2024 (2) TMI 507
Provisional Attachment Order - Money Laundering - proceeds of crime - Petitioner being Housewife - company had prepared 17 fake bills of entry and presented the same before the ICICI Bank for making foreign outward remittances - HELD THAT:- Section 5 of the PMLA postulates that where the Director or any other officer not below the rank of Deputy Director authorised by the Director, on the basis of material on possession has reason to believe, which has to be recorded in writing, that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings, he may, by order in writing, provisionally attach such property for a period not exceeding 180 days from the date of the order. The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority.
It is well settled that where any Statute provides a procedure to deal with the issues which arises under the Statute, the High Court while exercising its jurisdiction under Article 226 of the Constitution of India ordinarily must not interfere with the scheme unless there is a patent lack of jurisdiction.
The present case is not a case of patent lack of jurisdiction. The Adjudicating Authority has the power to look into the facts of the case of the Petitioner before coming to a conclusion as to whether the properties in question are proceeds of crime or not. It has been contended by the Petitioner that one accused has been discharged and proceedings against one accused has been abated because of his death. It is pertinent to mention that apart from individuals, even companies have been made accused. Merely because proceedings have been dropped against some individuals does not mean that the proceedings against the Petitioner should or will be dropped. The offences under the PMLA Act are distinct from offences under the IPC. The companies can still be convicted for the predicate offence and the Petitioner can be prosecuted under the PMLA Act.
This Court is not inclined to interfere under Article 226 of the Constitution of India - the writ petition is dismissed.
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2024 (2) TMI 441
Seeking grant of regular bail - Money Laundering - proceeds of crime - paper/bogus sale and purchase for projecting paper/bogus revenue and paper/bogus profit of Bankey Behari Group of Companies - HELD THAT:- Having perused the prosecution complaint filed in the present case and statements of applicant recorded under Section 50 of PMLA as well as other material on record, it appears prima facie that the applicant herein, through his companies namely M/s Jindal Agro International, M/s Fagir Chand Dalip Kumar and M/s Jindal Green Crop International Pvt. Ltd., had indulged in paper/bogus sales and purchase of goods, even though there was no actual movement of goods. As per prosecution complaint, the applicant was asked during his examination to provide transportation bills, kanta parchi or any other supporting documents in order to prove the movement of goods from his entity to Bankey Behari Group of Companies or vice -versa. However, he had failed to provide any documents to prove his transactions with Bankey Behari Group of companies as genuine. Further, he had accepted in his statement that he had shown paper purchase and paper sales with Bankey Behari Group of Companies.
It is prima facie reflected from the records that the applicant herein, through his entities, had sold goods of about Rs. 314.57 crore and purchased goods of Rs. 200.83 crore, between the period 2013- 14 to 2016-17. However, on account of such false sale and purchase, the applicant had settled these transactions by passing journal voucher entries to the tune of Rs. 201.32 crore between the period 2013-14 to 2016-17, and a sum of Rs. 113.25 crore had been diverted to the bank accounts of the applicant.
Though the learned Senior Counsel for the applicant took this Court through the entries and other documents so as to point out as to how the same will not lead to conclusion of money laundering, however, while dealing with the present bail application, this Court is of the opinion that it cannot go through the entire list of entries of accounts for the purpose of appreciating their genuineness or authenticity. The cognizance of prosecution complaint has already been taken by the learned Trial Court vide order dated 24.02.2023.
This Court is of the opinion that twin conditions under Section 45 of PMLA are not satisfied since the material on record at this stage points out that the applicant herein was involved in the process of acquisition, possession, concealment of proceeds of crime obtained by way of cheating and forgery and projecting the same as untainted, thereby committing an offence of money-laundering under Section 3 of PMLA.
This Court is not inclined to grant bail to the present accused/applicant, at this stage - the present application stands dismissed.
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2024 (2) TMI 260
Seeking grant of bail - Money Laundering - huge quantity of gold has been recovered from the petitioner - Section 45 of the PMLA - HELD THAT:- In an appeal arising out of predicate offences the petitioner was granted bail by the High Court on 20.07.2022. Indisputably, the said order has not been challenged. In the present offence also, the accused Sukhpal Singh Khaira has already been granted bail. It is also considered Section 45 of the PMLA and find that in the facts and circumstances of the present case the rigor of the said section are duly satisfied more particularly looking to the custody period and parity of the petitioner’s case with that of Sukhpal Singh Khaira.
The petitioner is directed to be released on bail to the satisfaction of the Trial Court. The conditions of granting bail would be same as imposed by the High Court in the order dated 27.01.2022 passed in CRM-M No.51885/2021 in the case of Sukhpal Singh Khaira - SLP disposed off.
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2024 (2) TMI 259
Maintainability of SLP - money laundering - predicate offence - The High Court has allowed the petition of the respondent and quashed the ground that, "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."
HELD THAT:- The Special Leave Petition filed by the ED is dismissed as not pressed.
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2024 (2) TMI 201
Maintainability of SLP - Action against the Chartered Accountant under PMLA for issuing bogus CA certificates - High Court had granted the of Bail - the respondent is regularly attending the Court - HELD THAT:- Taking into consideration this aspect of the matter and considering the fact that the petitioner is a Chartered Accountant and further that the impugned order has been passed two years three months before, we are not inclined to entertain the present petition.
The special leave petition is, accordingly, dismissed.
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2024 (2) TMI 141
Money Laundering - proceeds of crime - attachments of the property - meaning to be prescribed to the words ‘the proceedings relating to any offence under this Act before a Court’ in Section 8(3)(a) of PMLA - HELD THAT:- The retention of the documents and properties has been allowed for the purposes of investigation/adjudication. The same would, therefore, extend for a period of 365 days in terms of Section 8(3)(a) of the Act unless a proceeding relating to the offence under the Act has been filed prior thereto. As noted hereinabove, the proceeding relating to any offence under this Act has to mean proceeding filed before the Special Court in relation to the property or the record so attached, seized or frozen.
The interpretation to Section 8(3)(a) of the Act as propounded by the learned counsel for the respondent would, in fact, make the said provision confiscatory and violative of Article 14 of the Constitution of India inasmuch as it would allow the seizure to continue endlessly even though the same does not culminate into any “proceedings relating to any offence under the Act before a court” within the period of 365 days as prescribed by that very provision.
Explanation (ii) to Section 44 of the Act states that the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted “to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence” for which complaint has already been filed, whether named in the original complaint or not. From the said provision also, it is apparent that the investigation may lead to filing of a subsequent complaint to bring on record further evidence in form of seized documents and records, either against the accused named in the original complaint or subsequent thereto - it is held that the period of 365 from the passing of the order dated 10.02.2021 by the Adjudicating Authority having been passed, the documents/digital device/property seized from the petitioner in the search and seizure conducted on 19th and 20th August, 2020 from the premises of the petitioner are liable to be returned.
Therefore, the natural consequence of the investigation for a period beyond three hundred and sixty five days not resulting in any proceedings relating to any offence under the Act, in terms of Section 8(3) of the Act, is that such seizure lapses and the property so seized must be returned to the person from whom it was so seized.
The respondents are directed to return the documents, digital devices, property, and other material seized from the petitioner pursuant to the search and seizure operation conducted on 19th and 20th August, 2020, forthwith to the petitioner, subject to any order to the contrary passed by any competent Court - The petition is allowed.
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2024 (2) TMI 90
Charge of criminal misconduct under the Prevention of Corruption Act, 1988 - illegal gratification demanded by and paid to senior Income Tax Officers - Framing of charges - HELD THAT:- The Supreme Court in ASIM SHARIFF VERSUS NATIONAL INVESTIGATION AGENCY [2019 (7) TMI 1546 - SUPREME COURT] expressed that the trial court is not expected or supposed to hold a mini trial for the purpose of marshalling the evidence on record.
The Supreme Court in STATE VERSUS M.R. HIREMATH [2019 (5) TMI 1986 - SUPREME COURT] held that it is a settled principle of law that at the stage of considering an application for discharge the court must proceed on the assumption that the material which has been brought on the record by the prosecution is true and evaluate the material in order to determine whether the facts emerging from the material, taken on its face value, disclose the existence of the ingredients necessary to constitute the offence.
The Supreme Court in NEERAJ DUTTA VERSUS STATE (GOVT. OF N.C.T. OF DELHI) [2022 (12) TMI 1490 - SUPREME COURT] also referred by the Special Public Prosecutor held that a person could be convicted based on circumstantial evidence for the crime of demanding a bribe or illegal gratification under the PCA, 1988.
In the present case the material collected during the investigation by the respondent/CBI is not sufficient to frame the charge against the petitioner. Accordingly, the present petition is allowed. The impugned order is not legally sustainable. The impugned order dated 12.09.2019 whereby the petitioner was charged for the offences punishable under section 120B IPC read with sections 7 and 13 (1) (d) of PC Act and for the substantive offences under sections 7 and 13(1)(d) punishable under section 13 (2) of PC Act, 1988 is set aside. The petitioner stands discharged for the offences for which he was discharged.
Petition allowed.
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2024 (2) TMI 89
Seeking grant of regular bail - bail sought on medical grounds - Money Laundering - proceeds of crime - acquisition of three immovable properties by the petitioner - HELD THAT:- This Court is not persuaded to consider the prayer for bail on the Medical grounds for two reasons: Firstly, the learned Senior Counsel for the Petitioner did not press this point at the time of arguments though the same has been averred in some detail in the application and briefly in the written submissions filed by the petitioner; and secondly, the PMLA does not provide for Bail, as a matter of right, solely on health grounds. As such, the prayer for Bail on medical grounds is not being considered.
In absence of any cogent material that the petitioner despite knowledge that a forged sale deed is involved in the claim supporting the title of the property situated at Chesire Home Road had purchased the same as a part of a larger conspiracy to launder proceeds of crime and that the petitioner had no role in the creation of the false document, this Court is satisfied that there are reasons to believe that the petitioner is not guilty of an offence punishable under the PMLA. It needs to be iterated that materials on record do not establish, even prima facie, that the petitioner had the intention to commit an offence punishable under the PMLA.
Likewise in view of the fact that with respect to lands situated at Mouza Pugru and Siram no scheduled offence has been reportedly committed and the criminal law has not been set in motion, in view of the judgment of the Supreme Court of India in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] no offence punishable under section 4 PMLA can be said to have to committed by the petitioner. Viewed thus, it can be held without any hesitance that the allegations qua the land situated at Pugru and Siram prima facie do not make out an offence of money laundering and thus this Court is satisfied that there are reasons to believe that the petitioner is not guilty of an offence punishable under the PMLA.
The petitioner is in custody from 31.07.2023. The trial is yet to commence. There are 34 witnesses and more than 6000 of documentary evidence. The scheduled offence in respect of Chesire Home Road property is still at the stage of investigation; whereas in respect of the other two properties no FIR / Complaint alleging commission of schedule offence has been registered till date. Prolonged detention will not serve any purpose. No material has been brought to the attention of this Court that the petitioner will hamper the trial in any manner and why his custody is important for the disposal of the trial.
Another aspect which cannot be lost sight of is that the prosecution pertains to sale and purchase of a piece of land measuring one acre and the accusations do not pertain to wrong aimed to harm the public at large or defraud the government exchequer.
The petitioner is directed to be released on bail subject to conditions imposed - bail application allowed.
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2024 (1) TMI 1249
Money Laundering - Criminal conspiracy - petitioner was convicted for the predicate offences under Sections 120B, 409 r/w 109 of the IPC - whether the respondent can maintain the complaint if the predicate offence is the offence of criminal conspiracy? - HELD THAT:- The Hon'ble Supreme Court answered this question in Pavana Dibbur's case [2023 (12) TMI 49 - SUPREME COURT] holding that in the charge sheets filed in the alleged scheduled offences, there is no allegation of the commission of criminal conspiracy to commit any of the offences included in the Schedule. As pointed out earlier, except for Section 120-B of the IPC, no other offence in the schedule has been applied. Therefore, in this case, the scheduled offence does not exist at all. Hence, the appellant cannot be prosecuted for the offences punishable under Section 3 of the PMLA.
The petitioner was convicted for the offence of 409 r/w 109 and 120B of the IPC. Therefore, the predicate offence alleged and proved is conspiracy to commit offence under Section 409 of the IPC which is not a scheduled offence. Therefore, even assuming that there are proceeds of crime, it cannot be said to be as a result of commission of a scheduled offence, which is a prerequisite to maintain a complaint under Section 3 of the PMLA.
Since the respondent has no jurisdiction to invoke the provisions of PMLA, as there are no proceeds of crime relating to any scheduled offence, the proceedings impugned in the Writ Petition is also liable to be set aside. Consequentially, though the Provisional Attachment Order has not been challenged, it is held that the said attachment order is also without jurisdiction.
The Criminal Original Petition and the Writ Petition are allowed.
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