2024 (3) TMI 1137 - HC - Money Laundering

Grant of Bail - Money Laundering - predicate offence - invocation of jurisdiction of this Court under Article 226 of the Constitution of India read with section 482 of the Code of Criminal Procedure (Cr.P.C.) - bank loan fraud - HELD THAT - It is an admitted fact that the petitioner has invoked the jurisdiction of the High Court of Punjab and Haryana for challenging the proceedings initiated against him under PMLA and he has also challenged the summons issued by the respondent against him. In the instant case the petitioner has challenged the action of the respondent leading to his arrest as also the order of learned Special Judge designated PMLA Jammu whereby he has been remanded to custody of the respondent. Both these events viz. arrest of petitioner and his remand to custody of the respondent have taken place within the territorial jurisdiction of this Court therefore the petitioner has rightly approached this Court by invoking the jurisdiction of this Court under Section 226 of the Constitution read with Section 482 of the Cr.P.C. for challenging the aforesaid actions. The question whether the High Court of Punjab and Haryana has jurisdiction to entertain the challenge to the proceedings initiated by the respondent against the petitioner and co-accused will have to be determined by that Court. It would not be appropriate for this Court to render any opinion on this issue in the present proceedings - Merely because grounds of challenge raised before this Court are identical to the grounds of challenge raised by the petitioner in the petition filed by him before the High Court of Punjab and Haryana does not disentitle him from invoking the jurisdiction of this Court. The preliminary objection of the learned DSGI to the maintainability of this petition prima facie appears to be untenable. Though offences under PMLA are stand alone offences yet their origin is the Scheduled offences. Once the Scheduled offence ceases to exist or is extinguished an accused cannot be proceeded against in respect of offences under PMLA. It is for this reason that the Supreme Court has in Vijay Mandanlal Choudhary s case 2022 (7) TMI 1316 - SUPREME COURT clearly laid down that if a person is finally discharged/acquitted of the scheduled offences or a criminal case against him is quashed there cannot be any offence of money laundering against him. As an obvious corollary to this is that once investigation in FIR relating to predicate scheduled offences is stayed the proceedings in the said FIR would get eclipsed. The same will definitely have a bearing upon the offences of money laundering as the said offences owe their origin to the predicate offences. Therefore the said offences would also stand eclipsed till such time the stay of investigation is in operation. In Sudhamani Dorai s case 2018 (10) TMI 330 - MADRAS HIGH COURT a Single Judge of Madras High Court has observed that stay of predicate offence is not a ground for preventing Directorate of Enforcement from proceeding under PMLA. In the instant case the Case Diary that has been produced by the learned DSGI would reveal that the grounds of arrest have been furnished to the petitioner immediately after his arrest. However a perusal of the impugned Order of Remand passed by the Special Judge PMLA reveals that it is nowhere recorded in the said order as to whether or not the grounds of arrest have been furnished to the petitioner - The learned Judge has not even recorded a finding as to whether or not she has perused the grounds of arrest so as to ascertain whether the ED had recorded reasons to believe that the petitioner was guilty of an offence under PMLA and whether or not there was proper compliance with the mandate of Section 19 of the PMLA. This Court is of prima facie view that the impugned order dated 07.02.2024 passed by the learned Special Judge PMLA smacks of non application of mind. The petitioner has been able to carve out a case for grant of interim relief. Accordingly the petitioner is directed to be released from custody in the subject ECIR subject to fulfilment of conditions imposed - bail application allowed.

Summary

Issues Involved:
1. Legality of the arrest and remand orders.
2. Jurisdiction of the High Court of Jammu and Kashmir and Ladakh.
3. Effect of stay on predicate offences on PMLA proceedings.
4. Compliance with Supreme Court guidelines on arrest under PMLA.

Summary:

Legality of the Arrest and Remand Orders:
The petitioner challenged the action taken by the respondent leading to his arrest under ECIR No. ECIR/JMSZO/02/2023 and subsequent remand orders, invoking Article 226 of the Constitution of India read with \u/s\ 482 Cr.P.C. The petitioner sought interim relief for release from custody.

Jurisdiction of the High Court of Jammu and Kashmir and Ladakh:
The court addressed the preliminary objection regarding the maintainability of the writ petition. It was determined that the petitioner rightly approached this court since the arrest and remand occurred within its territorial jurisdiction, despite similar contentions being raised before the High Court of Punjab and Haryana.

Effect of Stay on Predicate Offences on PMLA Proceedings:
The main contention was whether the respondent could proceed under PMLA when the investigation in the predicate offence was stayed. The petitioner relied on the judgment in B. Shanmugam v Karthik Dasari, which held that proceedings under PMLA should await the final outcome of the predicate offence. The court found this reasoning persuasive, noting that the Supreme Court in Vijay Mandanlal Choudhary's case stated that without a valid predicate offence, PMLA proceedings could not continue.

Compliance with Supreme Court Guidelines on Arrest under PMLA:
The petitioner argued non-compliance with the guidelines laid down by the Supreme Court in Pankaj Bansal v Union of India, which mandates furnishing written grounds of arrest. The court observed that while the grounds of arrest were provided, the Special Judge's remand order lacked detailed reasoning and did not confirm whether the grounds were perused, indicating non-application of mind.

Interim Relief:
Given the prima facie case, the petitioner was granted interim relief and directed to be released from custody on fulfilling conditions such as furnishing bail bonds, cooperating with the investigation, depositing his passport, and not leaving the country without permission. The bail would automatically withdraw if the stay on the predicate offences was vacated.

Conclusion:
The court granted interim relief to the petitioner, emphasizing that the observations were for the limited purpose of the interim application and not on the merits of the main petition, which was scheduled for further proceedings.