TMI Blog2016 (1) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequence of a finding of guilt in respect of the offences alleged under the PML Act. The power of search, seizure and arrest are considered an important tool in any investigation. Such power being available in matters relating to economic offences is not unusual. Identical provisions are found in the Customs Act, 1962, the Prevention of Food Adulteration Act, 1954, the Railway Property ( Unlawful Possession Act, 1966, etc. Further, as investigation precedes the filing of a charge sheet under Section 173 Cr.P.C , the exercise of power of search, seizure and arrest as part of investigation would not prejudice any person as such measures are controlled by other provisions of the Cr.P.C. Section 65 of the PML Act does provide that the provisions of the Cr.P.C. would be applicable including the provisions for investigation under the Act. Section 19 is assailed also on the ground that there is no judicial body provided to scrutinize the initial action as in the case of scheduled offences. However, Section 19 (3) itself provides that every person arrested under the Act would be produced before a Magistrate within 24 hours of such arrest. Further, the contention that such arrest may n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitutionally valid. In so far as Section 44 of the Act there is no material placed before the Court as to any incongruous situation having arisen wherein the Special Court not being able to reconcile the provisions in arranging the manner in which it has proceeded, thereby resulting in any prejudice being caused to any person or resulting in a miscarriage of justice. This court is not therefore in a position to proceed on a speculation as to particular situations having arisen that could be held as rendering the procedure prescribed, or other infirmity rendering, the creation of the Special Courts or the procedure contemplated as being unconstitutional. The petitions lack merit and are dismissed. - WRIT PETITION No.14649 OF 2014 (GM-RES) WITH WRIT PETITION No.19732 OF 2014 (GM-RES) - - - Dated:- 28-1-2016 - MR . ANAND BYRAREDDY J Shri Rajeev Awasthi, Advocate for Shri Kiran S Javali AND Shri Chandrashekara .K, Advocates for the Petitioners . Shri Prabhuling K Navadgi, Additional Solicitor General, Shri Krishna S Dixit, Assistant Solicitor General, Shri Prabhuling K Navadgi, Additional Solicitor General AND Shri Mahesh S, Special Public Prosecutor for the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Prevention of Money Laundering (Amendment) Act, 2013 (Central Act no. 2 of 2013). 3. The historical background to the enactment of the Prevention of Money Laundering Act, 2002 (Hereinafter referred to as the PML Act , for brevity) is that the General Assembly of the United Nations passed a resolution as on 14-12-1984, to initiate preparation of a draft convention about illicit traffic in Narcotic drugs. The Convention, to which India is a party, called for preventing of laundering of proceeds of drug crimes and other connected activities and confiscation of proceeds derived from such crimes. The PML Act is enacted keeping in view the main purpose of attaching and confiscating the proceeds of crime which are derived or obtained from the commission of offences having cross border implications. As such proceeds of crime are used for terrorist financing, which can cause a serious threat to the security of the country and pose a threat to the economy of the country as well. It is contended by the learned counsel Shri Rajeev Awasthi, appearing for the counsel for the petitioners that the phrase 'proceeds of crime' is defined under Section 2 (u) of the PML Act , to mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, there follows prosecution and punishment under Sections 3 4 of the PML Act. It is pointed out that till the year 2009, Section 5 contained three sub-clauses under Sub-section (1), which empowered a competent officer under the Act to provisionally attach property, as referred to above, if : a) any person was in possession of any proceeds of crime; b) such person had been charged of having committed a Scheduled offence and c) such proceeds of crime were likely to be concealed, transferred or dealt with in any manner which would result in frustrating any proceedings relating to confiscation of such proceeds of crime. The first proviso to sub-section (1) makes it mandatory that no attachment order shall be made unless in relation to a Scheduled offence, a report had been forwarded to the Magistrate under Section 173 of the Code of Criminal Procedure, 1973 (Hereinafter referred to as the 'Cr.PC ' , for brevity ) As Clause (b) above ensured that the property of a person could be attached only if he had committed a Scheduled offence, and to obviate this requisite, in the year 2009, a second proviso was added which reads as follows : (b) such proceeds of cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'attachment ' and not 'provisional attachment', as in the case of an accused in a Scheduled offence. And the limit of 180 days is also absent, while it is available under the first proviso. This, it is contended, is again violative of Article 14 and 21 of the Constitution of India. It is contended that Section 8 mandates that any provisional attachment order made under Section 5 (1) of the PML Act would only remain valid upto 180 days. During the said period the complaint was to be filed under Section 5 (5) of the Act, before the Adjudicating Authority, who after issuing notice and affording a hearing, would either confirm the provisional attachment order or if no order is passed within 180 days the attachment order shall cease to have any effect as per Section 8 (3) . If the adjudicating authority confirms the order and holds that the property is involved in money laundering, he could confirm the attachment order, if the conditions under Section 8(3) are satisfied and the order of confirmation of provisional attachment, which order of attachment shall : a) continue during the pendency of the proceedings relating to any Scheduled offence before the court and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sults in a situation where even before a statutory remedy of appeal attains finality, no sooner there is a conviction under the PML Act, the Special Court is empowered to pass an order of confiscation, unlike under the 2009 Amendment. It is contended that the same takes away a valuable right and inflicts serious injury to the right to possess property. And is violative of Article 14 and 21 of the Constitution of India. It is contended that Section 9 provides for vesting of property in the Central Government. As per the 2009 Amendment, no property could be finally confiscated unless an order of confiscation was made under Sub-section (6) of Section 8, which mandated that unless the person was proved guilty of a Scheduled offence and that order attained finality, no property could be finally confiscated. However, under the 2013 Amendment, even if the Adjudicating Authority confirms the provisional attachment order and the guilt is recorded under Section 3 4 by the Special Judge without that order becoming final, confiscation is provided for. It is further contended that Section 17 provides for Search and Seizure of premises, while Section 18 provides for Search of persons. Ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion - where if a person is acquitted in respect of the Scheduled offence the presumption with regard to inter-connected transaction would cease to exist. It is also contended that Section 24 of the Act which prescribes the burden of proof casts the burden on the accused to establish that the alleged proceeds of crime are untainted property by creating a presumption in favour of the Authority or the Court. This is opposed to the first principle of criminal law apart from being violative of Article 14 and Article 21 of the Constitution of India. In so far as Section 44 of the Act is concerned, under the 2013 Amendment it is provided that the trial in respect of the Scheduled offence as well as the offence under Section 3 and 4 are made triable by the Special Court constituted under the PML Act. It is contended that it is an established principle of law that the evidence tendered at one trial could not be considered or appreciated for purposes of another trial. It is wholly incomprehensible as to the wisdom of the two cases proceeding simultaneously before the same court. This is especially so as under the 2009 Amendment if a person was acquitted in respect of the Scheduled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s : 1. Rajiv Chanana vs. Deputy Director, W.P.(C).6293/2014 dated 19.09.2014 of Delhi High Court; 2. Indian Bank vs. Govt. of India 2012, Writ LR 702 of High Court of Madras; 3. M/s. Ajanta Merchants Pvt. Ltd. vs. Directorate of Enforcement, Crl. M.C.No.5581/2014 dated 9.4.2015 of Delhi High Court; 4. Arun Kumar Mishra vs. Directorate of Enforcement, Crl.M.C.5508/2014 dated 9.4.2015 of Delhi High Court; 5. State of Punjab vs. Bhajan Kaur, (2008) 12 SCC 112; 6. M/s. Punjab Tin Supply vs. Central Government, AIR 1984 SC 87; 7. Madisetti Bala Ramul vs. Land Acquisition Officer, (2007) 9 SCC 650; 8. Anant Gopal Sheorey vs. The State of Bombay, AIR 1958 SC 915; 9. Sangram Singh vs. Election Tribunal Kotah and another, AIR 1955 S.C. 425; 10. Sharif Ud Din vs. Abdul Gani Lone AIR 1980 SC 303; 11. The Workman of M/s. Firestone Tyer Rubber Co. of India Private Limited vs. The Management and others, AIR 1973 SC 1227; 12. K.S. Paripoornum vs. State of Kerala AIR 1995 SC 1012; 13. Dr. Subramanium Swamy vs. Director CBI, JT 2014 (7)SC 474; 14. Globle Energy vs. Central Electricity Regulatory Commission, AIR 2009 SC 3194; 15. Shreya Singhal vs. Unio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... countries across the world bring about legislative and regulatory reforms in these areas. It is contended that FATF Mutual Evaluation (ME) Team made a Mutual Evaluation Report in 2009 and suggested certain changes in so far as definition of Money-Laundering is concerned. It suggested that, among other things, the definition of Money- Laundering also should include possession, acquisition and use as well. The said recommendations were referred to the Standing Committee, Finance, seeking suitable changes in the Act. The Standing Committee, Finance, in its 56th Report submitted the Prevention of Money Laundering (Amendment) Bill 2011 on 9th May 2012 in both the Houses of Parliament. It is in this Report, the Standing Committee on Finance observed that there is a necessity of enhancing the definition pursuant to the mutual evaluation done by FATF and Article 6 of the Palermo Convention. On the Report being tabled, the definition included possession, acquisition, concealment in the 2013 amendment. No exception whatsoever could be taken by the petitioner in so far as the present definition is concerned. It is contended that except for making a statement that it is arbitrary, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if a person comes in possession of proceeds of crime even without any offence of money laundering, attachment of such property in his hands could be effected. Proviso (1) contemplates that before such attachment is done, there has to be proceeding in respect of scheduled offence before the Competent Court. Proviso (2) contemplates that if an officer has reason to believe that any property of any person is involved in money laundering, he can then attach the property. Section 5(1)(a) and proviso (2) of Section 5(1) operate in a situation where a person comes in possession of any proceeds of crime without actually being involved in money laundering or in a scheduled offence. In such a situation, as long as there is a proceeding in respect of any some scheduled offence, the authorities could attach such property if such properties are involved in money laundering. Whereas under proviso (2) of Section 5(1), the authority contemplated under such proviso is expected to attach the property, if it is found that the property is involved in money laundering. The difference between proviso (1) of Section 5(1) and proviso (2) of Section 5(1) is that in case there is an urgency and if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f (legal) deficiencies. Therefore it is recommended that: Legal measures are taken to allow for confiscation of the money laundered as subject of the ML offence and which is not contingent on a conviction for the predicate offence (stand-alone ML offence). The Standing Committee of Finance considered the recommendations of the FATF and having regard to the fact that India became a member of FATF and an obligation is cast upon it by making necessary changes in the domestic law so as to bring about the money laundering legislation in consonance with the international policy, necessary changes were suggested. It can further be seen that the changes now brought about under Section 5 and 8 of the Act is clearly in accordance with the object of the Act and would result in a fair dispensation of the attachment proceedings. Under the scheme of Sections 5 and 8 all the attachment proceedings could be initiated against three types of persons. (a) Persons who are accused of a scheduled offence. (b) Persons who are accused of having committed an offence of money laundering alone. (c) Persons who come in possession of the proceeds of the crime. The present provision whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity confirms provisional attachment order and guilt is recorded under Section 3 and 4, there is provision for confiscation which denies a statutory challenge to that order. The said argument is not clear since even after an order of confiscation is passed there could be an appeal against the order of the trial court for offences under Section 3 before the Appellate Court. Section 9 is only consequential and if any person is held guilty it is only natural to confiscate his property in favour of the State, which meets the object of the Act. It is urged that the contentions of the petitioner in assailing the validity of Sections 17, 18 and 19 are two fold, namely: (a) that the persons, who have been empowered to arrest are not police officers under the Act; (b) for effective search, seizure and arrest, only a report under Section 157 Cr.P.C. needs to be forwarded. Whereas for attachment of property final report under Section 173 of the Cro.P.C. is required. Both the arguments, being fallacious, are liable to be rejected. The power of arrest, search and seizure are considered an important tool in any investigation. They cannot be considered as being foreign in matters r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emain silent. The said Section was also called in question before the Andhra Pradesh High Court in the case of B.Rama Raju vs. Union of India (2011) 164 Comp Cases 149 AP, and it is contended that the decision is a complete answer to the challenge. That apart, the very nature of the offence of money laundering places the initial burden necessarily on the accused, because it is for the accused to explain the source of his property of which he is in possession. After he discharges the same, the burden shifts back upon the prosecution. There are similar provisions relating to burden of proof in various enactments such as Section 20 of Prevention of Corruption Act, 1988, Section 139 of Negotiable Instruments Act, 1881 and Section 53 of Prevention of Terrorism Act, 2002. It is contended that Section 43 provides for creation of Special Courts and for the trial of such cases expeditiously as a part of legislative mechanism to ensure that the offence of money laundering is stemmed at the earliest. The same is valid and not liable to be struck down. Section 44 now provides for both the offences of money laundering and of scheduled offences to be tried by the Special Court, if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of statements by officers concerned in aid of investigation under the Act. The petitioner further has stated that this could be the basis for conviction. This is wholly incorrect. There cannot be a conviction solely on the basis of statement made to an officer and unless there is a confession as provided under Section 164 of the Code of Criminal Procedure, 1973; Any statement recorded before a quasi-judicial body cannot be the basis for conviction. It is contended that having regard to the contentions raised in the writ petition, the following principles are also required to be examined. A ] That the provisions of the Act are capable of being misused . Merely because the provisions contemplate measures relating to search, seizure and arrest, the same cannot be considered draconian. This could be seen from the following: (a) The provisions of attachment is not final, but it is only provisional in nature; (b) The officer concerned, before effecting attachment, has to record reasons only on the basis of the material in his possession; (c) The matter once again goes before the adjudicating authority, which re-examines the entire issue and affords hearing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No .994 /2011, iii ) Sanjay Kumar Choudhary vs . Government of India, (2010 ) Crl .L .J . 1960, and iv )B . Ramaraju vs . Union of India and others, (2011 ) 164 CompCas 149 (AP ). It is also pointed out that the petitioner in the entire course of oral arguments has argued only on the questions of law and not on the facts. There is conspicuous silence as to the facts. It is contended that none of the questions of law raised apply to the present case stricto sensu. The petitioner, in the writ petition, has suppressed the fact that a prosecution complaint was filed by the respondent and the charge sheet was filed against other accused as well. It is contended that the petitioners are unable to show as to how the impugned provisions are unconstitutional. It could be seen from the synopsis above that most of the actions taken by the respondent under the Act is prior to 2013 amendment itself. The provisions now assailed are not clearly established or demonstrated. Hence Shri Navadagi seeks the dismissal of the petitions. 6. It would be useful to refer to and keep in view the background in which the PML Act came into being, in proceeding to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake laws for implementation of any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body. Article 253 of the Constitution of India reads as under: 253 . Legislation for giving effect to international agreements - Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body. The PML Act was enacted in the year 2002 and came into effect from 1.7.2005. The Act has undergone four amendments - in the year 2005, 2009, 2013 and by the Finance Act, 2015 (with effect from 14th May, 2015) under Part VI thereof, respectively . The last of the amendments was not brought to the attention of this court by the counsel for the parties. The same however, is kept in view in considering the case of the petitioners, on merits. 7. Keeping in view the settled principles that while examining a challenge to the constitutionality of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence of money- laundering. -------- As can be seen above, the change brought about by the amendment to Section 3 is the inclusion of the following phrase , including its concealment, possession, acquisition or use . This according to the petitioners is an inclusion which was significantly excluded by the legislature, after much debate and the section was accordingly redrafted, to avoid unnecessary harassment to innocent people who may have acquired the possible 'proceeds of crime' innocently, without knowledge or without the requisite mens rea. The amendment of the Section has given scope for an expansive definition to the expression 'proceeds of crime' and is wholly unreasonable and draconian. According to the respondent, this amendment was warranted on account of the recommendation made by the Financial Action Task Force (FATF), an intergovernmental body for development and promotion of policies to combat money laundering and terrorist financing . It also ensures adherence to its standards by member countries across the world, including India, to bring about legislative and regulatory reforms. It transpires that the FAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where the (1) Where the (1) Where the (1) Where the Director, or Director, or Director, or any Director, or any Director, or any any other any other other officer other officer other officer officer not officer not not below the not below the not below the below the rank below the rank rank of Deputy rank of Deputy rank of Deputy of Deputy of Deputy Director Director Director Director Director authorised by authorised by authorised by authorised by authorised by him for the the Director for the Director for him for the him for the purposes of this the purposes of the purposes of purposes of purposes of section, has this section, has this section, has this section, this section, reason to reason to reason to has reason to has reason to believe (the believe (the believe (the believe (the believe (the reason for such reason for such reason for such reason for reason for belief to be belief to be belief to be such such recorded in recorded in recorded in 2002 2005 2009 2013 2015 belief to be belief to be writing), on the writing), on the writing), on the recorded in recorded in basis of basis of basis of writing), on writing), on material in his material in his material in his the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub- section or on the date of an order made under sub- section (2) of section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation.- For purposes of this sub- section person interested , in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) 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. 5.Attachment of property involved in money- laundering.- (1) Where the Director, or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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. 5. Attachment of property involved in money- laundering.-- (1) Where the Director, or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person is in possession of any proceeds of crime; (b) such person has been charged of having committed a scheduled offence; and (c) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and fifty days from the date of the order, in the manner provided in the Income-tax Act, 1961 (43 of 1961) and the Director or the other officer so authorised by him, as the case may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f property involved in money- laundering.- (1) Where the Director, or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that- (a) any person is in possession of any proceeds of crime; (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorized to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorized to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in first proviso , any property be attached under this section if the Director or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section has reason to believe (the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Magistrate. Clause (b) was deleted by the 2009 Amendment, while clause (c) took its place as Clause (b). Now with the amendment of 2013, the reference to the earlier Clause (b) being incongruous is one of the contentions of the petitioner . By virtue of the 2015 Amendment, where by the words clause (b) found in the second proviso to Sub-section (1), has been substituted by the words first proviso . It has now rendered meaning to the Second proviso. Section 5 (1) (a) and the second proviso thereto operate in a situation where a person is found to be in possession of what is believed to be proceeds of crime by the competent officer, without actually being involved in money laundering or in a scheduled offence. While in terms of the first proviso to sub-section(1) of Section 5, it is necessary that there be a report under Section 173 Cr.P.C., before a Magistrate as regards a scheduled offence. In terms of the second proviso in case of urgency where the competent authority believes that the property is likely to be secreted or dealt with otherwise, thereby frustrating the attachment proceedings, power is afforded to take action. It is noticed that such attachment by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation connected with the proceeds of crime and projection of the same as untainted property; for the purposes of attachment and confiscation (imposition of civil and economic and not penal sanctions) neither mens rea nor knowledge that a property has a lineage of criminality is either constitutionally necessary or statutorily enjoined. Proceeds of crime (as defined in Section 2(u) is property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence or the value of any such property. Property is defined in Section 2(v) to include property of every description corporeal, incorporeal, movable, immovable, tangible, and intangible and includes deeds and instruments evidencing title to or interest in such property or assets wherever located. 35. The matrix of the relevant provisions of the Act compel the inference that the legislation subsumes that property which satisfies the definition of proceeds of crime , prima facie is considered as property whose transfer (defined in Section 2(za)) is subject to verification to consider whether the transfer is a stratagem of a money laundering operation and is part of a layering transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money- laundering and confiscated by the Central Government: Provided that where a notice under this sub- section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under sub- section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money- laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money- laundering and confiscated by the Central Government: Provided that where a notice under this sub- section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under sub- section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money- laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or, seized 2 under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money- laundering and confiscated by the Central Government: Provided that where a notice under this sub- section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under sub- section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money- laundering: Provided that if the property is claimed by a person, other than a person to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties should not be declared to be the properties involved in money- laundering and confiscated by the Central Government: Provided that where a notice under this sub- section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under sub- section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money- laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money- laundering. (3) Where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to possession of a property in respect of which an order has been passed under sub- section (3) of Section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money- laundering after having regard to the material before it. 8. Adjudication. (1) On receipt of a complaint under sub- section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub- section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3, or is in possession of proceeds of crime, he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money- laundering and confiscated by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a property frozen under sub-section (1A) of Section 17, the order of confiscation shall have the same effect as if the property had been taken possession of. (5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money- laundering has been committed, it shall order that such property involved in the money- laundering or which has been used for commission of the offence of money- laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money- laundering has not taken place or the property is not involved in money- laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub- section (3) of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated under Sections 3 and 4 are clearly and inextricably linked to the scheduled offence and it is not possible to envision an offence under PML Act as a 'stand alone' offence without the guilt of the offender in the Scheduled offence being established. However, it is to be seen that proceeds of crime is property of all kinds as defined under clause (v) of Section 2(1). The Explanation inserted to the said clause reads thus: Explanation.--For the removal of doubts, it is hereby clarified that the term property includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences; Hence, it is possible to extend the definition of 'proceeds of crime' to property used in the commission of an offence under the Act or any of the Scheduled offences. It is therefore possible to reconcile the amendments made elsewhere in the Act proceeding on the basis that money laundering is also treated as a 'stand alone' offence, de hors, a scheduled offence, if circumstances warrant. The endeavour under the Amendment Act, 2013, vis-a-vis Sections 5 8 is to enable attachment proceedings against the following : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement Directorate could initiate action under Section 17 and 18. The power of search, seizure and arrest are considered an important tool in any investigation. Such power being available in matters relating to economic offences is not unusual. Identical provisions are found in the Customs Act, 1962, the Prevention of Food Adulteration Act, 1954, the Railway Property ( Unlawful Possession Act, 1966, etc. Further, as investigation precedes the filing of a charge sheet under Section 173 Cr.P.C , the exercise of power of search, seizure and arrest as part of investigation would not prejudice any person as such measures are controlled by other provisions of the Cr.P.C. Section 65 of the PML Act does provide that the provisions of the Cr.P.C. would be applicable including the provisions for investigation under the Act. Section 19 is assailed also on the ground that there is no judicial body provided to scrutinize the initial action as in the case of scheduled offences. However, Section 19 (3) itself provides that every person arrested under the Act would be produced before a Magistrate within 24 hours of such arrest. Further, the contention that such arrest may not be warranted by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is or are proved to be involved in money- laundering, then for the purposes of adjudication or confiscation under Section 8, or for the trial of the money- laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court, be presumed that the remaining transactions form part of such inter- connected transactions. ------- It is evident that as it existed post the Amendment Act, 2009, in so far as the presumption arising in inter-connected transactions, where money laundering was alleged to be involved in two or more transactions , and if one or more such transactions was proved to be involved in money laundering then for purposes of adjudication or confiscation under Section 8 , unless otherwise proved, it could be presumed that the remaining transactions formed such inter-connected transactions. Hence if the scheduled offence resulted in acquittal, in terms of Section 8 the presumption with regard to inter connected transaction ceased to exist. However, with the Amendment Act of 2013, by the inclusion of the phrase or for the trial of the money laundering offence after the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has accepted or obtained or has agreed to accept or attempted to obtain for himself, or for any other person, any gratification (other than legal remuneration) or any valuable thing from any person, it shall be presumed, unless the contrary is proved, that he accepted or obtained or agreed to accept or attempted to obtain that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in section 7 or, as the case may be, without consideration or for a consideration which he knows to be inadequate. (2) Where in any trial of an offence punishable under section 12 or under clause (b) of section 14, it is proved that any gratification (other than legal remuneration) or any valuable thing has been given or offered to be given or attempted to be given by an accused person, it shall be presumed, unless the contrary is proved, that he gave or offered to give or attempted to give that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in section 7, or as the case may be, without consideration or for a consideration which he knows to be inadequate. (3) Notwithstanding anything contained in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 as amended by the Amendment Act of 2013 is held to be constitutionally valid. In so far as Section 44 of the Act is concerned it is sought to be contended that Section 44 mandates that the offence under this Act shall be triable by a Special Court. Sub-section (1) of Section 44 starts with the caption 'notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974)'. The Section also mandates that the scheduled offence as well as the offence under this Act shall be tried jointly by the Special Court of PML Act. The Scheme of the Section completely violates the principles of natural justice and also takes away the valuable legal right of an affected person. There seems to be no justification for insistence of joint trial, as both the trials are independent in nature based their own independent evidence and even while trying the offence of money laundering, the evidence recorded during the trial of scheduled offence could not be looked into and the same is in the either case. This is absolutely an incongruous situation and contrary to the procedure of a trial. The other main ambiguity created is that, as per the scheme of the PML Act, the action ..... X X X X Extracts X X X X X X X X Extracts X X X X
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