TMI Blog2022 (7) TMI 877X X X X Extracts X X X X X X X X Extracts X X X X ..... oney laundering rests on the commission of a predicate offense which in turn may have resulted in a pecuniary benefit being obtained and derived. It fundamentally aims at confiscation of benefits that may be derived as a result of criminal activity and the commission of a scheduled offense. It is aimed at countering and penalising the malaise of wealth and assets acquired as a result of criminal activity B. It is evident from a reading of the Act that while the commission of a predicate offense is the precipitate step for initiation of proceedings under the Act, the offense of money laundering must be tried and established separately. It is also pertinent to observe that the predicate offense constitutes the very foundation of a charge of money laundering. The entire edifice of a charge of money laundering is raised on an allegation of a predicate offense having been committed, proceeds of crime generated from such activity and a projection of the tainted property as having been legitimately acquired. C. However, once it is found on merits that the accused had not indulged in any criminal activity, the property cannot legally be treated as proceeds of crime or be viewed as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COURT] . Consequently it must be held that once it is found by a competent court, authority or tribunal that a predicate offence is either not evidenced or on facts it is held that no offence at all was committed, proceedings under the Act would necessarily have to fall or be brought to a close. H. Turning then to Section 3 of the Act, the Court finds that the said provision would come into play only if proceeds of crime are found to have been generated. As this Court reads Section 3 it finds that the offence of money laundering has an enduring and ineffaceable link to proceeds of crime. Absent the commission of a criminal offence, the foundation of proceedings initiated under the Act would undoubtedly fall and self-destruct. I. The Court further notes that not every criminal activity falls within the ambit of Section 3. While criminal activity may represent or evidence the commission of a predicate offence under the Penal Code, it is only activity relating to the laundering of proceeds of crime which can form the subject matter of proceedings under the Act. Absent the existence of criminal activity which may have resulted in proceeds of crime having been gained or obtained, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Act. N. The Court thus concludes that an offense of money laundering that may be committed post 01 July 2005 would still be subject to the rigours of the Act notwithstanding the predicate offense having been committed prior to that date. As noted hereinabove, Section 3 creates an offense for money laundering. Neither that provision nor the Act is concerned with the trial of the predicate offense. Thus, any activity or process that may be undertaken by a person post 01 July 2005 in terms of which proceeds of crime are acquired, possessed or used and/or projected as untainted property would still be subject to the provisions of the Act. O. The Court exposits and reiterates the legal position to be that it is the date of the commission of the offense of money laundering and not the date of commission of a scheduled offense which is relevant and determinative. The date of inclusion of a crime as a scheduled offense would also not be determinative and the issue would have to be decided bearing in mind whether an allegation of money laundering stood committed after the Act had come into force. P. The conflict between Axis Bank [ 2019 (4) TMI 250 - DELHI HIGH COURT] a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sts. Those safeguards clearly confer protection on a bona fide third-party interest that may come to exist in property acquired upon payment of due consideration. It also recognized the right of such a person to establish before the Adjudicating Authority that the acquisition of the interest was not intended to defeat the objectives of the Act and was a transfer validly made upon payment of due consideration. U. Axis Bank further held that in order to uphold action that the Directorate may take against alternative attachable property was one which established a nexus or link between such properties on the one hand and the person accused of money laundering. It further propounded the test that in such a case it would have to be found that the person accused of money laundering had an interest in such property at least till the time of engagement in the proscribed criminal activity from which a pecuniary interest had been derived or obtained. It also held that the date or period of commission of criminal activity would be liable to be treated and recognized as the cut off. V. These tests as spelt out in Axis Bank adequately safeguard third party interests. Seema Garg while proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003. This coupled with the fact that the allocation itself would not represent proceeds of crime leads the Court to the unescapable conclusion that the impugned proceedings are rendered patently illegal. AA. The Court has additionally taken into consideration the fact that the first chargesheet and which dealt with allegations of the allocation having been utilized for the purposes of extracting coal, the diversion of the mined mineral for unlawful gain, the acquisition of properties from the profits so earned and other related allegations already stands quashed. As long as that judicial declaration holds the field, the Court would have to necessarily acknowledge that no criminal activity was indulged in. BB. The show cause notice and the provisional orders of attachment proceed on the basis that the profits derived from criminal activities post 04 September 2003 and the properties acquired directly as a result thereof are liable to be attached under the Act. However, and as this Court has found activities post 04 September 2003, cannot form the foundation for the initiation of proceedings under the Act since the chargesheet itself stands restricted to events which occurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ON B. WHETHER PROCEEDINGS LIABLE TO BE DEFERRED C. PRELIMINARY OBJECTION D. THE BACKGROUND E. SUBMISSIONS F. MONEY LAUNDERING A STAND ALONE OFFENSE G. THE ARTICLE 20(1) ARGUMENT H. AXIS BANK VS. SEEMA GARG I. WHETHER ALLOCATION OF COAL IS PROCEEDS OF CRIME J. THE IMPACT OF QUASHING OF THE FIRST CHARGESHEET K. WHETHER ARTICLE 20(1) IN FACT VIOLATED L. IMPUGNED ATTACHMENT AND EQUIVALENT VALUE M. CONCLUSIONS N. OPERATIVE DIRECTIONS A. INTRODUCTION 2. These two writ petitions challenge proceedings initiated by the Directorate of Enforcement, the respondents herein, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e questions which are raised here. The amendments essentially assail further proceedings and steps taken pursuant to the Provisional Order of Attachment. In view of the aforesaid, the amendments as proposed by way of the present application are allowed. The Court notes that the amended writ petition already exists on the record. The application shall stand disposed of. W.P.(C) 14999/2021 CM APPLs. 47329/2021, 553/2022, 10949/2022 W.P.(C) 15000/2021 CM APPLs. 47331/2021, 547/2022, 10952/2022 Learned counsel representing the Enforcement Directorate prays for and is granted time to file reply to the added pleadings taken. For the purpose of considering the prayer for interim relief, the Court takes note of the contentions recorded in the earlier order of 06 January 2022 as well as the submission of Mr. Sibal, learned Senior Counsel appearing for the petitioners, who submits that the offences of which the petitioners are charged did not even form part of scheduled offences as contemplated under the PMLA. Additionally, the Court notes that the recordal of satisfaction by the Adjudicating Authority, prima facie, does not appear to satisfy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents have raised certain preliminary objections to the maintainability of the writ petitions as well as of the Court proceeding further, it would be apposite to notice the following salient facts. 5. Proceedings under the Act emanate from an allocation of the Chotia coal block in favour of Prakash Industries Limited, the petitioners in the lead matter (PIL). The aforesaid allocation came to be made in its favour on 04 September 2003. The allocation as made ultimately came to be cancelled in terms of the judgment of the Supreme Court in Manohar Lal Sharma vs. Principal Secretary (2014) 9 SCC 614. However, and much before that verdict came to be rendered, CBI on 07 April 2010 registered FIR No. RC/AC2/2010/A0001 alleging misrepresentation by PIL in order to obtain the coal allocation as well as diversion of coal extracted from the said block. The Special Judge CBI taking cognizance of the chargesheet which was submitted on conclusion of investigation, framed charges against PIL and other accused in CC No. 3/2012 (First Chargesheet). The aforesaid chargesheet came to be challenged by PIL before this Court which in terms of its judgment of 05 September 2014 quashed the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the various questions which stand raised before the Supreme Court on behalf of respective parties and submits that since the issues which are being considered by the Supreme Court are identical to those which are raised here, judicial propriety would warrant these writ petitions being called for consideration only after judgment has been rendered by the Supreme Court. Mr. Raju has also invited the attention of the Court to the written submissions submitted by him before the Supreme Court as well as the principal issues which were drafted and submitted by the learned Solicitor General of India in those proceedings. 8. The learned ASG in support of his submissions has also relied upon certain decisions to contend that in similar situations, courts have deferred proceedings awaiting a final verdict being handed down by the Supreme Court. Those decisions are noticed hereinafter. The decision in D.K. Trivedi Sons Vs. State of Gujarat 1986 Supp. SCC 20 was dealing with a case where the High Court had dismissed writ petitions challenging the constitutional validity of a particular statutory provision while an identical challenge was pending before the Supreme Court. It was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing submissions. It was contended that undisputedly the second chargesheet relates to events extending only upto the date of allocation of the coal block and thus restricted upto 04 September 2003. This according to Mr. Sibal is manifest from a reading of paragraphs 16.57 and 16.59 of the second chargesheet. Mr. Sibal has urged that the allocation of the coal block cannot fall within the ambit of the expression proceeds of crime as defined in Section 2(1)(u) of the Act. Learned Senior Counsel further contended that the allocation cannot possibly be considered or understood as representing property derived or obtained as a result of criminal activity relating to a schedule offence. In view of the aforesaid, it was the submission of Mr. Sibal that the proceedings initiated under the Act are wholly without jurisdiction. It was further contended that activities undertaken by the petitioners post 04 September 2003 including the extraction of coal and its alleged diversion were activities and events which formed subject matter of the first chargesheet. It was in the aforesaid backdrop that Mr. Sibal argued that once that chargesheet had come to be quashed, no proceedings could have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l provisions of Chapter XII of the Code of Criminal Procedure, 1973 is required to be followed while commencing and continuing investigation under the Prevention on Money Laundering Act, 2002? 3. Whether the twin conditions for grant of bail as provided for in Section 45 of the Prevention of Money Laundering Act, 2002, as it stands amended, is unconstitutional? Whether the amendment takes away the basis of the judgment in (2018) 11 SCC 1 and revives the twin conditions for grant of bail? 4. In case it is held that the twin conditions stand revived, whether the judgment in (2018) 11 SCC 1, holding that the twin conditions cannot apply to anticipatory bails, lays down the correct proposition of law? 5. Whether the provisions concerning the burden of proof under PMLA violate fundamental rights of the accused persons? 6. What are the contours of the offence under Section 3 of the PMLA? Does the Explanation to Section 3 of PMLA (added by an amendment in 2019) expand the meaning of the offence under Section 3 [as it stood prior to the amendment] and if so, is it permissible to do so? 7. Whether the filing of a chargesheet/complaint/FIR in the predicate offence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India and compares it with the principal arguments which were addressed on these two writ petitions, it finds that there is no commonality between the issues which are raised here and the challenge to the constitutional validity of the provisions of the Act. Whether an allocation of coal can be viewed as proceeds of crime is not a question which can be said to be even remotely engaging the attention of the Supreme Court. Similarly, the question whether the allocation could be treated as property derived or obtained from criminal activity also does not appear to be an issue raised for the consideration of the Supreme Court. The impact, if any, of the second chargesheet being restricted upto 04 September 2003 on the proceedings impugned in these two writ petitions is again an issue which would have to be adjudged on the facts obtaining in these two writ petitions. A decision on that issue cannot possibly be contended to be connected in any manner with the submissions addressed either by Mr. Raju or the learned Solicitor General of India before the Supreme Court. The arguments addressed by Mr. Sibal as well as Mr. Chawla essentially turn and rest on the facts leading to the filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the show-cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show-cause notice and take all stands highlighted in the writ petition. Whether the show-cause notice was founded on any legal premises, is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court. Further, when the court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriate at this stage . If this Court were to enter into the merits of this case at this stage, it would amount to scuttling the statutorily engrafted mechanism i.e. PMLA. Mr. Raju then relied upon M/s SRJ Infratech Pvt Ltd and Ors vs. Director Directorate of Enforcement 2016 SCC OnLine Del 221 where the Supreme Court observed as under:- 6. In the opinion of this Court, mixed questions of fact and law are involved in the present case. Moreover, as a show cause notice has already been issued as to why the provisional attachment order be not confirmed, this Court is of the view that the ends of justice would be met if the petitioners are permitted to take all their pleas and defences in the adjudication proceedings, which are pending under Section 8 of the PML Act. 17. While it is true that Courts have on more than one occasion refrained from entertaining a writ petition at the stage of issuance of a show cause notice, the principle enunciated in the various judgments rendered on the question is that a challenge at the stage of the issuance of a show-cause notice should not ordinarily be entertained. However, those very decisions have also carved out the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not operate as an absolute bar and that writ petition under Article 226 could still be entertained in exceptional circumstances. 17. A specific and clear rule was laid down in State of U.P. v. Mohd. Nooh [AIR 1958 SC 86 : 1958 SCR 595] as under: But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. 18. This proposition was considered by a Constitution Bench of this Court in A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani [AIR 1961 SC 1506 : (1962) 1 SCR 753] and was affirmed and followed in the following words: The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions which the learned Solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deal with the merits of the matter, the following salient facts may be noticed. PIL is stated to have applied for the grant of a mining lease on 25 May 1992. Its application is stated to have been taken up for consideration by the Screening Committee while dealing with other proposals relating to captive mining by power generating companies in its meeting held on 14 July 1993. According to the petitioners, PIL installed a Sponge Iron Plant at Chotia in the State of Chhattisgarh with a production capacity of 1.5 LTPA on 01 November 1993. On 30 September 1996, the Ministry of Coal is stated to have apprised PIL of its decision to permit it to explore the Hasdeo-Arand coal block for captive development. Pursuant to the aforesaid communication, PIL is stated to have apprised the Ministry of Coal of it having undertaken preparatory steps for exploration of the Chotia block falling within the Hasdeo-Arand and Panchvahini coalfields. The application for allocation of the Chotia coal block remained pending for consideration till it was allocated to PIL on 04 September 2003. On 07 April 2010, the first FIR came to be registered. That FIR alluded to acts of PIL which were alleged to amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l capacity of sponge iron project at Champa from the existing 4,00,000 MT P.A. to 8,00,000 MT P.A. i.e. additional 4,00,000 MT P.A. capacity. (Para-I at page 367 of Vol.II) [document D-46 (Annexure P-20) refers]. VIII. The afore-referred application reflects that PIL at that point of time i.e. in the year 2006 had an annual production capacity of 4, 00, 000 MT P.A. but had been allocated coal for the increased capacity upto 8,00,000 MT P.A. (at pages215 and 216 of Vol.II) IX The aforesaid Application which seeks allocations of Vijay Central beyond the capacity of 8,00,000 MT P.A. clearly states that the capacity in the year 2006 was only 4,00,000 MT P.A. whereas the application also stipulates that its capacity had already been increased to 8, 00, 000 MT P.A. for which coal allocation had already been done from Chotia Coal Block. X. The above-said Application was forwarded to the Ministry of Steel for examination and recommendation. (Para-17.4 at page-147 of Charge-Sheet refers). XI. Ministry of Steel vide OM dated December 6, 2007 recommended allocation in favour of PIL for Vijay Central Coal Block showing its existing capacity as of 8, 00, 000 MTPA for the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complaints of SKS and the documents of July 10 and July 23, 2008 the Ministry of Coal and Ministry of Steel held a meeting on July 25,2008, the Minutes of which dated September 1, 2008 were forwarded to the Ministry of Steel by way of furnishing clarifications. Ministry of Coal decided to undertake a spot verification of the production capacity of PIL and directed G.K. Basak Executive Secretary JPC on September 2, 2008 to visit the Factory Premises of PIL and assess its production capacity and forward a report to the Ministry of Steel. (Para-17.13 on page 150 of charge-sheet refers). XX. A spot Inspection at PIL site was conducted by accused-Mr. G.K. Basak and Mr. Soumen Chatterjee on September 4, 2008. They submitted a verification report on September 5, 2008 and forwarded it to the Ministry of Steel. The Inspection Report indicated that the PIL had four kilns and annual installed capacity of sponge iron at 7.2 lacs MT P.A. The visits and the report of G.K. Basak and Soumen Chatterjee Accused No.1 2 are not disputed. (Para-17.14 on page 150 of Charge-Sheet refers). XXI. The minutes of the joint meeting dated July 25, 2008 (at page 348 in Vol.II), reflect that in the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion about the production capacity of the operating kilns. Trial court in the impugned order has noted that the incriminating letter of 10 July, 2008 does not bear the signatures of petitioner-A.K. Chaturvedi, but has not adverted to any circumstances or material on record to jump to a conclusion that the aforesaid letter has been fabricated. 13. It has to be kept in mind that petitioners are sought to be prosecuted with the aid of Section 120-B of IPC. No doubt, direct evidence of conspiracy need not be there but circumstances justifying inference of criminal conspiracy ought to be there. During the course of hearing, attention of this Court was not drawn to any such circumstance, to enable this Court to prima facie infer that petitioners had conspired with their co-accused to commit the offences in question. Trial court was not at all justified in observing that the stand of petitioners relates to facts in issue. At this stage, it would be pertinent to refer to petitioners communication of 23rd July, 2008 and the documents accompanying it (Annexure P-14) which is part of the charge-sheet. Undisputedly, aforesaid communication (Annexure P-I4) reflects the correct factual po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facing trial for the substantive offences in this case, on the basis of spot Inspection Report (Annexure P-16) prepared by them 23. From the disclosures made in the counter affidavit which has been filed in these proceedings, the Court takes note of the allegation that PIL mined coal in a wrongful manner between 2006-2015 and extracted coal valued at Rs.951.77 crores. It is further alleged that based on the revenues generated as a result of the said criminal activity, various properties were purchased by PIL acting through its related and sister concerns. However, and as noticed in the introductory part of this judgment, the impugned proceedings rest upon the allegations which form part of the second chargesheet. That chargesheet takes due notice of the fact that the original FIR as well as the first chargesheet already stands quashed. It is perhaps in that background that the said chargesheet restricts itself to activities and events which transpired up to the allocation of the coal block itself on 04 September 2003. This is evident from the following recitals as appearing in the second chargesheet: - 16.57 A case RC AC2 2010 A0001 was registered by CB I, AC-I, - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings initiated by the Adjudicating Authority which were assailed by means of the amendment application which has come to be allowed. Insofar as connected writ petition No. 15000/2021 is concerned, the petitioner Nos. 1 to 9 are stated to be associate companies of PIL. The properties which have come to be provisionally attached stand registered and recorded in their names. It is the provisional order of attachment which has constrained those petitioners to approach this Court challenging the validity of the proceedings initiated on lines similar to those urged on behalf of PIL. E. SUBMISSIONS 26. Mr. Sibal, learned Senior Counsel appearing in the main writ petition being W.P.(C) 14999/2021 has assailed the initiation of proceedings under the Act on the following jurisdictional grounds. Mr. Sibal contended that the allocation of coal cannot be construed as being proceeds of crime since it clearly does not represent property which may be said to be derived or obtained as a result of criminal activity relating to a scheduled offence. It was submitted that the allocation of coal in itself cannot possibly be understood as being proceeds of crime since it only conferred upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad occurred till 04 September 2003 that is the date when the coal block came to be allocated. According to Mr. Sibal since those proceeds formed subject matter of the first chargesheet alone and fall outside the purview of the second chargesheet, those facts and events cannot possibly be countenanced to sustain the impugned proceedings. 28. Reverting then to the particular facts of the main writ petition, it was submitted that undisputedly the allocation of coal was made on 04 September 2003 and thus evidently at a time when neither the Act was in force nor an offence of money laundering in existence. It was pointed out that the Act itself came to be promulgated on 01 July 2005. Mr. Sibal also drew the Court s attention to the fact that Sections 120B and 420 of the Penal Code came to be included as scheduled offences only on 1 June 2009. According to Mr. Sibal, bearing in mind the fact that the allocation of coal was made on 04 September 2003, the invocation of the provisions of the Act would clearly amount to violation of Article 20(1) of the Constitution. According to Mr. Sibal, the impugned proceedings essentially seek to penalize the petitioners for the commission of an offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been taken, Section 3 of MCOCA can be invoked. There may be a case in which the investigating agency does not know exactly the date on which the crime was committed; in our opinion, in such a case the date on which the offence comes to the notice of the investigating agency, the ingredients constituting the offence have to be satisfied. In our opinion, an act which is not an offence on the date of its commission or the date on which it came to be known, cannot be treated as an offence because of certain events taking place later on. We may hasten to add here that there may not be any impediment in complying with the procedural requirement later on in case the ingredients of the offence are satisfied, but satisfying the requirement later on to bring the act within the mischief of penal provision is not permissible. In other words, procedural requirement for prosecution of a person for an offence can later on be satisfied but ingredients constituting the offence must exist on the date the crime is committed or detected. Submission of charge-sheets in more than one case and taking cognizance in such number of cases are ingredients of the offence and have to be satisfied on the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt time. The accused could not therefore be said to have committed an offence under clause (e) of sub-section (1) of Section 5 read with sub-section (2) of that section. 29. Mr. Sibal submitted that the facts of the present writ petition would reveal that at the time when the allocation was made neither the Act was in existence nor were Sections 420 and 120B of the Penal Code enlisted as scheduled offences. It is in the aforesaid backdrop that learned Senior Counsel contended that the proceedings as initiated are not only without jurisdiction but also violative of the constitutional guarantee enshrined in Article 20(1) of the Constitution. Mr. Sibal also raised the issue of the Explanation to Section 3 not only expanding but going beyond the contours of the main provision itself. According to learned senior counsel, an Explanation cannot travel beyond the ambit of the principal provision itself. In support of the aforesaid contention, learned senior counsel referred the Court to the decision in S. Sundaraman Pillai Vs. V.R. Pattabiraman (1985) 1 SCC 591. 30. Mr. Chawla, learned counsel appearing for the petitioners in the connected petition, while adopting the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. Explanation-For the removal of doubts, it is hereby clarified that proceeds of crime include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. There are three limbs of Section 2(1)(u) of the PMLA namely: i) Any property derived or obtained directly or indirectly as a result of criminal activity relating to scheduled offence; ii) Value of property derived or obtained from criminal activity; iii) Property equivalent in value held in India or outside where property obtained or derived from criminal activity is taken or held outside the country. 14. The first limb deals with property directly or indirectly obtained from criminal activity. The third limb is applicable where property obtained from criminal activity is held or taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. Section 4. Punishment for money-laundering.- Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine: Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words which may extend to seven years , the words which may extend to ten years had been substituted. xxxx xxxx xxxx 34. We deem it appropriate to examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty is purchased against said cash, the movable or immovable property would be value of property derived from commission of scheduled offence. If a person gets some land or building by committing cheating (Section 420 of IPC) which is a scheduled offence and said building or land is sold prior to registration of FIR or ECIR, the property derived from scheduled offence would not be available, however money generated from sale or transfer of said property in the form of cash or any other form of property may be available. The cash or any other form of property movable or immovable, tangible or intangible would be value of property derived from commission of scheduled offence. 32. Controverting the aforesaid submissions, Mr. Raju, learned ASG, has addressed the following submissions. It was firstly contended that merely because Sections 420 and 120B came to be included as scheduled offences on 1 June 2009, it cannot be said that the provisions of the Act have been accorded retroactive application. Mr. Raju submitted that the Act essentially targets the offence of money laundering. The learned ASG submitted that merely because the predicate offence may have been committed pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular offence as specified in the Penal Code comes to be added in the Schedule subsequently, that in itself cannot mean that the invocation of the penal provisions of the Act would amount to its retrospective application. It was submitted that the Act penalizes a separate and distinct offence of money laundering and it is therefore this offence alone which would determine the validity of proceedings. It was additionally submitted that the principles laid down in Seema Garg are clearly contrary to the judgment rendered by this Court in Deputy Director, Directorate of Enforcement vs. Axis Bank 2019 SCC OnLine Del 7854 and therefore it is the principles laid down in the latter which would bind and apply. According to the learned ASG, Axis Bank has clearly held that the Act empowers the respondents not only to proceed against properties which may be directly linked to proceeds of crime but also against properties which would be equivalent in value thereof. It was submitted that in the present case the properties which have been provisionally attached are equivalent in value to the quantification of proceeds of crime and therefore the action as initiated by the respondents canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound by the competent authority that a predicate offence is either not evidenced or on facts it is held that no offence at all was committed, proceedings under the Act would necessarily have to fall or be brought to a close. The Court bears in mind the language of Section 3 of the Act which links the activities and processes of money laundering to proceeds of crime. Section 2(1)(u) creates an indelible link between property derived or obtained and criminal activity relating to a scheduled offence. It is only when it is found that a person has derived property as a result of criminal activity that the offence of money laundering can be said to have been committed. Absent the element of criminal activity, the provisions of the Act itself would not be attracted. The offence of money laundering is essentially aimed at depriving persons of the fruits and benefits that may have been derived or obtained from criminal activity. However, once it is found that a criminal offence does not stand evidenced, the question of any property being derived or obtained therefrom or its confiscation or attachment would not arise at all and in any case, proceedings if initiated under the Act would be who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is completely independent of the principal crime (scheduled offence) giving rise to proceeds of crime is unmerited. It is necessary to bear in mind that the substratal subject of the Act is to prevent money-laundering and confiscate the proceeds of crime. In that perspective, there is an inextricable link between the Act and the occurrence of a crime. It cannot be disputed that the offence of money-laundering is a separate offence under section 3 of the Act, which is punishable under Section 4 of the Act. However as stated earlier, the offence of money-laundering relates to the proceeds of crime, the genesis of which is a scheduled offence. In the aforesaid circumstances, before initiation of any proceeding under Section 5 of the Act, it would be necessary for the concerned authorities to identify the scheduled crime. The First Proviso to Section 5 also indicates that no order of attachment shall be made unless in relation to a schedule offence a report has been forwarded to a Magistrate under Section 173 of the Code of Criminal Procedure, 1973 or a complaint has been filed by a person authorised to investigate the scheduled offence before a Magistrate or Court for taking cognizan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of Mahanivesh Oils in different sections of this decision. However conscious of the interim order passed on the LPA, it may only be observed that the said decision has not been treated as a binding precedent by the Court. While certain conclusions upon which the Court has ultimately reached independently may appear to be in line with what was held in that decision, that is not liable to be understood as an outcome of this Court adhering to precedent. The Court has deemed it apposite to refer to Mahanivesh Oil for the completeness of the record and to essentially record the views that have been expressed on the questions posited in the decisions handed down by this Court as well as other High Courts. 40. Reverting then to the issue at hand, the Court observes that a similar view was expressed by the Allahabad High Court in Sushil Kumar Katiyar vs. Union of India, Thru Dir. and Another 2016 SCC OnLine All 2632 as would be evident from paragraph 38 of that decision which is extracted hereinbelow: - 38. In view of what has been discussed above, I am of the view that the petitioner has been able to make out a good case for quashing of the summoning order fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission of scheduled offences under the PMLA and the subsequent offence of money laundering. The language of Section 3 clearly implies that the money involved in the offence of money laundering is necessarily the proceeds of crime, arising out of a criminal activity in relation to the scheduled offences enlisted in the Schedule of the Act. Hence, the essential ingredients for the offence of Section 3 of the PMLA become, first, the proceeds of crime, second, proceeds of crime arising out of the offences specified in the Schedule of the Act and third, the factum of knowledge while commission of the offence of money laundering. In the present matter, at the initial stage of proceedings, the Respondents were charged for offences under Section 21/25/29 of the NDPS Act and 420/468/471/120B of the IPC, however, the learned Additional Sessions Judge, Amritsar, observed that material produced before the Court as well as the allegations made against the Respondents were largely made upon suspicion. Though certain material, properties and cash, were recovered and attached/seized but the fact that such properties were obtained through proceeds of crime of drug trafficking could not be establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that consequent to closure of the criminal proceedings, action taken under the Act would also be liable to be brought to a close, the Division Bench held as follows: - 14. As we do not have any quibble over the facts narrated, let us go into the issues raised. As rightly submitted by the learned Additional Solicitor General, the definition of proceeds of crime under Section 2(u) of the Act is very exhaustive and elaborate. It speaks of any property derived or obtained, directly or indirectly, by any person. It is no doubt true that the complaint has been made by the respondent only in pursuant to the scheduled offence. However, the object, rationale and the scope enshrined under the Prevention of Money Laundering Act, 2002, being a special statute is distinct and different from the one enshrined under the Penal Code, 1860 and the Prevention of Corruption Act. Though the facts may be overlapping the nature of investigation differs. Therefore, it cannot be stated that a mere closure by the Central Bureau of Investigation would provide a death knell to the proceedings of the respondent. In a given case, the complaint may emanate from a registration of a case involving sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in various Paragraphs of the Schedule appended to the Act and nothing more than it. In other words, for initiating or setting the criminal law in motion under the PMLA, it is only that requirement of having a predicate/Scheduled crime registered prior to it. Once an offence under the PMLA is registered on the basis of a Scheduled Offence, then it stands on its own and it thereafter does not require support of Predicate/Scheduled Offence. It further does not depend upon the ultimate result of the Predicate/Scheduled Offence. Even if the Predicate/Scheduled Offence is compromised, compounded, quashed or the accused therein is/are acquitted, the investigation of ED under PMLA does not get affected, wiped away or ceased to continue. It may continue till the ED concludes investigation and either files complaint or closure report before the Court of competent jurisdiction. 29. The language of Sections 3 and 4 of PMLA, makes it absolutely clear that, the investigation of an offence under Section 3, which is punishable under Section 4, is not dependent upon the ultimate result of the Predicate/Scheduled Offence. In other words, it is a totally independent investigation as defined a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at event, it would be easiest mode for the accused in a case under PMLA to scuttle and/or put an end to the investigation under the PMLA. Therefore, the said contention needs to be rejected. 34. In view of the aforesaid discussion, it is clear that, even if the Investigating Agency investigating a Scheduled Offence has filed closure report in it and the Court of competent jurisdiction has accepted it, it will not wipe out or cease to continue the investigation of Respondent No. 1 (ED) in the offence of money-laundering being investigated by it. The investigation of Respondent No. 1 will continue on its own till it reaches the stage as contemplated under Section 44 of the PMLA. 46. It becomes pertinent to note that in Babulal Verma a closure report came to be submitted in proceedings relating to the predicate offence since the dispute between the complainant and the accused developer had come to be settled. However, there were serious allegations levelled against the developer of having diverted huge sums of monies obtained as loans from various financial institutions. Those allegations did not form part of the settlement nor had they been compounded. The refusal therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessarily held that offence under PML Act is a stand-alone offence. Keeping in view the same, if we look at subsection (b) of Section 44 of the PML Act, it would clearly indicate that the Special Court may take cognizance of the offence upon a complaint by authorized signatory, which means that cognizance would be taken of an offence, which is separate and independent. Even in case of a person who is initially not booked for a scheduled offence but booked later, and subsequently acquitted of the said scheduled offence, still such person can be proceeded under PML Act. It is not necessary that a person has to be prosecuted under the PML Act, only in the event of such person having committed scheduled offence. Prosecution can be independently initiated under PML Act only for the offence of money laundering. 15. A careful perusal of Section 2(1)(u) of PML Act and the explanation thereof makes it clear that a wider definition is given to 'proceeds of crime' including property not only derived or obtained from the scheduled offence, but also any property which may directly or indirectly be derived or obtained as a result of criminal activity relatable to a scheduled offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The offence of money laundering is not covered under any other provisions of law. Section 3 enacted by 2002 Act is a new offence and stands by itself. Section 44(1)(c) of the Prevention of Money Laundering Act, 2002, it is: provided that if the Court which takes cognizance of the scheduled offences is other than the Special Court under the PMLA, the Authority should move an application for transfer of the scheduled offence to the Special Court and the Special Court, on receipt of such case, proceed to deal with it from the stage at which it is committed. Therefore, it is clear from the provisions of the Act that the offence of money laundering stands by itself. As evident from Section 8(6) of the Act, the Court will release the property only if it is found on the conclusion of trial under PMLA that the offence of money laundering has not taken place or if the property is not involved in money laundering. Therefore, adjudication, prosecution, trial under PMLA is independent of scheduled offence. This is also clear in view of Section 24 of the PMLA, 2002, which deals with burden of proof as it clearly stated that the burden of proof relating to proceeds of crime involved in mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised, compounded, quashed or the accused therein is/are acquitted, the investigation under PML Act does not get affected, ceased or wiped out. It may continue till the Enforcement Directorate concludes investigation and either files complaint or closure report before the Special Court. PML Act is a special statute enacted with a specific object to track and investigate cases of money-laundering. Therefore, if the contention of the learned senior counsel for the petitioners that when the foundation (predicate/scheduled offence) is removed, the structure/frame work thereon (offence under PML Act) falls is accepted, it will have frustrating effect on the intention of Legislature in enacting the PML Act, so also on its enforcement. 19. Further, if an accused in a predicate/scheduled offence is highly influential, either monetarily or by muscle power, and by use of his influence he/she gets the predicate/scheduled offence compromised or compounded to avoid further investigation in the offence under PML Act, it will put to an end to the independent investigation of Enforcement Directorate, which is certainly not the intention of Legislature in enacting the PML Act. Therefore, if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of result of scheduled offences or commencement of trial In the predicate/scheduled offences. Further, there is no requirement under law to conduct trials of both category of cases simultaneously. Therefore, the contention that Money Laundering offence starts at the end of predicate offence and commencement of trial in offence under PML Act shall not precede trial of predicate/scheduled offence, is unsustainable. 48. It would be pertinent to note that in Jagati Publication, the learned Judge was evaluating the merits of a challenge laid to an order passed by the Trial Judge which had refused to accede to the prayer made by the petitioner there for deferral of proceedings relating to allegations of money laundering till the conclusion of trial relating to a schedule offence. It was in the aforesaid backdrop that the decision in Jagati Publication referred to the Explanation appended to Section 44. As is evident from a reading of that Explanation, the jurisdiction of the Special Court while dealing with offences under the Act is mandated not to be dependent upon any orders passed in proceedings relating to a scheduled offence. Section 44 and the Explanation appended thereto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the predicate/scheduled offence. Even if the predicate/scheduled offence is compromised, compounded, quashed or the accused therein is/are acquitted, the investigation under PML Act does not get affected, ceased or wiped out. It may continue till the Enforcement Directorate concludes investigation and either files complaint or closure report before the Special Court. PML Act is a special statute enacted with a specific object to track and investigate cases of money-laundering. Therefore, if the contention of the learned senior counsel for the petitioners that when the foundation (predicate/scheduled offence) is removed, the structure/frame work thereon (offence under PML Act) falls is accepted, it will have frustrating effect on the intention of Legislature in enacting the PML Act, so also on its enforcement. 18. Further, the burden of proof in the predicate/Scheduled offences and the offence under PML Act is different. Section 24 of the PML Act reads as follows: 24. Burden of proof: In any proceeding relating to proceeds of crime under this Act:- a) In the case of a person charged with the offence of money laundering under Section 3, the Authority or Court shall, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons under PML Act and they are likely to get acquittal in the predicate/scheduled offences would not be a ground to stall the proceedings. In the given facts and circumstances of the case, it is difficult to state the result of the case of predicate/scheduled offence and its bearing over the proceedings or decision rendered in the subject offence under PML Act. Therefore, the contention raised that without proving the guilt of the accused in predicate/scheduled offences, trial of offences under PML Act cannot be proceeded with, is unsustainable. In view of the above observations, it cannot be held that unless proceeds of crime are established by putting the accused on trial, any prosecution of the person under PML Act would be premature and would be futile exercise. Since the offence under PML Act is a stand-alone offence and not dependent on predicate/scheduled offences, it can be proceeded with independently without awaiting the outcome of result of scheduled offences or commencement of trial in the predicate/scheduled offences. Further, there is no requirement under law to conduct trials of both category of cases simultaneously. Therefore, the contention that Money Launderin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erits that the accused had not indulged in any criminal activity, the property cannot legally be treated as proceeds of crime or be viewed as property derived or obtained from criminal activity. G. THE ARTICLE 20(1) QUESTION 52. In the present petitions, the challenge raised on the anvil of Article 20(1) of the Constitution is premised on the following facts. It was the submission of Mr. Sibal that since the allocation was made on 04 September 2003 and thus evidently before the promulgation of the Act coupled with the fact that even Sections 420 and 120B of the Penal Code were not scheduled offenses on that date, any action initiated under the Act would clearly violate the constitutional guarantee conferred by Article 20(1). Mr. Chawla learned counsel addressing submissions on behalf of the petitioners in the connected writ petition additionally argued that since the aforenoted two provisions of the Penal Code were included in the Schedule only on 01 June 2009 and the properties provisionally attached had been purchased prior thereto, even on this score the proceedings impugned are rendered without jurisdiction and authority of law. Mr. Chawla argued that since these provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the language of the statute by any means permits it. In the American system, however, such ex post facto laws are themselves rendered invalid by virtue of Article 1, Sections 9 and 10 of its Constitution. It is contended by the learned Attorney-General that Article 20 of the Constitution was meant to bring about nothing more than the invalidity of such ex post facto laws in the post-Constitution period but that the validity of the pre-Constitution laws in this behalf was not intended to be affected in any way. The case in Keshavan Madhavan Menon v. State of Bombay [1951 SCR 228] has been relied on to show that the fundamental rights guaranteed under the Constitution have no retrospective operation, and that the invalidity of laws brought about by Article 13(1) of the Constitution relates only to the future operation of the pre-Constitution laws which are in violation of the fundamental rights. On this footing it was argued that even on the assumption of the convictions in this case being in respect of new offences created by Ordinance 48 of 1949 after the commission of the offences charged, the fundamental right guaranteed under Article 20 is not attracted thereto so as to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is pending. 54. More importantly, their Lordships further went on to pertinently observe that the phrase law in force must be understood as being the law in fact in existence and in operation at the time of commission of the act. This is evident from paragraph 10 of the report which is extracted hereinbelow: - 10. In this connection our attention has been drawn to the fact that the Vindhya Pradesh Ordinance 48 of 1949, though enacted on 11th September, 1949 i.e. after the alleged offences were committed, was in terms made retrospective by Section 2 of the said Ordinance which says that the Act shall be deemed to have been in force in Vindhya Pradesh from the 9th day of August, 1948, a date long prior to the date of the commission of the offences. It was accordingly suggested that since such a law at the time when it was passed was a valid law and since this law had the effect of bringing this Ordinance into. force from 9th August, 1949, it cannot be said that the convictions are not in respect of a law in force at the time when the offences were committed. This, however, would be to import a somewhat technical meaning into the phrase law in force as used in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, penalises acts of money laundering. It does not create a separate punishment for a crime chronicled or prescribed under the Penal Code. The Act does not penalise the predicate offense. That offense merely constitutes the substratum for a charge of money laundering being raised. Undisputedly, the offense of money laundering rests on the commission of a predicate offense which in turn may have resulted in a pecuniary benefit being obtained and derived. It fundamentally aims at confiscation of benefits that may be derived as a result of criminal activity and the commission of a scheduled offense. It is aimed at countering and penalising the malaise of wealth and assets acquired as a result of criminal activity. Accordingly, while the commission of the predicate offense may be described as the sine qua non for an allegation of money laundering being laid against a person, it is an offense created independently owing its genesis to the Act which came to be promulgated on 01 July 2005. It would also be pertinent to note that while the punishment in respect of various crimes created under different statutes and which are included in the Schedule did exist prior to 01 July 2005, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such an offense may have been committed would be of little relevance provided an act of money laundering is alleged to have been committed after the Act had come into force. 58. The view taken by this Court finds resonance in the following observations as appearing in Mahanivesh Oils: - 32. The central issue in the present case is not on whether the scheduled offence was committed, but whether the attachment under Section 5 of the Act can be sustained where the principal offence as well as the offence of using its proceeds is alleged to have been committed prior to the Act coming into force. 33. As stated hereinbefore, the scope of the offence of money-laundering was widened by virtue of the Prevention of Money-Laundering (Amendment) Act, 2012 and the rigor of Section 3 of the Act also extends to any person who assists or is a party or is involved in any process or activity connected with concealment, possession, acquisition or use of proceeds of crime. However, the subject of the offence continues to be the proceeds of crime and its involvement in money-laundering. This again draws one to the central controversy in this petition, that is, whether any property of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention to be considered is whether in the given facts and circumstances, any offence or money-laundering had been made out to warrant an issuance of the impugned order. It is alleged that on 10th February, 2005, MIL through its Director issued cheques aggregating Rs. 1.5 crores in favour of its holding companies, namely, M/s. Duoroyale Enterprises Ltd. and M/s. Shri Radhey Trading Pvt. Ltd. and these companies in turn issued two cheques of Rs. 75 lacs each in favour of the petitioner. It is suggested that these amounts were proceeds of crime received by the petitioner as a result of a criminal activity and bulk of these funds were utilized by the petitioner for paying the consideration for acquiring the property in question. It was argued that all actions of integrating the money by purchase of immovable property would fall within the definition of money-laundering . In this respect it is relevant to note that the sale deed in respect of the property was executed on 18.03.2005. Thus, even if the allegations made by the respondent are assumed to be correct, the proceeds of crime had been used by the petitioner for acquisition of the property much prior to the Act coming into fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted at the time when the scheduled offence was committed. Given the wide definition of proceeds of crime it would be contended that irrespective of how far back in the past a scheduled offence was committed, the authorities could nonetheless try persons for an offence of money-laundering as well as confiscate the value of the property alleged to have been derived or obtained by criminal activity relating to the scheduled offence. This would be notwithstanding that the proceeds derived from a scheduled offence have undergone significant changes and have been integrated in legitimate economic activity. The properties could also be traced in the hands of persons unconnected with the scheduled offence. There is no indication from the express language of the Act, that the Legislature intended the Act to be retroactive or operative with retrospective effect. 38. The Act was enacted as the international community recognised the threat of money-laundering whereby money generated from illegal activities such as trafficking and drugs etc. was finding its way into the economic system of a country and funding further criminal activity. The expression money-laundering would ordinarily i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of money-laundering offences done prior to 01.07.2005 or prior to the related crime being included as a scheduled offence under the Act. 40. Learned counsel for the respondent has contended that Article 20 of the Constitution of India prohibited conviction or sentence under an ex-post facto law but not the trial thereof. He relied on the decision of the Andhra Pradesh High Court in V. Suryanarayhana Prabhakara Gupta v. Union of India (UOI) : W.P. No. 27898 of 2010, decided on 25.08.2011 in support of the aforesaid contention and drew attention of this Court to the following passage. From the abovementioned Judgment, the principle that can be deducted is that, Article 20 prohibits only conviction or sentence under an ex post facto law and not the trial thereof and such trial cannot ipso facto be held to be unconstitutional. In view of this undisputed principle, the resistance offered by the petitioners to the impugned orders, is totally misconceived and unacceptable. The present one is not the stage for securing protection under Article 20 of our Constitution. 59. In A.K. Samsuddin, the Kerala High Court made the following pertinent observations: - 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the properties were acquired prior to the Schedule being amended on 01 June 2009, proceedings under the Act would be invalidated, holding thus:- 44. Petitioners appear to have put forward the plea of post facto law on the premise that the acts constituting the offences alleged against them were perpetrated prior to the amendment of the schedule to the PML Act and therefore, the action initiated against them falls within the mischief of Article 20(1) of the Constitution of India. This contention, in my view, in the factual setting of the case, is totally misplaced and misconceived and appears to have been canvassed by misconstruing the provisions of sections 3, 2(1)(u) and the Schedule appended to the PML Act. No-doubt, it is true that the Schedule to the PML Act was amended by Act 21 of 2009 and the various offences specified therein came to be included therein with effect from 1.06.2009. Nonetheless, in the instant cases, as on the date of initiation of action against petitioners, be it under section 3 or under section 5 of the PML Act, these provisions were very much there in the statute book. As already stated above, in all the cases, the prosecution under section 3 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g contrary to the language of section 3 of the PML Act and the intendment of the Legislature in enacting section 3 of the PML Act and the allied provisions is liable to be rejected and is accordingly rejected. 49. This Court in K. Sowbhagya v. Union of India, Ministry of Finance, North Block, Department of Revenue and others , had an opportunity to examine the various provisions of PML Act while deciding the constitutionality or validity of the sections 2(1) (u), 3, 5, 8, 9, 17, 18, 19, 23, 24 and 44 of the PML Act 2002(as amended from time to time) and held that:- Money laundering is a stand alone offence. A person who has not committed a scheduled offence could be prosecuted for an offence of money laundering. In such a situation, the prosecution need not wait for the scheduled offence to be established. It can independently prosecute and lay material to show that he had knowingly assisted or was responsible for laundering of the illicit wealth. In such a situation, the property would then stand attached and the person who is being prosecuted for money laundering has to show the Court that he is not guilty of money laundering. The same would work to his advantage as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Supreme Court further went on to hold that in such a situation, presence and existence of possession could be justified for the intention is to exercise right over the substance of chattel and to act as the owner to the exclusion of others. 52. After dealing with the concept of 'possession', the Hon'ble Supreme Court considered the issue as to whether the appellant could be convicted and sentenced under the Opium Act, as that was the law in force at the time of commission of an offence and if he is convicted under section 18 of the NDPS Act, whether it would tantamount to retrospective operation of law imposing penalty which is prohibited, under Article 20(1) of the Constitution of India. The Hon'ble Supreme Court held as under:- Article 20(1) gets attracted only when any penal law penalises with retrospective effect i.e. when an act was not an offence when it was committed and additionally the persons cannot be subjected to penalty greater than that which might have been inflicted under the law in force at the time of commission of the offence. The Article prohibits application of ex post facto law. In Rao Shiv Bahadur Singh and Anr. v. State of V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and therefore the offenders are liable to answer the charge under section 3 punishable under section 4 of the PML Act. In the light of this legal and factual position, I am unable to accept the submission of learned counsel for petitioners that they are the victims of ex post facto laws offending the constitutional protection granted to them under Article 20(1) of the Constitution of India. 62. Again, in Dyani Antony Paul Ors. vs. Union of India Ors. MANU/KA/4442/2020, the Karnataka High Court held that it is the date of laundering of proceeds of crime which is relevant and determinative as would be evident from the following extracts of that decision: - 76. The expression schedule offence is defined under Section 2(y), which means-(i) the offences specified in Part-A of the Schedule; or (ii) the offences specified under Part-B of the Schedule if the total value involved in such offences is one crore rupees or more; or (iii) the offences specified under Part-C of the Schedule. Section 5 relates to attachment of the property involved in money laundering. Thus, it is evident from the aforesaid provision of the PML Act that commission of a schedule offence is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffence for initiation of proceedings under the PML Act is not a condition precedent or in other words, the offence under Section 3 of the PML Act is a stand alone offence. Hence, the presence of a schedule offence as prescribed under the PML Act would not be condition precedent for proceeding against such person under the PML Act. The reasons which have weighed with this Court to hold to the contrary have been duly spelt out in the preceding paragraphs of this decision and are therefore not being repeated. 64. The Court thus holds that the fact that the predicate offense which gave rise to proceeds of crime was committed prior to 01 July 2005 or that it came to be included in the Schedule on 01 June 2009 would clearly not be determinative and in any case an action under the Act founded on the commission of that offense provided the act of money laundering is alleged to have been committed after the coming into force of the Act cannot be held or understood to be a violation of Article 20(1) of the Constitution. As long as the act of money laundering is alleged to have been committed post the enforcement of the Act, proceedings initiated in respect thereof would clearly be susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the scheduled offence or the value of any such property, [or where such property is taken or held outside the country, then the property equivalent in value held within the country] proceeds of crime, means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to the scheduled offence or the value of any such property, or where such property is taken or held outside the country, then the property equivalent in value held within the country [ or abroad ] proceeds of crime, means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to the scheduled offence or the value of any such property, or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. Explanation- For removal of doubts, it is hereby clarified that proceeds of crime including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, In any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. 68. Both Axis Bank as well as Seema Garg have recognised that the definition of proceeds of crime as contained in Section 2(1)(u) comprises of three limbs. Those limbs have been described to comprise of (a) properties derived or obtained (directly or indirectly) as a result of criminal activity relating to a scheduled offence, (b) the value of any such property as above and (c) property equivalent in value whether held in India or abroad. Explaining the extent of these three limbs which constitute proceeds of crime, the learned Judge in Axis Bank has held thus:- 103. The special legislation against money-laundering (PMLA) seeks to enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much as there would assumably be evidence to prima facie show that the source of (or consideration for) its acquisition is the product of specified crime, the essence of money-laundering being its projection as untainted property (Section 3). This would include such property as may have been obtained or acquired by using the tainted property as the consideration (directly or indirectly). To illustrate, bribe or illegal gratification received by a public servant in form of money (cash) being undue advantage and dishonestly gained, is tainted property acquired directly by a scheduled offence and consequently proceeds of crime . Any other property acquired using such bribe as consideration is also proceeds of crime , it having been obtained indirectly from a prohibited criminal activity within the meaning of first limb of the definition. 107. In contrast, the second and third kinds of properties mentioned above would ordinarily be untainted property that may have been acquired by the suspect legitimately without any connection with criminal activity or its result. The same, however, are intended to fall in the net because their owner is involved in the proscribed crim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may have entered into some transaction vis-a-vis the property in question) and the enforcement authority (the State). Since the second of the above species of proceeds of crime uses the expression such property , the qualifying word being such , it is vivid that the property referred to here is equivalent to the one indicated by the first kind. The only difference is that it is not the same property as of the first kind, it having been picked up from among other properties of the accused, the intent of the legislature being that it must be of the same value as the former. The third kind does use the qualifying words equivalent in value . Though these words are not used in the second category, it is clear that the said kind also has to be understood in the same sense. 110. Thus, it must be observed that, in the opinion of this court, if the enforcement authority under PMLA has not been able to trace the tainted property which was acquired or obtained by criminal activity relating to the scheduled offence for money-laundering, it can legitimately proceed to attach some other property of the accused, by tapping the second (or third) abovementioned kind provided that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are either not traceable or cannot be reached. These properties were described in Axis Bank to be alternative attachable property or deemed tainted property . Axis Bank appears to take note of an exigency where an asset or property which may be directly or indirectly connected to criminal activity may not be traceable. It is in the aforesaid backdrop that the learned Judge appears to have interpreted the phrase or the value of any such property and thus enabling the Directorate to proceed even against such property in which the accused may have had an interest notwithstanding the fact that the same may not have a direct or indirect relationship with the criminal activity itself. This was explained by the learned Judge in Axis Bank as is evident from paragraphs 109 to 110 extracted hereinabove. 70. Axis Bank also takes note of a contingency where a third-party interest may stand created in the deemed tainted property and the conflict which may arise in case such property comes to be attached under the Act. Dealing with the issue of a bona fide third party right claimed in such property, the Court held thus: - 148. In view of the conclusions reached as above, rejecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y acquired assets, contains sufficient safeguards to protect the interest of such third parties as may have acted bonafide. Such safeguards and rights to secure their lawful interest in the property subjected to attachment (with intent to take it to confiscation) have already been noticed at length with reference to the statutory provisions. To recapitulate, and by way of illustration, reference may be made to the opportunity afforded by law (Section 8) to a person claiming a legitimate interest to approach the adjudicating authority and the appellate tribunal, as indeed the court, to prove that he had acted in good faith , taking all reasonable precautions , himself not being involved in money-laundering, to seek its release or restoration . In this context, however, as also earlier noted, the presumptions that can be drawn in terms of Sections 23 and 24 of PMLA are to be borne in mind, the burden of proving facts contrary to the case of money-laundering being on the person claiming to have acted bonafide. 71. Proceeding then to the issue of balancing of competing interests in a deemed tainted property, the Court held as follows: - 159. As noted earlier, there are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , conversely, with ulterior motive to frustrate or to defeat the objective of law against money-laundering. In case of tainted asset - that is to say a property acquired or obtained as a result of criminal activity - the interest acquired by a third party from person accused of money-laundering, even if bona fide, for lawful and adequate consideration, cannot result in the same being released from attachment, or escaping confiscation, since the law intends it to vest absolutely in the Central Government free from all encumbrances , the right of such third party being restricted to sue the wrong-doer for damages, the encumbrance, if created with the objective of defeating the law, being treated as void (Section 9). 162. But, in case an otherwise untainted asset (i.e. deemed tainted property) is targeted by the enforcement authority for attachment under the second or third part of the definition of proceeds of crime , for the reason that such asset is equivalent in value to the tainted asset that was derived or obtained by criminal activity but which cannot be traced, the third party having a legitimate interest may approach the adjudicating authority to seek its release b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w for enforcement of such interest prior to the order of attachment under PMLA, the initiation of the latter action unwittingly having the effect of frustrating the former. Since both actions are in accord with law, in order to co-exist and be in harmony with each other, following the preceding prescription, it would be appropriate that the PMLA attachment, though remaining valid and operative, takes a back-seat allowing the secured creditor bonafide third party claimant to enforce its claim by disposal of the subject property, the remainder of its value, if any, thereafter to be made available for purposes of PMLA. 72. From a reading of the aforesaid passages of Axis Bank, it is evident that the learned Judge took into consideration bona fide third-party interests that may come to be created or exist in deemed tainted property. Axis Bank while dealing with third party interests has also taken into consideration both secured as well as unsecured interests in such deemed tainted properties. The learned Judge while proceeding to notice the aforesaid conflicts which may arise also culled out certain salutary safeguards with respect to such interests. Axis Bank holds that in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law, harmoniously interpreted it must be held that though an attachment under the Act would remain valid and operative it would have to take a back seat and thus permit the secured creditor to enforce its rights on the subject property and only remainder of its value if any, be available for the purposes of the Act. The aforesaid conclusion appears to have been drawn bearing in mind the fact that undisputedly an attachment or confiscation under the Act is not akin to the enforcement of a debt due in law. 74. Insofar as Seema Garg is concerned, it would be apposite at the outset to note that the challenge in those proceedings was with respect to the attachment of properties purchased prior to the period of commission of the scheduled offence and in some instances before the enforcement of the Act itself. The Division Bench in Seema Garg formulated the questions which arose for consideration in paragraph 26 of the report which is reproduced hereinbelow: - 26. From the conceded position and arguments of both sides, we find that following questions arise for our adjudication: i) Whether provisional attachment of property is sustainable after the expiry of 90 or 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been further amended w.e.f. 19.04.2018 enlarging the scope. The question arises that if phrases value of such property and property equivalent in value held within the country or abroad are of same connotation and carry same meaning, there was no need to insert third limb in the definition of proceeds of crime . The amendment made by legislature cannot be meaningless or without reasons. Use of different words and insertion of third limb in the definition cannot be ignored or interpreted casually. Every word chosen by legislature deserves to be given full meaning and effect. Accordingly, words value of such property and property equivalent in value held within the country or abroad cannot be given same meaning and effect. Had there been intention of legislature to include any property in the hands of any person within the ambit of proceeds of crime, there was no need to make three limbs of definition of proceeds of crime. It was very easy and convenient to declare that any property in the hands of a person who has directly or indirectly at any point of time had obtained or derived property from scheduled offence. There was even no need to declare property derived or obtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indulge or knowingly assisted or knowingly is a party or is involved in concealment, possession, acquisition or use or projecting as untainted property or claiming as untainted property shall be guilty of an offence. If property purchased prior to commission of alleged offence or property not derived or obtained from commission of scheduled offence is declared as proceeds of crime, every person who is concerned with sale, purchase, possession or use of said property would be guilty of offence of money laundering. A person who is not connected with commission of scheduled offence as well property derived from said offence but had dealt with any other property of a person, who had committed scheduled offence, would fall within the ambit of Section 3 of the PMLA, which cannot be countenanced in law. There would be total chaos and uncertainty. The authorities would get unguided and unbridled powers and may implicate any person even though he has no direct or indirect connection with scheduled offence and property derived from thereon but has dealt with any other property (not involved in scheduled offence) of the person who has derived or obtained property from scheduled offence. It wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence of money laundering committed under Section 3 of the PMLA. As per scheme of the Act, there is criminal liability of an accused apart from civil liability of attachment of property, thus object of the Act is not defeated merely on the ground that property derived from crime is not available for attachment. The property derived from legitimate source cannot be attached on the ground that property derived from scheduled offence is not available. There are so many scheduled offences where property may or may not be involved because every scheduled offence is not committed for the sake of property e.g. offence relating to wild animals, waging war against Government of India, murder, attempt to murder, offences under Arms Act. There is a long list of offences under different enactments where property is normally not involved still these are scheduled offences and punishable under Section 3 4 of PMLA. 38. Accordingly, we find and hold that phrase value of such property does not mean and include any property which has no link direct or indirect with the property derived or obtained from commission of scheduled offence i.e. the alleged criminal activity. xxx 51. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be added to Section 2(1)(u) which further sheds light on the expansive sweep of Section 2(1)(u) and prescribes that proceeds of crime would also extend to any property which may be directly or indirectly derived or obtained as a result of any criminal activity. 78. As would be evident from the transformative journey of Section 2(1)(u) between 2005 to 2019 it is manifest that the expressions value of any such property and property equivalent in value were both used to deal with distinct contingencies. The phrase equivalent in value was placed in the provision to be read in conjunction with property taken or held outside the country. The phrase equivalent in value cannot be understood or interpreted to control the first or the second limb of Section 2(1)(u). The expression value of any such property always stood hinged to the first limb of the definition of proceeds of crime. It would therefore be incorrect to assume that the expression value of any such property was either surplusage or of no import at all. 79. Regard must also be had to the fact that the legislation itself is dealing with contingencies where proceeds of crime are layered and their origins camouf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell settled tenets of statutory construction but would clearly amount to the Court rewriting the provision itself in a manner that it stands deprived of vital and purposive content. The Court further notes that Axis Bank had enunciated important safeguards which would apply in respect of third-party interests in deemed tainted property. Those caveats duly secure and protect bona fide third-party interests created for valid consideration. This Court, thus, reaffirms those defences as were culled out in Axis Bank. The Court thus reiterates the interpretation accorded to Section 2(1)(u) by this Court in the aforesaid decision. Consequently, and for all the aforesaid reasons this Court finds itself unable to agree with the principles as laid down in Seema Garg as well as the subsequent decisions rendered by the Andhra Pradesh High Court in Kumar Pappu Singh Vs. Union of India 2021 SCC OnLine AP 983 and the Patna High Court in HDFC Bank Limited Vs Government of India, Ministry of Finance 2021 SCC OnLine Pat 4222. In Kumar Pappu Singh, the High Court held thus: - 24. The Division Bench held that the property derived from the offence would be proceeds of the crime and as such any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the makers of the Act, pro bona publico. In In re Mayfair Property Company [LR [1898] 2 Ch. 28 at p. 35] Lindley, M.R. in 1898 found the rule as necessary now as it was when Lord Coke reported Heydon case . In Eastman Photographic Material Company v. Comptroller General of Patents, Designs and Trade Marks [LR [1898] A.C. 571 at 576] Earl of Halsbury reaffirmed the Rule as follows: My Lords, it appears to me that to construe the Statute in question, it is not only legitimate but highly convenient to refer both to the former Act and to the ascertained evils to which the former Act had given rise, and to the later Act which provided the remedy. These three being compared I cannot doubt the conclusion. It appears to us that this rule is equally applicable to the construction of Article 286 of our Constitution. In order to properly interpret the provisions of that article it is, therefore, necessary to consider how the matter stood immediately before the Constitution came into force, what the mischief was for which the old law did not provide and the remedy which has been provided by the Constitution to cure that mischief. 30. In that view of the matter, the properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention. As per said judgment, if property derived or obtained from scheduled offence is taken or held outside India, the property of equivalent value held in India or abroad may be attached irrespective of date of purchase. We fully subscribe to the opinion expressed by Delhi High Court. We find that third limb of definition proceeds of crime covers property equivalent to property held or taken outside India, thus date of purchase of property which is equivalent to property held outside India, is irrelevant. Any property irrespective of date of purchase may be attached if property derived or obtained from scheduled offence is held or taken outside India. 32. The moot question arises that whether property of equivalent value may be attached where property derived or obtained from scheduled offence is not held or taken outside India. If any property is permitted or held liable to be attached irrespective of its date of purchase, it would amount to declaring second and third limb of definition of proceeds of crime one and same. As pointed out by counsel for Appellants, the third limb of definition clause was inserted by Act 20 of 2015. The aforesaid 3rd limb has been furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. As per Section 24 of the PMLA, burden to prove that property is not involved in money laundering is upon the person whose property is attached. There is no sense on the part of any person to discharge burden qua source of property if any property may be attached, irrespective of its source. 33. As per Section 8(6) of the PMLA, where the Special Court finds that offence of money laundering has not taken place or property is not involved in money laundering, it shall release such property. If contention of Respondent is upheld, there would be no need of recording findings by Special Court with respect to property attached being proceeds of crime, no sooner it is held that offence of money laundering has been committed, then the Special Court would be bound to confiscate every attached property because every property in the hand of a person, who had obtained or derived property from scheduled offence, would be proceeds of crime. 34. We deem it appropriate to examine contention of Respondents from another angle i.e. offence of money laundering as defined under Section 3 of the PMLA. As per Section 3 of the PMLA, any person who has directly or indirectly attempted to indulg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting (Section 420 of IPC) which is a scheduled offence and said building or land is sold prior to registration of FIR or ECIR, the property derived from scheduled offence would not be available, however money generated from sale or transfer of said property in the form of cash or any other form of property may be available. The cash or any other form of property movable or immovable, tangible or intangible would be value of property derived from commission of scheduled offence. 21. I adopt the view of the Division Bench of Punjab and Haryana High Court in preference to the single Judge judgment of Delhi High Court in Deputy Director of Enforcement v. Axis Bank relied upon by learned counsel for respondent Nos. 1 to 4 for the simple reason that the issue directly involved herein was there before the Punjab and Haryana High Court and not before the Delhi High Court. Finally, this Court finds that the phrase value of such property does not mean and include any property which have no link direct or indirect with the property derived or obtained from commission of scheduled offence i.e., the alleged criminal activity. 81. The Court also takes note of the position that alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petitions emanate from a second FIR registered by the CBI on 02 December 2016 and was numbered as R.C. No. 221/2016/E0035. Investigation undertaken in terms of the second FIR has culminated in the filing of a chargesheet numbered 1/2020 before the competent court on 23 January 2020 alleging commission of offenses under Section 120 B read with Section 420 of the Penal Code. The allegations in the second chargesheet essentially are that the petitioners submitted false and forged documents in support of their application for allocation of the coal block, misrepresented facts pertaining to proceedings pending before the BIFR and thus fraudulently and dishonestly obtained the coal allocation. As noted hereinbefore, the aforesaid chargesheet and the proceedings relating to the same form subject matter of challenge in Special Leave to Appeal (Crl.) Nos. 656-657/2022 in which by an order of 06 May 2022, further proceedings before the Trial Court have been stayed. The impugned proceedings emanate from the second chargesheet and relate to the provisional attachment of properties held by sister concerns and entities of PIL. It becomes pertinent to highlight here that while the second cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral that allocation of coal block does not amount to grant of largesse. It is true that allocation letter by itself does not authorise the allottee to win or mine the coal but nevertheless the allocation letter does confer a very important right upon the allottee to apply for grant of prospecting licence or mining lease. As a matter of fact, it is admitted by the interveners that allocation letter issued by the Central Government provides rights to the allottees for obtaining the coal mines leases for their end-use plants. The banks, financial institutions, land acquisition authorities, revenue authorities and various other entities and so also the State Governments, who ultimately grant prospecting licence or mining lease, as the case may be, act on the basis of the letter of allocation issued by the Central Government. As noticed earlier, the allocation of coal block by the Central Government results in the selection of beneficiary which entitles the beneficiary to get the prospecting licence and/or mining lease from the State Government. Obviously, allocation of a coal block amounts to grant of largesse. 76. The learned Attorney General accepted the position that in the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of money laundering. It is the financial gains that may be derived and obtained or proceeds generated from such allocation which could be considered as falling within the net of Section 2(1)(u). 87. It becomes pertinent to bear in mind that money laundering as has been defined under the Act and is universally acknowledged and understood as activity relating to the layering and obfuscation of the origins of ill-gotten gains. Money laundering is concerned with the concealment of moneys obtained as a result of criminal activity, the act of cleansing criminal proceeds of their origin and its conversion into what may then be projected as untainted assets or properties. The world over the fight against crime has realigned its focus upon ensuring that the profits generated from criminal activity are forfeited and confiscated. It is this aim and intent that the Act purports to subserve. The offense of money laundering was explained by the Court of Appeals in JSC BTA Bank Vs. Ablyazov (2010) 1 WLR 976 as a parasitic offense predicated on the commission of another offense which yielded proceeds which then become the subject of laundering. It is essentially concerned with the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Each Party may, at the time of signature or when depositing its instrument of ratification, acceptance, approval or accession, by declaration addressed to the Secretary General of the Council of Europe declare that paragraph 1 of this article applies only to predicate offences or categories of such offences specified in such declaration. 88. It is therefore evident that the Act essentially seeks to confiscate properties and assets that may be obtained from criminal activity and which may then be concealed and legitimised through processes which are described as placement, layering and integration. The Act is motivated by the aim to confiscate the monetary advantage that may be obtained or derived from criminal activity. When viewed in that light, it is evident that the allocation per se cannot possibly be viewed or understood as representing proceeds of crime in itself. It is the illegal gains obtained and derived by the utilisation of that allocation and the concealment or conversion of those gains into assets or properties which could possibly be understood as amounting to an act of money laundering. J. IMPACT OF ALLOCATION NOT BEING PROCEEDS OF CRIME 89. The q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UASHING OF THE FIRST CHARGESHEET 92. It would be pertinent to recall that amongst the various charges which were levelled in the first chargesheet, it was inter alia alleged that PIL diverted 2,27,000 tons of coal to the black market and profited to the extent of Rs. 22.7 crores. It is this amongst other charges which ultimately came to be quashed and annulled by the Court in terms of its judgment dated 05 September 2014. Admittedly the first chargesheet and all proceedings relating thereto came to be quashed by the Court in terms of its judgment rendered on 05 September 2014. While that judgment does form subject matter of challenge in a pending special leave petition, no effective orders have either been passed on that petition nor has the judgment of this Court been placed in abeyance. According to Mr. Raju, as long as that special leave petition remains pending, it cannot be said that finality stands attached to the decision of this Court quashing the aforesaid chargesheet. The Court may only observe that the mere pendency of that petition before the Supreme Court cannot legally be construed as amounting to a revival or continuance of the criminal proceedings which were ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are found to have been derived or obtained from criminal activity, the question of money laundering would not arise. Money laundering, as noted above, is concerned with the commission of an offense which may have yielded revenues or profits and which are then concealed and conferred a sheath of legitimacy. Once the charge of commission of a scheduled offense levelled against a person or entity stands annulled by virtue of a judicial declaration with the Court specifically holding that an offense could not be said to have been committed, it would be wholly impermissible to allege that the person or entity indulged in money laundering. The Court bears in mind the fact that the expression proceeds of crime has been defined under the Act itself as the acquisition of property and assets by any person as a result of criminal activity relating to a scheduled offense. The initiation of proceedings under the Act are predicated on the commission of an offense finding mention in the Schedule. The Court is thus of the firm view that it would be wholly illogical and irrational to hold that an allegation of money laundering would survive in the absence of an allegation that a person committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt further notes that it was the revenues generated from and pursuant to the allocation and the properties derived or acquired therefrom which may have fallen within the meaning of the expression proceeds of crime . Those moneys generated or properties acquired when concealed, possessed or used and/or thereafter projected/claimed as untainted could be said to have fallen within the scope of Section 3. That activity or process as has been found above, does not form subject matter of the present chargesheet and in any case those allegations insofar as they stood comprised in the first chargesheet already stand quashed by this Court. The allocation of the coal block in any case on its own cannot be held to amount to money laundering. 99. Before concluding the discussion on this issue, it would be pertinent to note that there is no allegation that proceeds of crime had been generated as on 04 September 2003. The respondents have not founded the impugned proceedings on any monetary gains or benefits that may have allegedly accrued to the petitioners as on 04 September 2003. In the absence of any allegation that such gains had been derived or obtained as on that date, the Court finds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided bearing in mind whether an offence of money laundering stood committed after the Act had come into force. The various decisions rendered on this question have been duly considered and noted by the Court while ruling on Issue G and is thus not being repeated for the sake of brevity. The Court while dealing with Issue G has independently found that the inclusion of an offense in the Schedule has no correlation to the invocation of the penal provisions of the Act. It has also held that the Act cannot be said to operate retroactively merely because the proceedings are based on the commission of a predicate offense which had occurred prior to its enforcement. The Court has also duly noted the judgments rendered by various other High Courts on the question and thus does not propose to reiterate the same in this part of the judgment. The Court exposits and reiterates the legal position to be that it is the date of the commission of the offense of money laundering and not the date of commission of a scheduled offense which is relevant and determinative. 103. Insofar as the additional submissions of Mr. Sibal addressed in this regard are concerned, the Court finds that there ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he indulged in the proscribed criminal activity. The learned Judge further observed that bona fide rights acquired by third parties prior to the commission of the predicate offense would stand saved. 106. Reverting however to the facts of the present case, as this Court reads the impugned show cause notice, it is manifest that the respondents have not initiated action against the properties noted above on the ground that their attachment is being resorted to out of compulsion and necessity and since the tainted properties could not be discovered or traced. This the Court observes notwithstanding it having already found that the allocation did not constitute proceeds of crime, that the second chargesheet stood restricted upto 04 September 2003 and the quashing of the first chargesheet brought all allegations of criminal activity allegedly indulged in post that date to an end. In fact and to the contrary, the provisional order of attachment proceeds on the basis that the promoter/Directors of Prakash Industries indirectly exercised majority control over the entities in whose names properties were purchased. This included Hi Tech Mercantile one of the petitioners in the second writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aundering is described as a stand-alone offense, all that is sought to be conveyed is that it represents an independent offense and is to be tried separately in accordance with the procedure prescribed under the Act. The objective of the Act is to try charges of money laundering which entails proceeds of crime being acquired, possessed or used and/or projected as untainted property. Undisputedly, the offense of money laundering rests on the commission of a predicate offense which in turn may have resulted in a pecuniary benefit being obtained and derived. It fundamentally aims at confiscation of benefits that may be derived as a result of criminal activity and the commission of a scheduled offense. It is aimed at countering and penalising the malaise of wealth and assets acquired as a result of criminal activity B. It is evident from a reading of the Act that while the commission of a predicate offense is the precipitate step for initiation of proceedings under the Act, the offense of money laundering must be tried and established separately. It is also pertinent to observe that the predicate offense constitutes the very foundation of a charge of money laundering. The entire e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of crime creates an inextricable link between criminal activity and the acquisition of property and assets as a result thereof. If the charge of criminal activity ceases to exist in law, a charge of money laundering would neither sustain nor survive. The Court thus reiterates the conclusions as drawn and recorded in Rajeev Chanana and Gagandeep Singh. Consequently it must be held that once it is found by a competent court, authority or tribunal that a predicate offence is either not evidenced or on facts it is held that no offence at all was committed, proceedings under the Act would necessarily have to fall or be brought to a close. H. Turning then to Section 3 of the Act, the Court finds that the said provision would come into play only if proceeds of crime are found to have been generated. As this Court reads Section 3 it finds that the offence of money laundering has an enduring and ineffaceable link to proceeds of crime. Absent the commission of a criminal offence, the foundation of proceedings initiated under the Act would undoubtedly fall and self-destruct. I. The Court further notes that not every criminal activity falls within the ambit of Section 3. While crim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst a person, it is an offense created independently owing its genesis to the Act which came to be promulgated on 01 July 2005. While the commission of a predicate offense may be a condition precedent for an allegation of money laundering being laid, it is the activities of money laundering alone which would determine the validity of proceedings initiated under the Act. N. The Court thus concludes that an offense of money laundering that may be committed post 01 July 2005 would still be subject to the rigours of the Act notwithstanding the predicate offense having been committed prior to that date. As noted hereinabove, Section 3 creates an offense for money laundering. Neither that provision nor the Act is concerned with the trial of the predicate offense. Thus, any activity or process that may be undertaken by a person post 01 July 2005 in terms of which proceeds of crime are acquired, possessed or used and/or projected as untainted property would still be subject to the provisions of the Act. O. The Court exposits and reiterates the legal position to be that it is the date of the commission of the offense of money laundering and not the date of commission of a schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and the extent of the power which it seeks to confer on the Directorate. T. Axis Bank also culled out various salutary and significant safeguards insofar as third-party interests, secured or unsecured, that may come to exist in property and thus balancing competing interests. Those safeguards clearly confer protection on a bona fide third-party interest that may come to exist in property acquired upon payment of due consideration. It also recognized the right of such a person to establish before the Adjudicating Authority that the acquisition of the interest was not intended to defeat the objectives of the Act and was a transfer validly made upon payment of due consideration. U. Axis Bank further held that in order to uphold action that the Directorate may take against alternative attachable property was one which established a nexus or link between such properties on the one hand and the person accused of money laundering. It further propounded the test that in such a case it would have to be found that the person accused of money laundering had an interest in such property at least till the time of engagement in the proscribed criminal activity from which a pecuniar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represents a critical pinion in this case since the criminal activity on which the allegation of money laundering is constructed and raised is the allocation of the coal block. As noted above, there is no allegation that any illegal monetary gains were derived or obtained as on 04 September 2003. This coupled with the fact that the allocation itself would not represent proceeds of crime leads the Court to the unescapable conclusion that the impugned proceedings are rendered patently illegal. AA. The Court has additionally taken into consideration the fact that the first chargesheet and which dealt with allegations of the allocation having been utilized for the purposes of extracting coal, the diversion of the mined mineral for unlawful gain, the acquisition of properties from the profits so earned and other related allegations already stands quashed. As long as that judicial declaration holds the field, the Court would have to necessarily acknowledge that no criminal activity was indulged in. BB. The show cause notice and the provisional orders of attachment proceed on the basis that the profits derived from criminal activities post 04 September 2003 and the properties a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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