TMI Blog2023 (1) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... When one reads Section 3 of the PMLA, 2002 [offence of money-laundering] together with the definition of the words proceeds of crime [Section 2(1)(u)] and scheduled offence [Section 2(1)(y)], it is clear that for charging a person with the offence of money-laundering, there has to firstly be a scheduled offence. When any property is derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence, then such property would be the proceeds of crime . When a person directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime, he is guilty of the offence of money-laundering. Therefore, the sine qua non for Section 3 of the PMLA, 2002 to apply would be the commission of a scheduled offence. If there is no scheduled offence, then Section 3 cannot be pressed into service. As of now, the scheduled offences against the Accused have admittedly been dropped in the chargesheet filed by the Goa Police Crime Branch before the JMFC F Court at Mapusa, Goa and the matter is registered as Criminal Case No.AOA/572/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of certain subsequent developments more particularly set out in the Criminal Misc. Application. 2. Criminal Application (Bail) No. 29 of 2022 is filed by the Applicant-Ankur @ Rahul Khanna also seeking regular bail, and who is hereinafter referred to as Applicant No.1 . Applicant No. 1 has also filed Criminal Misc. Application No. 92 of 2022 seeking interim bail in view of certain subsequent events/developments. 3. Since the facts in both the cases are identical, all the above matters are disposed of by this common judgment and order. 4. The above bail applications, namely Criminal Application (Bail) Nos. 30 of 2022 and 29 of 2022, have been moved by Applicant No.2 and Applicant No.1 respectively, under Sections 437 and 439 of the Code of Criminal Procedure, 1973, (for short the Cr.P.C. ), seeking regular bail in the matter titled as Ankur @ Rahul Khanna and anr. vs. Assistant Director, Directorate of Enforcement; PMLA 1/2022 in ECIR No. 3 of 2022, registered by the Respondent under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002, (for short PMLA, 2002 ). 5. The brief facts of the case are this: An FIR bearing No. 10 of 2022 was regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se clubs, individual players are invited through Whatsapp/Telegram chats for placing illegal bets through various Poker gaming Apps. This data apparently revealed that commissions were generated @ 5 % by the said club on each table running in the said clubs. The settlement of the commission and the betting amount was done mainly through hawala operators in cash or through crypto currency with each individual player and the Union Head, by their respective club managers. 8. Be that as it may, during the course of the investigation, the Respondent conducted a search on the premises of Applicant Nos. 1 and 2 situated in the State of West Bengal, on 6th April 2022. It is the case of Applicant Nos. 1 and 2 that they fully co-operated with the Investigating Agency. However, on the very next day, namely on 7 th April 2022, Applicant Nos. 1 and 2 were arrested by the Respondent and since then they are in custody. 9. Mr. Parag Rao as well as Mr. Lawande, the learned advocates appearing for Applicant Nos. 1 and 2 respectively, submitted that after the arrest of Applicant Nos.1 and 2, the Respondent s Complaint (Prosecution Complaint) was filed before the Special Court for PMLA cases un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no scheduled offence in existence with the jurisdictional Police Station and hence the question of continuing their incarceration under the provisions of the PMLA, 2002 cannot continue. 12. On these facts, I have heard Mr. Lawande, the learned Advocate appearing on behalf of Applicant No. 2, Mr. Parag Rao, learned Advocate appearing on behalf of Applicant No. 1 and Mr. Karpe, the Special Public Prosecutor for the Respondent. They have all agreed that I should hear and dispose of Criminal Application (Bail) No.29 of 2022 Criminal Application (Bail) No.30 of 2022 [the Applications for regular bail]. I have accordingly heard the parties. 13. Mr. Lawande and Mr. Rao, both submitted that the entire case of the Respondent against Applicant Nos.1 2 is admittedly based upon the alleged scheduled offences enlisted in FIR No. 10 of 2022 dated 22nd January 2022 registered at Porvorim Police Station, Goa. The scheduled offences were Section 420 and Section 120-B of the IPC. They submitted that in the present case, though the FIR charged the Accused persons therein [Mr. Shashank Siddharth, Mr. Rajnesh Kumar and Mr. Anup Palod] under Sections 408, 420, 120-B read with Section 34 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Supreme Court in the case of Vijay Madanlal Choudhary Ors. (supra), is wholly misplaced. Relying upon Paragraph 33 of the said judgment, Mr. Karpe submitted that the Supreme Court has clearly opined that in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a court of competent jurisdiction, owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person, or person claiming through him, in relation to the property linked to the stated scheduled offence. Mr. Karpe submitted that what is important is that there should be an order [with respect to the scheduled offence] passed by the court of competent jurisdiction absolving the Accused. According to Mr. Karpe, in the facts of the present case, there is no order passed by a court of competent jurisdiction but only a chargesheet has been filed by the police dropping the scheduled offences. If this be the case, Mr. Karpe submitted that the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary Ors. (supra), would have no appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered with M/s. Binance Crypto Exchange in their name, despite they being confronted with the user ID and KYC details. Mr. Karpe submitted that these facts, along with other facts, would prima facie disclose the grave probability of the Accused tampering with crucial evidence and influencing witnesses in the present case of money-laundering. In these circumstances, Applicant Nos. 1 and 2 ought not to be enlarged on bail, was the submission of Mr. Karpe. Consequently, he submitted that all the above applications ought to be dismissed. 15. I have heard the learned Counsel for the parties at some length. I have also perused the papers and proceedings in the above applications. The undisputed facts in the present case are this: On 22 nd January 2022, FIR No.10/2022 was registered against Mr. Shashank Siddharth, Mr. Rajnesh Kumar and Mr. Anup Palod under Sections 408, 420, 120-B read with Section 34 of the IPC along with Sections 3 and 4 of the Goa Gambling Act and Section 66D of the Information Technology Act, 2000. Based on this FIR, ECIR/PJZO/03/2022 was recorded against the said Mr. Shashank Sidharth, Mr. Rajnesh Kumar and Mr. Anup Palod. On the basis of the statement of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting or claiming it as untainted property, shall be guilty of the offence of money-laundering. The explanation to the said section clarifies that a person shall be guilty of the offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the processes or activities [connected with the proceeds of crime] as more particularly enumerated in the Explanation. 18. Since a person is guilty of the offence of money-laundering when he/she inter alia directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime, it would be apposite to refer to the definition of proceeds of crime as set out in Section 2(1)(u), which reads thus:- 2. Definitions.-( 1) In this Act, unless the context otherwise requires,- .. .. (u) proceeds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ph 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. 22. When one reads Section 3 of the PMLA, 2002 [offence of money-laundering] together with the definition of the words proceeds of crime [Section 2(1)(u)] and scheduled offence [Section 2(1)(y)], it is clear that for charging a person with the offence of money-laundering, there has to firstly be a scheduled offence. When any property is derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence, then such property would be the proceeds of crime . When a person directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime, he is guilty of the offence of money-laundering. Therefore, the sine qua non for Section 3 of the PMLA, 2002 to apply would be the commission of a scheduled offence. If there is no scheduled offence, then Section 3 cannot be pressed into service. This, according to me, is the clear po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion emerging from the principal provision [i.e., Section 2(1)(u)]. 251. The proceeds of crime being the core of the ingredients constituting the offence of money-laundering, that expression needs to be construed strictly. In that, all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime. There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act - so long as the whole or some portion of the property has been derived or obtained by any person as a result of criminal activity relating to the stated scheduled offence. To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally, some other property is purchased or derived from the proceeds of crime even such subsequently acquired property must be regarded as tainted property and actionable under the Act. For, it would become property for the purpose of taking action under the 2002 Act which is being used in the commission of offence of money-laundering. Such purposive interpretation would be necessary to uphold the purposes and objects for enactment of 2002 Act. 253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum . For, the expression derived or obtained is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the crimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as proceeds of crime despite such adjudication by a Court of competent jurisdiction. It is well within the jurisdiction of the concerned Court trying the scheduled offence to pronounce on that matter. 282. Be it noted that the authority of the Authorised Officer under the 2002 Act to prosecute any person for offence of money-laundering gets triggered only if there exists proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act and further it is involved in any process or activity. Not even in a case of existence of undisclosed income and irrespective of its volume, the definition of proceeds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, there is no question of any generation of any proceeds of crime , and consequently, there can be no offence of money-laundering. In these circumstances, I am satisfied that Applicant Nos. 1 and 2 have made out a case for grant of bail. 25. Before parting, I must take note of a decision of another Single Judge of this Court (M. S. Karnik, J.), in the case of Amit Balasaheb Chandole vs. Union of India and Marath Sashidharan vs. Directorate of Enforcement Anr. [Bail Application No. 1546 of 2021 and Bail Application No. 2890 of 2021 decided on 12th December 2022]. The facts in this case were very similar to the facts before me. In this case also a FIR came to be registered on 28th October 2020 which charged the Accused of a scheduled offence. On the basis of the said FIR, for the purpose of investigating the offence of money-laundering, an ECIR came to be recorded by the Enforcement Directorate on 31st October 2020. Pursuant thereto, the Applicants/Accused therein were arrested and remanded to judicial custody. The Enforcement Directorate thereafter completed the investigation, and a complaint was filed in connection with the said ECIR before the said Sessions Court, Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision in Vijay Madanlal Choudhary and ors. (supra), the applicant-Marath s challenge to the order refusing him bail by this Court is pending before the Supreme Court. 14. When the question of a liberty of an individual is involved, it is not really possible for me to completely ignore the acceptance of the C-Summary report which virtually has the effect of bringing to an end the proceedings registered with Yellow Gate Police Station pursuant to the filing of the FIR dated 28/10/2020. The proceedings in the PMLA case before the Special Judge will obviously be taken to the logical conclusion in accordance with law. The Supreme Court has in clear terms in Vijay Madanlal Choudhary and ors. (supra) observed that the offence under Section 3 of the PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. Their Lordships held that if the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot already surrendered. (vii) Applicant Nos. 1 and 2 shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him/her from disclosing the facts to Court or to any Police Officer. Applicant Nos. 1 and 2 shall not tamper with evidence or the proceeds of crime. (viii) Applicant Nos. 1 and 2 shall not indulge in any activities similar to the activities on the basis of which Applicant Nos. 1 and 2 stand prosecuted in the offence of money-laundering. (ix) Applicant Nos. 1 and 2 shall attend the proceedings before the Special Judge (PMLA), Mapusa, without any default unless exempted. (x) Applicant Nos. 1 and 2 shall not try to establish communication with the Co-Accused or any other person involved directly or indirectly in similar activities, through any mode of communication. (xi) Applicant Nos. 1 and 2 shall co-operate with the expeditious disposal of the trial and in case the delay is caused on account of any act or conduct of the Applicant Nos. 1 and 2, the bail shall be liable to be cancelled. (xii) On being released on bail, Applicant Nos. 1 and 2 shall furnish their contact numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
