TMI Blog2022 (1) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... th the following illustration. Section 392 IPC-Robbery, is a scheduled offence under the PML Act. A person commits robbery of Rs.1 crore at knife point from the cashier at a bank and decamps with the booty. The Enforcement Directorate had not registered 2023 ECIRs under the PML Act because, they are aware that mere generation of proceeds of crime via a criminal activity without anything more, cannot attract PML Act. In the above illustration, the robber should have projected the sum of Rs.1 crore, being the proceeds of crime, as untainted property. The Enforcement Directorate cannot be heard to say that every robber would be liable under the PML Act, but, that they would pick and choose only the best amongst them to prosecute under the PML Act. Thus, when a robber cannot be prosecuted under the PML Act for the offence of robbery simpliciter, his accessories like conspirators and abettors, cannot also be prosecuted under the PML Act, in the absence of any material to show that they had projected the fruits of the crime as untainted property. Chandrasekaran is being prosecuted for the offence under Section 3 read with Section 4 of the PML Act, for having sanctioned the housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation and cases were registered in this regard. After completing the investigation, the CBI filed seven charge sheets against Chandrasekaran and others, for the offences under Section 120-B IPC read with Sections 420, 468 and 471 IPC read with Sections 13(1)(d) and Section 13(2) of the Prevention of Corruption Act, 1988, before the Special Court for CBI Cases, Chennai. 3.4. The sum and substance of the allegations in the charge sheets filed by the CBI are that, Chandrasekaran had, in abuse of his official position as Senior Branch Manager of Syndicate Bank, granted housing loans and personal loans to the co-accused named therein, in violation of the rules. Since the charge sheets filed by the CBI disclosed the commission of a scheduled offence under the Prevention of Money Laundering Act, 2002 (in short the PML Act ), the Enforcement Directorate registered cases in ECIR No.9 of 2013 and ECIR No.8 of 2013 and after completing the investigations, filed two complaints in C.C.No.20 of 2015 (covering four CBI charge sheets in which Chandrasekar is an accused) and C.C.No.49 of 2016 (covering three CBI charge sheets in which Chandrasekar is an accused) in the Special Court for Preven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any criminal activity relatable to the scheduled offence. 7. Thereafter, the learned Special Public Prosecutors took us through the explanation that was added to Section 2(1)(u) as well Section 3 of the PML Act by Act 23 of 2019 and submitted that mere participation of a person directly or indirectly in a criminal activity that led to the generation of proceeds of crime , would, by itself, attract the provisions of Section 3 read with Section 4 of the PML Act. 8. Though at the first blush, this argument of the learned Special Public Prosecutors did sound attractive, the fallacy in this argument, can be explained by expatiating on Section 2(1)(u) and Section 3 of the PML Act. 9. Section 2(1)(u) of the PML Act defines the expression proceeds of crime . In consonance with the speech of the Hon'ble Finance Minister alluded to above, explanation clauses have been added to Section 2(1)(u) as well Section 3 of the PML Act. From a careful analysis of Section 2(1)(u) and Section 3 of the PML Act, one can draw the following inference : For attracting the offence of money laundering, the following ingredients require to be satisfied : (a)There should have been a criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the legal position nor set at naught the observations of the Supreme Court in paragraph 11 (supra). 12. The explanation to Section 3 of the PML Act, cannot have the effect of expanding the horizons of the mother penal provision. The 'explanation' by itself cannot create a new offence. As held by the Supreme Court in Bihta Cooperative Development Cane Marketing Union Ltd. and Another Vs Bank of Bihar and Others (AIR 1967 SC 389), the explanation must be read as to harmonise with and clear up any ambiguity in the main section and that it should not be so construed as to widen the ambit of the section. The interpretation proffered by the learned Special Public Prosecutors that mere generation and possession of the proceeds of a crime by the commission of a criminal activity, would attract the penal provisions of PML Act, would lead to disastrous results, which we propose to demonstrate with the following illustration. Section 392 IPC-Robbery, is a scheduled offence under the PML Act. A person commits robbery of Rs.1 crore at knife point from the cashier at a bank and decamps with the booty. The sum of Rs.1 crore is undoubtedly proceeds of crime . The robber hides the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and fabricated documents, as submitted by Shri.S.Kumar @ Vijayakumar (A-3 herein) in the names of the accused borrowers (A-4 to A-21) for the purpose of purchase of various housing sites and construction of houses/flats thereof, and has knowingly involved himself in the process and activity connected with the proceeds of the crime. Therefore, Shri.R.Chandrasekaran (A-2 herein) is guilty of offence of money laundering under the PMLA, 2002. Similarly, the allegations set out in paragraph 30.8 of the complaint in C.C.No.49 of 2016, read as under : 30.8. Shri.R.Chandrasekaran (A-8 herein) had dishonestly processed sanctioned the loans based on forged and fabricated documents, as submitted by Shri.S.Kumar @ Vijayakumar (A-1 herein) in the names of the borrowers as arranged by Shri.S.Kumar @ Vijayakumar for the purpose of purchase of various housing sites and construction of houses thereof, and has knowingly involved himself in the process and activity connected with the proceeds of crime. He has also knowingly assisted Shri.S.Kumar @ Vijayakumar, in acquiring the aforesaid properties out of the proceeds of the crime involved in the afore mentioned charge sheets filed by CBI, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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