TMI Blog2023 (12) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... ct-finding exercise which may not be permissible at the stage of considering the bail application. No doubt, the challenge to the order passed by the revisional Court quashing the process is pending in this Court but the order of the revisional Court has not been stayed. The applicant can not, therefore, be deprived of the fruits of the order passed by the revisional Court merely because the Writ Petition challenging the revisional Court s order is pending in this Court. It is always open for the respondent to take such steps in accordance with law in case the MoEF succeeds in the Writ Petition. It is the submission that the act of registering FIR No. 177 of 2022 is malafide action on the part of the respondent. A reading of the MoEF complaint and the FIR No. 177 of 2022 indicates that though the property may be the same but the allegations made are in different context on the basis of the complaint filed by the separate entities. It is not possible to render a finding of malafide at this stage. No doubt this Court while considering twin test of Section 45 of the PMLA has to consider the broad probabilities of the case, however, having regard to the nature of the accusatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Forests (hereafter MoEF for short) filed a private complaint RCC/12/2022 before the JMFC, Dapoli under Sections 5, 7 read with 15 of the Environment (Protection) Act, 1986 (hereafter EP Act for short) and Sections 420 read with 34 of the Indian Penal Code, 1860 (hereafter IPC for short). Treating the above private complaint as a predicate offence, respondent registered the ECIR. The statement of the applicant was recorded by the Directorate of Enforcement (hereafter ED for short) on 26/05/2022 and 27/05/2022. The JMFC, Dapoli directed the investigation by Dapoli Police Station under Section 202 of the Code of Criminal Procedure (hereafter Cr.P.C. for short) on 14/09/2022. A report was filed and the matter was proceeded on 09/11/2022 before the JMFC, Dapoli for orders on the private complaint of MoEF. 4. On 08/11/2022 at 00.02 hrs, Mrs. Rupa Dighe, block development officer, attended Dapoli Police Station and at her instance, First Information Report (hereafter FIR for short) No. 177 of 2022 came to be lodged against Shri Anil Parab under Section 420 of the IPC. The FIR was registered on the basis that Shri Anil Parab applied for assessment of the structure to proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the MoEF before the JMFC, Dapoli alleging violations of (i) CRZ rules, i.e. Section 5 read with Section 15 of the EP Act, (ii) releasing effluents in sea i.e. Section 7 read with Section 15 of EP Act and (iii) offences under IPC. The JMFC directed an investigation into the offence under Section 202 of the Cr.P.C. pursuant to which a police report dated 17/10/2022 is made. The report found that no case of cheating under IPC or of any release of effluents. The JMFC by order dated 09/11/2022 issued process under the provisions of EP Act only i.e. Sections 5 and 7 read with Section 15 of the EP Act. Only Section 7 i.e. releasing effluents is Scheduled Offence under the PMLA. The complaint is deemed to have been rejected in so far as allegations of offences under the IPC were concerned. The order issuing process was quashed by the Sessions Court in revision on 14/03/2022 inter alia on merits by categorically holding that the resort did not discharge or emit any environmental pollutants and was never started/operationalised. As a matter of law, it is not open for the MoEF to file a new complaint or argue that the remnant of the complaint continues. Once the issuance of process on com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the chargesheet go contrary to the allegations in relation to the applicant. Further, the allegations of pressure being exerted on the public officials, is also not made out, given the conversion approval of the Sai Resort being one out of 35 approvals being given by the same officials, in relation to similarly situated land in the vicinity of Sai Resort. The applicant having purchased the land and building on the said land, for a legitimate activity, it cannot be said that an offence under the PMLA is committed. There is no activity alleged against the applicant in relation to the accusations made in FIR No. 177 of 2022 from the complaint. The respondent s reliance on the Section 50 statement of Mr. Sathe for making out the case against the applicant are not relevant at all for the reasons that :- a. The allegation that Mr. Sathe s signature on the application for building is forged is not the allegation for invoking 467, 471 and 478 in FIR No. 177 of 2022, therefore, forgery of his signature is not the crime being prosecuted there. b. Mr. Sathe is not the complainant, victim or aggrieved person cited in the chargesheet. The aggrieved person cited in the chargesheet is gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, therefore, no question of any layering or concealment. The Applicant has no nexus to these crimes and is in fact a 'witness' in the said FIR/chargesheet. (G) The Respondent having failed to make out a predicate offence, has not been able to establish proceeds of crime and therefore there can be no question of an offence of money laundering. In any case, there is no allegation of the applicant being involved in any process or activity connected with the proceeds of crime. The only allegation seems to be one of concealment of ownership of the property by Shri Anil Parab, which is not borne out by the other allegations of the Respondent, i.e., pressure being put on public officials. Further, the payment for the property was directly made by Shri Parab to the owner and an agreement was entered into by him in his own name, therefore, this allegation is also not borne out. This Court has to while considering the twin tests of Section 45(2) of PMLA consider the broad probabilities of the case, and in the present case the same lie in favour of the applicant and he is required to be granted bail. As per the allegations of the respondent in the PMLA complaint, the amounts tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed . For initiation of action under PMLA for offences under Section 3 of the PMLA, registration of a scheduled offence is a prerequisite. It has been categorically held that in any case, it cannot and on its own motion proceed on the surmise that particular set of facts evidence the commission of a scheduled offence, investigate the same and based on that opinion initiate action under the PMLA. In the instant case, the respondent has sought to make out alleged proceeds of crime on the basis of its own investigation in the predicate offence (the same is contrary to the investigation by the appropriate authority) which is impermissible. The investigation and material relied upon by the respondent should not be considered for the purposes of the bail application. (J) Section 19(1) of PMLA provides that an empowered officer must have material in his possession to believe that a person is guilty of the offence described in Section 3. The reasons, as to why he believes the person is guilty, must be recorded in writing. Those reasons shall be informed to the accused. Informed means furnished/supplied/served i.e. the document in writing. Absent this, the entire safeguard is rendered n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R relates to two scheduled offences viz. complaint No. 12 of 2022 of the MoEF as well as FIR No. 177 of 2022. It is submitted that though the order issuing process in criminal complaint No. 12 of 2022 filed by MoEF has been set aside by the revisional Court, the same does not result in dismissal of the complaint No.12 of 2022. The complaint No. 12 of 2022 is still at large for consideration before the trial Court. As even the order passed by the revisional Court is subject matter of challenge in this Court by way of Criminal Writ Petition No. 2327 of 2023 which is currently pending. Despite the revisional Court s order dated 14/03/2023 concerning the EP Act related offences, the allegations of cheating under the IPC remain active and unresolved. The complaint, to the extent that it pertains to these allegations of cheating, continues to be a live issue before the Court. It is adequate material found in the investigation substantiating the claim on the respondent which links the applicant with the alleged criminal activities of laundering and the proceeds derived therefrom. The complaint does not involve isolated or trivial offences but with a systematic and complex interplay by ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Deputy Director authorized by the Director, to arrest any person if he has reason to believe that the person has been guilty of an offence punishable under the Act, based on the material in his possession, with a memo of reasons of arrest being provided. Section 44 and 45 - Twin Bail Conditions: Section 44 deals with offences triable by special courts. Section 45 sets conditions for bail, stating that no person accused of an offence under this Act shall be released on bail or on his own bond unless the Public Prosecutor has been given an opportunity to oppose the application for such release, and where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. Section 50 - Statements in Evidence: This section allows the authority to record statements during the course of the investigation. These statements, when duly signed by the person against whom proceedings are being conducted, become admissible in the trials under this Act. This is a key distinguishing factor from S.161 CrPC statements which are inadmissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bail IMP NIKESH TARACHAND VIS A VIS AMENDMENT OF 2018 IMP DEFECT REMOVED BY VALIDATING THE ACT RETROSPECTIVELY. CHALLENGE TO TWIN CONDITIONS POST AMENDMENT OF 2018 371 377-380 386 387 10 Quantum of punishment cannot be the basis to determine the seriousness and gravity of this offence. 395 11 Relevant Judgments 395-397 IMP 401 12 Twin Conditions vis a vis Companies Act 402 13 Limitations under Section 45 are in addition to limitation under the 1973 404 SR. NO. PARTICULARS PARA NO. Code 14 TWIN CONDITIONS UPHELD 405 15 Re : Anticipatory Bail 411 412 16 Section : 50 422 and 431 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continuing activity and continues till such time a person is directly or indirectly enjoying the by proceeds of crime concealment or possession its or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. On a plain reading of Section 3, unless proceeds of crime exist, there cannot be any money laundering offence. Clause (u) of subsection (1) of Section 2 of the PMLA defines proceeds of crime , which reads thus: 2. Definition (1) In this Act, unless the context otherwise requires,- (u) proceeds of crime means any property derived or obtained, directly 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 relatab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheduled offence already accomplished. Similarly, 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. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1) (u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause proceeds of crime , as it obtains as of now. (underline supplied) In paragraphs 269 and 270, this Court held thus: 269. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money- laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n reading, an offence under Section 3 can be committed after a scheduled offence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing an offence under Section 3 of the PMLA. To give a concrete example, the offences under Sections 384 to 389 of the IPC relating to extortion are scheduled offences included in Paragraph 1 of the Schedule to the PMLA. An accused may commit a crime of extortion covered by Sections 384 to 389 of IPC and extort money. Subsequently, a person unconnected with the offence of extortion may assist the said accused in the concealment of the proceeds of extortion. In such a case, the person who assists the accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. What is held in paragraph 270 of the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as there will not be any proceeds of crime. Thus, in such case, the accused against whom the complaint under Section 3 of the PMLA is filed will benefit from the scheduled offence ending by acquittal or discharge of all accused. Similarly, he will get the benefit of the quashing the proceedings of the scheduled offence. However, an accused in the PMLA case who comes into the picture after the scheduled offence is committed by assisting in the concealment or use of proceeds of crime need not be an accused in the scheduled offences. Such an accused can still be prosecuted so long as the scheduled offence exists. 12. So far as the procedure of arrest is concerned, the Supreme Court in Pankaj Bansal (supra) in detail analysed the constitutional and statutory mandate of Section 19(1) of the PMLA. In paragraph Nos. 21, 29 to 33 and 39, it is observed thus: 21. This chronology of events speaks volumes and reflects rather poorly, if not negatively, on the ED's style of functioning. Being a premier investigating agency, charged with the onerous responsibility of curbing the debilitating economic offence of money laundering in our country, every action of the ED in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that would mean that they should be communicated at the earliest but there is no statutory requirement of the grounds of arrest being communicated in writing. 31. No doubt, in Vijay Madanlal Choudhary (supra), this Court held that non-supply of the ECIR in a given case cannot be found fault with, as the ECIR may contain details of the material in the ED's possession and revealing the same may have a deleterious impact on the final outcome of the investigation or inquiry. Having held so, this Court affirmed that so long as the person is 'informed' of the grounds of his/her arrest, that would be sufficient compliance with the mandate of Article 22(1) of the Constitution. 32. In this regard, we may note that Article 22(1) of the Constitution provides, inter alia, that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest. This being the fundamental right guaranteed to the arrested person, the mode of conveying information of the grounds of arrest must necessarily be meaningful so as to serve the intended purpose. It may be noted that Section 45 of the Act of 2002 enables the person ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her furnish such grounds of arrest in writing or to allow such grounds to be read by the arrested person or be read over and explained to such person. 39. On the above analysis, to give true meaning and purpose to the constitutional and the statutory mandate of Section 19(1) of the Act of 2002 of informing the arrested person of the grounds of arrest, we hold that it would be necessary, henceforth, that a copy of such written grounds of arrest is furnished to the arrested person as a matter of course and without exception. The decisions of the Delhi High Court in Moin Akhtar Qureshi (supra) and the Bombay High Court in Chhagan Chandrakant Bhujbal (supra), which hold to the contrary, do not lay down the correct law. In the case on hand, the admitted position is that the ED's Investigating Officer merely read out or permitted reading of the grounds of arrest of the appellants and left it at that, which is also disputed by the appellants. As this form of communication is not found to be adequate to fulfil compliance with the mandate of Article 22(1) of the Constitution and Section 19(1) of the Act of 2002, we have no hesitation in holding that their arrest was not in keeping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judge Bench has categorically observed that the statements of witnesses/accused are admissible in evidence in view of Section 50 of the said Act and such statements may make out a formidable case about the involvement of the accused in the commission of a serious offence of money laundering. Further, as held in Vijay Madanlal (supra), the offence of money laundering under Section 3 of the Act is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The offence of money laundering is not dependent or linked to the date on which the scheduled offence or predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with the proceeds of crime. Thus, the involvement of the person in any of the criminal activities like concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so, would constitute the offence of money laundering under Section 3 of the Act. 17. As well settled by now, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expressions as a result of and derived or obtained in Section 2(1)(u) of the Act. The evidence of criminal activity would be either a first information report, a complaint or a charge-sheet as envisaged under various statutes. However, in absence thereof, it would be wholly impermissible for the ED to itself become the arbiter of whether a scheduled offence stands committed. 15. Bearing in mind the aforementioned principles laid down, I now proceed to deal with the rival submissions. 16. The complaint filed by the MoEF is regarding violation of the EP Act and cheating. The allegations in brief pertain to the purchase of the land by Shri Anil Parab from Mr. Sathe. The allegations are that by exerting pressure building permissions are illegally obtained. Further, the construction is made in a no-development zone in violation of CRZ rules. Though the transaction between Mr. Sathe and Shri Anil Parab was of the year 2017, it is only in the year 2019 that the sale deed came to be executed. Hence, it is alleged that this is to conceal the identity by Shri Anil Parab. Shri Anil Parab later executed the sale deed in respect of the said land in favour of the present applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayram Deshpande, the then SDO, Dapoli Sudhir Shantaram Pardule, the then Circle officer, Dapoll, for acquiring illegal permission for conversion as well as construction over the said Agricultural Land and only after that Revenue Department authorities granted illegal permission for conversion of the said land into nonagricultural and construction therein. Sadanand Kadam on behalf Shri Anil Parab also looked after the construction of unauthorized structure and changed the construction plan to resort viz. Sai Resort NX even though the construction plan approved by Revenue Department was of Twin Bungalow. Further, Sadanand Kadam on behalf of Anil Parab had again used influence of Anil Parab, the then MLC and pressurized Suresh Shankar Tupe, Sarpanch Anant Koli, Gram Sevak of Murud Gram Panchayat to assess levy the tax immediately on the said unauthorized and illegal resort and to make entries in Gram Panchayat Form No.S, therefore, tax was levied on the incomplete structure due to pressure and influence of Shri Anil Parab used by Sadanand Kadam. Accused Sadanand Kadam has also manipulated the balance sheets and invoices in order to show expenses made for the construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anand Kadam and Shri Anil Parab while having complete knowledge that land admeasuring area 42.14 Gunta (over an Acre) located at Gat No.445, Marud, Tehsil Dapoli, Ratnagiri, Maharashtra falls within prohibited CR-IlI area which is No Development Zone , indulged into purchase of the said land from Shri Vibhas Rajaram Sathe for construction of a twin bungalow/ resort. Further, accused Sadanand Kadam helped Shri Anil Parab to utilize his unaccounted money in cash amounting to Rs.80 Lac for purchase of the said land. 9.2 Accused Sadanand Kadam in connivance with Vinod Depolkar and on the instance of Shri Anil Parab, illegally acquired the permission for conversion of the said land into non-Agricultural and construction of Twin bungalow (Ground+ 1 Floor) and subsequently constructed a resort (Ground+ 2 Floors) inspite of having illegal permission for construction of twin bungalow. Further, in order to legitimize the said illegal resort accused Sadanand Kadam with the help of Shri Anil Parab deceived Gram Panchayat, Murud by stating that he had purchased land and structure from Shri Vibhas Sathe. Further, without completion of the construction, accused Sadanand Kadam pressurized a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le transaction legitimate, Accused Sadanand Kadam with the help of Shri Anil Parab, deceived, pressurized, cheated influenced the Gram Panchayat, Murud, Dapoli for assessment levying of tax on the said resort. 9.6 Thus, in the instant case, total proceeds of crime in terms of section 2(1)(u) of PMLA, 2002, r/w explanation to Section 2 (1)(v) of the Act, 2002, is land for which illegal permission was acquired for conversion into Non-Agricultural and used in commission of schedule offence and Sai Resort NX which has been generated out of criminal activities i.e. cheating, forgery, misdeclaration. 9.7 During the search proceedings on 26.05.2022 at the premise of Sai Resort NX located at Gat No.446, Murud, Tehsil Dapoli, Ratnagiri, Maharashtra, valuation of the said resort was conducted by M/s L B M Valuers Engineers in the presence of Panchas. The valuation report was submitted on 03.06.2022 by M/s L B M Valuers Engineers and as per the valuation report value of land is Rs.2,73,91,000 and the Resort was valued at Rs.7,46,47,000/-. 9.8 Thus, in the instant case, total proceeds of crime in terms of section 2(1)(u) of PMLA, 2002, r/w explanation to Section 2 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. It is always open for the respondent to take such steps in accordance with law in case the MoEF succeeds in the Writ Petition. 23. However, so far as FIR No. 177 of 2022 is concerned, it relates to the scheduled offence. Though, the writ petition is pending in this Court for quashing FIR No. 177 of 2022, mere pendency of the Writ Petition is not sufficient to hold that there is no predicate offence. Furthermore, merely because the applicant is not an accused in FIR No. 177 of 2022 cannot afford protection to the applicant from a prosecution under the PMLA in the light of the observations of the Supreme Court in Pavana Dibbur (supra). 24. It is not necessary that a person against whom the offence under Section 3 is alleged must have been shown as an accused in the scheduled offence. The conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of subsection( 1) of Section 3 of the PMLA. 25. Learned senior advocate Shri Desai submitted that the accusations in FIR No. 177 of 2022 is almost identical with those in RCC No. 12 of 2022 and hence the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to a scheduled offence. Further, in my opinion, prima facie, the applicant can be said to have directly or indirectly attempted to indulge or knowingly assisted or is knowingly a party or actually involved in process or activity connected with proceeds of crime and projected it as untainted property. 27. Though learned senior advocate Shri Desai was at pains to rely upon Section 202 of Cr.P.C. report in the private complaint of MoEF, according to me, such a report is specific to the private complaint instituted by the MoEF. This report under Section 202 can not be the sole basis for absolving the applicant if otherwise from the material the accusations regarding offence of money laundering is made out. So far as the statements of Mr. Vibhas Sathe recorded under Section 50 of the PMLA are concerned, at this stage the same can not be discarded only on the ground that more weightage should be given to the statements recorded by the police under Section 161 of the Cr.P.C. The distinction as regards the statement made under Section 161 of Cr.P.C. with the evidentiary value of the statement made under the PMLA has to be kept in mind. 28. As regards the submission of learned senio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said paragraphs are reproduced as under: 456. As per the procedure prescribed by the 1973 Code, the officer in-charge of a police station is under an obligation to record the information relating to the commission of a cognizable offence, in terms of Section 154 of the 1973 Code. There is no corresponding provision in the 2002 Act requiring registration of offence of money-laundering. As noticed earlier, the mechanism for proceeding against the property being proceeds of crime predicated in the 2002 Act is a sui generis procedure. No comparison can be drawn between the mechanism regarding prevention, investigation or trial in connection with the scheduled offence governed by the provisions of the 1973 Code. In the scheme of 2002 Act upon identification of existence of property being proceeds of crime, the Authority under this Act is expected to inquire into relevant aspects in relation to such property and take measures as may be necessary and specified in the 2002 Act including to attach the property for being dealt with as per the provisions of the 2002 Act. We have elaborately adverted to the procedure to be followed by the authorities for such attachment of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeds of crime. Indeed, after arrest, the manner of dealing with such offender involved in offence of money-laundering would then be governed by the provisions of the 1973 Code - as there are no inconsistent provisions in the 2002 Act in regard to production of the arrested person before the jurisdictional Magistrate within twenty-four hours and also filing of the complaint before the Special Court within the statutory period prescribed in the 1973 Code for filing of police report, if not released on bail before expiry thereof. 457. Suffice it to observe that being a special legislation providing for special mechanism regarding inquiry/investigation of offence of money-laundering, analogy cannot be drawn from the provisions of 1973 Code, in regard to registration of offence of money-laundering and more so being a complaint procedure prescribed under the 2002 Act. Further, the authorities referred to in Section 48 of the 2002 Act alone are competent to file such complaint. It is a different matter that the materials/evidence collected by the same authorities for the purpose of civil action of attachment of proceeds of crime and confiscation thereof may be used to prosecute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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