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TMI Blog2023 (11) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise of his powers under sub-sections (2) & (3) of Section 50 of the PMLA, 2002. 2. The common prayer in the writ petitions in W.P. Nos. 33463, 33464, 33465, 33466 & 33468 of 2023 is for a declaration that the power of the respondent, so far as it relates to investigation, enquiry etc., of an offence of money laundering in relation to the predicate offence arising out of and within the territorial limits of a State, without the consent of the concerned State, is violative of basic structure of federalism and separation of powers and therefore such enquiry, investigation etc., by the respondent can be carried out only at the request of the State Agencies/State Government or by the directions of the Constitutional Courts. The petitioners in the first set of five writ petitions are the petitioners in the second set of five writ petitions. 3. Pending disposal of the first set of writ petitions concerning the impugned summons issued to the respective District Collectors, the petitioners have prayed for interim stay of operation of the impugned summons issued to the concerned District Collector of the five Districts, who are shown as the third petitioner in each of the writ petitions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the Mines and Minerals (Development and Regulation) Act, 1957 read with Tamil Nadu Minor Mineral Concession Rules, 1959. Whereas no such action is initiated in other States governed by ruling party, where thousands of cases relating to illegal mining are reported. We are not inclined to consider this submission which is contrary to the Senior Counsel's preliminary statement on the gist of his arguments, particularly in the absence of any statistics or verifiable material. (vi) The focus of the learned Senior Counsel is on the usurpation of powers of the State Government by the Centre through the Enforcement Directorate. He submitted that such exercise of power is in contravention of the principles of federalism under the Constitution. (vii) He also relied upon several provisions of the PMLA, 2002 in support of his arguments and we are inclined to consider the submissions on the admitted facts in the following paragraphs. 6. The respondent, namely, the Assistant Director, Directorate of Enforcement has filed an objection affidavit. The learned Additional Solicitor General raised a preliminary objection stating that the writ petitions are not maintainable by the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 of the PMLA, 2002 regarding the First Information Reports registered for the past five years in connection with illegal sand mining, the Director General of Police has not responded so far. Making a distinction between the power under Section 54 and Section 50(2) of the PMLA, 2002, the learned Additional Solicitor General submitted that the enquiry by issuing summons is within the jurisdiction and authority of the respondent under the PMLA, 2002. 8. This Court, prima facie, found that the writ petitions filed by the State Government along with the District Collector concerned, are maintainable, in view of the specific allegations made in the affidavit questioning the jurisdiction of the respondent to conduct investigation in relation to mining violations, which is within the exclusive domain of the State Government. Though the learned Senior Counsel appearing for the petitioners relied upon a few judgments of the Hon'ble Supreme Court for the proposition that the writ petitions filed by the State Government are maintainable wherever the State is an aggrieved person, this Court finds a thin difference between the State Government filing writ petition as a person individually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:-- (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.]" As per Section 2(1)(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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 crime" under Section 2(1)(u) will get attracted, unless the property has been derived or obtained as a result of criminal activity relating to a scheduled offence. It is possible that in a given case after the discovery of huge volume of undisclosed property, the authorised officer may be advised to send information to the jurisdictional police (under Section 66(2) of the 2002 Act) for registration of a scheduled offence contemporaneously, including for further investigation in a pending case, if any. On receipt of such information, the jurisdictional police would be obliged to register the case by way of FIR if it is a cognizable offence or as a non-cognizable offence (NC case), as the case may be. If the offence so reported is a scheduled offence, only in that eventuality, the property recovered by the authorised officer would partake the colour of proceeds of crime under Section 2(1)(u) of the 2002 Act, enabling him to take further action under the Act in that regard. 283. Even though, the 2002 Act is a complete Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence of undisclosed income and irrespective of its volume is noticed, the proceeds of crime under Section 2(1)(u) cannot be presumed, unless the property has been derived or obtained as a result of criminal activity relating to a scheduled offence. Therefore, the existence of proceeds of crime within the meaning of Section 2(1)(u) of the PMLA, 2002 is quintessential, as held by the Hon'ble Supreme Court and in the absence of existence of proceeds of crime as aforesaid, the authorities under the PMLA, 2002 cannot step in or initiate any prosecution. 12. In the given cases, the learned Additional Solicitor General, referring to the Enforcement Case Information Report (ECIR), pointed out that the information gathered by the respondent shows the nature of predicate offence. From the report, it is seen that the respondent has relied upon four First Information Reports. The first one is registered by Murappanadu Police Station, Thoothukudi District for the alleged offence under Section 302 of Indian Penal Code. The second one refers to the case registered by Vigilance & Anti-Corruption, Theni for the alleged offence under Sections 120(B) & 471 of Indian Penal Code and for the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and Anti-Corruption, Thanjavur for the alleged offence under Sections 120(B), 421, 409, 109 of IPC read with Section 13(1)(c) and other provisions of the Prevention of Corruption Act. From the said complaint, the allegation by the Vigilance and Anti-Corruption Department is that in collusion with the officials of Revenue and Geology & Mining Departments, the suspects have quarried gravel more than the permitted depth of land. 14. The complaints as seen from the First Information Reports produced before this Court by the learned Additional Solicitor General only indicate the registration of cases in relation to illegal mining coupled with scheduled offence. This Court can take judicial notice that thousands or lakhs of complaints are registered throughout the State for the scheduled offence. In Paragraph-8 of the Enforcement Case Information Report, it is stated that the mining mafias who are involved in theft of national wealth are generating huge proceeds of crime. When offences under Sections 302, 120(B), 420, 471 of IPC or Section 7(a) and other provisions of the Prevention of Corruption Act are scheduled offences as specified under Part A of the Schedule of PMLA, 2002, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laces throughout the State submitted that every illegal sand mining involve commission of offence under the schedule. He relied upon the judgment of the Hon'ble Supreme Court in the case of Y.Balaji v. Karthik Desari and another, 2023:INSC:542 and submit that the issue is covered by this precedent. A reading of the above judgment, of course, indicates that similar issue was considered by the Hon'ble Supreme Court. It was argued before the Hon'ble Supreme Court that to make out an offence of money laundering, three things are essential, namely, (i) the commission of a crime, which is a scheduled offence, (ii) generation of proceeds of crime, and (iii) the laundering of those proceeds. When a submission was made that none of these three foundational facts are present in that case, the Hon'ble Supreme Court has rejected the contention after referring to the provisions of PMLA, 2002 and its objects by referring to the history of the legislation. It was observed therein that the First Information Report registered against the accused therein shows commission of offence included in the schedule by taking illegal gratification for providing appointment to several persons i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by such sand mafia or offenders can be considered as proceeds of crime. Section 66(2) of the PMLA, 2002 reads as follows:- "66. Disclosure of information. (1) ... (2) If the Director or other authority specified under sub-section (1) is of the opinion, on the basis of information or material in his possession, that the provisions of any other law for the time being in force are contravened, then the Director or such other authority shall share the information with the concerned agency for necessary action." It is to be noted that even the Hon'ble Supreme Court in Vijay Madanlal Choudhary has observed that the respondent even if it had unearthed any particular offence and found proceeds of crime relating to the said offence, then under Section 66(2), the respondent is bound to inform the investigating agency about such offence. Only if the offence is scheduled offence, the respondent will get a right to further investigate the proceeds of crime, as held by the Hon'ble Supreme Court. Having regard to the interpretation of various provisions by the Hon'ble Supreme Court, this Court is prima facie convinced that the nature of enquiry contemplated by issuing the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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