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TMI Blog2025 (1) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... o-operative House Building Society (for short 'the Society'), which Society had proposed to develop a satellite township at Shivpora, Srinagar on a big plot of land that was identified by the Society for the said purpose and the said land was proposed to be purchased by the Society from its land owners for the development of the said township. (ii) In furtherance of the aforesaid proposal, petitioner 1 herein claims to have approached the Jammu and Kashmir State Co-operative Bank (for short 'the Bank') for grant of financial assistance by way of loan of Rs. 300 crores in favour of the Society for enabling it to acquire the identified land from its owners and its subsequent development for establishment of the satellite township. A detailed project report is claimed to have been prepared and submitted to the Bank for consideration of the case of the Society for grant of loan. It is stated that the petitioner also filed an application to the Government of Jammu and Kashmir for facilitating early consideration of the said loan case. The Bank after considering the financial viability of the project and financial interests of the Bank, is stated to have agreed to finance the project t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said investigation, the land in question is stated to have been attached and the bank accounts of 18 land owners frozen, so as to stop them from withdrawing the amount credited into their accounts against the land in question. (v) After completion of the investigation in the FIR supra, charge-sheet is stated to have been filed before the competent court against the petitioners herein along with the other accused persons, which charge-sheet is stated to be pending trial before the competent court. (vi) It is further stated that the attached Bank accounts of the land owners became subject matter of litigation before the Hon'ble Apex Court, wherein during the course of proceedings, Society volunteered to abide by its arrangement with the Bank and return the loan amount availed by it with interest, subject to the condition that the attachment order qua the land was lifted, whereupon the Apex Court is stated to have lifted the attachment order, however, in respect of the accounts of the land owners in order to facilitate them to withdraw the money that had been credited into their accounts in consideration of their land in question having been leased out perpetually in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her proceedings in the month of November 2023 and in the course of said proceedings, on 14.12.2023, attached the land in question being 257 Kanal and 18 Marlas having been acquired in the name of the Society in lieu of the sanctioned amount of loan and subsequent thereto, the petitioners herein as also the above named Mohammad Shafi Dar were again arrested by the respondent-Directorate in connection with the investigation in the ECIR (Supra), but were subsequently released on bail pursuant to the orders passed by the competent court of law/High Court. (x) It is further stated that upon completing the investigation in the ECIR supra, the respondent-Directorate filed a complaint before the court of Special Judge, Anti Corruption Bureau (CBI) being Designated Court for the purposes of Prevention of Money-laundering Act, 2002 (for short PMLA), wherein the petitioners came to be arrayed as accused Nos. 2 and 3 and the above named Mohammad Shafi Dar as accused No. 1 and alleged to have committed offence under Section 44 and 45 read with Section 70 of the PMLA. 3. The petitioners herein have maintained the instant petition on the following grounds: a) Because the registration of impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the conditions exist in the present case. The complaint is, thus, liable to be quashed. g) That the Hon'ble High Court has already taken cognizance of the matter and stayed the proceedings in the complaint at the behest of so-called main accused, Mr. Mohammed Shafi Dar. Under the circumstances, proceedings cannot be continued against petitioners, which is neither practicable nor feasible. Copy of the order passed by the Hon'ble High Court at the first instance as well as order whereby said order has been extended till further orders are annexed herewith and collectively marked as Annexure III. 4. Reply to the petition has been filed by the respondent-Directorate, wherein the petition is being opposed, inter alia, on the premise that the petitioners herein entered into a conspiracy with the then Chairman of the Bank besides others while creating a non-existent fictitious Society in the year 2018-19 for obtaining a loan of Rs. 300 crores from the Bank on a false pretext of developing and establishing a satellite township at Shivpora, Srinagar and that an amount of Rs. 250 crores was sanctioned as loan by the then Chairman of the Bank on 25.04.2019, which loan was arran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the purpose of PMLA. B. CRM(M) No. 418/2024 (i) In the instant petition, the petitioner herein claims to have been elected as Chairman of the Bank in the month of December 2018 for a period of three years to expire in December 2021, however, alleges to have been dislodged on 15.05.2020 at the instance of a powerful team of bureaucrats working in the Government of J&K purportedly in exercise of its power under the J&K Co-operative Act, 1989 and got the FIR supra registered against the petitioner herein, in the capacity as Chairman of the Bank along with other accused persons for having sanctioned a loan allegedly in favour of a non-existent Society and that the removal of the petitioner and the elected board of Bank came to be questioned before the High Court in WP(C) No. 2775/2021, which came to be decided on 15.07.2022 holding that the nominated Board of Directors of the Bank is entitled to remain in position and legitimately run the affairs and management of the Bank till 04.10.2022 and that the nominated Board of Directors shall cease to be in existence after 04.10.2022 and that it is incumbent upon the Government or the Registrar to reconstitute the Board of Directors on o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the sake of brevity. Heard learned counsel for the parties and perused the record. 8. Before proceeding further in the matter, it would be advantageous and appropriate to refer to the ambit and scope of inherent power vested in this Court saved under Section 482 Cr.P.C, qua the quashing of a complaint/FIR. A reference in this regard to the judgment of Apex Court passed in case titled State of Haryana and others vs. Bhajan Lal and others reported in 1992 Supp (1) SCC 335 would be relevant, wherein in para 102, following has laid down: "102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of administration of justice on the principle quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. It would be an abuse of process of the court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his court saved under Section 482 Cr. P.C. does not confer any new power on the High Court, in that, it only saves the inherent power of this Court, which the court possessed before enactment of the Code of Criminal Procedure and it envisages three circumstances under which the inherent jurisdiction may be exercised, namely- a) To give effect to an order under the Code, b) To prevent abuse of process of court, and c) To otherwise secure the ends of justice. 9. It is also significant to mention here that the consistent view of the Constitutional Courts that it is neither possible not desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction and no legislative enactment dealing with procedure can provide for all cases that may possibly arise, thus suggesting that the courts have inherent powers apart from provisions of law which are necessary for proper discharge of functions and duties imposed upon them by law. That is the doctrine which finds expression in Section 482 Cr. P.C. which merely recognises and preserves the inherent power of the High Court to do the right and to undo the wrong in the course of administration of justice on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owingly assisted or knowingly is a party or 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 (a) 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 "whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof executed an irrevocable power of attorney in favour of the Chairman of the Society i.e. petitioner 1 in CRM(M) No. 484/2024 to facilitate the transfer of land in favour of the Society, who in turn executed a perpetual lease in favour of the Society represented by the petitioner 2 in CRM(M) No. 484/2024, whereafter, the said lease hold rights had been mortgage by the Society with the Bank in lieu of the loan of Rs. 223 crores sanctioned by the Bank through its Chairman being petitioner in CRM(M) No. 418/2024, which loan amount had been transferred/credited in the Bank accounts of 18 land owners whose land was proposed to be utilised by the Society for developing the satellite township by the Society. 13. Perusal of the record tends to show that initially the investigation in the matter was initiated by the ACB upon registration of FIR 4/2020 (Supra) under the J&K Prevention of Corruption Act, wherein crux of the composite allegations against the petitioners in both the petitions was that the Society was falsely created which succeeded in obtaining the loan from the Bank on a false premise, which loan had been sanctioned by the Bank illegally and fraudulently without followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence of "proceeds of crime" pursuant to the predicate offence is sine qua non for commission of offence of money-laundering, to be precise that if there is no money or property, a question of money-laundering would not arise. A reference in this regard to the judgment of the Apex Court passed in case titled as Vijay Mananlal Choudhary and others vs. Union of India and others reported in 2022 SCC Online SC 929 would be relevant, wherein at para 283 and 284 following has been held:- "283. Even though, the 2002 Act is a complete Code in itself, it is only in respect of matters connected with offence of money-laundering, and for that, existence of "proceeds of crime" within the meaning of Section 2 (1) (u) of the Act is quintessential. Absent existence of "proceeds of crime", as aforesaid, the authorities under the 2002 Act cannot step in or initiate any prosecution. 284. In other words, the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of ""proceeds of crime"". Only if that belief is further supported by tangible and credible e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the petitioners herein under said circumstances cannot but said to be not only abuse of process of law, but as well an attempt to overreach the orders of the Apex Court, in that, the transaction between the land owners and the Society essentially has been treated as a genuine transaction by the Apex Court while ordering release of money in question in favour of the land owners. 17. Thus, what emanates from the above is that none of the ingredients of the offence of money-laundering against the petitioners herein is found to be existing in the present case, more so in view of the fact that an act of mortgaging the property with the Bank for securing the loan that is said to have been obtained fraudulently without following Banking rules and regulations cannot by any stretch of imagination be termed as money-laundering and that the act of the petitioners herein of having fraudulently secured loan for development and establishment of satellite township by submitting false documents, at the most makes out a case for forgery or Bank fraud. 18. For what has been observed, considered and analysed hereinabove, the instant petitions succeed, as a consequence whereof, the impugned co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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