TaxTMI 
TaxTMI 
2025 (3) TMI 1250
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.... 3/2021, in which following three entities/individuals have been arrayed as accused: (i) Peoples International & Services Pvt. Ltd. (PISPL) (ii) S.N. Vijaywargiya (Director from 22.7.2008) (iii) Ram Vilas Vijaywargiya (Ex-Director) from 22.7.2008 to 11.8.2015) Second complaint was registered vide Complaint No. 10/2021 in which following three entities/individuals were arrayed as accused: (i) PGH International Pvt. Ltd (ii) S.N. Vijaywargiya (Director from 19.5.2003) (iii) Ram Vilas Vijaywargiya (Ex-Director) (from 19.5.2003 to 11.8.2015) and third complaint was registered vide Complaint No. 12/2021 in which following entities/individual were arrayed as accused. (i) M/s Peoples General Hospital Pvt. Ltd. (PGHPL) (ii) S.N. Vijaywargiya (Managing Director) (iii) Ishtiyaq Hussain Siddiqui (whole time Director) (iv) Ram Vilas Vijaywargiya (whole time Director liable upto 11.8.2015) 3. The aforesaid complaint cases have been registered against the applicant, four companies, one Public Trust and two other individuals. The role of the present applicant as detailed in Paragraph 24.7 of the ECIR/8/INSZO/2022 reveals that the present applicant is a civil engineer. He ....
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....tands in a narrow compass, inasmuch as, the present applicant along with other co-accused was being prosecuted on the strength of the complaint filed under Section 447 of the Companies Act, 2013. The said proceedings so initiated by the Registrar of the Companies were culminated in filing of a complaint against the applicant under Section 3 & 4 of the PMLA and as the complaint for the predicate offence i.e. Section 447 of the Companies Act, 2013 has already been quashed by this Court, the prosecution of the applicant under Section 3 & 4 of the PMLA, 2002 is an exercise in futility and, therefore, the impugned complaint deserves to be quashed. It is further contended that the order dated 20.12.2024 passed by the coordinate Bench in M.Cr.C. No. 6919 of 2024 has not been assailed by the Registrar of the Companies before the Apex Court as on date, therefore, the said order has attained finality. The order dated 20.12.2024 deals with the entire aspect of the matter. It is further contended that one of the co-accused had approached the Gwalior Bench of this Court by filing a petition under Section 482 of Cr.P.C. vide M.Cr.C. No. 41956 of 2023 [ M/s Peoples General Hospital Private Ltd. V....
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....edings under Sections 3 & 4 of the PMLA, 2002 are consequential to the proceedings pertaining to commission of a predicate offence. It is also contended that in order to lodge the prosecution, the foundational ingredients of statutory provisions should be directly applicable and when no such provision is applicable, the proceedings can be quashed. The reliance has been placed by the counsel for the applicant on a decision of a Division Bench of this Court in M.Cr.C. No. 492 of 2022 (D.K. Khare Vs. State of M.P. ) dated 7.5.2022. Thus, it is submitted that in view of the aforesaid, the impugned complaint is liable to be quashed. 6. Conversely, learned counsel for the respondent submits that the present petition filed by the applicant is grossly misconceived and is liable to be dismissed. It is submitted that the applicant is guilty of "Suppressio veri and suggestio falsi". The applicant, while filing the petition M.Cr.C. No. 6919 of 2024 challenging the complaint under Section 447 of the Companies Act did not bring all the aspect to the notice of the co-ordinate Bench of this Court and the co-ordinate Bench of this Court proceeded to quash the complaint filed under Section 447 of t....
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.... confiscation under section 8 or for the trial of the money-laundering offence, unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court, it shall be presumed that the remaining transactions form part of such inter-connected transactions. 7. It is contended by the counsel for the respondent that it is the burden of the accused person to prove that the proceeds of crime are not involved in money-laundering and such statutory onus is required to be discharged by the accused person. In the present case that stage is yet to come and, therefore, at this pre-mature stage, no interference is warranted. There was continued cause of action and as per the definition of money-laundering as detailed in Section 3 of the PMLA, 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. It is, thus, contended that similar petition filed by Peoples General Hospital Pvt. Ltd. (PGHPL) of which the present applicant is also a Director, has already been dismissed by the Gwalior Bench of this Court vide order dated 3.11.2023 passed in M.Cr.C. No. 4....
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....ordinate Bench of this Court at the time of hearing of M.Cr.C. No. 6919 of 2024, inasmuch as, the Directorate of Enforcement was not a party to the said litigation. Even the bail application so filed by the applicant was dismissed by this Court and this Court while dealing with the bail application of the applicant had elaborately dealt with the aspect that involvement of the applicant was apparent and accordingly as there was prima facie case, this Court had declined to accede to the prayer for grant of bail to the applicant and accordingly, the bail application was dismissed. Thus, the applicant is not entitled for any relief merely on the ground of quashment of the complaint under Section 447 of the Companies Act, therefore, this petition be dismissed. 9. No other point is argued or pressed by the counsel for the parties. 10. Heard submissions advanced on behalf of the parties and perused the record. 11. The main question which has cropped up in the present petition is that if the complaint in regard to a scheduled offence has been quashed, the complaint under Section 3 & 4 of the PMLA, 2002 pertaining to some scheduled offence is maintainable or not? 12. Before dealing with....
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....a scheduled offence. 14. The expression "scheduled offence" has been defined in Section 2(1)(y). This provision assumes significance as it has direct link with the definition of "proceeds of crime". In that, the property derived or obtained as a result of criminal activity relating to notified offences, termed as scheduled offence, is regarded as tainted property and dealing with such property in any manner is an offence of money-laundering. The Schedule is in three parts, namely, Part A, B and C. Part A of the Schedule consists of 29 paragraphs. These paragraphs deal with respective enactments and the offences specified thereunder which are regarded as scheduled offences. Similarly, Part B deals with offence under the Customs Act specifically and Part C is in relation to offence of cross-border implications. 15. To deal with the aforesaid question, which requires pensive consideration by this Court, it would be necessary to pave way in the scheme of PMLA, 2002. As per the object of the PMLA, 2002 the same has been enacted to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith. Sec....
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....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 of projecting it as untainted property or claiming it as untainted property in any manner whatsoever. 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 "which may extend to seven years", the words "which may extend to ten years" had been substituted. 18. A perusal of aforesaid Section 3 reveals that whosoever directly or indirectly attempted to indu....
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.... the country, then the property equivalent in value held within the country and by further amendment vide Act 13 of 2018, it also added property which is abroad. By further amendment vide Finance (No. 2) Act, 2019, Explanation has been added which is obviously a clarificatory amendment. That is evident from the plain language of the inserted Explanation itself. The fact that it also includes any property which may, directly or indirectly, be derived as a result of any criminal activity relatable to scheduled offence does not transcend beyond the original provision. In that, the word "relating to" (associated with/has to do with) used in the main provision is a present participle of word "relate" and the word "relatable" is only an adjective. The thrust of the original provision itself is to indicate that any property is derived or obtained, directly or indirectly, as a result of criminal activity concerning the scheduled offence, the same be regarded as proceeds of crime. In other words, property in whatever form mentioned in Section 2(1)(v), is or can be linked to criminal activity relating to or relatable to scheduled offence, must be regarded as proceeds of crime for the purpose....
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....liable for prosecution under the provisions of the PMLA, 2002. The Apex Court further held that the explanation, which is added to Section 2(1)(u) and which provides for definition of proceeds of crime, does not travel beyond the intent of tracking and reaching up to the property derived or obtained directly or indirectly as a result of criminal activity relating to a schedule offence. The Apex Court in Para- 109 observed as under:- 109. 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 that 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 criminal activity rela....
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.... 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 court concerned trying the scheduled offence to pronounce on that matter. 24. The Apex Court in Para 382.8 has also observed as under:- 382.8. The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money laundering. The authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. 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 ....
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....ons contained in FIR, the court finds considering the same to be true at its face value, the offence registered is not formulated and prosecution can be considered to be malicious prosecution, same can be quashed." 28. From the aforesaid, it is clear that the co-ordinate Bench of this Court concluded that the prosecution launched under Section 447 of the Companies Act as was an attempt to apply statutory provision with retrospective effect, which was not permissible and therefore, concluded that the prosecution was illegal. Even the co-ordinate Bench proceeded ahead to label the prosecution to be malicious. The Court also concluded that upon due consideration of the allegations as set out in the FIR, if the offence registered is not formulated and the prosecution is considered to be malicious, the proceedings can be quashed. While making the aforesaid observations, the co-ordinate Bench proceeded to quash the complaint filed under Section 447 of the Companies Act vide complaint case No. SC/12/24. The said order so passed by the co-ordinate Bench of this Court has not been assailed before the Apex Court as of now, therefore, the same is holding the field. As the very prosecution of....