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2013 (12) TMI 1588 - HC - Money LaunderingAttachment proceedings under PMLA - Proceeds of crime or not - Overriding provision of PMLA over Income Tax Act - Seizure of amount in bank account by the Income Tax Authority - Untainted money - Burden of Proof - HELD THAT- The ambit and scope of trial under the PMLA is totally different from that of the Indian Penal Code. - In case of offences under the Indian Penal Code under the criminal jurisprudence, it is for the prosecution to prove the guilt of the accused beyond reasonable doubt. But in a proceeding under the PMLA, the onus is on the accused to prove that the properties seized are untainted and not the proceedings of any crime. The facts of the present case were considered and the provisions of the PMLA, being a Special Statute, it has overriding effect on the Income Tax Act and further considering the huge amounts of money, which are lying in the bank in the accounts of the petitioners as well as the nature of proceeding under the PMLA, more specifically, section 24 which provides that burden of proof is upon the person who has committed crime under Section-3 of PMLA and that the proceeds of crime are untainted property shall be on the accused. Thus Court opined that even if the petitioner no. 2 has been acquitted of the charges framed against him in the sessions trial, a proceeding under the PMLA 2002 cannot amount to double jeopardy, where the procedure and nature of proof are totally different from a criminal proceeding under the Indian Penal Code. Decision on this case Union of India v. Hassan Ali Khan and another, while dealing with an order, by which the accused persons were granted bail by the High Court 2011 (9) TMI 847 - SUPREME COURT was observed. It may be made clear that the question as to whether the inherent power available under section 482 Cr.P.C. can be exercised for quashing a proceeding initiated under the IMLA or not, is left open. In the result, the CRLMC, being devoid of merit, stands dismissed.
Issues Involved:
1. Legality and jurisdiction of proceedings under Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA). 2. Validity of search and seizure operations and attachment of properties under the PMLA. 3. Impact of parallel proceedings under the Income Tax Act on the PMLA proceedings. 4. Implications of acquittal in related criminal cases on PMLA proceedings. 5. Application of double jeopardy principle to PMLA proceedings. Issue-wise Detailed Analysis: 1. Legality and Jurisdiction of Proceedings under Section 3 of PMLA: The petitioners sought quashing of the proceedings initiated under Section 3 of the PMLA, arguing that the proceedings were illegal, arbitrary, and without jurisdiction. The court examined the basis of the proceedings, which were initiated following the arrest and detention of petitioner no. 2 for involvement in large-scale smuggling of iron ores and extortion. The Directorate of Enforcement registered an Enforcement Case Information Report (ECIR) against the petitioner for offenses under Sections 307/387 IPC and Sections 25 and 27 of the Arms Act, which are scheduled offenses under the PMLA. The court found that the initiation of proceedings under the PMLA was valid and within jurisdiction. 2. Validity of Search and Seizure Operations and Attachment of Properties: The petitioners challenged the search and seizure operations and the attachment of properties, arguing that they were conducted without proper authorization and were contrary to law. The court reviewed the provisions of Sections 5 and 17 of the PMLA, which outline the procedures for attachment and search and seizure. The court noted that the retention of amounts in different bank accounts of the petitioners was confirmed by the adjudicating authority under the PMLA. The court found no illegality in the search and seizure operations and attachment of properties, as they were conducted in accordance with the provisions of the PMLA. 3. Impact of Parallel Proceedings under the Income Tax Act on PMLA Proceedings: The petitioners argued that parallel proceedings under the Income Tax Act and Wealth Tax Act were pending and that the PMLA proceedings should be stayed until the final disposal of those proceedings. The court, however, held that the PMLA, being a special statute, has an overriding effect on the Income Tax Act. The court emphasized that the nature of proceedings under the PMLA is distinct and independent from those under the Income Tax Act. Therefore, the court found no basis to stay the PMLA proceedings. 4. Implications of Acquittal in Related Criminal Cases on PMLA Proceedings: The petitioners contended that the acquittal of petitioner no. 2 in the related criminal case should lead to the quashing of the PMLA proceedings, as it would amount to double jeopardy. The court examined the judgment of the Assistant Sessions Judge, which acquitted petitioner no. 2 of the charges under the IPC and Arms Act. The court noted that the scope and ambit of trial under the PMLA are different from those under the IPC. Under the PMLA, the burden of proof lies on the accused to prove that the properties are untainted. Therefore, the court held that the PMLA proceedings do not amount to double jeopardy, despite the acquittal in the criminal case. 5. Application of Double Jeopardy Principle to PMLA Proceedings: The court addressed the argument of double jeopardy, clarifying that the principle does not apply to PMLA proceedings due to the distinct nature and procedural differences between PMLA and IPC trials. The court referred to the Supreme Court's observation in Union of India v. Hassan Ali Khan, which emphasized that the burden of proof under Section 24 of the PMLA shifts to the accused to prove that the proceeds of crime are untainted. Consequently, the court concluded that there was no double jeopardy in allowing the PMLA proceedings to continue. Conclusion: The court found no merit in the petitioners' arguments and dismissed the Criminal Miscellaneous Case, holding that the proceedings under the PMLA were valid and lawful. The court did not quash the proceedings and left open the question of whether inherent power under Section 482 Cr.P.C. can be exercised to quash a proceeding initiated under the PMLA.
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