2016 (5) TMI 1385 - HC - Money Laundering

Prevention of Money-Laundering - Held that - Petitioner has been able to make out a good case for quashing of the summoning order for the simple reason that from the allegations made in the complaint, no offence under section 3 of the Money-Laundering Act is made out against the petitioner in view of the fact that the petitioner has been discharged from the scheduled offences and except the present complaint in which the impugned summoning order has been passed, no case is pending against him. The learned Sessions Judge while passing the impugned summoning order has not taken into account this fact that the petitioner has already been discharged of all the scheduled offences. The properties which were allegedly acquired by the petitioner during crime period, were also not acquired during the offence period, except the one of which sufficient explanation has been given by the petitioner. There was, thus, no sufficient ground to have summoned the petitioner for facing trial under section 3 of the Prevention of Money-Laundering Act. It is a settled law that summoning of a person to face trial in respect of an offence, is a serious matter and the court should examine in detail and record a finding that a person, prima facie, is guilty of an offence. In the present case, the opposite parties concealed the material fact in the complaint that the petitioner had already been discharged from the scheduled offence and no trial was pending against him. The impugned summoning order was passed by the learned Sessions Judge assuming that the trial in respect of the schedule offence was pending against him while as a matter of fact, no such trial was pending on the date when the complaint was filed and the summoning order was passed. The impugned summoning order therefore suffers from manifest error of law and is liable to be quashed.

Issues Involved:
1. Quashing of the summoning order under Section 3/4 of the Prevention of Money-Laundering Act, 2002.
2. Discharge from scheduled offences and its impact on prosecution under the Prevention of Money-Laundering Act.
3. Validity and implications of the amendment to Section 3 of the Prevention of Money-Laundering Act, 2002.
4. Attachment of property under Section 5 of the Prevention of Money-Laundering Act.

Issue-wise Detailed Analysis:

1. Quashing of the Summoning Order under Section 3/4 of the Prevention of Money-Laundering Act, 2002:
The petitioner sought to quash the order dated 30.04.2015, summoning him to face trial under Section 3/4 of the Prevention of Money-Laundering Act, 2002. The Sessions Judge, Lucknow, had issued the summoning order based on a complaint alleging that the petitioner was involved in embezzling government funds through bearer cheques and acquiring properties from the proceeds of crime. The petitioner argued that since he was discharged from all scheduled offences, the prosecution under the Money-Laundering Act could not proceed.

2. Discharge from Scheduled Offences and its Impact on Prosecution under the Prevention of Money-Laundering Act:
The petitioner was discharged from all scheduled offences by the trial court, and this discharge was upheld by the High Court. The petitioner contended that without a scheduled offence, there could be no "proceeds of crime," and thus, no case under Section 3 of the Prevention of Money-Laundering Act could be made. The court noted that the discharge order was not based on technical grounds but on merits, and there was no evidence of the petitioner receiving proceeds of crime during the alleged period of embezzlement.

3. Validity and Implications of the Amendment to Section 3 of the Prevention of Money-Laundering Act, 2002:
The amendment to Section 3, effective from 03.01.2013, broadened the scope of the offence of money laundering to include possession, acquisition, and projection of proceeds of crime as untainted property. The Union of India argued that the amendment allowed prosecution for money laundering even if the individual was not charged with a scheduled offence. However, the court referred to various judgments, including those from the Karnataka High Court and Delhi High Court, concluding that the prosecution under the Money-Laundering Act is contingent upon the commission of a scheduled offence. If a person is acquitted or discharged from scheduled offences, their prosecution under the Money-Laundering Act cannot sustain.

4. Attachment of Property under Section 5 of the Prevention of Money-Laundering Act:
The authorities had attached properties allegedly acquired by the petitioner during his tenure as Chairman. The petitioner provided evidence that most properties were acquired before the period of the alleged crime, and the purchase of one property during the crime period was through a legitimate agreement made in 2009. The court observed that the attachment could be provisional and independent of the prosecution for money laundering. However, the discharge from scheduled offences and lack of evidence of proceeds of crime weakened the basis for attachment.

Conclusion:
The court found that the summoning order was issued without considering the petitioner's discharge from scheduled offences. The properties in question were acquired legitimately, and there was no evidence of proceeds of crime. Consequently, the summoning order dated 30.04.2015 was set aside. The court emphasized the need for a detailed examination before summoning an individual to face trial, noting that the prosecution had concealed material facts about the petitioner's discharge from scheduled offences. The application under Section 482 Cr.P.C. was partly allowed, quashing the summoning order.

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