2015 (8) TMI 1439 - HC - Money Laundering

Maintainability of petition - Jurisdiction of respondent to issue summons - Prevention of Money-Laundering Act, 2002 - Held that - The appellant has no case that the respondent is not a statutory authority conferred with the power of investigation under the provisions of Prevention of Money-Laundering Act, 2002. His only objection is that the facts of the case would not attract the provisions of Prevention of Money-Laundering Act as it stood originally. The matter involves a core question as to whether the relevant date is the date of acquisition of illicit money or the date on which such money is being processed for projecting it untainted. The question cannot be decided merely on the basis of the affidavit filed by the appellant. The respondent should be permitted to conduct investigation to arrive at a definite finding. The jurisdiction in a case of this nature is a mixed question of law and fact and the same cannot be decided on the basis of half baked materials produced by the appellant. Petition dismissed being not maintainable.

Summary

Issues:
1. Jurisdiction of the respondent to issue summons under the Prevention of Money-Laundering Act based on the inclusion of Section 420 of IPC as a Scheduled Offence in 2009.
2. Applicability of the Prevention of Money-Laundering Act to a case involving allegations from 2007-2008.
3. Interpretation of the term "money-laundering" under the Prevention of Money-Laundering Act.
4. Authority of the respondent to investigate and make determinations under the Act.

Analysis:
1. The appellant challenged the summons issued by the Directorate of Enforcement under the Prevention of Money-Laundering Act, arguing that since Section 420 of IPC was included as a Scheduled Offence only in 2009, the respondent lacked jurisdiction to initiate proceedings. The appellant contended that retrospective application of penal provisions is not permissible.
2. The Central Bureau of Investigation had registered a case against the appellant in 2013 for cheating Bank of Baroda, leading to the initiation of proceedings under the Prevention of Money-Laundering Act by the respondent. The appellant objected to the applicability of the Act to events from 2007-2008, emphasizing the timing of the alleged offense.
3. The Prevention of Money-Laundering Act defines "money-laundering" as any process connected with the proceeds of crime to project it as untainted property. The Act aims to prevent money-laundering and confiscate illicitly obtained property, with provisions for investigation by designated authorities.
4. The respondent, as a statutory authority under the Prevention of Money-Laundering Act, has the power to investigate and determine if money-laundering has occurred. The appellant's challenge was not about the authority of the respondent but rather the application of the Act to the specific circumstances of the case.

Conclusion:
The Court upheld the respondent's jurisdiction to issue summons under the Prevention of Money-Laundering Act, emphasizing the need for a thorough investigation to determine if the appellant was involved in money-laundering activities. The Court highlighted the distinction between the date of acquiring illicit funds and the process of projecting them as untainted, indicating that a definitive finding requires detailed factual analysis. The dismissal of the writ petition was supported, underscoring the complexity of the legal and factual issues involved in the case.