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2019 (10) TMI 1408 - HC - Money LaunderingJurisdiction of proceedings initiated by the respondents under PMLA - money-laundering and siphoning of funds - scheduled offences or not - HELD THAT - It is beyond the cavil of any debate that the offence of criminal conspiracy punishable under section 120- B RPC shall be deemed to be a scheduled offence corresponding to Section 120-B of IPC which figures on top of Part A of the Schedule appended to the PMLA. The argument of learned counsel for the petitioner that Section 120- RPC cannot be taken to be a scheduled offence is an argument in despair and, therefore, cannot be accepted - the definition of corresponding law as given in clause (ia) of Sub- section 1 of Section 2 of PMLA inserted by Act 2 of 2013 is required to be restricted to the expression used in the Amendment Act 2 of 2013 which introduced various new provisions in the PMLA. It is, thus, clearly demonstrable that the offence of criminal conspiracy defined under section 120-A RPC and punishable under section 120- B RPC is a deemed scheduled offence for the purpose of Section 3 read with clause (u) of Sub-section 1 of Section 2 of PMLA. It is beyond the pale of any doubt that offence of criminal conspiracy punishable under Section 120- B IPC is a stand alone offence and figures on top of Part A of the Schedule of PMLA. That being the position, it is difficult to accept the plea that unless the offence of criminal conspiracy is committed in conjunction with a scheduled offence, it cannot be taken to be a scheduled offence for the purpose of Section 3 read with clause (u) of Sub- section 1 of Section 2 of PMLA. Undoubtedly, the offence of money- laundering relates to the process or activity connected with the proceeds of the crime including its concealment possession, acquisition etcetra and proceeds of crime would mean any property derived or obtained directly or indirectly as a result of criminal activity relating to scheduled offence. Once Section 120- B is held to be a distinct, independent and stand alone offence and is one of the scheduled offences under PMLA, any property derived or obtained by any person directly or indirectly as a result of criminal activity relating to the offence of conspiracy would come within the definition of proceeds of crime . No fault could be found with the investigation or action initiated by the respondents including issuance of summons in exercise of powers conferred by Section 50(2) and (50(3) of PMLA - Petition dismissed.
Issues Involved:
1. Jurisdiction of the Directorate of Enforcement under the PMLA. 2. Applicability of Section 120-B RPC as a scheduled offence under PMLA. 3. Interpretation of 'corresponding law' and its impact on PMLA provisions. 4. Stand-alone nature of Section 120-B IPC/RPC and its implications. Issue-wise Analysis: 1. Jurisdiction of the Directorate of Enforcement under the PMLA: The petitioners challenged the jurisdiction of the Directorate of Enforcement, arguing that the designated authority under PMLA lacks the power to initiate proceedings against them since the offences they are charged with (Sections 406, 409, and 120-B RPC) are not scheduled offences under PMLA. They contended that the commission of a scheduled offence is essential to attract PMLA's applicability. 2. Applicability of Section 120-B RPC as a scheduled offence under PMLA: The respondents argued that Section 120-B RPC corresponds to Section 120-B IPC, which is a scheduled offence under PMLA. They asserted that the petitioners were involved in money laundering and siphoning funds from the J&K Cricket Association, as revealed by statements recorded during the investigation. The court noted that Section 120-B IPC is a scheduled offence under PMLA, and by virtue of Section 2(2) of PMLA, Section 120-B RPC should be construed as a corresponding law, making it a scheduled offence as well. 3. Interpretation of 'corresponding law' and its impact on PMLA provisions: The court examined the definition of 'corresponding law' introduced by the Amendment Act 2 of 2013, which links Indian law provisions with foreign laws. It clarified that the term 'corresponding law' in Section 2(2) of PMLA, existing since the statute's inception, should not be interpreted using the definition introduced in 2013. Instead, 'corresponding law' in Section 2(2) refers to laws in force in areas where the Indian Penal Code does not extend, such as the RPC in Jammu and Kashmir. 4. Stand-alone nature of Section 120-B IPC/RPC and its implications: The court emphasized that the offence of criminal conspiracy under Section 120-B IPC/RPC is an independent and stand-alone offence. Citing various judgments, including those of the Supreme Court, it concluded that even if the predicate offence is not a scheduled offence, Section 120-B IPC/RPC remains a scheduled offence for the purpose of PMLA. Therefore, any property derived from criminal conspiracy would be considered 'proceeds of crime,' and activities connected with such proceeds would constitute money laundering under Section 3 of PMLA. Conclusion: The court dismissed the petition, holding that the Directorate of Enforcement has jurisdiction to investigate and take action under PMLA, including issuing summons. The offence of criminal conspiracy under Section 120-B RPC is deemed a scheduled offence, and the petitioners' involvement in money laundering activities justified the proceedings initiated against them. The court's interpretation of 'corresponding law' and the stand-alone nature of Section 120-B IPC/RPC reinforced the applicability of PMLA in this case.
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