2021 (2) TMI 1185 - HC - Money Laundering

Money Laundering - proceeds of crime - diversion of funds during the demonetisation period - conversion of old currency notes into new currency notes - the trial of the offences under the PMLA can proceed or not, when the FIR with regard to the schedule offence was closed for want of evidence and in the absence of connected evidence with a crime of schedule offence - prosecution for offences under Sections 3 and 4 of the PMLA - HELD THAT - From a reading of the provisions in the PMLA that though the commission of schedule offence is a fundamental pre-condition for initiating proceedings under the Act, ''the offence of money laundering is independent of the schedule offences'', the scheme of the PMLA indicates that it deals only with laundering of money acquired by committing the schedule offence. In other words, the PMLA deals only with the process or activity with the ''Proceeds of the Crime'' including its concealment, possession, acquisition or use. So that in the Act under Section 44 explanation (i) clearly indicated that the Special Court while dealing with the offence under the Act shall not be dependent upon any orders passed, in respect of the schedule offence. Another argument of the learned counsel for the petitioners that the observation of the trial Court, while granting bail, that there is no material to connect the petitioner with the offence will not be enough to quash the case which has to be decided only on legal evidence let in by the respondent. Therefore, we find that the argument of the learned counsel for the petitioners in this aspect is legally unsustainable and is accordingly rejected. The explanation to Section 44(1) of the PMLA is complete answer to the statement of the learned counsel for the petitioners. The distinction that the counsel for the petitioners sought to make for distinguishing the law laid down by this Court in VGN Developers 2019 (10) TMI 1236 - MADRAS HIGH COURT is a distinction without a difference. Considering the above fact, we should not forget that money laundering, being an economic offence, poses a serious threat to the National economy and National interest and committed with cool calculation and deliberate design and with motive of personal gain regardless of the consequences to the society. Petition dismissed.

Issues Involved:
1. Quashing of proceedings in C.C. No.2 of 2017 under the Prevention of Money Laundering Act (PMLA).
2. Validity of prosecution under PMLA after closure of FIRs related to scheduled offences.
3. Argument of double jeopardy and pre-mature trial under PMLA.
4. Connection of "proceeds of crime" to scheduled offences.
5. Applicability of prior judgments and legal precedents.

Issue-wise Detailed Analysis:

1. Quashing of Proceedings in C.C. No.2 of 2017 under PMLA:
The petitioners sought to quash the proceedings in C.C. No.2 of 2017 on the grounds that the scheduled offences under the Indian Penal Code (IPC) and Prevention of Corruption Act (PCA) were closed due to lack of evidence. They argued that since the scheduled offences were not established, the charges of money laundering under PMLA could not survive. The court, however, held that the offence of money laundering is independent of the scheduled offences and that the PMLA deals with the process or activity involving "proceeds of crime," including its concealment, possession, acquisition, or use.

2. Validity of Prosecution under PMLA after Closure of FIRs Related to Scheduled Offences:
The petitioners contended that the trial under PMLA could not proceed because the FIRs related to the scheduled offences were closed. The court referred to Section 44 of the PMLA, which clarifies that the jurisdiction of the Special Court while dealing with offences under the PMLA is not dependent on any orders passed in respect of the scheduled offences. The court emphasized that the PMLA proceedings could continue independently of the closure of the FIRs for the scheduled offences.

3. Argument of Double Jeopardy and Pre-mature Trial under PMLA:
The petitioners argued that proceeding with the trial under PMLA would amount to double jeopardy and would be premature without establishing the scheduled offences. The court rejected this argument, stating that the trial under PMLA is independent and does not require the prior establishment of scheduled offences. The court also noted that the principle of double jeopardy did not apply in this context.

4. Connection of "Proceeds of Crime" to Scheduled Offences:
The petitioners claimed that no "proceeds of crime" were identified in connection with the scheduled offences and that the entire proceedings under PMLA lacked substance. The court found that significant amounts of cash and gold were seized from the petitioners during the demonetization period, which indicated potential money laundering activities. The court held that the presence of "proceeds of crime" justified the continuation of the PMLA proceedings.

5. Applicability of Prior Judgments and Legal Precedents:
The petitioners relied on several prior judgments to support their case, arguing that the closure of FIRs for the scheduled offences should lead to the quashing of the PMLA proceedings. The court, however, distinguished the present case from the cited judgments, emphasizing that the PMLA's provisions allow for independent proceedings. The court referred to the explanation in Section 44(1) of the PMLA and previous decisions, such as in the case of VGN Developers Pvt Ltd, to support its conclusion that the PMLA proceedings could continue independently.

Conclusion:
The court dismissed the Criminal Original Petitions, finding no merit in the arguments presented by the petitioners. The court emphasized the independent nature of PMLA proceedings and the serious threat posed by money laundering to the national economy and interest. Consequently, the connected miscellaneous petitions were also closed.

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