2022 (2) TMI 1418 - HC - Money Laundering

Money Laundering - Property acquired from proceeds of crime or not - involvement in an international syndicate of laundering the money generated out of drug trafficking in Australia and other countries - continuation of proceeding under PMLA. HELD THAT - The offence of money laundering under the PMLA is therefore, layered and multi-fold and includes the stages preceding and succeeding the offence of laundering money as well. The language of Section 3 clearly implies that the money involved in the offence of money laundering is necessarily the proceeds of crime, arising out of a criminal activity in relation to the scheduled offences enlisted in the Schedule of the Act. Hence, the essential ingredients for the offence of Section 3 of the PMLA become, first, the proceeds of crime, second, proceeds of crime arising out of the offences specified in the Schedule of the Act and third, the factum of knowledge while commission of the offence of money laundering. In the present matter, at the initial stage of proceedings, the Respondents were charged for offences under Section 21/25/29 of the NDPS Act and 420/468/471/120B of the IPC, however, the learned Additional Sessions Judge, Amritsar, observed that material produced before the Court as well as the allegations made against the Respondents were largely made upon suspicion. Though certain material, properties and cash, were recovered and attached/seized but the fact that such properties were obtained through proceeds of crime of drug trafficking could not be established. In view of the observation that the no scheduled offence was made out against the Respondents, this Court finds that an investigation and proceedings into the PMLA could not have been established against them at the first instance. A bare reading of the provision of the Cr.P.C. suggests that the Court shall limit itself to the findings, sentence or order passed by the subordinate Court, against which the Revisionist is seeking relief before the Courts concerned, and shall not go beyond the analysis and observations made by the subordinate court. By extension, a limitation and bar is, hence, set out on the scope of the powers that may be exercised by the concerned Court under the provision which precludes the Revisional Court to go into the enquiry of evidence and submissions made before the subordinate Court at the time of passing of the impugned Order, against which the revision is sought. In the present matter, the Petitioner had filed a Supplementary Complaint based on certain additional documents received by it against the Respondents, including, the Prosecution Report of Commonwealth Director of the Public Prosecution by the Australian Federal Police. The Petitioner based its findings against the Respondents on the said documents and alleged certain facts based on the apprehension that the amount being transferred from the business accounts of the Respondents were proceeds of drug trafficking and hence, was laundered money. Keeping in view all the material, including the abovementioned document, the Additional Sessions Judge was not satisfied that the apprehension and suspicion of the Petitioner was well founded and even for the offences under the NDPS, no recovery was brought on record - It was observed that the additional evidence did not disclose prima facie any material to infer that the accused persons, Respondents herein, were involved in the commission of the offences alleged against them. Thus, this Court finds force in the argument that since no offences were made out against the Respondents as specified in the Schedule of the PMLA, the offence under Section 3/4 of the PMLA also, do not arise as the involvement in a scheduled offence is a pre-requisite to the offence of money laundering - there is no apparent error, gross illegality or impropriety found in the Order of the learned Additional Sessions Judge. Petition dismissed.

Issues Involved:
1. Legality of the discharge of accused persons by the Special Judge.
2. Involvement of the accused in money laundering under the PMLA.
3. Connection between scheduled offences and the offence of money laundering.
4. Scope of revisional jurisdiction of the High Court.

Detailed Analysis:

1. Legality of the Discharge of Accused Persons by the Special Judge:
The Petitioner sought to set aside the Order dated 15th May 2017, passed by the Special Judge, which discharged the accused persons on the grounds that no prima facie case was made out against them. The Special Judge observed that the material available did not establish that the accused were involved in money laundering and that the complaints were based on suspicion. It was further noted that any suspicion which is not well-founded cannot be considered prima facie proof. Since no scheduled offences under the PMLA were made out against the Respondents, proceedings under the Act could not be invoked.

2. Involvement of the Accused in Money Laundering under the PMLA:
The Petitioner argued that the Respondents were involved in an international syndicate laundering money generated from drug trafficking. The investigation revealed that proceeds of crime were transferred through various bank accounts, and properties worth crores were acquired using these funds. However, the Special Judge found that the evidence presented, including documents and statements, did not establish a prima facie case of money laundering. The Special Judge noted that the material produced was largely based on suspicion and that no cogent or trustworthy evidence was presented to prove the allegations.

3. Connection between Scheduled Offences and the Offence of Money Laundering:
The Respondents' counsel argued that the primary condition for initiating an investigation under the PMLA is the commission of a scheduled offence from which the proceeds of crime are derived. The Supreme Court in Nikesh Tarachand Shah vs. Union of India emphasized that the offence of money laundering requires proceeds of crime resulting from a scheduled offence. The Special Judge found that no scheduled offence was made out against the Respondents, and hence, the offence of money laundering under the PMLA could not be established.

4. Scope of Revisional Jurisdiction of the High Court:
The High Court, in its revisional jurisdiction, is limited to examining the correctness, legality, and propriety of the order of the subordinate court. The Supreme Court in Ashish Chadha vs. Smt. Asha Kumari & Ors. and Hindustan Petroleum Corporation Ltd. vs. Dilbahar Singh held that the revisional court should not reappreciate or reassess the evidence as an appellate court. The High Court found that the Special Judge's order did not suffer from any procedural illegality or irregularity and that the Special Judge rightly discharged the Respondents as there was no material on record to cast a shadow of doubt over them.

Conclusion:
The High Court concluded that since no scheduled offences were made out against the Respondents, the offence under Section 3/4 of the PMLA did not arise. The material produced by the Petitioner was not sufficient to establish the allegations against the Respondents. The Special Judge's order did not suffer from any apparent error, gross illegality, or impropriety. Therefore, the petition was dismissed, and the order of the Special Judge was upheld.

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