2019 (1) TMI 189 - HC - Money Laundering

Smuggling - illegal possession of Heroin - illegal possession of an amount of ₹ 9 lacs recovered from underneath the rear seat of the vehicle - procceds of crime - pendency of attachment proceedings - Whether prosecution for offence under Section 3 of PMLA can be initiated during the pendency of attachment proceedings or before the attachment confirmation attains finality or before the conviction of the petitioner under the NDPS Act attains finality? Held that - As is evident from the scheme of the PMLA, the proceedings for attachment are separate and in the nature of interim measures required to be taken to avoid a situation where proceedings are rendered redundant on account of the property being squandered away. If the designated officer has reason to believe, based on the material in his possession, that a person is in possession of proceeds of crime and, such proceeds, are likely to be concealed, transferred or dealt with in any manner which may result in frustrating proceedings relating to confiscation of proceeds of crime , he may proceed to attach the property in question. In fact it is in anticipation of prosecution that attachment proceedings are initiated. The second proviso to Section 5(1), when read alongwith first proviso, would itself make it clear that attachmant or pendency of attachment proceedings would not affect filing of a complaint under PMLA. While the first proviso to Section 5(1) envisages the provisional attachment being made simultaneously with the filing of the challan in the criminal Court for offences under Sections 3 and 4 of PMLA, the second proviso carves out an exception by providing that in case the Director or any other authorised officer has reason to believe that if such property involved in moneylaundering is not attached immediately the non-attachment of the property is likely to frustrate any proceeding under this Act, the attachment may be made prior to initiation of criminal proceedings. While proceedings under Sections 5 and 8 of PMLA are conducted by Enforcement Authorities, a complaint for offence under section 3 of PMLA is dealt with by a Special Court presided over by a judicial officer. Needless to mention that the Special Court is neither bound not governed not influenced by any order passed by the Enforcement Authorities and has to act independently on the basis of evidence led before it. It is thus evident from the provisions of PMLA itself that there is no statutory bar for initiating prosecution under PMLA in case it is prima facie found that an offence under Section 3 of PMLA has been committed. Attachment proceedings are initiated simply with the purpose of ensuring that the recovered amount is kept intact - The maxim sublato fundamento cadit opus , has no application to the present case for the reason that it is not the order of attachment which is foundation for lodging a complaint under section 3 of P MLA but it is the factum of recovery of the amount of ₹ 9 lakhs, primafacie believed to be proceeds of crime which forms the foundation for prosecuting the accused for offence under section 3 of PMLA. There is no ground either for quashing the complaint filed against petitioner under Prevention of Money Laundering Act, 2002 or the summoning order or even for staying the proceedings of complaint during pendency of the appeal against attachment before the Appellate Authority - petition dismissed.

Issues Involved:
1. Quashing of Complaint Case No.CNR No.PBJL010005702017 of 2017.
2. Validity of the summoning order dated 16.1.2017.
3. Legitimacy of proceedings under the Prevention of Money Laundering Act (PMLA) during the pendency of attachment proceedings and appeal.
4. Whether the amount of ?9 lacs recovered is "proceeds of crime."

Comprehensive, Issue-Wise Detailed Analysis:

1. Quashing of Complaint Case No.CNR No.PBJL010005702017 of 2017:
The petitioner, Navdeep Singh, sought to quash Complaint Case No.CNR No.PBJL010005702017 of 2017, which pertained to an offence under Section 3 punishable under Section 4 of the Prevention of Money Laundering Act, 2002 (PMLA). The complaint was based on the recovery of ?9 lacs and 95 grams of heroin from the petitioner and his co-accused. The petitioner argued that the complaint was filed in a hurried manner based on provisional attachment orders that had not attained finality, as the appeal against the confirmation order was still pending. The court, however, found that the complaint was not solely based on the attachment order but also on the entire facts, including statements and documents provided by the accused.

2. Validity of the Summoning Order Dated 16.1.2017:
The petitioner challenged the summoning order dated 16.1.2017, issued by the Special Judge (PMLA), Jalandhar, which found a prima facie case against the petitioner for an offence under Section 3 punishable under Section 4 of the PMLA. The court held that the summoning order was valid as it was based on sufficient material, including the recovery of ?9 lacs and heroin, and statements recorded under Section 50 of the PMLA Act.

3. Legitimacy of Proceedings Under PMLA During Pendency of Attachment Proceedings and Appeal:
The petitioner argued that the prosecution under PMLA should not proceed during the pendency of attachment proceedings or before the attachment confirmation attained finality. The court clarified that the scheme of the PMLA allows for separate and parallel proceedings. Attachment proceedings are interim measures to ensure the property is not squandered away, whereas prosecution under Section 3 of the PMLA can proceed independently. The court referred to the Delhi High Court judgment in J. Sekar Vs. Union of India, which supported the view that there are parallel streams of criminal and departmental proceedings under PMLA.

4. Whether the Amount of ?9 Lacs Recovered is "Proceeds of Crime":
The petitioner contended that the ?9 lacs recovered was not "proceeds of crime" but part of an earnest amount received for the sale of his property. The court noted that this contention forms part of the petitioner's defense and can be addressed during the trial. The court emphasized that the complaint could not be quashed at the threshold based on this defense. The court also mentioned that the statements and documents provided by the petitioner during the trial of the NDPS case were not believed by the Special Court, Jalandhar, but the petitioner would have the opportunity to present his defense in the PMLA proceedings.

Conclusion:
The court concluded that there was no ground for quashing the complaint or the summoning order under the PMLA. The petition was dismissed, and the proceedings under the PMLA were allowed to continue during the pendency of the appeal against the attachment order. The court found that the prosecution under PMLA was legitimate and based on sufficient material, and the attachment proceedings were interim measures to ensure the property was preserved.

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