2020 (9) TMI 742 - HC - Money Laundering

Provisional attachment order - It is alleged that the police without any justification and cause have implicated the petitioner in a frivolous case on the basis of a disclosure statement made by one Mushfiq Ahmad Lone in FIR No.254 /2009 for offences under Section 120, 120-B, 121, 121/A RPC and 11, 18, 20 and 40A of ULA(P) Act of Police Station, Saddar, Srinagar - HELD THAT - It is clear that whosoever, directly or indirectly, attempts to indulge or knowingly assists or is knowingly part or is actually involved in any process or activity connected with the proceeds of crime etc. etc. is guilty of offence of money laundering. The expressions used in the provision are directly and knowingly assists . These expressions convey that it is not necessary that proceeds of crime should have been actually and directly concealed, possessed, acquired or used by an offender. Even an indirect link or assistance in an activity connected with proceeds of crime constitutes an offence of money laundering. So the mere fact that the proceeds of crime in the instant case have not been recovered from the possession of the petitioner does not mean that he has nothing to do with the amount that has been provisionally attached, particularly when there are allegations in the impugned order of Provisional Attachment that the petitioner was in league and in touch with other accused from whom the money was seized. While confirming the Provisional Attachment Order, it is necessary that the above aspects of the case i.e. whether the petitioner was in any manner linked or associated with the co-accused, from whom the money was seized, are required to be gone into. This aspect of the matter involves disputed questions of fact which cannot be gone into in these proceedings. Therefore, to say that the impugned shown cause notice has been issued by the Adjudicating Authority without jurisdiction does not hold any merit - the Adjudicating Authority was well within its jurisdiction to issue the show cause notice to the petitioner so as to offer him an opportunity to present his case qua the allegations leveled against him in the impugned Provisional Attachment Order. The facts regarding possession of proceeds of crime or its use or concealment or its acquisition can be determined only after adjudicating the facts and circumstances and by verifying the documents and other relevant record. In the instant cases, there is material on record giving the Authorities reason to believe for initiation of proceedings against the petitioner and other accused persons. Therefore, institution of the proceedings by the respondents under the provisions of the Act cannot be found fault with - The proceedings before the Authority under the Act are aimed at unearthing the truth relating to the offences under the Act. If the Authorities come to the conclusion that the offence under Money Laundering Act is made out, thereafter they can proceed against the offender while undertaking the process of investigation relating to truth or otherwise behind the allegation of money laundering. The High Court cannot entertain a writ petition so as to quash the entire proceedings. The Authorities under the Act must be allowed to investigate freely and fairly in accordance with the procedure contemplated under the Act. This Court has no hesitation in coming to the conclusion that the present writ petition is premature and it raises complex issues of fact which cannot be adjudicated upon in these proceedings in view of the fact that the petitioner has not exhausted the remedies available to him under the provisions of the Money Laundering Act - Petition dismissed.

Summary

Issues Involved
1. Provisional attachment order under Section 5 of the Prevention of Money Laundering Act, 2002.
2. Double jeopardy and constitutional rights.
3. Seizure of money and its connection to the petitioner.
4. Maintainability of the writ petition without exhausting alternative remedies.
5. Jurisdiction of the Adjudicating Authority.

Issue-wise Detailed Analysis

1. Provisional Attachment Order under Section 5 of the Prevention of Money Laundering Act, 2002
The petitioner challenged the provisional attachment order dated 27.05.2020, the related complaint, and the show cause notice issued under Section 8 of the Act. The petitioner argued that the respondents failed to satisfy the requirements of Section 5 before issuing the order. The court noted that the provisional attachment order was issued based on allegations connecting the petitioner with other accused persons from whom money was seized, thus justifying the issuance of the show cause notice.

2. Double Jeopardy and Constitutional Rights
The petitioner contended that he was already facing trial before the Designated Special Court for the same alleged offenses, and the new proceedings amounted to double jeopardy, violating his constitutional rights. The court observed that the Prevention of Money Laundering Act provides a separate mechanism for dealing with proceeds of crime, and the proceedings under the Act are distinct from the criminal trial, thus not constituting double jeopardy.

3. Seizure of Money and its Connection to the Petitioner
The petitioner argued that no money was seized from his possession, and therefore, he should not be implicated. However, the court highlighted that under Section 3 of the Act, indirect involvement or assistance in money laundering activities constitutes an offense. The provisional attachment order indicated that the petitioner was in touch with other accused persons from whom the money was seized, justifying the proceedings against him.

4. Maintainability of the Writ Petition without Exhausting Alternative Remedies
The respondents raised a preliminary objection regarding the maintainability of the writ petition, arguing that the petitioner had not exhausted the remedies available under the Act. The court referred to several Supreme Court judgments emphasizing that writ jurisdiction should not be invoked when an effective alternative remedy is available. The court concluded that the petitioner should have approached the Adjudicating Authority and the Appellate Tribunal before filing the writ petition.

5. Jurisdiction of the Adjudicating Authority
The petitioner claimed that the Adjudicating Authority lacked jurisdiction to issue the show cause notice since no money was seized from him. The court noted that the Adjudicating Authority has the jurisdiction to issue such notices if there are allegations connecting the petitioner with proceeds of crime, even if indirectly. The court found that the provisional attachment order contained sufficient allegations to justify the jurisdiction of the Adjudicating Authority.

Conclusion
The court dismissed the writ petition, stating that it was premature and involved complex factual issues that could not be adjudicated in writ proceedings. The petitioner was directed to present his case before the Adjudicating Authority, which would provide a fresh date for the petitioner to submit his defense. The court emphasized that the petitioner must exhaust the remedies available under the Prevention of Money Laundering Act before seeking relief through writ jurisdiction.