2022 (4) TMI 992 - HC - Money Laundering

Money Laundering - provisional attachment of land - creation of first encumbrance on the subject land - proceeds of crime - offences under Sections 3 and 4 of the PML Act - HELD THAT - The ingredients for fastening criminal liability u/s.3 r/w 4 of the PML Act against Naidu Amrutesh Reddy are absent in the impugned complaint. To recapitulate the facts, even according to the Enforcement Directorate, Naidu Amrutesh Reddy had paid ₹ 4.33 crores to Suruli Andavar, who was not the actual owner, for purchasing the subject land and had the sale registered as Document No.6266/2011. It is not the case of the Enforcement Directorate that Naidu Amrutesh Reddy sold the said subject land to someone, knowing full well that he has no title to it, obtained the sale consideration of ₹ 4.33 crores via the said criminal activity and projected the amount as an untainted. Petition allowed.

Summary

Issues Involved:
1. Quashing of Complaint under Prevention of Money Laundering Act (PMLA)
2. Legitimacy of Property Ownership
3. Criminal Liability under PMLA
4. Procedural Directions and Remedies

Detailed Analysis:

1. Quashing of Complaint under Prevention of Money Laundering Act (PMLA):

The petitioner sought to quash the complaint in C.C.No.14 of 2017 under ECIR/11/CEZO/2011 on the file of the Principal Sessions Court, Chennai, constituted under section 43(1) of the PMLA. The complaint was filed by the Enforcement Directorate (ED) for the offences under Sections 3 and 4 of the PMLA against four accused, including the petitioner.

2. Legitimacy of Property Ownership:

The subject matter involved a vacant land with a shed measuring 67 cents in Valsaravakkam Village, Chennai, originally owned by Kamalakannan, who sold it to Alamelu and Mangalam in 1973. Alamelu's heirs gave a Power of Attorney to D.Nagarajan. Various fraudulent activities ensued, including false claims of leasehold rights and fabricated Power of Attorney documents. The petitioner purchased the land from Suruli Andavar, who falsely represented ownership via a fabricated sale deed dated 12.04.1967.

3. Criminal Liability under PMLA:

The ED registered a case on 09.03.2011, following a charge sheet in C.C.No.5718 of 2010, disclosing the commission of a scheduled offence under Section 420 IPC. The petitioner paid ?4.33 crores to Suruli Andavar and purchased the land via a sale deed dated 10.11.2011. The ED attached the land under Section 5 of the PMLA. The court examined if there were sufficient materials to prosecute the petitioner under Sections 3 and 4 of the PMLA. It was found that the petitioner had paid ?4.33 crores to Suruli Andavar without knowledge of the fraudulent nature of the transaction and did not project the proceeds as untainted money. The Supreme Court's judgment in Nikesh Tarachand Shah Vs. Union of India was referenced to highlight the necessary ingredients for criminal liability under the PMLA, which were absent in the petitioner's case.

4. Procedural Directions and Remedies:

The court quashed the prosecution in C.C.No.14/2017 against the petitioner but allowed the ED to examine him as a witness in the prosecution of the other accused. The court also provided directions for Mangalam and the legal heirs of Alamelu to approach the Special Court for filing appropriate applications for restoration of the subject land under Rule 3A of the Prevention of Money Laundering [Restoration of Property] Rules, 2016. The trial court was directed to complete the trial expeditiously within six months.

Conclusion:

The Criminal Original Petition was allowed, quashing the prosecution against the petitioner, with connected miscellaneous petitions closed. The court provided clear directions for further proceedings and remedies for the original landowners.