2022 (6) TMI 1135 - HC - Money Laundering

Money Laundering - scheduled offences - proceeds of crime - tainted money - requirement of sanction for criminal prosecution in money-laundering cases - Section 50 of PMLA - HELD THAT - Money-laundering poses a serious threat not only to financial systems of countries but also to their integrity and sovereignty. To obviate such threats international community has taken some initiatives. The Prevention of Money-Laundering Bill having been passed by both the Houses of Parliament received the assent of the President on 17th January, 2003. It came on the Statute Book as THE PREVENTION OF MONEY-LAUNDERING ACT, 2002 (15 of 2003) (Came into force on 1-7-2005). The PMLA seeks to combat money laundering in India and has three main objectives (I) to prevent and control money laundering, (ii) to confiscate and seize the property obtained from the laundered money; and (iii) to deal with any other issue connected with money laundering in India. It is not in dispute that the tainted money was not obtained by the applicants in discharge of any official duty, the said money has no nexus with the official duty of the applicants and therefore, as per Section 197 of CrPC, there was no requirement for obtaining sanction for criminal prosecution of the applicants. There is no provision under the PMLA Act requiring sanction for criminal prosecution. In this case, in the complaint filed by the ED all the facts as available in case registered by the ACB are mentioned and evidence has also been recorded under Section 50 of PMLA of the applicants by the competent authority. The defence taken by the applicants that they are innocent, under the pressure of Alok Kumar Agrawal they took the money which was seized from them, is a matter of evidence and also depends upon the defence to be taken by Alok Kumar Agrawal during the course of trial. Therefore, the defence taken by the applicants cannot be considered at this stage and it can be considered after recording entire evidence in the case - In the present case, in view of Section 94 of IPC, the defence of the applicants that they kept the tainted money of Alok Kumar Agrawal under threat or compulsion, whether there was any threat of instant death, is to be considered only after taking evidence of the parties during trial. This Court is of the opinion that the tainted money seized from the applicants has no nexus with their official duties and as such, there is requirement of obtaining sanction for criminal prosecution in the money-laundering case and further, no such provision is there in the PMLA. The evidence of the applicants has been recorded in the case registered by the EoW and thereafter, their statements under Section 50 of PMLA was recorded wherein it was found that the tainted money was received by the applicants. Therefore, if the applicants are made accused in the money-laundering case, there is no illegality and also there is no any bar under any law for their impleadment in money-laundering case - this Court finds no illegality or perversity in the impugned orders of the trial Court taking cognizance of the offence against the applicants. Revision petition dismissed.

Summary

Issues Involved:
1. Legality of cognizance taken by the trial court without obtaining sanction.
2. Involvement of the applicants in the criminal activities alleged.
3. Applicability of Section 94 of IPC regarding compulsion by threats.
4. Non-impleadment of Hariram Patel as an accused.

Detailed Analysis:

1. Legality of Cognizance Taken by the Trial Court Without Obtaining Sanction:
The applicants argued that the trial court's cognizance of the offence was illegal due to the absence of sanction from the appropriate authority. However, the court clarified that the tainted money was not obtained by the applicants in the discharge of their official duties, and thus, as per Section 197 of CrPC, there was no requirement for obtaining sanction for their prosecution. Additionally, there is no provision under the Prevention of Money Laundering Act (PMLA) requiring such sanction. The court concluded that the cited judgments by the applicants' counsel were not applicable to the facts of this case.

2. Involvement of the Applicants in the Criminal Activities Alleged:
The court examined the prosecution's case, which involved financial irregularities and corruption by the main accused, Alok Kumar Agrawal, and the subsequent laundering of money by his associates, including the applicants. The applicants were found to have knowingly assisted in the concealment and possession of the tainted money. The court noted that the applicants' defense of innocence and compulsion by Alok Kumar Agrawal would be a matter for trial. Under Section 24 of PMLA, the burden of proof lies on the accused to prove their innocence, which can only be discharged during the trial.

3. Applicability of Section 94 of IPC Regarding Compulsion by Threats:
The applicants claimed they were compelled by threats from Alok Kumar Agrawal to keep the tainted money. The court referred to Section 94 of IPC, which exempts acts done under threats of instant death from being considered offences. However, the court stated that whether the applicants were under such threats is a matter of evidence to be considered during the trial. The court emphasized that the applicants' defense under Section 94 of IPC could not be evaluated at this stage.

4. Non-impleadment of Hariram Patel as an Accused:
The applicants argued that Hariram Patel, who was involved in the crime, was not made an accused. The court dismissed this argument, stating that the non-impleadment of Hariram Patel, who had since died, had no bearing on the accusations against the applicants. The applicants must prove their innocence based on the merits of the case during the trial.

Conclusion:
The court found no illegality or perversity in the trial court's orders taking cognizance of the offence against the applicants. The revision petitions were dismissed, with the court clarifying that its order should not be construed as an expression of opinion on the merits of the case, which should be decided strictly on the basis of the evidence presented during the trial.