2022 (11) TMI 1221 - DSC - Money Laundering

Money Laundering - proceeds of crime - predicate offence/scheduled offences - criminal conspiracy hatched for committing large scale rioting - admissibility of statements under section 50 of the PMLA - HELD THAT - If an accused directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting and claiming it as untainted property, is guilty of offence of money laundering and proceeds of crime would include not only property derived or obtained from the scheduled offence but also directly or indirectly derived or obtained as a result of any criminal activity relatable (associated with/has to do with) to the scheduled offence. Recently, Hon'ble Supreme Court of India in DIRECTORATE OF ENFORCEMENT VERSUS PADMANABHAN KISHORE on the question of proceeds of crime and money-laundering under PMLA inter alia stated that The offences punishable under Sections 7, 12 and 13 are scheduled offences, as is evident from paragraph 8 of Part-A of the Schedule to the PML Act. Any property thus derived as a result of criminal activity relating to offence mentioned in said paragraph 8 of Part-A of the Schedule would certainly be proceeds of crime . In view of the statutory provisions, the transactions of Tahir Hussain in a conspiracy to fraudulently withdraw money from the accounts of certain companies owned or controlled by him through bogus and malafide transactions with bogus entry operators on the strength of fake bills with him being the beneficiary and with intent putting it to use towards riots, then accused Tahir Hussain would be set to be deriving or obtaining property as a result of criminal activity associated with/relatable to scheduled offence as the proceeds of crime and will be guilty of money laundering. In terms of the contents of the complaint and the accompanying documents and statements, it emerges, prima facie, that accused Tahir Hussain, acting in conspiracy, engaged in money laundering, under the provisions of PMLA. The proceeds of crime generated in the conspiracy was put to use for riots. There is sufficient material on record, prima facie, creating grave suspicion against the accused for framing charge against him and to proceed further with the trial of the case - it is stated that a charge be framed against the accused Tahir Hussain for the offence under Section 3 of the Prevention of Money Laundering Act, 2002 punishable under Section 4 of the Prevention of Money Laundering Act, 2002. Application disposed off.

Summary

Issues Involved:
1. Conspiracy to commit riots.
2. Fraudulent financial transactions.
3. Money laundering under the Prevention of Money Laundering Act (PMLA), 2002.
4. Use of laundered money for riots.
5. Admissibility of statements under Section 50 of PMLA.
6. Arguments for and against framing charges under PMLA.

Detailed Analysis:

1. Conspiracy to Commit Riots:
The prosecution argued that the accused, along with his associates, hatched a conspiracy to incite riots in North East Delhi during February 2020. FIRs No. 59/2020, 65/2020, and 88/2020 were registered against the accused for various offences under the Indian Penal Code (IPC), including Sections 147, 148, 149, 120B, 34, 201, 302, 307, and 385. The conspiracy involved mobilizing crowds, stockpiling weapons, and inciting violence, particularly during the visit of U.S. President Donald Trump to India.

2. Fraudulent Financial Transactions:
The prosecution alleged that the accused fraudulently withdrew money from the accounts of companies he controlled (SEAPL, ECPL, and EGSPL) through bogus transactions with fake bills. The money was transferred to accounts of bogus entities, and cash was generated through entry operators. The accused was the ultimate beneficiary of this laundered money.

3. Money Laundering Under PMLA:
The Directorate of Enforcement initiated inquiries under PMLA based on the scheduled offences in the FIRs. The prosecution argued that the accused engaged in money laundering by generating proceeds of crime through fraudulent transactions and using the money for riots. Statements of 22 persons associated with the companies and the accused were recorded under Section 50 of PMLA, corroborating the money trail.

4. Use of Laundered Money for Riots:
The prosecution presented evidence that the laundered money was used to fund anti-CAA protests and riots. The accused allegedly gave money to individuals involved in the protests and riots. The prosecution argued that the proceeds of crime were used for unlawful activities, thus constituting money laundering.

5. Admissibility of Statements Under Section 50 of PMLA:
The prosecution argued that statements recorded under Section 50 of PMLA are admissible in law. The statements of various individuals, including the accused, detailed the fraudulent transactions and the use of laundered money for riots. The accused's statements confirmed his involvement in the transactions and receipt of cash.

6. Arguments for and Against Framing Charges Under PMLA:
The defense argued that the accused was framed due to his political affiliations and that there was no predicate offence for the Directorate of Enforcement to start its investigation. They contended that the transactions were regular business activities and not proceeds of crime. The defense also argued that the accused could not conspire with himself, and the absence of a provisional attachment order of any property indicated no proceeds of crime.

The court, however, found sufficient material on record to create grave suspicion against the accused for framing charges under Section 3 of PMLA, punishable under Section 4 of PMLA. The court held that the accused, acting in conspiracy, engaged in money laundering, and the proceeds of crime were used for riots.

Conclusion:
The court ordered that charges be framed against the accused for the offence under Section 3 of PMLA, punishable under Section 4 of PMLA, based on the prima facie evidence of conspiracy, fraudulent transactions, and use of laundered money for riots. The case will proceed to trial.