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2022 (11) TMI 1231 - HC - Money LaunderingMoney Laundering - conspiracy - proceeds of crime - GST violation or not - commission of any scheduled offence in terms of the Scheduled Part A B in terms of Section 2(x) of the PMLA, 2002 or not - admissible statements under Section 50 of the PMLA, 2002 - judicial proceedings within the meaning of Section 193 228 of the Indian Penal Code, 1860 or not. HELD THAT - The observations in Vijay Madanlal Choudhary Ors. vs. Union of India Ors 2022 (7) TMI 1316 - SUPREME COURT do not detract from the factum of statements recorded in terms of Section 50(3) of the PMLA, 2002 r/w sub-clause 3 of the said enactment falling within the ambit of judicial proceedings and though, undoubtedly, the consequences of Article 20(3) of the Constitution in Section 25 of the Indian Evidence Act, 1872 may come into play to urge that the statements made after arrest would be in the nature of a confession, the same would relate only to the accused and not to a witness as was the witness Rahul Kasana, who is not an accused in the ECIR. As put forth by the Directorate of Enforcement, the petitioner had hatched a criminal conspiracy with his associates to fraudulently withdraw money from the accounts of companies i.e. M/s. Show Effect Advertisement Pvt. Ltd. (SEAPL), M/s. Essence Cellcom Pvt. Ltd. (ECPL) and M/s. Essence Global Services Pvt. Ltd. (EGSPL) owned and controlled by him through bogus and mala fide transactions with bogus entry operators on the strength of fake bills and used this money to fund the Delhi riots. The witness named Nitesh Kumar Gupta further admitted that the said transfer of Rs. 1.12 Crore from the accounts of ECPL and EGSPL in the garb of payment for supply of manpower was done on the instructions of Tahir Hussain i.e. the petitioner herein and Roshan Pathak, the accountant of Tahir Hussain, assisted Tahir Hussain and facilitated these transactions along with Amit Aggarwal on the instructions of Tahir Hussain - The statements of other witnesses recorded under Section 50 of the PMLA, 2002 already adverted to elsewhere hereinabove as reproduced from the ECIR, all prima facie indicate the alleged complicity of the petitioner with persons to cause an illegal act to be done through illegal means which would fall within the ambit of Section 120A of the Indian Penal Code, 1860 making the offence allegedly committed punishable under Section 120B of the Indian Penal Code, 1860. The offence punishable under Section 120B of the Indian Penal Code, 1860 is a scheduled offence in terms of the Scheduled Para 1 to Section 2(y) of the PMLA, 2002 and falls in Part A of the Schedule. As per Section 2(u) and the explanation thereto, the proceeds of crime include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence, which thus falls within the ambit of proceeds of crime, which proceeds of crime fall withing the ambit of culpability in terms of Section 3 of the PMLA, 2002 making a person who has so allegedly committed such an offence, guilty of the offence of money laundering, which is punishable in terms of Section 4 of the PMLA, 2002 - the contention of the petitioner that what the petitioner was allegedly involved in, can at the most be considered to be a GST violation and that a GST violation may be punishable under the enactment dealing with GST violation and under the Income Tax Act, 1961 but that the same would not amount to the commission of any scheduled offence in terms of the Scheduled Part A B in terms of Section 2(x) of the PMLA, 2002 and thus, no offence described under Section 3 of the PMLA, 2002 punishable under Section 4 thereof, can be held to have been prima facie committed,- cannot be accepted. Thus, the alleged commission of a conspiracy even for the purpose of GST violation in order to avail cash i.e. money through the process of the criminal conspiracy for use of the said proceeds i.e. the commission of the crime to commit riots in the North Eastern part of Delhi between 23/25.02.2020 and to cause unrest, falls prima facie within the ambit of commission of a scheduled offence, in as much as, the offence for commission of a criminal conspiracy is a standalone offence and a scheduled offence in terms of Section 2(y) of the PMLA, 2002 - Apparently thus, the agreement to enter into an agreement to commit a crime, falls within the ambit of Section 120A of the Indian Penal Code, 1860 falling thus, within the ambit of a scheduled offence. There is no infirmity in the impugned order dated 03.11.2022 of the learned Trial Court holding that prima facie case is made out against the accused/ petitioner herein of the alleged commission of the offence under Section 3 of the PMLA, 2002 punishable under Section 4 of the said enactment, in as much as, the petitioner allegedly acted prima facie in conspiracy and engaged in money laundering with the proceeds of crime generated having been put to use for riots by way of fraudulently withdrawing money from the accounts of companies owned or controlled by him through bogus and malafide transactions with bogus entry operators on the strength of fake bills and being the beneficiary of the same and with intent to put the said money to fund the Delhi riots and thus, obtained property as the result of the criminal activity relatable to the scheduled offence as the proceeds of crime to make him prima facie culpable under Section 3 of the PMLA, 2002. Petition dismissed.
Issues Involved:
1. Whether the charges under Section 3 of the PMLA read with Section 4 of the PMLA can be framed in the absence of proceeds of crime from the predicate offence. 2. Whether amounts arising from a non-scheduled offence can be treated as proceeds of crime. 3. Whether the phrase "criminal activity relating to the scheduled offence" under Section 2(u) encompasses offences not specified in the Schedule. 4. Whether transactions unrelated to the scheduled offence can be treated as interconnected offences under Section 23. 5. Whether statements recorded under Section 50 of the PMLA can be used to incriminate despite constitutional and statutory bars. 6. Whether the Enforcement Directorate has jurisdiction to investigate non-scheduled offences. 7. Whether prosecution under Section 3 and 4 of the PMLA is valid without proceeds of crime. 8. Whether incomplete investigation bars framing of charges. Detailed Analysis: 1. Charges under Section 3 of the PMLA: The petitioner argued that the provisions of Section 3 of the PMLA cannot be invoked as there is no material suggesting accumulation of proceeds of crime from the predicate offences. The court, however, held that the statements under Section 50 of the PMLA are admissible and the evidence indicates the petitioner's involvement in money laundering. The court referenced the Supreme Court's decision in Vijay Madan Lal Choudhary, which clarifies that the offence of money laundering is independent and involves any process connected with proceeds of crime derived from a scheduled offence. The court concluded that the petitioner's actions fall within the ambit of Section 3 of the PMLA. 2. Amounts from Non-Scheduled Offences: The petitioner contended that GST violations are not scheduled offences and thus cannot constitute proceeds of crime under the PMLA. The court rejected this argument, stating that the offence of criminal conspiracy under Section 120B IPC is a standalone scheduled offence. The court noted that the proceeds of crime include property derived from any criminal activity related to a scheduled offence, which in this case involves fraudulent transactions and funding riots. 3. Criminal Activity Relating to Scheduled Offence: The court clarified that the definition of proceeds of crime under Section 2(u) of the PMLA includes property derived from any criminal activity related to a scheduled offence. The court emphasized that the process or activity connected with proceeds of crime constitutes money laundering, regardless of the nature of the predicate offence. 4. Interconnected Offences: The petitioner argued that transactions unrelated to the scheduled offence cannot be treated as interconnected offences under Section 23. The court, however, held that the conspiracy to commit a scheduled offence (criminal conspiracy) and the subsequent use of proceeds of crime for riots fall within the ambit of interconnected offences under the PMLA. 5. Admissibility of Statements under Section 50 of PMLA: The petitioner challenged the admissibility of statements recorded under Section 50 of the PMLA. The court referenced the Supreme Court's decision in Rohit Tandon, which upheld the admissibility of such statements. The court noted that the statements of witnesses, including the petitioner's driver, provided substantial evidence of the petitioner's involvement in money laundering. 6. Jurisdiction of Enforcement Directorate: The petitioner questioned the jurisdiction of the Enforcement Directorate (ED) to investigate non-scheduled offences. The court held that the ED has jurisdiction to investigate offences under the PMLA, which includes investigating the proceeds of crime derived from scheduled offences. The court emphasized that the offence of money laundering is independent and involves processes connected with proceeds of crime. 7. Validity of Prosecution under PMLA: The petitioner argued that prosecution under Sections 3 and 4 of the PMLA is invalid without proceeds of crime. The court rejected this argument, stating that the process or activity connected with proceeds of crime constitutes money laundering. The court noted that the petitioner's actions of fraudulent transactions and funding riots fall within the ambit of money laundering. 8. Incomplete Investigation and Framing of Charges: The petitioner contended that charges could not be framed based on incomplete investigation. The court referred to Explanation (ii) to Section 44(1) of the PMLA, which allows for subsequent complaints in respect of further investigation. The court held that the initial investigation provided sufficient grounds for framing charges, and further investigation would not bar the framing of charges. Conclusion: The court upheld the framing of charges against the petitioner under Section 3 of the PMLA, punishable under Section 4. The court found prima facie evidence of the petitioner's involvement in money laundering, fraudulent transactions, and funding riots, making him culpable under the PMLA. The petition and accompanying application were declined.
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