2023 (1) TMI 510 - HC - Money Laundering

Seeking grant of Regular Bail - Money laundering - settlement of the commission and the betting amount was done mainly through hawala operators in cash or through crypto currency with each individual player and the Union Head, by their respective club managers - offences under Sections 3 and 4 of Goa Gambling Act - no scheduled offences against any of the Accused including Applicant Nos. 1 and 2 - HELD THAT - From definition of proceeds of crime, it clear that when any property, either directly or indirectly, is derived or obtained as a result of any criminal activity relatable to a scheduled offence, it would be proceeds of crime . Therefore, for there to be any proceeds of crime , the property must be derived or obtained as a result of any criminal activity relatable to a scheduled offence. If any property is obtained or derived as a result of any criminal activity, but which is not relatable to a scheduled offence, then the same cannot be termed as the proceeds of crime . When one reads Section 3 of the PMLA, 2002 offence of money-laundering together with the definition of the words proceeds of crime Section 2(1)(u) and scheduled offence Section 2(1)(y) , it is clear that for charging a person with the offence of money-laundering, there has to firstly be a scheduled offence. When any property is derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence, then such property would be the proceeds of crime . When a person 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, he is guilty of the offence of money-laundering. Therefore, the sine qua non for Section 3 of the PMLA, 2002 to apply would be the commission of a scheduled offence. If there is no scheduled offence, then Section 3 cannot be pressed into service. As of now, the scheduled offences against the Accused have admittedly been dropped in the chargesheet filed by the Goa Police Crime Branch before the JMFC F Court at Mapusa, Goa and the matter is registered as Criminal Case No.AOA/572/2022/F. If there is no scheduled offence, there is no question of any generation of any proceeds of crime , and consequently, there can be no offence of money-laundering. In these circumstances, I am satisfied that Applicant Nos. 1 and 2 have made out a case for grant of bail. This decision squarely answers the argument of Mr. Karpe that because there is no order of a court of competent jurisdiction absolving Applicant Nos. 1 and 2 of the scheduled offences, the judgment of Supreme Court in the case of VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. 2022 (7) TMI 1316 - SUPREME COURT ) is not applicable. This Court correctly held that when the question of liberty of an individual is involved, it is not really possible to completely ignore the acceptance of the C-Summary Report which has the effect of bringing to an end the proceedings registered with the Yellow Gate Police Station pursuant to the filing of the FIR dated 28.10.2020 - Even in the facts of the present case, when the question of liberty of an individual is involved, it is not possible for me to ignore the fact that the chargesheet filed in the present case, as of now, does not relate to any scheduled offence which would give rise to proceeds of crime , which in turn, would make out an offence of money-laundering under Section 3 of the PMLA, 2002. Applicant is allowed to be released subject to conditions imposed - bail application allowed.

Summary

Issues Involved:
1. Regular Bail Applications.
2. Interim Bail Applications.
3. Applicability of the Prevention of Money Laundering Act (PMLA), 2002.
4. Definition and Existence of "Scheduled Offences".
5. Interpretation of Supreme Court Judgment in Vijay Madanlal Choudhary & Ors. vs. Union of India & Ors.

Detailed Analysis:

1. Regular Bail Applications:
Both applicants filed for regular bail under Sections 437 and 439 of the Cr.P.C., seeking release in the case titled "Ankur @ Rahul Khanna and anr. vs. Assistant Director, Directorate of Enforcement," registered under Section 3 read with Section 4 of the PMLA, 2002.

2. Interim Bail Applications:
Applicant No. 2 and Applicant No. 1 also filed Criminal Misc. Applications seeking interim bail based on subsequent developments. These applications were considered in light of the regular bail applications.

3. Applicability of the PMLA, 2002:
The case against the applicants was based on an FIR charging certain individuals under Sections 420, 408, 120-B read with Section 34 of the IPC, Sections 3 and 4 of the Goa Gambling Act, and Section 66D of the Information Technology Act, 2000. An ECIR was recorded under the PMLA, 2002, as the FIR contained scheduled offences under Paragraph 1 of Part A of the Schedule appended to the PMLA, 2002. However, the applicants were not named in the FIR or the ECIR initially.

4. Definition and Existence of "Scheduled Offences":
The chargesheet filed by the Goa Police Crime Branch in respect of FIR No. 10 of 2022 dropped the scheduled offences under Sections 408, 420, and 120-B of the IPC and Section 66D of the Information Technology Act, 2000, retaining only Sections 3 and 4 of the Goa Gambling Act. Since no scheduled offences were pending, the applicants argued that the PMLA charges could not stand.

5. Interpretation of Supreme Court Judgment in Vijay Madanlal Choudhary & Ors. vs. Union of India & Ors.:
The applicants' counsel argued that without scheduled offences, the PMLA charges could not be sustained, citing the Supreme Court judgment in Vijay Madanlal Choudhary & Ors. The Special Public Prosecutor countered that the Supreme Court's interpretation required a court order absolving the accused of scheduled offences, not merely a dropped charge in the chargesheet.

Court's Findings:
The court examined Sections 2(1)(u) and 2(1)(y) of the PMLA, 2002, defining "proceeds of crime" and "scheduled offence," respectively. It concluded that without a scheduled offence, there could be no "proceeds of crime," and thus no offence of money-laundering under Section 3 of the PMLA, 2002.

Supporting Precedents:
The court also referred to a similar case where the acceptance of a C-Summary Report was considered akin to acquittal or discharge, impacting the applicability of the PMLA.

Order:
1. The court granted regular bail to both applicants.
2. Specific conditions were imposed, including reporting to the Enforcement Directorate, surrendering passports, and not leaving Goa without permission.
3. The bail order was subject to any future court orders that might reinstate scheduled offences.
4. The court clarified that its observations were prima facie and limited to the bail applications.

Conclusion:
The court granted regular bail to the applicants, emphasizing that the absence of scheduled offences as per the chargesheet rendered the PMLA charges unsustainable, aligning with the Supreme Court's interpretation in Vijay Madanlal Choudhary & Ors. The order included stringent conditions to ensure compliance and prevent tampering with evidence.