2023 (5) TMI 102 - SC - Money Laundering

Money Laundering - proceeds of crime - Scheduled Offences - knowledge of the accused is the condition precedent or sine qua non required to be shown by the prosecution for lodging the complaint - absence of any material to show that the petitioners had the knowledge that they were dealing with the proceeds of crime committed by Bharat Bomb and his associates - HELD THAT - Section 2(u) defines what is proceeds of crime and Section 2(y) defines what is Scheduled offence . As discernable from the record, the Prosecution complaint in ECIR was lodged against the petitioners and others under the PMLA by the ED, pursuant to the investigation carried out by the CBI in the FIR No. RCBD1/2016/E/0002 dated 07.03.2016 and the charge-sheet dated 14.06.2016 filed by the CBI against Bharat Bomb and others for the offences under Sections 120B, 420, 467, 468, 471, 472 and 474 of IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 at the Designated CBI Court at Jaipur. All the said offences are scheduled offences within the meaning of Section 2(y) of the said Act - Suffice it to say that serious allegations of money laundering are alleged against both the petitioners in the Prosecution complaint and sufficient material particulars have been narrated in the said complaint to substantiate the said allegations, which prima facie show the direct involvement of the petitioners in the alleged offences of money laundering as defined in Section 3 of the said PMLA. Having regard to the definition contained in Section 3, it would be a folly to hold that the knowledge of the accused that he was dealing with the proceeds of crime, would be a condition precedent or sine qua non required to be shown by the prosecution for lodging the complaint under the said Act. As the definition itself suggests whosoever 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 or claiming it as untainted property shall be guilty of offence of money-laundering - In the instant case, the direct involvement of the petitioners in the activities connected with the proceeds of crime has been alleged, along with the material narrated in the complaint which would require a trial to be conducted by the competent court. Apart from the fact that after filing of the SLPs, no documents could have been filed without the permission of the Court, which in the instant case does not appear to have been sought for by the petitioners nor granted by the Court, the very practice of not filing the essential and relevant documents, more particularly, the documents in respect of which a relief is sought in the SLPs, is strongly deprecated. It may be noted that non-production of the relevant documents especially the documents in respect of which the relief is sought, along with the SLPs could be the sole ground for rejection of the SLPs at the outset - The Registry is also directed to verify at the time of registration of SLPs as to whether all the relevant documents, more particularly, the documents in respect of which the relief is sought, have been produced at the first instance by the petitioners along with the SLPs or not. The interim relief granted earlier stands vacated forthwith - petition dismissed.

Issues Involved:
1. Quashing of ECIR No.JPZO/01/2016 and Prosecution Complaint.
2. Cognizability and non-bailability of offences under PMLA.
3. Petitioners' knowledge of dealing with proceeds of crime.
4. Abuse of process of law.

Summary:

Issue 1: Quashing of ECIR No.JPZO/01/2016 and Prosecution Complaint
The petitioners challenged the High Court's dismissal of their writ petitions seeking to quash ECIR No.JPZO/01/2016 and the subsequent prosecution complaint. The High Court had imposed a cost of Rs. 50,000/-. The petitioners argued that they had a "buyer-seller" relationship with Bharat Bomb and his associates and had no knowledge that the money received was proceeds of crime. They contended that the prosecution complaint was not tenable as the essential ingredient of knowledge was missing.

Issue 2: Cognizability and Non-bailability of Offences under PMLA
The Court noted that Section 45 of the PMLA, as amended and explained by the Finance (No.2) Act, 2019, clarified that all offences under the PMLA are cognizable and non-bailable. The authorized officers under the PMLA are empowered to arrest an accused without a warrant, subject to conditions under Section 19 and Section 45. The Court found no substance in the petitioners' submission that the prosecution complaint was not lodged by an authorized officer.

Issue 3: Petitioners' Knowledge of Dealing with Proceeds of Crime
The petitioners argued that their knowledge of dealing with proceeds of crime was a sine qua non for the offence of money laundering under Section 3 of the PMLA. However, the Court held that the direct involvement of the petitioners in activities connected with the proceeds of crime was sufficient to constitute the offence of money laundering. The Court emphasized that the definition of money laundering under Section 3 includes attempts to indulge, knowingly assist, or be a party to activities connected with proceeds of crime.

Issue 4: Abuse of Process of Law
The Court highlighted that the power to quash complaints under Section 482 of Cr.P.C. should be exercised sparingly and in the rarest of rare cases. The petitioners' case did not fall under any of the categories warranting such exercise of power. The Court found enough material to show prima facie involvement of the petitioners in the alleged offence of money laundering. The High Court's dismissal of the petitions was deemed appropriate, and any lenient view would be a travesty of justice.

Conclusion:
The petitions were dismissed, and the interim relief granted earlier was vacated. The Enforcement Directorate (ED) was allowed to proceed further with the prosecution complaint in accordance with the law. The Court directed the Registry to ensure that all relevant documents are produced at the first instance along with the SLPs. The trial court was instructed to decide the case on merits without being influenced by the observations made in this order.

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