2023 (7) TMI 720 - HC - Money Laundering

Money Laundering - conspiracy - misappropriation and diversion of the food grains meant for persons below poverty line, mid-day meal and Antyoday scheme in Varanasi district - HELD THAT - It is significant to note that the offence under Section 37 of the Air (Prevention and Control of Pollution) Act, 1981 was not mentioned in the Schedule of Offences appended to PMLA originally. It was inserted in paragraph 24 of Part B of the schedule by Act 21 of 2009. Thus the offence under Section 37 of the Air (Prevention and Control of Pollution) Act, 1981 was not a Scheduled Offence under PMLA during the period 12.09.1984 to 17.07.2007, which it was committed, yet the accused was charged with commission of offence under Section 3 of the PMLA. The co-ordinate Bench rightly did not interfere with the proceedings on the Ground that on the date of commission of the predicate offence, it was not a Scheduled Offence. The offence of money laundering is an offence separate and distinct from the Scheduled offence. The complaint alleges that the petitioners have derived proceeds of crime and they have siphoned off the same. The petitioners have been involved in possession, acquisition and use of the proceeds of crime and they have enjoyed the proceeds of crime by it s possession, acquisition and use. The trial Court has ignored that the minimum threshold for all cash transaction or any transaction is given as per Rule 3 is ₹ 8,27,711/-.10 Lakh is concerned, although the ground does not specify as to which set of Rules is being referred by the petitioners, it appears that the petitioner is referring to Rule 3 of Prevention of Money-laundering (Maintenance of Records) Rules, 2005, which have been framed for regulating maintenance of records of the nature and value of transactions, the procedure and manner of maintaining and time for furnishing of information and verification of records of the identity of the clients of the banking companies, financial institutions and intermediaries . Rule 3 has no relevance for deciding as to whether a person needs to be tried for commission of an offence under section 3 of PMLA - the trial Court has rightly rejected the application for discharges of the petitioners and there appears to be no illegality in the orders. In any case, the orders do not suffer from any such illegality as calls for interference of this Court in exercise of its revisional jurisdiction. The revisions lack merit and the same are dismissed.

Issues Involved:
1. Legality of rejection of discharge applications under Section 227 of Cr.P.C.
2. Applicability of the term "Scheduled Offence" under PMLA.
3. Relevance of Rule 3 of Prevention of Money-laundering (Maintenance of Records) Rules, 2005.
4. Independent nature of the offence of money laundering.

Summary:

1. Legality of rejection of discharge applications under Section 227 of Cr.P.C.:

The petitioners, co-accused in a single case under PMLA, filed revisions against the trial court's orders rejecting their discharge applications. The trial court's orders dated 25.04.2023 were challenged on grounds of innocence, delayed complaint filing, and lack of evidence of money trail or suspicious transactions. The High Court found no illegality in the trial court's rejection of the discharge applications and dismissed the revisions, stating that the orders do not suffer from any such illegality as calls for interference of this Court in exercise of its revisional jurisdiction.

2. Applicability of the term "Scheduled Offence" under PMLA:

The petitioners argued that the predicate offence was not a scheduled offence at the time of its alleged commission and that the loss caused was below the threshold amount. The court clarified that the condition of the total value involved applies only to offences specified under Part B of the Schedule, which mentions the offence under Section 132 of the Customs Act. The petitioners were not charged with this offence, thus the threshold value condition was irrelevant. The court also noted that the offences under Sections 120 B, 420, 467, 471 I.P.C., and Section 13 of the Prevention of Corruption Act were included in Part A of the Schedule, making them scheduled offences.

3. Relevance of Rule 3 of Prevention of Money-laundering (Maintenance of Records) Rules, 2005:

The petitioners contended that the minimum threshold for all cash transactions is Rs. 10 lakhs as per Rule 3 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005. The court clarified that Rule 3 pertains to the maintenance of records by reporting entities and has no relevance in deciding whether a person should be tried for an offence under Section 3 of PMLA.

4. Independent nature of the offence of money laundering:

The court emphasized that the offence of money laundering is distinct from the scheduled offence. It involves activities connected with the proceeds of crime, such as concealment, possession, acquisition, and use. The Supreme Court's judgment in Vijay Madanlal Choudhary vs. Union of India was cited, which held that the offence of money laundering is independent and can be a continuing offence, irrespective of the date of the predicate offence. The petitioners were found to have derived proceeds of crime and engaged in activities connected with them.

Conclusion:

The High Court dismissed the revisions, upholding the trial court's orders rejecting the discharge applications. It concluded that the trial court rightly rejected the applications for discharge, and the orders did not suffer from any illegality warranting interference.

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