2023 (11) TMI 617 - HC - Money Laundering

Money Laundering - case has been registered in continuation of a predicate offence which is registered for offence under Sections 120-B, 406 and 420 of IPC - It is contended by the petitioner that an offence under 2002 Act, cannot be dealt with before the scheduled offences have been tried and proved - HELD THAT - In the present case, the petitioner himself has admitted his acquaintance with the 1st accused. The FIR in the predicate offence may not of course reveal the involvement of the petitioner. However, the statement obtained from the witnesses who were examined in connection with the predicate offence would show how the petitioner was introduced to the bank officials as person who is the authorised signatory of the business concern of the 1st accused. Though the learned counsel for the petitioner pointed out that the petitioner was not a Partner or a share holder in the business concern and the account was purely in the name of the enterprises, which is not connected with the petitioner, the case of the petitioner that he has no connection with the predicate offence under Section 3 of the 2002 Act, cannot be accepted. Despite the fact that the petitioner was not shown in any of the documents relating to the business concern of the 1st accused, the petitioner himself has admitted that substantial amount that was mobilised following the predicate offence alleged to have been committed by the 1st accused, was transferred to the accounts of the petitioner. The learned counsel for the petitioner submitted that the statement of the petitioner under Section 50(2) and (3) of 2002 Act, was given under coercion and hence, it cannot be the basis for prosecution. This Court is of the view that it is for the trial Court to decide the said issue and this Court cannot adjudicate this issue in the instant quash petition. This Court is unable to find any one of the circumstances indicated in the judgment of the Hon'ble Supreme Court to quash the complaint as against the petitioner. Therefore, finding that there is no merit in this quash petition, the Petition is dismissed.

Summary

Issues involved:
The judgment involves the quashing of criminal proceedings under the Prevention of Money Laundering Act, 2002. The main issues include the interpretation of Section 3 of the 2002 Act, the connection between scheduled offences and money laundering, the admissibility of statements obtained under coercion, and the ownership of properties acquired with alleged proceeds of crime.

Interpretation of Section 3 of the Prevention of Money Laundering Act, 2002:
The Hon'ble Supreme Court's interpretation of Section 3 of the 2002 Act establishes that money laundering is an independent offence related to activities involving proceeds of crime. The Court clarified that any process connected with the proceeds of crime, including concealment, possession, acquisition, or use, constitutes money laundering. The offence can be committed even if the criminal activity occurred before the scheduled offence was recognized. The Court emphasized that the authorities cannot prosecute based on assumptions and must establish a link between the property and the scheduled offence.

Admissibility of Petitioner's Statements and Involvement:
The petitioner's involvement in money laundering was contested based on the absence of specific allegations in the FIR against him. However, the Court found that the petitioner's statements and actions, such as receiving substantial amounts from the accused, indicated his connection to the proceeds of crime. The petitioner's claim of coercion in providing statements was deferred for trial court consideration, and the petitioner's involvement was upheld based on the Supreme Court's interpretation of Section 3.

Ownership of Properties and Alleged Proceeds of Crime:
The petitioner's acquisition of properties, including a flat purchased with substantial cash, raised suspicions of utilizing proceeds of crime. Despite attempts to distance himself from the transactions, the petitioner's admission of receiving and transferring significant sums linked him to the alleged money laundering activities. The Court rejected the petitioner's explanations regarding property ownership and payment considerations, reinforcing the notion that the proceeds of crime were potentially involved in the property transactions.

Quashing of Criminal Proceedings:
The Court examined the circumstances under which a complaint could be quashed, as outlined by the Hon'ble Supreme Court. Finding no grounds for quashing the proceedings against the petitioner, the Court dismissed the petition and allowed the trial court to proceed independently. The judgment emphasized the need to establish a prima facie case for money laundering based on the interpretation of the 2002 Act, indicating that the petitioner's involvement warranted further trial proceedings.