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2024 (4) TMI 26 - HC - Money LaunderingMoney Laundering - proceeds of crime - Predicate/scheduled offence - offences punishable under Sections 3, 4 and 8 (5) of PMLA - HELD THAT - It is an admitted fact that the trial in the predicate offence (scheduled offence) had concluded. The trial Court has convicting three of the accused in this case. Their appeal is pending. The Hon'ble Supreme Court has held that the accused in the PMLA case need not necessarily be an accused in the schedule offence case. It is the proceeds of crime, which must be common to both cases and not the offenders. The predicate offence might have committed prior to the PMLA Act came into force or after the act introduced. Since money laundering is a process involving many stages like - (a) Placement (which is to move the funds from direct association of the crime); (b) Layering (which is disguising the trail to foil pursuit); and (c) Integration (which is making the money available to the criminal from what seem to be legitimate sources), the prosecution under PMLA can be initiated at any time. Section 3 and the Explanation (ii) to Section 3 of the PMLA is interpreted by the Hon'ble Supreme Court as, 'money laundering as defined under Section 3 has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration or tainted property in the formal economy. The Explanation inserted to Section 3 by way of amendment of 2019 does not expand the purport of Section 3, but is only clarificatory in nature. So it include 'every' process or activity indulged into by anyone.' This Court is of the view that the petitions to quash does not carry any merit to sustain - these Criminal Original Petitions are dismissed.
Issues Involved:
1. Quashing of criminal complaint under PMLA. 2. Validity of proceedings under PMLA in light of pending predicate offence. 3. Interpretation of "proceeds of crime" and its application. 4. Jurisdictional concerns regarding trial courts. Summary: Issue 1: Quashing of Criminal Complaint under PMLA The petitions sought to quash the criminal complaint under \u/s 45(1) of the Prevention of Money-Laundering Act, 2002 (PMLA) for offences punishable under Sections 3, 4, and 8(5) of the Act. The complaint was initiated by the Deputy Director, Enforcement Directorate, Madurai, and taken cognizance in C.C.No.9 of 2017. Issue 2: Validity of Proceedings under PMLA in Light of Pending Predicate Offence The petitioners argued that the predicate offence initiated by CBI was still pending, hence the PMLA complaint lacked a basis. They contended that without proving the predicate offence, the money used for property investments could not be deemed proceeds of crime. However, the court noted that the Supreme Court in Vijay Madanlal Choudhary and others vs. Union of India had clarified that the outcome of the predicate offence is not necessary for initiating proceedings under PMLA. Issue 3: Interpretation of "Proceeds of Crime" and Its Application The petitioners claimed that the properties were purchased from their own income sources and loans, and not from proceeds of crime. The court referred to the Supreme Court's interpretation in Vijay Madanlal Choudhary case, which stated that "money-laundering" includes every process and activity dealing with proceeds of crime, not limited to the final act of integrating tainted property into the formal economy. The court emphasized that the offence of money-laundering is independent and can be prosecuted even if the predicate offence was committed before the PMLA came into force. Issue 4: Jurisdictional Concerns Regarding Trial Courts The petitioners argued that prosecuting the case in different courts caused prejudice. The court clarified that the trial in C.C.No.9 of 2017 was transferred to the Special Court for CBI cases, Madurai, following a notification by the Union of India and the proceedings of the High Court Madras. The court reiterated that the PMLA offence can be tried independently of the predicate offence. Conclusion The court dismissed the petitions, stating that the arguments lacked merit in light of the Supreme Court's authoritative pronouncement in Vijay Madanlal Choudhary case. The petitions to quash the criminal complaint under PMLA were dismissed, and consequently, the miscellaneous petitions were also dismissed.
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