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2024 (6) TMI 588 - HC - Money LaunderingMoney Laundering - forceful possession of property - proceeds of crime - main plank of the petitioner is that mere forceful possession of the subject property cannot be the proceeds of crime covered under section 2(1)(u) of the PMLA - HELD THAT - The gist of the offence of money-laundering as defined under section 3 of the PMLA is involvement in any process or activity connected with the proceeds of crime derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. Concerning a scheduled offence, the definition of money-laundering under section 3 encompasses every possible manner of involvement of the person with the proceeds of crime derived or obtained as a result of that crime. Section 3 incorporates every attempt whether directly or indirectly to conceal, possess, acquire, or use the proceeds of crime. Even an attempt to project the proceeds of crime as untainted property or attempting to claim the same to be an untainted property shall come within the sweep of section 3. The expression possession has a definite meaning and connotation and illegal possession of a person over an immovable property is protected in law to a certain extent. The word property within the meaning under clause (v) to section 2(1) of the PMLA includes any property or assets of every description and it can be tangible or intangible. There is a crime registered for forging the revenue records, falsification of the official records and other scheduled offences. This is the case pleaded by the ED that by its timely action the intended acts of forgery and manipulation in the revenue records of the subject property were foiled. The subject property must be considered the proceeds of crime which is in forceful possession of the petitioner and there is prima facie evidence of an attempt to commit the scheduled offences for legalizing the subject property. To constitute the offence of money-laundering under section 3 of the PMLA, this is not necessary to establish that first a crime was committed which included the scheduled offence. It may so happen, as has happened in this case, that the property was first grabbed and then the attempt was made to make it lawfully acquired through illegal acts which shall constitute the scheduled offence or an attempt to commit the scheduled offence. The interpretation to section 2(1)(u) of the PMLA that is put, is in tune with the intention of the Parliament and further advances the object and purpose behind the legislation. The validity of section 19 of the PMLA was under challenge in Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT . The Hon ble Supreme Court held that this provision has reasonable nexus with the purposes and objects of prevention of money-laundering and confiscation of the proceeds of crime involved in money-laundering and prosecution of the persons involved in the processes or activities connected with the proceeds of crime under the PMLA Act; the Constitutional validity of section 19 was upheld. Section 167 of the Code of Criminal Procedure empowers the Judicial Magistrate to authorize the detention of an accused in the custody of the police and, until the accused is committed the Court of Sessions, the Magistrate is vested with the power under section 209 of the Code of Criminal Procedure to remand an accused to custody. However, even where an order of remand is found to be illegal the accused does not get acquitted and the proceedings do not terminate. The provisions under section 19 of the PMLA are clear and unambiguous. The power of the arresting officer is well defined and his duties are prescribed under sub-sections (2) and (3). This is a fundamental rule of interpretation that if the words of a statute are themselves precise and unambiguous no more is necessary than to expound those words in their natural and ordinary sense as the words themselves shall best declare the intention of the Legislature - In the present case, the question of malafides pales into insignificance in the face of the abundance of materials collected by the ED which prima facie show the involvement of the petitioner with the proceeds of crime and money-laundering. The case set up by the ED against the petitioner is not based only on the statements recorded under section 50 of the PMLA including of those who claimed themselves real owners of the properties in question, there is an abundance of documents that lay a foundation for the arrest and remand of the petitioner to police and judicial custody. At this stage, this is not possible to hold that the ED has proceeded against the petitioner for no reasons. The admissibility or otherwise of the materials collected by the ED can be examined by the Special Court if a prosecution report is filed against the petitioner. The learned ASG rightly contended that the scheme under the PMLA does not contemplate a mini-trial at this stage. The maxim sublato fundamento cadit opus which means when the foundation goes the superstructure falls shall not be applied in case of subsequent remand(s). Every remand order is a separate order and without laying a challenge to the subsequent remand order(s), the accused must fail in his attempt to seek a declaration that his custody is bad in law. The challenge to the remand order dated 2nd February 2024 is of no consequence and it is not demonstrated that the arrest of the petitioner was illegal. Petition dismissed.
Issues Involved:
1. Legality of Summons under Section 50(2) of the Prevention of Money-Laundering Act, 2002 (PMLA). 2. Legality of Arrest and Detention of the Petitioner. 3. Jurisdiction of the Enforcement Directorate (ED) under PMLA. 4. Allegations of Political Vendetta and Malafide Intentions. 5. Validity of Remand Orders. Summary of Judgment: Legality of Summons under Section 50(2) of PMLA: The petitioner challenged the summons issued under Section 50(2) of PMLA, arguing that the authorized person must record in writing the reasons for considering the attendance necessary. The court found no real force in this challenge, stating that the power vested in the Director under Section 50 is of wide amplitude and intended to give effect to the object behind PMLA. The court held that the summons issued to the petitioner cannot be faulted on the ground that they did not contain specific details of the crime. Legality of Arrest and Detention of the Petitioner: The petitioner argued that his arrest and consequent detention were unwarranted, arbitrary, and illegal. The court examined the grounds of arrest served to the petitioner and found that the arresting officer had reasonable grounds to believe that the petitioner was guilty of the offence of money-laundering. The court stated that the requirement in Section 19 of PMLA that the arresting officer must have "reason to believe" before arresting a person is not that of strict proof but of preponderance of probability. The court found that the arrest was not arbitrary or illegal. Jurisdiction of the Enforcement Directorate (ED) under PMLA: The petitioner contended that the ED had exceeded its jurisdiction under PMLA and indulged in a vindictive and capricious inquiry. The court rejected this argument, stating that the ED had sufficient grounds to issue summons and make inquiries. The court referred to the ongoing investigation and the materials collected, including statements and documents, which indicated the involvement of the petitioner in money-laundering activities. Allegations of Political Vendetta and Malafide Intentions: The petitioner alleged that the ED's actions were part of a political conspiracy to destabilize the elected government. The court dismissed these allegations, stating that the existence of political vendetta is not a ground to quash the proceedings. The court emphasized that the presumption in law is in favor of the bona fides of the order unless contradicted by acceptable material. The court found that the materials collected by the ED prima facie showed the involvement of the petitioner with the proceeds of crime and money-laundering. Validity of Remand Orders: The petitioner challenged the remand order dated 2nd February 2024. The court found that the remand order was justified and necessary for a fair and complete investigation. The court noted that the Special Court had given police remand of the petitioner after perusing the records and materials related to the case. The court held that the subsequent remand orders were not challenged by the petitioner, and therefore, the challenge to the initial remand order was of no consequence. Conclusion: The court dismissed the writ petition, stating that there was no substance in the petitioner's arguments. The court clarified that the observations made were prima facie opinions and should not prejudice the petitioner in future proceedings.
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