2024 (9) TMI 119 - SCH - Money Laundering

Money Laundering - scheduled offences - proceeds of crime - large scale illegal mining - HELD THAT - It is found that the connection between these First Information Reports pleaded in paragraph 1 of the first and the second complaints and the alleged proceeds of crime has not been pleaded. In the first complaint, in paragraph 3.4 there is a reference to several offences registered at different places. However, there is no prima facie material to show that the offences pleaded, directly or indirectly, generated proceeds of crime in the form of money or illegally mined minerals. There are, no doubt, allegations of large scale illegal mining against the accused, but that is not sufficient. Prima facie, there must be factual assertions in the complaints to show that the offences which are named as scheduled offences on the basis of which complaints are filed, directly or indirectly, generated proceeds of crime. It is also noted that the first offence mentioned in both the complaints is not a predicate offence at all, as apart from Section 120B of the Indian Penal Code, 1860, no other scheduled offence is mentioned in the First Information Report. There are reasonable grounds for believing that the complaints do not indicate that the appellants are guilty of offence of money-laundering. It is noted here that nothing is pleaded to show that the appellants are involved in any other offence of money-laundering under the PMLA. Allegation of tampering with the evidence have not been made. Both the appellants have undergone incarceration for a period of about 01 year approximately. Therefore, a case is made out for enlarging the appellants on bail - appeal allowed.

Summary

Issues:
1. Allegations of money laundering under the Prevention of Money laundering Act, 2002.
2. Connection between First Information Reports and alleged proceeds of crime.
3. Sufficiency of factual assertions in complaints.
4. Grounds for believing the accused are guilty of money laundering.
5. Consideration for bail and terms and conditions.

Analysis:
The Supreme Court heard the case involving the accused who were shown in two complaints filed by the Directorate of Enforcement for alleged offenses under the Prevention of Money laundering Act, 2002. Upon perusing both complaints, the Court noted that there was a lack of connection between the First Information Reports mentioned and the alleged proceeds of crime. The complaints did not provide prima facie material to demonstrate that the offenses generated proceeds of crime in the form of money or illegally mined minerals. Additionally, the complaints did not sufficiently establish that the accused were involved in money laundering offenses under the PMLA. The Court highlighted the absence of allegations of tampering with evidence and the fact that the accused had already undergone incarceration for about a year.

The Court found that there were reasonable grounds to believe that the complaints did not indicate the guilt of the appellants for money laundering offenses. Consequently, the Court decided to enlarge the appellants on bail and directed their production before the Special Court under the PMLA within a week. The Special Court was instructed to grant bail to the appellants on appropriate terms and conditions. Importantly, the Court clarified that the observations made in the order were limited to the bail consideration and should not be construed as findings on the merits of the predicate offenses or the offenses under the PMLA. Ultimately, the Appeals were allowed based on the Court's analysis of the issues raised in the case.