2024 (9) TMI 844 - HC - Money Laundering

Money Laundering - Bribe - proceeds of crime - obtaining illegal gratification from the passengers arriving at Chennai from foreign countries for clearance of their unaccompanied baggage by charging less or no duty through private person - HELD THAT - Admittedly the Petitioner herein had fixed the bribe amount and received illegal gratification through Shri G Kumar for the fraudulent clearance of goods in commercial quantity in the guise of unaccompanied baggage during his tenure in the UB (Air) Unit. Hence, mere acquisition of bribe amounts to proceeds of crime and thereby falls under section 3 of PMLA. Hence, such a contention is ought to be rejected. Pertinently, the Division Bench of this Court, in the case of Padmanabhan Kishore Vs. Directorate of Enforcement 2021 (4) TMI 263 - MADRAS HIGH COURT supported the views raised by the petitioner in the present revision petition. However, the said case was taken by way of an appeal before the Hon ble Supreme Court of India by the Enforcement Directorate in the case of Directorate of Enforcement Vs. Padmanabhan Kishore 2022 (11) TMI 53 - SUPREME COURT . Therefore, the ground raised on restrospectivity by the petitioner deserves no merit consideration - involvement in corrupt activities itself is Proceeds of Crime within the definition of Section 2(1)(u) of PMLA. That being the scope of pre-amended Section 3, question of discharging the petitioners on the ground that they did not possess the Proceeds of Crime after 2009, is untenable and is rejected. The Trial Court considered both the pre-amended Section 3 and the principles laid down by the Apex Court in Vijay Madanlal Chaudhary's case 2022 (7) TMI 1316 - SUPREME COURT , the scope of Section 2(1)(u) in conjunction with Section 3 has been considered by the Trial Court in a right direction as held by the Hon ble Supreme Court of India and thus, we do not find any infirmity in respect of the findings made by the Trial Court in the order impugned. The impugned order stands confirmed and accordingly, the present Criminal Revision Petitions are dismissed.

Issues Involved:
1. Legality of the application of the amended Section 3 of the PMLA retrospectively.
2. Determination of whether the actions of the petitioners constitute money laundering under the PMLA.
3. Validity of the provisional attachment of seized amounts.
4. Establishment of a prima facie case against the petitioners for money laundering.

Issue-wise Analysis:

1. Legality of the application of the amended Section 3 of the PMLA retrospectively:
The petitioners argued that the amendment to Section 3 of the PMLA in 2013, which included possession and concealment as offenses, could not be applied retrospectively to actions that took place in 2009. They contended that at the time of the alleged offense, possession or concealment of proceeds of crime was not an offense under the pre-amended Section 3 of the PMLA. The court, however, referred to the Supreme Court judgment in Vijay Madanlal Chaudhary vs. Union of India, which clarified that Section 3 of the PMLA has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime. The court emphasized that the amendment to Section 3 was clarificatory in nature and did not expand its scope, thus rejecting the petitioners' argument on the retrospective application.

2. Determination of whether the actions of the petitioners constitute money laundering under the PMLA:
The petitioners claimed that since the seized money was deposited in court custody in 2009, they were not in possession of the proceeds of crime and thus could not be charged with money laundering. The court, however, noted that the Supreme Court in Vijay Madanlal Chaudhary's case held that mere possession of tainted money constitutes money laundering. The court also referred to the case of Y. Balaji vs. Karthik Dasari, where it was established that receiving bribe money constitutes proceeds of crime, and the act of acquisition or use of such money falls under the purview of Section 3 of the PMLA. The court concluded that the petitioners' actions amounted to money laundering.

3. Validity of the provisional attachment of seized amounts:
The court noted that the provisional attachment of the amounts seized from the petitioners was completed and confirmed by the adjudicating authority. The petitioners argued that since the money was deposited in court custody, it could not be considered proceeds of crime. However, the court, relying on the Supreme Court's interpretation, held that the possession of tainted money, even if subsequently deposited in court, falls within the definition of money laundering. Thus, the provisional attachment was deemed valid.

4. Establishment of a prima facie case against the petitioners for money laundering:
The petitioners contended that no prima facie case of money laundering was made out against them, and thus they should be discharged. The court, however, emphasized that the burden of proof under Section 24 of the PMLA lies on the accused to establish that the attached properties were not involved in money laundering. The court found that a prima facie case was made out against the petitioners based on the evidence presented, including the seizure of large amounts of cash and the involvement in corrupt practices. The court concluded that the petitioners could not be discharged at this stage and must establish their defense during the trial.

Conclusion:
The court dismissed the criminal revision petitions, confirming the impugned order of the trial court. The court held that the actions of the petitioners constituted money laundering under the PMLA, the provisional attachment of the seized amounts was valid, and a prima facie case was made out against the petitioners. The petitioners' arguments on the retrospective application of the amended Section 3 of the PMLA and the lack of possession of proceeds of crime were rejected.

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