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2024 (12) TMI 162 - HC - Money LaunderingSeeking to assail the complaint filed under Section 45 read with Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 - Customs duty evasion in the import of Carbide inserts imported vide 9 bills of entry during the period from 2009-2011 - HELD THAT - In light of the language employed under Section 3 of the PMLA, any person whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. Therefore, if a person other than a Company is also found to have committed the offence as contemplated under Section 3 of the PMLA punishable under Section 4 of the PMLA the person can be arraigned as an Accused. It has been repeatedly held by the Courts that the person Accused of committing an offence under Section 3 of the PMLA need not even be arrayed as an Accused in the prosecution of the predicate offence as long as the said person has satisfied the ingredients mentioned under Section 3 of the PMLA. The contention of the 2nd and the 3rd Petitioner herein are that they had nothing to do with the day-to-day administration of the Company, will not hold water, even if proved to be true by the Accuseds in trial, since the Complaint under PMLA was filed against them for the possession, acquisition, use of the proceeds of crime, while claiming the same to be untainted property and not for the offences committed by them in their capacity as the Directors of the Company. It has been repeatedly reiterated by the Hon'ble Apex Court that the offence of Money-Laundering is a stand-alone offence. The offence under the Customs Act is totally different and distinct from the offence of Money- Laundering. The Petitioners/Accuseds are attempting to paint two distinct offences, as if it is the very same transaction. Therefore, the submission of the Petitioner/Accused that the subject matter of investigation by the Department of Customs and ED emanates from the same transaction is incorrect. The Hon'ble Apex Court in Vijay Madanlal Choudhary and Ors -Vs- Union of India and Ors 2022 (7) TMI 1316 - SUPREME COURT held that the investigation conducted by the Respondent Department is into the offence of money laundering and the same can be established through the prosecution of the offence of money laundering independent of the predicate offence. There are no hesitation in arriving at a conclusion that the present petition is devoid of merits and the petitioners have to face the trial. However, the Trial Court shall proceed with the trial uninfluenced by the observations made in the present order with reference to the facts, if any. Petition dismissed.
Issues Involved:
1. Whether the complaint under the Prevention of Money Laundering Act, 2002 (PMLA) is maintainable without implicating the company alongside its directors. 2. Whether the proceedings under PMLA can continue independently of the proceedings for the predicate offence. 3. Whether the directors can be prosecuted for money laundering independently of the company. Issue-wise Detailed Analysis: 1. Maintainability of the Complaint Under PMLA Without Implicating the Company: The petitioners contended that the complaint under PMLA is not maintainable as the company involved in the alleged predicate offence was not made an accused. They argued that under Section 70 of PMLA, when a contravention is committed by a company, the company and every person in charge of the company should be proceeded against. The court analyzed Section 70 and observed that it is not necessary to prosecute the company alongside its directors for money laundering. The court distinguished between the predicate offence and the offence of money laundering, stating that while the predicate offence may have been committed by the company, the act of money laundering could have been committed by individuals in their personal capacity. The court cited various judgments, including "Sheoratan Agarwal v. State of Madhya Pradesh," which support the prosecution of individuals without necessarily prosecuting the company. 2. Independence of PMLA Proceedings from Predicate Offence: The petitioners argued that since proceedings for the predicate offence were already initiated by the CBI, the PMLA proceedings were not maintainable. The court clarified that the offence of money laundering is a standalone offence, independent of the predicate offence. The court emphasized that PMLA proceedings can be initiated once an FIR for a scheduled offence is registered, and it is not necessary for the predicate offence to be proved before proceeding under PMLA. The court referred to the Supreme Court's ruling in "Vijay Madanlal Choudhary and Ors v. Union of India," which stated that money laundering is an independent offence connected to the proceeds of crime derived from a scheduled offence. 3. Prosecution of Directors Independently of the Company: The court addressed the contention that directors cannot be prosecuted without implicating the company. It reiterated that under Section 3 of PMLA, any person involved in the process or activity connected with the proceeds of crime can be prosecuted for money laundering. The court noted that the investigation revealed proceeds of crime in the form of immovable properties in the names of the accused directors, not the company. Thus, the directors were charged for money laundering in their individual capacity. The court emphasized that the directors' involvement in money laundering is distinct from their roles as directors and can be prosecuted independently. The court also highlighted that the burden of proving that the offence occurred without their knowledge lies with the accused, as per the proviso to Section 70 of PMLA. Conclusion: The court dismissed the petition, affirming that the complaint under PMLA is maintainable against the directors without implicating the company. It upheld the independence of PMLA proceedings from the predicate offence and confirmed that directors can be prosecuted for money laundering independently. The trial court was directed to proceed with the trial uninfluenced by the observations made in this order.
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