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Money Laundering - Case Laws
Showing 101 to 120 of 2022 Records
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2024 (12) TMI 1309
Confiscation of properties - Money laundering - scheduled offence - appellant would contend that the Special Court without issuing the notice to the appellant has passed the impugned order confiscating the properties of the appellant - violation of principles of natural justice - Applicability of Criminal Procedure Code (Cr.P.C) provisions to the proceedings under PMLA.
Applicability of Criminal Procedure Code (Cr.P.C) provisions to the proceedings under PMLA - HELD THAT:- Except as otherwise provided in the P.M.L.A Act, the provision of Cr.P.C., are made applicable to the proceedings before the Special Court. The order of confiscation of the properties of the accused by the Special Court amounts to disposal of properties under section 452 of Cr.P.C. Against the order of said disposal of the properties passed under section 452 of Cr.P.C, the appeal shall lie to this Court under Section 454 of Cr.P.C. The provision of the P.M.L.A Act does not provide for filing of any appeal against the order of confiscation of properties. Therefore, the appeal shall lie under section 454 of Cr.P.C to this Court as appeal against conviction lie to this Court.
Confiscation of schedule ‘A’ properties - HELD THAT:- The words “such properties involved in money laundering or which has been used for commission of offence of money laundering” would indicate that the disproportionate assets acquired by the accused which had been used for money laundering is subject to be confiscated to the Central Government under Sub Section (5) of Section 8 of the P.M.L.A Act. The scheduled offence alleged against late Sri. G.E. Veerabharappa has been tried in Spl. CC. No. 56/2015. Even though the C.B.I had alleged disproportionate assets to the tune of Rs. 2,91,70,984/-, the Court only directed confiscation of disproportionate asset to the extent of Rs. 1,72,40,951/- in favour of the Central Government. Therefore, the proceeds of crime is to the extent of Rs. 1,72,40,951/-. The said disproportionate assets to the extent of Rs. 1,72,40,951/- is alleged to have been used by late Sri. G.E. Veerabharappa in money laundering. Therefore, the properties to the extent of Rs. 1,72,40,951/- requires to be confiscated to the Central Government under Sub Section (5) of Section 8 of the P.M.L.A Act. Late Sri. G.E. Veerabharappa had furnished the fixed deposit receipts to the tune of Rs. 1,72,40,951/- pursuant to the order of the Hon’ble Apex Court in VEERBHADRAPPA G.E. [2023 (4) TMI 1332 - SUPREME COURT] in favour of C.B.I and E.D. The said fixed deposit receipts in a sum of Rs. 1,72,40,951/- is the properties involved in money laundering and it is said to have been used for commission of the offence of money laundering. The properties worth more than Rs. 1,72,40,951/- cannot be confiscated under Sub Section (5) of Section 8 of the P.M.L.A Act - The option open for the Special Court was to confiscate the fixed deposit to the extent of Rs. 1,72,40,951/- furnished by late Sri. G.E. Veerabharappa with a lien in favour of the C.B.I and E.D. Instead of that, the Special Court has confiscated the properties of the appellant. Therefore, the Trial Court has erred in ordering confiscation of the properties of the appellant which are at Sl.No. 2 of schedule ‘A’ properties in Spl. CC. No. 359/2019 - the said order of confiscation of properties of the appellant requires to be set-aside.
Conclusion - The impugned order dated 24.06.2024 passed in Spl. C.C. No. 359/2019 by the XXXII Additional City Civil and Sessions Judge and Special Judge for C.B.I cases, Bengaluru, sofar as it relates to confiscation of the appellant’s properties ie., Sl. No. 2 of the Schedule ‘A’ properties namely, the land measuring 6 acres 37 guntas, located at Gunjal village, Varthuru Hobli, Bengaluru East Taluk, bearing Survey No.187/3 (28 guntas), Survey No.188/1 (3 acres and 20 guntas) and Survey No. 210/2 (2 acres and 29 guntas) is set-aside - The court recognized the appellant's ownership rights over the properties and ruled that the confiscation order was not justified, as the fixed deposit furnished by late Sri. G.E. Veerabharappa should have been considered the asset involved in money laundering.
Appeal allowed.
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2024 (12) TMI 1308
Money Laundering - scheduled offences - challenge to provisional attachment under Section 5(1) of PMLA, 2002 - Distribution of exorbitant and unjustified compensation to farmers with the intention of getting monetary benefits - misappropriation of government funds by way of granting compensation on acquisition of land at non-agricultural rate for the agricultural land which resulted into loss to Government - Non-completion/concluding of adjudication proceedings within prescribed period of 180 days - No scheduled offence and offence of money laundering is made out as per the observation of Ld. Special Judge (PMLA), Dehradun, Uttarakhand
Non-completion/concluding of adjudication proceedings within prescribed period of 180 days - HELD THAT:- The issue was meticulously considered and decided by the Telangana High Court. It is after taking note of the Judgement of the Apex Court in the case of Prakash Corporates vs Dee Vee Projects Limited [2022 (2) TMI 1268 - SUPREME COURT]. The Judgement in the case of Prakash Corporates [2022 (2) TMI 1268 - SUPREME COURT] has distinguished its earlier Judgement in the case of S. Kasi v. State [2020 (6) TMI 727 - SUPREME COURT]. The Judgement in the case of S. Kasi was discussed therein and found it to be in reference to Article 21 of the Constitution of India whereas the case of attachment of properties is not governed by Article 21 of the Constitution of India.
The attachment would lapse in the present case because the period subsequent to 15.03.2020 is to be eliminated for determination of the period of 180 days and in that case, the impugned order of attachment would not lapse.
No scheduled offence and offence of money laundering is made out as per the observation of Ld. Special Judge (PMLA), Dehradun, Uttarakhand - HELD THAT:- The High Court found a case under the Act of 2002 after considering all the relevant facts which includes the order passed by the Arbitrator - the argument alleging non commission of crime under section 3 of the Act of 2002 would not be made out.
No direct nexus found between scheduled offence and properties in question vis-à-vis principle of value thereof - HELD THAT:- he issue is otherwise covered by the judgement of the Apex Court in the case of Vijay Madan Lal wherein the similar argument that “the value of any such property” would apply only when property is held outside the country was not accepted.
The appellant Dinesh Pratap Singh has even referred to the balance of Rs. 25,51,000/- in his bank account to justify the purchase of property apart from his agriculture income in the different financial years without referring to any document to prove the agriculture income other than the assessment order, if any, because agriculture produced is to be disclosed in the revenue record and otherwise by producing the receipt of amount on sale of the produce. The appellant has failed to submit any document to prove the same and accordingly we find that in the absence of the proof of source to acquire the property and that too worth of crores by the two appellants, it was rightly attached by the respondents. Since, total value of the proceeds was available with the appellant having vanished, the other properties and “the value of any other property” was attached.
There are no substance in the issue and is rejected.
Non-satisfaction of basic ingredients of offence of money laundering - HELD THAT:- The appellant has submitted that basic ingredient of section 3 of the Act of 2002 is not made out whereas according to the respondent and in the opinion of the Tribunal the ingredient of section 3 has been satisfied which would reveal from the Judgement of the Uttarakhand High Court in the case of the appellant himself - the issue has no substance.
Non-recording of "reasons to believe" as prescribed under Section 5 of PMLA, 2002 - HELD THAT:- In the instant case, the procedure aforesaid was applied and therefore only the Adjudicating Authority issued notice to the appellant to disclose the source of income as per section 8(1) of the Act of 2002. The finding has been recorded on the offence and acquisition of the proceeds of crime - the ground is not made out to cause interference in the order.
Non-consideration of merits and demerits of the case by the Ld. Adjudicating Authority - HELD THAT:- The last argument raised by the appellant is that the Adjudicating Authority has failed to make consideration of any of the issue raised by the appellant. Reference to the Judgment of Delhi High Court has been given - The position of the fact is that now this Tribunal has taken up each issue raised by the appellant and the order has been passed in reference to each issue. It is after analyzing the issue separately.
Even the impugned order has been passed by using the technology of "cut-copy-paste" without appreciating the material on record -the impugned attachment order passed by Ld. Adjudicating Authority may be set-aside - the last issue raised by the appellant remains of no consequence.
There are no merit in the appeal - appeal dismissed.
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2024 (12) TMI 1307
Maintainability of the Appeal in reference to Section 26 of the Prevention of Money Laundering Act, 2002 against the Provisional Attachment Order - Writ Petition before the High Court invoking jurisdiction under Article 226 of the Constitution of the India - HELD THAT:- An interim order was passed but ultimately the Delhi High Court relegated the Appellant to approach the Tribunal and for that Writ Petition was order to be treated as an Appeal. The copy of the Writ Petition was accordingly presented by the Appellant and was registered as an Appeal in compliance of the order of the High Court.
The perusal of sub Section (1) and (2) reveals that Appeal can be preferred against the order passed by the Adjudicating Authority or an order under Section 13(2) of the Act of 2002. The Appeal has not been provided against the order of the Provisional Attachment Order - there are reasons to dismiss the Appeal being not maintainable.
The Adjudicating Authority would not be persuaded by the dismissal of the Appeal rather it would independently analyze the issue and more specifically in reference to the earlier order passed by the same Authority denying confirmation of the earlier Provisional Attachment Order arising out of same ECIR though Appeal against that order is pending before the Tribunal. The Authority would be expected to examine whether second Provisional Attachment Order is sustainable.
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2024 (12) TMI 1198
Money Laundering - Jurisdiction of the E.D. to attach the properties of the Corporate Debtor, which was undergoing Corporate Insolvency Resolution Process, particularly in the light of Section 32A of the Insolvency and Bankruptcy Code, 2016 - provisional attachment of the properties - proceeds of crime as defined u/s 2 (1) (u) of the PMLA - HELD THAT:- In view of the submissions made by the learned counsel for the E.D. and the learned counsel for the CoC and for the successful Resolution Applicant JSW, following order is passed without expressing any opinion on the merits of the Appeals and without prejudice to the rights and contentions of the respective parties in the connected Appeals and other proceedings, including the right of the E.D. to investigate into the cases registered against the accused-Promoters of the Corporate Debtor, under the PMLA.
The Appellant-E.D. is directed to handover and the Respondent successful Resolution Applicant JSW is directed to take over the control of the properties of Corporate Debtor-Bhushan Power and Steel Ltd., provisionally attached vide the order dated 10.10.2019 passed by the E.D., immediately in view of Section 8 (8) of the PMLA read with Rule 3A of the said Rules.
Appeal disposed off.
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2024 (12) TMI 1147
Money Laundering - organized crime - proclaimed offender - whether the captioned Appeals challenging the impugned order should be entertained on the civil side or the criminal side? - HELD THAT:- The power of attachment of the property is therefore, conferred upon the Adjudicating Authority against whose order an Appeal is maintainable before the Appellate Tribunal, but this is a provision which is supplementary to the offence of money laundering created under the statute and with a specific provision prescribing that the confiscation or release of the property upon conclusion of trial, will depend upon whether the offence of money laundering has been made out or not. Upon a finding to that effect being finally rendered in a trial of an offence under PMLA, on conclusion of the trial, it can be rightly assumed that the power to attach the property and its adjudication is in the aid of the Special Court, who shall ultimately pronounce upon the aspect of commission of offence of money laundering.
Since the proceedings for attachment and its adjudication by the Adjudicating Authority, are in aid of the trial of the offence, an Appeal being preferred against an order passed by the Authority before the Appellate Tribunal, is definitely liable to be entertained on the criminal side.
By reading Section 9 of the Act, it was inferred that the proceedings taken therein, following the procedure of Code of Civil Procedure, results either in confirmation of ad-interim order of attachment passed by the Government or varying the same, and sale of property, leading to equitable distribution among depositors of money realised out of such sale, and it was concluded that it would be in form of Civil Appeal.
Reliance placed upon the decision of the Delhi High Court in case of Deputy Director, Directorate of Enforcement, Vs. Axis Bank and Ors. [2019 (4) TMI 250 - DELHI HIGH COURT] where the learned Judge has summarized the conclusion to the effect that the process of attachment (leading to confiscation) of proceeds of crime under PMLA is in the nature of civil sanction which runs parallel to investigation and criminal action vis-à-vis the offence of money laundering, do not determine the issue as to whether the Appeal should be entertained on criminal side or civil side. There can be no difference of opinion that while the proceedings of attachment are conducted by the Adjudicating Authority, in adjudicating the rights of the contesting parties, the Adjudicating Authority shall have the powers vested in a civil court under Code of Civil Procedure and the proceedings shall be deemed to be civil proceedings.
The ultimate test to be applied is, whether the attachment of property was on account of the registration of offence under PMLA, and what has to be done with the property on culmination of the trial, and in this case, since the result of attachment would depend upon the result of the trial of an offence.
Necessarily, the proceedings having criminal element involved, would lie on the criminal side of the High Court - the Appeal is directed to be listed after Christmas Vacation.
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2024 (12) TMI 1146
Money Laundering - challenge to provisional attachment order on the ground of time limitation - challenge to the order has been made mainly in reference to section 5 (3) of the Act of 2002 on the ground that the order of confirmation of provisional attachment order is subsequent to the period of 180 days, thus it should lapse - criminal conspiracy - forging of licenses - attachment of joint property.
Whether the confirmation of the provisional attachment order beyond 180 days should result in its lapse under Section 5(3) of the Prevention of Money Laundering Act, 2002? - HELD THAT:- The impugned orders were passed during the period of Covid-19. Both the orders were passed in the year 2021 which was the period of Covid-19. The Supreme Court extended the period for termination of proceeding under any statute.
Whether the attached property being a joint property without notice to the joint holder invalidates the attachment order? - HELD THAT:- There are no material on record to show that the property attached to be a joint property and in any case, if it is assumed for the sake of argument that the property attached is a joint property, the challenge to the order should have been made by the party holding the property with joint share. The appeal is not preferred by anyone else than the appellant - this ground cannot be accepted as well.
Thus, there are no case to cause interference in the impugned order - appeal dismissed.
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2024 (12) TMI 1031
Money Laundering - Illegal appointment of ineligible candidates in lieu of extraneous consideration - Applicability of section 45 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- The Hon’ble Supreme Court, in the authority in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] has held that 'The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail.'
Whether seizure of incriminating articles/documents from the petitioner’s house and property, both movable and immovable, worth crores of rupees allegedly acquired by the petitioner discloses an unbroken money trail, i.e., generation of proceeds of crime which eventually leads to the petitioner shall be decided in trial.
The allegations primarily rest on the statement of the co-accused recorded under section 50 of the Act, the truth and veracity of which need to be weighed during trial. The material collected by the E.D. prima facie suggests that the petitioner was allegedly in liason with Manik Bhattacharyya and Kuntal Ghosh who were actively involved in the offence. Both of them have been granted bail by this Court. The petitioner is similarly circumstanced - With regard to prolonged incarceration of the petitioner and delay in trial, the petitioner has submitted that he is in custody since 10th March, 2023, i.e., for about twenty months.
The Hon’ble Supreme Court has time and again held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial and in such a case Article 21 applies irrespective of the seriousness of the crime. The right to life and personal liberty enshrined under Article 21 of the Constitution is overarching and sacrosanct. A constitutional Court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused-under trial under Article 21 of the Constitution has been infringed. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional Court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part.
It is not in dispute that he is a first-time offender and has not been convicted of any offence earlier. Keeping in view the voluminous evidence to be considered by the learned Trial Court, chance of conclusion of trial within the time frame for incarceration during trial laid down in section 479 is bleak. Rejecting the prayer of the petitioner at this stage and granting him liberty to renew his prayer upon completion of the said time frame shall serve no purpose at all. Article 21 of the Constitution and section 479 of the 2023 Act read in harmony speak in favour of grant of bail to the petitioner on the ground of prolonged detention without trial as well as delay in trial.
This Court is inclined to release the petitioner on bail subject to stringent conditions - Application for bail allowed.
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2024 (12) TMI 951
Legality of the freezing orders issued under Section 17 and Section 17(1-A) of the Prevention of Money Laundering Act, 2002 - proceeds of crime - reasons to believe - authority to conduct search and seizure under Section 17 of PMLA - HELD THAT:- In Reshmi Metaliks Limited [2022 (8) TMI 543 - CALCUTTA HIGH COURT] the Court was dealing with the factual circumstances in a case where the Hon’ble Supreme Court stayed the proceedings in respect of an affected party relating to the ECIR and consequently the freezing orders passed under Section 17 of the PMLA, 2002 by the Authorized Officer was dealt with by the Court. Thus, the factual circumstances of the present case is completely different from the case which has been referred to, as in the present case the investigation of the case is continuing and there has been no interference by any Court of law when the freezing order has been passed by the Authorised Officer. An appeal was preferred by the Directorate of Enforcement before the Hon’ble Division Bench, in respect of the aforesaid order, wherein the Appeal Court was prayed to interfere and modify the order directing the learned Single Judge to hear the writ petition after exchange of affidavits. As such, the findings of the learned Single Judge by the Hon’ble Division Bench cannot be considered as an authoritative finding in respect of Section 17 or Section 17(1-A) of the PMLA, 2002.
Section 17(1-A) of the PMLA, 2002, postulate that where it is not possible to seize any record or property, the authorized officer may pass an order to freeze such property so that the property is not transferred or otherwise dealt with except without prior permission of the officer passing such freezing order and a copy of the order should be served upon the person concerned - Section 17(2) of PMLA, 2002 states that immediately after search, seizure or issuance of freezing order the authorized officer/authority referred to in Section 17(1) of the PMLA, 2002 shall forward a copy of the reasons so recorded along with material in his possession to the Adjudicating Authority in a sealed envelope.
While Section 17(1-A) of the PMLA, 2002 is in the nature of intimation to the affected party/person on the other hand Section 17(2) of PMLA, 2002 is a mandate to assign the reasons for implication with regard to the property being freezed and which involves the power to maintain secrecy, otherwise the term ‘sealed envelope’ referred in Sub-section (2) of Section 17 of PMLA, 2002 would be futile.
In light of the materials which have been placed by the investigating agency, especially the financial/monetary trail, which links the petitioner company with Corporate Power Limited, which is under investigation, it is held that the phrase ‘for the purposes of investigation’ in the notice under Section 17(1-A) of the PMLA, 2002 is sufficient and do justify the act of the Enforcement Directorate/Investigating Agency. As such no interference is called for in respect of the prayers advanced before this Court - application dismissed.
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2024 (12) TMI 845
Seeking permission to withdraw the present petitions with liberty to apply for bail - Money Laundering - scheduled offences - charging of illegal commission - Sale of unaccounted illicit country liquor wherein usage of hologram along with other methods was modus operandi - payment of annual commission by distilleries for operation of cartel, which make out a cognizable offence under Sections 7 and 112 of the PC Act and section 420, 467, 471 and 120B of the IPC - it was held by High Court that 'From perusal of the FIR and the ECIR in question, it cannot be said that no prima facie offence whatsoever is disclosed against the petitioners. Moreover, the material collected during the investigation goes to show that the nature of offences committed by the accused/ petitioners has caused huge financial loss to the State exchequer and the estimated proceeds of crime is of around Rs. 2161 Crores.'
HELD THAT:- The special leave petitions are disposed of as withdrawn with liberty to apply for grant of bail. If such applications are made, considering the peculiar facts of the case, the concerned Special Court shall give necessary priority to disposal of the bail applications.
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2024 (12) TMI 844
Grant of bail u/s 439 of Cr.P.C. (now section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023) read with Section 45 of PMLA - Money Laundering - applicant fraudulently obtained import authorization in the name of his Benami entities by cheating the Government authorities with an intent to acquire wrongful gain - non-compliance of section 19 of the PMLA - applicability of section 45 of PMLA - HELD THAT:- It is apparent that in case of non-compliance of section 19 of the PMLA, the court shall examine the material and resources whereby the authorized officer has to give reason to belief the guilt of accused and the court has to give reason to belief of not guilty of offence i.e. reason to belief becomes a sine-qua-non . It is also clear that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under section 50 of PMLA to the same investigating agency is inadmissible against the maker. Furthermore, the arrest should be rational, fair and as per law and shall not be merely based upon guilt of accused established from inadmissible evidence. Additionally, forming of opinion of the designated officer of the guilt of accused in writing is must.
In the instant case before the arrest of the applicant, he was neither summoned, nor his statement was recorded by the investigating authorities. As alleged, the applicant carried out his import business under valid license. No information was called by ED from the licensing authority to show that the applicant adopted fraudulent practices in obtaining import license. Opinion formed by the ED u/s 19 of the PMLA with respect to the guilt of the applicant, is based upon the statement of the co-accused person which is prima facie inadmissible. Therefore, it appears that in this case provisions of section 19 of the PMLA has not been complied with.
In the case of V. SENTHIL BALAJI VERSUS THE STATE REPRESENTED BY DEPUTY DIRECTOR AND ORS. [2023 (8) TMI 410 - SUPREME COURT] in paragraph 97.2, it has been held that in any non-compliance of the mandate under section 19 of the PMLA, the same would enure to benefit of the person arrested. It also appears that as submitted by the learned counsel for the ED, no further custodial interrogation is required.
Considering the aforesaid facts and circumstances of the case, in view of this court it is a fit case to grant bail to the applicant. Hence, without expressing any opinion on merit of the case, this application is allowed - bail application allowed.
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2024 (12) TMI 745
Money Laundering - predicate offence - Legitimacy of recruitment procedures for various educational posts - HELD THAT:- It is worth reiterating that this Court, through a catena of decisions, has consistently emphasized that prolonged incarceration of an accused awaiting trial unjustly deprives them of their right to personal liberty. Even statutory embargoes on the grant of bail must yield when weighed against the paramount importance of the right to life and liberty under Article 21 of the Constitution, particularly in cases where such incarceration extends over an unreasonably long period without conclusion of trial.
Equally well-established is the principle that the grant of bail must be determined based on the unique circumstances of each case, balanced against settled factors such as the gravity of the offence, the nature of the allegations, likelihood of interference with the ongoing investigation, the possibility of evidence tampering, threat or influence over the material witnesses, the societal impact of such release, and the risk of the accused absconding among others.
Since the charge sheet in the ED Case (ECIR No. KLZO- 11/19/2022) has already been filed but charges are yet to be framed, the Trial Court is directed to decide on framing of charges before the commencement of the winter vacations and/or before 31.12.2024, whichever is earlier - the Trial Court shall thereafter fix a date within the second and third week of January 2025 for recording the statements of such prosecution witnesses who are the most material or vulnerable - petition disposed off.
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2024 (12) TMI 744
Money Laundering - proceeds of crime - scheduled offence - misappropriation of funds as well as abuse of power under Mahatma Gandhi National Rural Guarantee Scheme - whether a property derived or obtained directly or indirectly out of the criminal activity relating to scheduled offence can alone be considered to be the proceeds of crime or in absence of the availability of such property, any other such property of equivalent value would also fall in the definition of ‘proceeds of crime’?
HELD THAT:- The judgment in SHRI SADANANDA NAYAK VERSUS THE DEPUTY DIRECTOR DIRECTORATE OF ENFORCEMENT, BHUBANESWAR [2024 (10) TMI 1619 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] deals with the issue and it is not only after referring to the judgment of Punjab and Haryana High Court in the case of Seema Garg [2021 (4) TMI 1247 - SUPREME COURT] but even other judgments of High Courts and Supreme Court. However, reliance has been made on the judgment of the Apex Court in the case of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] apart from the judgment of Delhi High Court in the case of Prakash Industries (supra). In the case of Prakash Industries [2022 (7) TMI 877 - DELHI HIGH COURT], elaborate discussion to define the proceeds of crime has been made where the judgment of the Punjab and Haryana High Court in the case of Seema Garg was also referred but has been distinguished because Punjab and Haryana High Court taken only two limbs of the definition of proceeds of crime while it has three limbs. The specific argument raised before the Apex Court in the case of Vijay Madanlal Choudhary to make second and third limb together was not accepted i.e. other than the property acquired or derived directly or indirectly as a result of criminal activity, the property can be attached only when it is sent outside India. In that case, the property of equivalent value can be attached.
The Adjudicating Authority committed grave illegality in taking narrow meaning or giving a different construction to the definition of ‘proceeds of crime’ than legislated by the legislature. The courts are having no authority to nullify any definition though Constitutional Court declared it to be ultra vires.
It is found that the reasons to cause interference in the impugned order of the Adjudicating Authority which is set aside with the remand of the case for a fresh consideration. It would be within the period specified in the statute and for that the parties would remain present before the Adjudicating Authority on 10.12.2024.
The appeal is allowed.
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2024 (12) TMI 680
Money Laundering - proceeds of crime - scheduled offences - criminal conspiracy and illegally quarried granite stones from the nearby lands and non-lease patta lands and transported more minerals than permit obtained quantity - HELD THAT:- There are prima facie materials to show that illicit mining had taken place. The prosecution in respect of the scheduled offences is still pending. The evaluation report of the Department of Geology and Mining indicates that the proceeds of crime were valued at Rs. 261.89 crores. It is not known as to what happened to the said amount. The learned counsel for the petitioners would claim that identification of the proceeds of the crime is sine qua non and in its absence, no complaint in respect of the offence of money laundering can lie. This argument has no merit. The learned Additional Solicitor General of India pointed out that Section 3 of the Prevention of Money Laundering Act which defines the offence of money laundering clarifies that a person shall be guilty of the offence of money laundering, if such person is involved in concealment of the proceeds of crime. When concealment of the proceeds of crime itself would constitute the offence of money laundering, it cannot be contended that unless the proceeds of crime are identified, the complaint will not lie.
The Hon'ble Supreme Court in Rana Ayyub v. Directorate of Enforcement [2023 (2) TMI 236 - SUPREME COURT] observed that 'Section 3 comprises of two essential limbs, namely : (i) involvement in any process or activity; and (ii) connection of such process or activity to the proceeds of crime. The expression “proceeds of crime” is defined in Section 2(1)(u) to mean any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad.'
Thus, it is enough if the prosecution establishes that there was generation of proceeds of crime and the accused was involved in any process or activity in connection with the proceeds of crime. If by a Houdini trick, they vanish thereafter, the Enforcement Directorate need not establish the money trail. Since concealment of the proceeds of crime is an offence, the accused can be held guilty of the same. The Enforcement Directorate need not demonstrate where the money eventually went. The accused after engineering a disappearing act cannot be heard to contend that they must be exonerated because proceeds of crime has not been identified. If a rat has escaped into a hole, one can only point to the hole. The rat might even have exited through another end. The defence cannot argue that unless the rat is found, there cannot be a prosecution.
Section 24(a) of the Act will apply if charges have been framed against the accused. Section 24(b) of the Act will apply in the case of any other person. While Section 24(a) of the Act is a mandatory presumption, Section 24(b) is a discretionary presumption. Taking into account the quantum of money involved and the nature of allegation, this is a case in which the presumption under Section 24(b) has to be necessarily invoked. It is for the petitioner herein to rebut the presumption. But that can be done only during trial. The court below had approached the issue from a correct perspective and rightly dismissed the discharge petition filed by the revision petitioners herein. The court below had come to the conclusion that there is sufficient ground for proceeding against the petitioners herein. The court below has recorded convincing reasons for doing so. In exercise of revisional jurisdiction, interference with the said order is not warranted.
This criminal revision petition is dismissed.
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2024 (12) TMI 613
Seeking release on bail - petitioner sought bail on the limited ground of his medical condition - Money Laundering - E.D. has failed to establish the link between the generation of proceeds of crime and the bank accounts of the petitioner - HELD THAT:- In the judgment in Prem Prakash v/s. Union of India through Directorate of Enforcement [2024 (8) TMI 1412 - SUPREME COURT] the Hon’ble Supreme Court has held that once these foundational facts are established by the prosecution the onus shifts on the person facing charge of offence of money laundering to rebut the legal presumption that the proceeds of crime are not involved in money laundering, by production of evidence which is within his personal knowledge.
Admittedly, the petitioner was not named in the FIR, charge sheet or supplementary charge sheet submitted by the CBI in the predicate offence.
It is trite law that prosecution cannot commence with the statement of a co-accused under section 50 of the PMLA. The Hon’ble Supreme Court has held in a catena of judgments with the statement of the coaccused cannot be considered against the petitioner and is not substantive piece of evidence. Its evidentiary value has to be tested at the time of trial and not at the stage of granting bail. The statement cannot be taken as gospel truth and only broad probabilities have to be seen. In the authority in A. Tajudeen v/s. Union of India [2014 (10) TMI 367 - SUPREME COURT] the Hon’ble Court has held that statement of the accused can under no circumstances constitute the sole basis for recording the finding of guilt against him.
The E.D. has placed reliance on a voice recording of the petitioner. Whether the said recording is relevant to the present proceeding shall be decided at the appropriate stage of trial - True, the conditions laid down in section 45 of the PMLA are the guiding factors for grant of bail to an accused under the Act and the accused has to satisfy the said condition for earning an order of bail in his favour.
The petitioner is in custody for considerable period of time. It is not in dispute that he was lastly interrogated by the E.D. before about eleven months. Therefore it is evident that his further custodial interrogation is not required. The E.D. intends to rely upon voluminous evidence including 180 witnesses, and 438 documents. Charges are yet to be framed. Chance of conclusion of trial in near future is bleak. The delay in trial is not wholly attributable to the petitioner - Since the case primarily depends on documentary evidence which is in custody of the E.D, there is no scope for the petitioner to tamper with the same. With regard to the apprehension that the petitioner shall influence witnesses or may abscond if released on bail, stringent conditions may be imposed upon him to address the concern.
Upon consideration of the facts and circumstances of the case, submission made on behalf of the parties as well as material on record, this Court is inclined to release the petitioner on bail subject to stringent conditions keeping in mind his right to speedy trial under section 21 of the Constitution as well as his prolonged incarceration without trial - the application for bail is allowed.
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2024 (12) TMI 612
Money Laundering - predicate offence - Legality of arrest and detention under the Prevention of Money Laundering Act - Alleged clandestine business of call centres being run at Godrej Waterside Building - requirement to satisfy twin conditions laid down under section 45 of PMLA - Rebuttal of presumption under section 24 - reliability of the statement of the petitioner, the co-accused and others recorded under section 50 of the PMLA - Right to life and personal liberty enshrined under Article 21 of the Constitution.
Rebuttal of presumption under section 24 - HELD THAT:- It is for the E.D. to establish the foundational facts after which the onus shall shift upon the petitioner to rebut the presumption under section 24 - The Hon’ble Supreme Court, in Prem Prakash [2024 (8) TMI 1412 - SUPREME COURT] held that once these foundational facts are established by the prosecution the onus shifts on the person facing charge of offence of money laundering to rebut the legal presumption that the proceeds of crime are not involved in money laundering, by production of evidence which is within his personal knowledge.
Reliability of the statement of the petitioner, the co-accused and others recorded under section 50 of the PMLA - HELD THAT:- In the authority in Prem Prakash [2024 (8) TMI 1412 - SUPREME COURT] the Hon’ble Supreme Court has held that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under section 50 PMLA to the same investigating agency is inadmissible against the maker. The reason being that the person in custody pursuant to the proceeding investigated by the same investigating agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker.
In the present case, though the predicate offence and the present proceeding have been investigated by two different agencies, the vulnerable position in which the petitioner was placed when his statement was recorded while he was in custody cannot be ignored. Also, it is trite law that statement under section 50 of the PMLA cannot be treated as substantive piece of evidence and can at best lend corroboration to the material available against the accused in course of investigation - Statement of the co-accused cannot be considered against the petitioner. Such statements cannot be taken as gospel truth and only broad probabilities have to be seen.
Operation of fake call centres in the premises in question - transfer of proceeds of crime to the account of the petitioner - HELD THAT:- The payment of Rs. 1.50 crores to the petitioner in cash has prima facie not been substantiated. The said cash transaction surfaced from a purported excel sheet available in the laptop of Aditya Gupta who is neither an accused, nor a witness in the present proceeding. A comprehensive investigation appears to have been done by the E.D. resulting in overlapping of statements, documents, etc., in both the PMLA cases - There is no scope for the petitioner to tamper with the same. The witnesses cited are official witnesses who are employees of the department and it is expected that the petitioner is not in a position to influence them. The issue of the petitioner being at flight risk can be addressed by imposing stringent conditions upon the petitioner while granting him bail. Investigation has culminated in submission of charge sheet. Further detention of the petitioner is not required for the purpose of custodial interrogation.
Right to life and personal liberty enshrined under Article 21 of the Constitution - HELD THAT:- The Hon’ble Supreme Court has time and again held that prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial and in such a case Article 21 applies irrespective of the seriousness of the crime. The right to life and personal liberty enshrined under Article 21 of the Constitution is overarching and sacrosanct. A constitutional Court cannot be restrained from granting bail to an accused on account of restrictive statutory provisions in a penal statute if it finds that the right of the accused-under trial under Article 21 of the Constitution has been infringed. Even in the case of interpretation of a penal statute, howsoever stringent it may be, a constitutional Court has to lean in favour of constitutionalism and the rule of law of which liberty is an intrinsic part.
Upon consideration of the facts and circumstances of the case, material on record as well as law on the point, this Court is inclined to release the petitioner on bail subject to stringent conditions - the petitioner be released on bail upon furnishing bond of Rs. 10,00,000/- with adequate sureties, half of whom should be local, subject to the fulfilment of conditions imposed - bail application allowed.
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2024 (12) TMI 611
Seeking grant of bail - Money Laundering - proceeds of crime - siphoning off of the loans availed by indulging in criminal conspiracy and generation of Proceeds of Crime within the meaning of Section 2(1) (u) of PMLA - HELD THAT:- The applicant is in custody in connection with an offence under Prevention of Money Laundering Act. In the predicate offence he has been granted bail. The said order stands final till date - No charge sheet has been submitted in the predicate offence with regards to the present issue being committed relating to Punjab National Bank till date.
The law with regards to trial is clear and well settled - The case under PMLA and the predicate offence has to be tried together by the same court which is not possible in the present case as of now since predicate offence is yet to see its charge sheet, if any.
The principle of “bail is a rule and jail is an exception” is being consistently followed and repeatedly being reiterated and reminded by the Apex Court and other Courts - The applicant is in jail since 07.02.2024 - There are no chances of his absconding - Looking to the facts and circumstances of the case, it is a fit case for grant of bail.
Let the applicant Padam Singhee, be released on bail in the aforesaid case crime number on furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned with the fulfilment of conditions which are being imposed in the interest of justice - bail application allowed.
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2024 (12) TMI 610
Petition instituted to grant leave to the petitioner herein to prefer an appeal against the order of acquittal of the respondents/accused under PMLA, 2002 - HELD THAT:- Undoubtedly, right of appeal against the order of acquittal by the prosecution is restricted, as the accused had the benefit of acquittal on the ground that charge against him had not been proved before the Trial Court. However, when the prosecution was not able to point out clinching ground or error resulting in miscarriage of justice or an erroneous conclusion, then the High Court would not hesitate to grant leave to the prosecution to prefer an appeal against an order of acquittal. Admissibility of ground to grant leave depends on the facts of each case. Complete justice to the parties being the objective, the prosecution in the event of raising grounds to the satisfaction of the Court, then they are entitled to secure leave from the Court to prefer an appeal against an order of acquittal.
In the present case, the prosecution is able to establish that vital documents relied on by the Enforcement Directorate to prove the offence of money laundering has been treated as an inadmissible evidence, merely on the ground that the statements taken from the bank computer has not been certified nor original was filed. Admittedly, the said document Ex.P3, Forensic Audit Report was subsequently certified by the bank officials and it was produced before the Trial Court. But the Trial Court has not taken into consideration and formed an opinion that the bank statements are wholly inadmissible, which resulted in an order of acquittal - there are no hesitation in forming an opinion that the petitioner in present case is entitled to prefer an appeal against the order of acquittal.
Consequently, leave is granted to the petitioner to file an Appeal against the order of acquittal of the respondents by judgment passed by the Principal Sessions at Chennai/Special Court under PMLA - Thus, the Criminal Original Petition stands allowed.
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2024 (12) TMI 473
Money Laundering - proceeds of crime - challenge to orders of freezing - reasons to believe - justificatioon for search and seizure operations - HELD THAT:- It would be worthwhile to deal with the decisions relied upon by the petitioner in the background of the facts of the present case. In Reshmi Metaliks Limited [2022 (8) TMI 543 - CALCUTTA HIGH COURT] the Court was dealing with the factual circumstances in a case where the Hon’ble Supreme Court stayed the proceedings in respect of an affected party relating to the ECIR and consequently the freezing orders passed under Section 17 of the PMLA, 2002 by the Authorized Officer was dealt with by the Court. Thus, the factual circumstances of the present case is completely different from the case which has been referred to, as in the present case the investigation of the case is continuing and there has been no interference by any Court of law when the freezing order has been passed by the Authorised Officer. An appeal was preferred by the Directorate of Enforcement before the Hon’ble Division Bench, in respect of the aforesaid order, wherein the Appeal Court was prayed to interfere and modify the order directing the learned Single Judge to hear the writ petition after exchange of affidavits. As such, the findings of the learned Single Judge by the Hon’ble Division Bench cannot be considered as an authoritative finding in respect of Section 17 or Section 17 (1-A) of the PMLA, 2002.
In M/s. Kedia Fintrade Pvt. Limited & Ors. [2024 (5) TMI 725 - CALCUTTA HIGH COURT] in fact, the question which was raised related to the authority of the Assistant Director in issuing the freezing orders and the same was approved by the Hon’ble Court, as such there is no dispute regarding the authorization of Assistant Director in issuing the freezing orders under Section 17 and Section 17 (1-A) of the PMLA, 2002.
The documents submitted by the investigating agency reflect that notices under Section 50 of the PMLA, 2002 have been issued to the persons responsible for the day-to-day activities of the company. It would therefore be the responsibility of the persons who have been called to explain in respect of the proceeds which they have acquired in regular course of their business transactions. The petitioner is also not without any option as they are entitled to take up their plea before the adjudicating authority.
There is a difference in the implementation of the provisions of Section 17 (1-A) and Section 17(2) of the PMLA, 2002, otherwise the phrase “reasons so recorded along with material in his possession referred to in that Sub-section, to the Adjudicating Authority in a sealed envelope, in the manner.” – would be redundant. What follows therefore is that while Section 17 (1-A) of the PMLA, 2002 is in the nature of intimation to the affected party/person on the other hand Section 17(2) of PMLA, 2002 is a mandate to assign the reasons for implication with regard to the property being freezed and which involves the power to maintain secrecy, otherwise the term ‘sealed envelope’ referred in Sub-section (2) of Section 17 of PMLA, 2002 would be futile.
In light of the materials which have been placed by the investigating agency, especially the financial/monetary trail, which links the petitioner company with Corporate Power Limited, which is under investigation, it is required to hold that the phrase ‘for the purposes of investigation’ in the notice under Section 17 (1-A) of the PMLA, 2002 is sufficient and do justify the act of the Enforcement Directorate/Investigating Agency. As such no interference is called for in respect of the prayers advanced before this Court.
Application dismissed.
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2024 (12) TMI 472
Confirmation of provisional attachment order - HELD THAT:- It is found that the property at 205 Jascon Plaza, Ranchi in the name of the Appellant Dr. Pradeep Kumar is already in possession of the Appellant as is obvious from the Order dated 30.08.2022 passed by the Hon’ble High Court of Jharkhand. The Appellant has also not made prayer for the restoration of the said property in Ranchi. In relation to the other immovable properties at Plot No. 20 in District Udaipur in the name of the Appellant Dr. Pradeep Kumar and at Plot No. 19 in District Udaipur as well as Plot of Land in Bangalore in the name of the Appellant Sh. Rajendra Kumar, Ld. Counsel for the Appellants has prayed for restoration of possession not only in terms of the Judgment in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] but also for the reason that the properties can be better maintained. He has also clarified that the Appellants do not oppose the attachment but will also abide by the conditions imposed by the Tribunal till the matter is disposed of in the trial before the Special Court.
It is also clear that the Appellants have not objected to abide by the impugned order in so far as the confirmation of the movable and immovable properties is concerned till the completion of the trial before the Special Court.
These three Appeals are disposed of without causing interference in the Provisional Attachment Order so as in the impugned order of confirmation. The Appellants are directed to ensure that the properties are neither alienated nor transferred till conclusion of the trial. The Appellants are further directed to ensure that the properties are not dealt with in any manner till conclusion of the trial.
Appeal disposed off.
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2024 (12) TMI 471
Money Laundering - Provisional Attachment Order - consequences of the discharge of the accused from predicate offence - HELD THAT:- The facts on record shows that the FIR was registered against Chhagan Bhujbal and his sons, apart from the associates. The attachment of the properties was made even for the entities in light of the fact that they belong to the accused involved in the crime. The fact now remains that the accused to whom the entities belong have been discharged by the Competent Court and the order passed in the year 2021 has attained finality in absence of its challenge. Therefore, the attachment of the properties has been questioned not only by the individual but also the entities belonging to them.
There are substance in the argument of the appellant in reference to the facts of the case. The accused involved in this case have been discharged. Thus, there are reasons to accept the argument of the learned counsel for the appellant.
The respondent has contested the argument in reference to an order passed by the Special Court, PMLA, to deny the dropping of proceedings despite the discharge of the accused from the predicate offence - In the instant case, the specific allegation exists against the accused for the commission of a predicate offence. The offence under the Act of 2002 is in reference to their alleged criminal acts pertaining to the scheduled offence where they have been discharged. Hence, when the accused have been discharged from the scheduled offence, the impugned orders cannot sustain.
The orders of the provisional attachment so also its confirmation are set aside. The appeal is allowed.
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