2018 (9) TMI 457 - HC - Money Laundering

Offence under PMLA - material showing existence of any mens rea or culpable knowledge - Held that - It becomes clear that by the impugned order dated 18-7-2014, the Special Court for PMLA mechanically took cognizance of the alleged offence punishable under Section 4 of PMLA qua each of the accused applicants, without even prima-facie material showing existence of any mens rea or culpable knowledge with all or any of them, or of any proceeds of crime emanating from the said scheduled offences. Neither there is any tangible evidence, nor even any circumstantial material to impute culpable knowledge to the applicants and to even primafacie conclude that they were either aware of the commission of the Scheduled Offence or the generation of the alleged proceeds of crime by or out of such Scheduled Offence by main or other accused. As per the material produced, it cannot be even prima facie held that the applicants had any reason or even have any reasonable doubt regarding commission of alleged scheduled offence and generation of any proceeds of crime in relation thereto. The same is also fortified by the fact that none of the applicants were made an accused in the scheduled offence. Even though the accused applicants received in their bank accounts certain amounts at the instance of or from Shri Afroz Hasanfatta, the statements if taken on their face value, do not satisfy even on prima facie basis the prerequisite for trying any person on allegation of money laundering i.e. mens rea or culpable knowledge of the Scheduled Offence and Proceeds of Crime derived therefrom, and projection of such proceeds of crime as untainted. Even on prima facie basis no offence is made out against any of the accused applicants. No hesitation in holding that the impugned Order was passed mechanically and deserves to be set aside. The instant Revision Petition is accordingly allowed and the impugned Order dated 18-7-2014 is set aside qua each of the applicants with consequential reliefs.

Issues Involved:
1. Legality of the order dated 18-7-2014 by the Special Court for Prevention of Money Laundering Act, 2002 (PMLA).
2. Applicability of the judgment in Criminal Revision Application No. 926 of 2016 to the present applicants.
3. Maintainability of the revision petition against the order taking cognizance and issuing summons.
4. Sufficiency of evidence to take cognizance under Sections 3 and 4 of the PMLA.
5. Impact of non-challenge of the order in Criminal Revision Application No. 926 of 2016 before the Supreme Court.
6. Relevance of the burden of proof under Section 24 of the PMLA.
7. Judicial discipline and precedent in considering similar cases.

Analysis:

1. Legality of the Order Dated 18-7-2014:
The order dated 18-7-2014 issued by the Special Court for PMLA was challenged on the grounds that it was passed mechanically without proper application of mind. The court noted that the order was based on hearing the complainant and his advocate and referring to some documents without naming those documents. The court concluded that the order was issued without sufficient evidence to substantiate the allegations against the applicants under Sections 3 and 4 of the PMLA.

2. Applicability of the Judgment in Criminal Revision Application No. 926 of 2016:
The applicants relied heavily on the judgment in Criminal Revision Application No. 926 of 2016, where the Coordinate Bench had quashed the issuance of summons against similarly situated co-accused. The court observed that the applicants in the present case were co-accused in the same PMLA case and faced similar charges. Since the order in Criminal Revision Application No. 926 of 2016 had not been successfully challenged before the Supreme Court, it held full force and was applicable to the present applicants.

3. Maintainability of the Revision Petition:
The court addressed the issue of maintainability of the revision petition against the order taking cognizance and issuing summons. It referred to the Supreme Court judgment in Urmila Devi v. Yudhvir Singh, which clarified that such orders are intermediatory or quasi-final in nature and can be challenged under the revisional jurisdiction provided under Section 397 of the CrPC. The court concluded that the revision petition was maintainable.

4. Sufficiency of Evidence to Take Cognizance Under Sections 3 and 4 of the PMLA:
The court scrutinized the evidence presented against the applicants. It found that there was no prima facie evidence to show that the applicants had the requisite knowledge or mens rea to commit the offence of money laundering. The court emphasized that merely receiving money through banking channels did not constitute sufficient evidence of involvement in money laundering. It was noted that the statements of the applicants did not reflect any knowledge of the commission of any scheduled offence or proceeds of crime.

5. Impact of Non-Challenge of the Order in Criminal Revision Application No. 926 of 2016 Before the Supreme Court:
The court observed that the judgment in Criminal Revision Application No. 926 of 2016 had not been challenged before the Supreme Court, and therefore, it held full force and was binding. The respondents' argument that the order was not final was rejected. The court emphasized the principle of judicial discipline and the need for parity in treatment of similarly situated persons.

6. Relevance of the Burden of Proof Under Section 24 of the PMLA:
The court addressed the respondents' reliance on Section 24 of the PMLA, which shifts the burden of proof to the accused. It clarified that while Section 24 presumes involvement of proceeds of crime in money laundering, it does not presume the property as proceeds of crime or the accused's knowledge of such proceeds. The court found no merit in the respondents' argument that mere assistance in handling proceeds of crime without knowledge would attract the offence of money laundering.

7. Judicial Discipline and Precedent in Considering Similar Cases:
The court emphasized the importance of judicial discipline and adherence to precedents. It referred to the judgment in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, which stated that the stay of operation of an order does not mean it is quashed. The court concluded that the applicants were entitled to the same treatment as the co-accused in Criminal Revision Application No. 926 of 2016.

Conclusion:
The court allowed the revision petition, setting aside the order dated 18-7-2014 qua each of the applicants with consequential reliefs. It emphasized that there was no prima facie evidence to proceed against the applicants under the PMLA, and the impugned order was passed mechanically without due application of mind. The court also rejected the respondents' request to stay the order, noting that no petition had been filed before the Supreme Court to challenge the judgment in Criminal Revision Application No. 926 of 2016.

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