2021 (1) TMI 568 - HC - Money Laundering

Money Laundering - provisional attachment order - proceeds of crime - existence of predicate offence or not - petitioner as well as the original accused filed their objections to the provisional attachment interalia contending that the properties acquired by the petitioner and her husband were not the proceeds of crime - It is the submission of learned counsel for the petitioner that prior to amendment of section 5 of PML Act, the provision postulated a charge for the schedule offence. But this requirement was done away with after the amendment Act 2 of 2013 w.e.f. 15.02.2013 - HELD THAT - The prosecution under section 3 of the PML Act cannot be equated with the prosecution under section 13 of the PC Act or other offences specified in the Schedule namely IPC or other laws. They are distinct and separate offences. Prosecution under section 3 of PML Act is not based on the outcome of the trial of the offenders under section 13 of the PC Act. A reading of section 3 of PML Act in unamended form would clearly indicate that even without there being any conviction of the accused in a predicate offence and even if the offender under section 3 of the PML Act is not a party to the predicate offence, still the prosecution could be launched against him if the offender is found involved in any process or activity connected with the 'proceeds of crime'. What is necessary to constitute the offence of money laundering is the existence of proceeds of crime and not the pendency of predicate offence as vehemently contended by the learned counsel appearing for the petitioner. This Court as well as various other Courts have analysed this provision and have consistently held that the offence under section 3 of the PML Act is an independent and stand alone offence. Therefore, the argument of learned counsel for petitioner that without the existence of predicate offence and without there being any conviction of the petitioner for the predicate offence, her prosecution for the offence of money-laundering cannot be sustained being contrary to the language of section 3 of the PML Act and the intendment of the Legislature in enacting section 3 of the PML Act and the allied provisions is liable to be rejected and is accordingly rejected. Petition dismissed.

Summary

Issues:
1. Legality of prosecution under section 3 of Prevention of Money Laundering Act, 2002.
2. Validity of attachment order under section 5(1) of PML Act.
3. Interpretation of amendments to PML Act regarding prosecution for predicate offence.
4. Applicability of procedural changes to pending prosecutions.
5. Availability of alternative remedy under PML Act for appeal.

Analysis:
1. The petitioner challenged the prosecution under section 3 of the PML Act, arguing that the predicate offence was only alleged against her husband, not her. The provisional attachment order included properties held by both the petitioner and her husband. The petitioner contended that the amendment to section 5 of the PML Act in 2013 removed the requirement for a charge for the schedule offence, affecting her vested rights. Citing legal precedents, the petitioner claimed violation of Article 20(2) of the Constitution of India.

2. The court examined the legality of the attachment order under section 5(1) of the PML Act, which was later confirmed under section 8(3). The petitioner had appealed the order, indicating the availability of a remedy under the PML Act. The court found that the Deputy Director had the authority to pass the attachment order, and the petitioner did not challenge the order's application of mind or jurisdiction, making it beyond challenge in a writ proceeding.

3. The petitioner's argument regarding the retrospective application of amended provisions of the PML Act was addressed. The court clarified that prosecution under section 3 of the PML Act is distinct from other offences and does not depend on the conviction of the accused in a predicate offence. The court emphasized that the offence of money laundering is independent and standalone, requiring the existence of proceeds of crime, not the conviction for a predicate offence. Therefore, the court rejected the petitioner's argument against the prosecution without a conviction for the predicate offence.

4. The court considered the petitioner's contention about being not party to the prosecution against her husband for the predicate offence. Referring to previous judgments, the court held that the prosecution under section 3 of the PML Act is based on involvement with proceeds of crime, not the predicate offence. The court dismissed the petitioner's argument that prosecution without a conviction for the predicate offence is unsustainable, as it aligns with the legislative intent of the PML Act.

5. The court concluded that the petition lacked merit and dismissed it, highlighting the independent nature of the offence under section 3 of the PML Act and the availability of remedies under the PML Act for challenging attachment orders.