2022 (11) TMI 103 - HC - Money Laundering

Money Laundering - proceeds of crime - obtaining huge loans from Andhra Bank and Union Bank of India for starting a medical college in the name of D.D.Medical College - raising huge amounts from students, for giving admission without even getting the necessary permission from the Medical Council of India - HELD THAT - Even if the accused was not involved in the criminal activity that generated the proceeds of crime, but, if he is involved in some way or the other with the proceeds of crime so generated, he would be liable to be prosecuted under Section 3 read with 4 of the PML Act. Whether the cars were purchased from and out of the proceeds of crime, is also a question of fact which has to be decided only during trial. There are no infirmity in the orders passed by the trial Court in the discharge petitions warranting interference by this Court. Similarly, there are prima facie materials against Sonia and therefore, the prosecution against her cannot be quashed. The presence of Tataji and Sonia may be dispensed with on the conditions imposed - application disposed off.

Summary

Issues:
1. Prosecution under the Prevention of Money Laundering Act (PMLA) without being accused in the predicate offence.
2. Alleged possession of proceeds of crime and involvement in money laundering.
3. Dismissal of discharge petitions and quashing of prosecution.

Issue 1: Prosecution under PMLA without being accused in the predicate offence

The petitioner contended that since they were not named as accused in the predicate offence, their prosecution under the PML Act was not sustainable. Citing a Supreme Court judgment, the petitioner argued that prosecution under the PML Act cannot proceed unless the accused is connected to a scheduled offence. However, the court disagreed, citing a previous decision by the same bench where a similar argument was dismissed. The court held that the prosecution could proceed even if the accused were not directly involved in the criminal activity generating the proceeds of crime.

Issue 2: Alleged possession of proceeds of crime and involvement in money laundering

The petitioner further argued that the immovable properties were acquired before the loans were taken and settled on them, challenging the prosecution for possession of alleged proceeds of crime. The court considered this a disputed question of fact to be decided during trial. Referring to legal provisions, the court highlighted that even if the accused were not directly involved in the criminal activity generating proceeds of crime, their involvement with the proceeds could lead to prosecution under the PML Act. The court emphasized that the source of funds for purchasing high-end cars in the name of the accused needed to be determined during trial.

Issue 3: Dismissal of discharge petitions and quashing of prosecution

The court found no infirmity in the trial court's orders dismissing the discharge petitions and upheld the prosecution against the petitioner. It noted prima facie evidence against one of the petitioners, leading to the rejection of the quashing of prosecution. Consequently, the petitions seeking quashment of prosecution and challenging dismissal orders in discharge petitions were dismissed. The court allowed the presence of the petitioners to be dispensed with during trial under specific conditions to ensure their participation and compliance with legal proceedings.

In conclusion, the High Court of Madras dismissed the petitions seeking quashment of prosecution and challenging dismissal orders in discharge petitions. The court upheld the prosecution under the PML Act against the petitioners, emphasizing the need to determine the source of funds for assets allegedly acquired from proceeds of crime during trial. The court allowed the petitioners' absence during trial under specified conditions to ensure their participation and adherence to legal proceedings.