2022 (12) TMI 1243 - HC - Money Laundering

Criminal conspiracy - scheduled offences - predicate offences - Large scale bungling - misappropriation and cheating of public funds, while implementing the NRHM by the government officials, in active connivance and conspiracy with private persons - HELD THAT - Offence of money laundering is clearly a distinct and distinguishable from predicate offence. The FIR could be triggering point for initiation of proceedings under the PMLA. If it is found that the accused have also committed an offence which is punishable under the PMLA, the prosecution under the PMLA will be initiated by filing complaint under Section 45 of the PMLA. The scheduled offence and offence of money laundering are mutually exclusive and independent of each other. The offence under Section 3 of the PMLA does not prescribe any limit of proceeds of crime for initiating the proceedings under the PMLA. Section 4 of the PMLA also does not provide that the offence under Section 3 of the PMLA would be punishable when the proceeds of crime is Rs. 1 Crore or more. The offence of money laundering is made punishable for activities related to money laundering but not the quantum of money. The attachment proceedings are associated with civil proceedings mentioned in the PMLA. Even for the civil action i.e. attachment of proceeds of crime and property under the PMLA, it is not a condition precedent that against such a person, there should existing proceedings under scheduled offences. The definition of proceeds of crime and property under the PMLA would allow for confiscation of property derived or obtained directly or indirectly from proceeds of crime relating to a scheduled (predicate) offence, including income, profit and other benefits from the proceeds of crime. Offence of money laundering is a contining offence and relevance of the date of commission of the scheduled offence is irrelevant for the reason that as long as one is in possession of the proceeds of crime, he would be liable to be prosecuted for the offence under Section 3/4 of the PMLA - application dismissed.

Issues Involved:

1. Misuse of funds allocated under the National Rural Health Mission (NRHM).
2. Allegations of large-scale bungling, misappropriation, and cheating of public funds.
3. Criminal conspiracy and forgery by government officials and private persons.
4. Registration of FIRs and charge sheets by the CBI.
5. Proceedings under the Prevention of Money Laundering Act (PMLA).
6. Cognizance and proceedings against the accused under PMLA.
7. Quantum of proceeds of crime and its relevance under PMLA.

Detailed Analysis:

1. Misuse of Funds Allocated under NRHM:
The case pertains to the misuse of funds allocated under the National Rural Health Mission (NRHM), which was launched by the Government of India on 12.04.2005 to provide accessible, adequate, and affordable health services, especially to vulnerable sections of society in remote areas. A Memorandum of Understanding was entered into between the Central Government and the State Government of Uttar Pradesh on 12.11.2006, stipulating that 85% of the funds would be provided by the Central Government, while the State Government would contribute 15%.

2. Allegations of Large-Scale Bungling, Misappropriation, and Cheating of Public Funds:
Allegations emerged regarding large-scale bungling, misappropriation, and cheating of public funds by government officials in active connivance and conspiracy with private persons during the implementation of the NRHM. This led to the filing of three Public Interest Litigation petitions, prompting the Court to direct the CBI to conduct a preliminary enquiry into the matter.

3. Criminal Conspiracy and Forgery by Government Officials and Private Persons:
The accused, including government officials and private persons, were alleged to have entered into a criminal conspiracy to supply items at exorbitant prices and make false entries in stock books to defraud the government exchequer. Specific allegations include the involvement of accused-applicant Satish Kumar Kashyap, who allegedly abused his official position as a public servant and conspired with suppliers to forge quotations and make false entries.

4. Registration of FIRs and Charge Sheets by the CBI:
In compliance with the Court's directions, the CBI registered several FIRs, including FIR No. RC/DST/2012/A/0001 and FIR No. RC/DST/2012/A/0003, under various sections of the IPC and the Prevention of Corruption Act. Multiple charge sheets were filed in connection with these FIRs, detailing the irregularities in the supply of medicines, equipment, and other items at exorbitant prices under the NRHM.

5. Proceedings under the Prevention of Money Laundering Act (PMLA):
The Enforcement Directorate (ED) registered ECIRs against the accused, including Satish Kumar Kashyap, Savita Srivastava, and Pooja Srivastava, under the PMLA. Separate complaints were filed under Section 45 of the PMLA after completing the investigation.

6. Cognizance and Proceedings Against the Accused under PMLA:
Applications were filed by the accused for quashing the proceedings under the PMLA, arguing that the proceeds of crime attached by the ED were less than Rs. 1 Crore, making the complaints non-cognizable. However, the Court noted that the offence of money laundering is distinct and independent of the predicate offence, and the total amount of proceeds of crime involved was Rs. 1,02,41,900/-, making the proceedings valid.

7. Quantum of Proceeds of Crime and its Relevance under PMLA:
The Court emphasized that the offence under Section 3 of the PMLA does not prescribe any limit of proceeds of crime for initiating proceedings. The attachment proceedings are civil in nature, and the total proceeds of crime, rather than the attached amount, are relevant. The Supreme Court's judgment in Vijay Madanlal Choudhary and others Vs. Union of India clarified that the offence of money laundering is a continuing offence, and the date of commission of the scheduled offence is irrelevant as long as one is in possession of the proceeds of crime.

Conclusion:
The Court dismissed the applications, finding no merit in the arguments presented by the accused. The proceedings under the PMLA were upheld, and the applications were deemed devoid of merit and force.

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