2023 (5) TMI 444 - HC - Money Laundering

Money Laundering - proceeds of crime - predicate offence - property purchased from proceeds of crime is attached - whether there is ground for putting the petitioner on trial for offence of money laundering? - HELD THAT - Organized crime in general and economic offences in particular are not individual act, they are collaborative criminal enterprise of collective of persons, with defined role, who may join at its different stage of its execution. These are species of economic offence, where proceed of crime may run into crores with wide ramification undermining financial institutions and the economic health of the country. Actors involved are skilled and educated, the process of money laundering involves meticulous planning and deft execution in placement, layering and integration of the ill-gotten money in a complex layer of financial transactions to disguise it and project it as untainted. Different players may enter and exit in stages, to bring into fructification the larger design. In order to curb this, Prevention of Money Laundering Act aims at the persons who may not be involved in the predicate offence, but in laundering the proceeds of crime. The offence of money laundering is a stand alone offence and it is not necessary that the person accused of offence under PMLA should also be charged of the Scheduled offence. It is sufficient that proceed of crime so generated by the commission of scheduled offence, is laundered by the accused for being charged under PMLA. Money laundering is an independent offence has been held in Vijay Madan Lal Choudhary Vs Union of India 2022 (7) TMI 1316 - SUPREME COURT . After investigation chargesheet has been submitted against the contracting company M/s Classic Coal Construction Pvt. Ltd through its directors Sri Pawan Kumar Singh (father of the petitioner, since dead) and others for causing wrongful loss to the Govt. of Jharkhand and wrongful gain to the Company - Petitioner became a salaried director in the year 2010 and after the death of his father on 27.03.2013 he became the Managing Director and inherited the assets and liabilities of the Company. The presumption under Section 24 of PML Act can be rebutted only at the stage of trial and not at the stage of framing of charge. Nexus if any, between the properties acquired in the name of this petitioner and the proceeds of crime is a question of fact to be looked into at the stage of trial and not at the stage of discharge. There are no infirmity in the impugned order - Criminal Revision Petition accordingly stands dismissed.

Summary

Issues involved:
The judgment involves the quashing of an order rejecting a petition for discharge in a criminal revision petition related to the Prevention of Money Laundering Act (PMLA) and the consideration of whether there are grounds for putting the petitioner on trial for the offense of money laundering.

Details of the Judgment:

Issue 1: Quashing of the order rejecting the discharge petition
The petitioner filed a criminal revision petition seeking to quash the order passed by the Special Judge under the PMLA rejecting the petition for discharge. The petitioner argued that he was a minor at the time of the alleged offense and that the only material against him was the purchase of a property in his name after the completion of the work contract. The attachment of the property was appealed, and the confirmation order was stayed by the appellate authority under Section 25 of PMLA.

Issue 2: Arguments presented by the parties
The petitioner's counsel highlighted that the company had a healthy business during the relevant period, as evidenced by the balance sheet, and argued that no findings regarding this were included in the prosecution complaint. The Enforcement Directorate opposed the petition, stating that the crime proceeds involved a significant sum, part of which was attached, including a plot of land in the petitioner's name.

Issue 3: Standalone nature of the offense of money laundering
The court discussed the nature of money laundering as a standalone offense under the PMLA. It emphasized that a person accused of money laundering need not be charged with the predicate offense and that the focus is on laundering the proceeds of crime. The court cited a previous case to support the independent nature of the offense of money laundering.

Issue 4: Objective and provisions of the Prevention of Money Laundering Act
The court explained the dual objectives of the PMLA, focusing on prosecuting individuals involved in processes connected with proceeds of crime and on the attachment and confiscation of such proceeds. It outlined the stages of attachment under the Act and highlighted the importance of the existence of proceeds of crime for prosecuting money laundering offenses.

Issue 5: Nexus between properties acquired and proceeds of crime
The court addressed the argument that the properties acquired by the petitioner were not from the proceeds of crime but from the company's financial resources. It cited a legal precedent regarding the burden of proof in such cases and emphasized that the presumption under the PMLA can be rebutted only at the trial stage, not at the discharge stage.

Conclusion:
Based on the facts and circumstances of the case, the court found no infirmity in the impugned order rejecting the discharge petition. The Criminal Revision Petition was accordingly dismissed.

This summary provides a detailed overview of the judgment, highlighting the key issues, arguments presented, legal principles applied, and the court's conclusion.