2024 (10) TMI 570 - HC - Money Laundering

Money Laundering - scheduled offences - Proceeds of crime - amassing huge assets disproportionate to his known source of income - burden of prove - offences under Sections 120B, 420 and 472 of IPC and offences under Sections 7, 9 and 13 of the Prevention of Corruption Act, 1988. Whether any prima facie materials are made available against the petitioner in the complaint filed or not? - HELD THAT - The expression money-laundering , ordinarily, means the process or activity of placement, layering and finally integrating the tainted property in the formal economy of the country. However, Section 3 has a wider reach. The offence, as defined, captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money- laundering. This is amply clear from the original provision, which has been further clarified by insertion of Explanation vide Finance (No. 2) Act, 2019, Section 3, as amended. Mere possession of proceeds of crime would be sufficient to invoke the provisions of PMLA. Using the proceeds of crime by itself is an offence. Since the scope of Section 3 is wider enough to cover various circumstances in order to curb the economic offences, High Court cannot restrict its meaning so as to restrain the Authorities from invoking the provisions of PMLA. Section 24 of PMLA denotes Burden of Proof . In any proceeding relating to proceeds of crime under PMLA in a case of a person charged with offence of money laundering under Section 3, the authority or Court shall unless the contrary is proved presume that such proceeds of crime are involved in money laundering and in the case of any other person, the authority or Court may presume that such proceeds of crime involved in money laundering . Therefore, the presumptions of the authorities, investigation conducted and documents collected would be sufficient to proceed against a person under PMLA. Unless contrary is proved, presume that such proceeds of crime are involved in money laundering. Therefore, the burden of proof lies on the affected person, who in turn has to prove his innocence during the course of trial. Adjudication of those materials placed by the petitioners would be unnecessary for this Court, while dealing with the discharge petitions. The Trial Court considered the allegations set out in the complaint and formed an opinion that the petitioner has failed to made out prima facie case for discharge. There are no infirmity or perversity with reference to the findings made by the Special Court rejecting the discharge petition. The Criminal Revision Case is dismissed.

Summary

Issues Involved:

1. Whether the petitioner, as a trustee, is implicated correctly under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA).
2. Whether there is a prima facie case against the petitioner for the offence of money laundering.
3. Whether the petitioner's involvement in the alleged activities constitutes an offence under PMLA.
4. The applicability of the burden of proof under Section 24 of PMLA.

Issue-wise Detailed Analysis:

1. Implication under PMLA:

The petitioner, identified as Accused No.2, was a trustee of the All India Indian Overseas Bank Employees Union Welfare Charitable and Endowment Trust. The complaint against the petitioner was filed under Section 45(1) read with Sections 3 and 4 and 8(5) of PMLA. The prosecution alleged that the petitioner, in his capacity as a trustee, was involved in a criminal conspiracy with Accused No.1 to manage the affairs of the Trust, which was used to project proceeds of crime as untainted. The petitioner contended that he was not involved in the administration of the Association and had no connection with the money collected by Accused No.1. However, the court found that the petitioner, as a trustee, had entered into various agreements and had not provided any document to support his claim of resignation from the Trust. Under Section 46 of the Indian Trusts Act, 1882, a trustee cannot renounce the trust without fulfilling specific conditions, none of which were demonstrated by the petitioner.

2. Prima Facie Case:

The court examined whether there were prima facie materials available against the petitioner. The prosecution complaint highlighted the role of the petitioner in the formation and management of the Trust, which was allegedly used for money laundering activities. Statements from other trustees and bank account analyses indicated that the Trust earned significant amounts from commercial activities, which were not benefiting the Union or its members. The court found that the complaint sufficiently outlined the petitioner's involvement, thereby establishing a prima facie case.

3. Offence under PMLA:

The court analyzed the definition of "proceeds of crime" under Section 2(1)(u) of PMLA and the offence of money laundering under Section 3. The complaint alleged that the petitioner was involved in the acquisition, possession, and use of proceeds of crime, projecting them as untainted property. The court noted that the scope of Section 3 is broad and includes various activities connected with proceeds of crime. The petitioner's alleged actions fell within this scope, and thus, the provisions of PMLA were applicable.

4. Burden of Proof:

Section 24 of PMLA places the burden of proof on the person charged with the offence of money laundering. The court emphasized that the authorities are presumed to have sufficient grounds to proceed against a person unless proven otherwise. The petitioner was required to prove his innocence during the trial. The court found that the trial court had correctly applied this principle, and the petitioner failed to demonstrate any contrary evidence.

Conclusion:

The court concluded that the trial court had rightly rejected the discharge petition, as there was no infirmity or perversity in its findings. The petitioner's arguments were insufficient to establish a lack of prima facie case. Consequently, the impugned order dated 02.06.2023 by the Principal Sessions Court, Chennai, was confirmed, and the Criminal Revision Case was dismissed.