2024 (12) TMI 680 - HC - Money Laundering

Money Laundering - proceeds of crime - scheduled offences - criminal conspiracy and illegally quarried granite stones from the nearby lands and non-lease patta lands and transported more minerals than permit obtained quantity - HELD THAT - There are prima facie materials to show that illicit mining had taken place. The prosecution in respect of the scheduled offences is still pending. The evaluation report of the Department of Geology and Mining indicates that the proceeds of crime were valued at Rs. 261.89 crores. It is not known as to what happened to the said amount. The learned counsel for the petitioners would claim that identification of the proceeds of the crime is sine qua non and in its absence no complaint in respect of the offence of money laundering can lie. This argument has no merit. The learned Additional Solicitor General of India pointed out that Section 3 of the Prevention of Money Laundering Act which defines the offence of money laundering clarifies that a person shall be guilty of the offence of money laundering if such person is involved in concealment of the proceeds of crime. When concealment of the proceeds of crime itself would constitute the offence of money laundering it cannot be contended that unless the proceeds of crime are identified the complaint will not lie. The Hon ble Supreme Court in Rana Ayyub v. Directorate of Enforcement 2023 (2) TMI 236 - SUPREME COURT observed that Section 3 comprises of two essential limbs namely (i) involvement in any process or activity; and (ii) connection of such process or activity to the proceeds of crime. The expression proceeds of crime is defined in Section 2(1)(u) to mean any property derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence or the value of such property or where such property is taken or held outside the country then the property equivalent in value held within the country or abroad. Thus it is enough if the prosecution establishes that there was generation of proceeds of crime and the accused was involved in any process or activity in connection with the proceeds of crime. If by a Houdini trick they vanish thereafter the Enforcement Directorate need not establish the money trail. Since concealment of the proceeds of crime is an offence the accused can be held guilty of the same. The Enforcement Directorate need not demonstrate where the money eventually went. The accused after engineering a disappearing act cannot be heard to contend that they must be exonerated because proceeds of crime has not been identified. If a rat has escaped into a hole one can only point to the hole. The rat might even have exited through another end. The defence cannot argue that unless the rat is found there cannot be a prosecution. Section 24(a) of the Act will apply if charges have been framed against the accused. Section 24(b) of the Act will apply in the case of any other person. While Section 24(a) of the Act is a mandatory presumption Section 24(b) is a discretionary presumption. Taking into account the quantum of money involved and the nature of allegation this is a case in which the presumption under Section 24(b) has to be necessarily invoked. It is for the petitioner herein to rebut the presumption. But that can be done only during trial. The court below had approached the issue from a correct perspective and rightly dismissed the discharge petition filed by the revision petitioners herein. The court below had come to the conclusion that there is sufficient ground for proceeding against the petitioners herein. The court below has recorded convincing reasons for doing so. In exercise of revisional jurisdiction interference with the said order is not warranted. This criminal revision petition is dismissed.

Summary

Issues:
Money laundering offense, Proceeds of crime, Property purchased with proceeds of crime, Burden of proof under Prevention of Money Laundering Act, Discharge petition dismissal.

Analysis:
The judgment involves a case where the revision petitioners were accused of committing offenses related to money laundering. The complainant alleged that the petitioners engaged in illegal quarrying activities, generating proceeds of crime valued at Rs. 261.89 crores. The petitioners were summoned under the Prevention of Money Laundering Act, 2002, and properties purchased with the unlawfully generated income were identified. One such property, a house in Kilpauk, was claimed to be untainted by the petitioners. However, the prosecution contended that the property was purchased with proceeds of crime. The court considered the ongoing nature of the offense of money laundering and the involvement of the petitioners in activities connected to the proceeds of crime. The prosecution argued that the concealment of proceeds of crime itself constitutes money laundering, irrespective of identifying the exact whereabouts of the money.

The court discussed the statutory definitions of money laundering and the requirement to establish the generation of proceeds of crime and the accused's involvement in activities related to such proceeds. The judgment highlighted that the Enforcement Directorate need not trace the money trail if the accused attempt to conceal the proceeds of crime. The court emphasized that the offense of money laundering can be established based on the involvement in concealing proceeds of crime, even if the exact location of the money is unknown. The judgment cited legal provisions regarding the burden of proof in cases related to proceeds of crime under the Prevention of Money Laundering Act, 2002.

Regarding the property purchased by the petitioners, the court invoked the presumption under Section 24(b) of the Act, considering the nature of the allegations and the amount of money involved. The court held that the presumption of the property being involved in money laundering must be rebutted by the petitioners during trial. The court upheld the decision of the lower court to dismiss the discharge petition filed by the revision petitioners, concluding that there were sufficient grounds to proceed against them. The judgment emphasized that interference with the lower court's order was not warranted in the exercise of revisional jurisdiction, and thus, the criminal revision petition was dismissed along with the connected miscellaneous petition.