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2025 (4) TMI 693 - AT - Money LaunderingMoney Laundering - predicate offence - provisional attachment order - conspiracy between the accused and officials of NSE which resulted in undue gain to the appellant Company and undue loss to the NSE - whether an offence under section 420 IPC is made out or not? - HELD THAT - In the instant case the work assigned to the appellant was not constitutionally permissible because it effected privacy of the employees guaranteed under Article 21 of the Constitution of India. Huge amount of 4.54 crore was yet paid with dishonest intention to the benefit of the appellant Company and with wrongful loss to the NSE. Despite specific allegation to this effect in the FIR the argument was made that the offence under section 420 is not made out. If the order of the High Court on the bail application is also taken note of an opinion in favour of the appellant is found but therein the allegation of wrongful loss to the NSE and wrongful gain to the Company in connivance of each other was not brought to the notice of the court. It is alleged to be a case of cheating in connivance of the top officials of the NSE. If the entire FIR is looked into the serious allegation of connivance of top official of NSE with the appellant Company has been made. The learned representative appearing for the appellant could not disclose as to how NSE could gain out of the work assigned to the appellant for a sum of Rs. 4.54 crore. The allegation otherwise refers to the position of Sanjay Pandey who remained the IPS Officer and Commissioner of Police and established the Company taking his mother (Smt. Santosh Pandey) as Director where even Directors were changed from time to time. All these facts were not brought to the notice of Delhi High Court. The perusal of the FIR discloses the allegation of wrongful gain to the appellant Company to the tune of Rs. 4.5 crores and wrongful loss to the NSE. The gain and loss has been quantified and made in terms of the money and not on account of the breach of confidentiality and privacy of the employees of NSE rather it was a separate part of allegation than the allegation for wrongful loss to the NSE and wrongful gain to the appellant for a sum of Rs. 4.5 cr. which has not been referred to rather brought to the notice of the Delhi High Court in the bail application where order is in terms of reply given by the respondents before the High Court. Conclusion - i) The appellant s actions constituted cheating under Section 420 IPC as there was a dishonest intention to cause wrongful loss to NSE and wrongful gain to the appellant. ii) The appellant s conduct fell within the definition of money laundering under Section 3 of the PMLA as the proceeds from the NSE were projected as legitimate income constituting proceeds of crime. There is no case in favour of the appellant and the appeal is accordingly dismissed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered was whether the provisional attachment order under the Prevention of Money Laundering Act, 2002 (PMLA) was sustainable, given the allegations against the appellant company. The core legal questions included:
ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The Tribunal examined the provisions of Section 420 IPC, which deals with cheating and dishonestly inducing delivery of property, and Section 3 of the PMLA, which pertains to the offence of money laundering. The Tribunal also considered the provisions of the Indian Telegraph Act, 1885, and the Information Technology Act, 2000, regarding unauthorized interception of communications. Court's Interpretation and Reasoning The Tribunal noted that the appellant company was accused of intercepting telephone lines of the NSE employees without consent, thereby breaching privacy and confidentiality. This act, coupled with the alleged conspiracy with NSE officials, was argued to constitute cheating under Section 420 IPC. The Tribunal emphasized that the wrongful gain to the appellant and loss to the NSE were crucial elements in determining the offence. The Tribunal also considered the Delhi High Court's decision, which granted bail to Sanjay Pandey, but clarified that the bail order was not a final determination on the commission of the offence. The Tribunal independently analyzed the allegations to determine if a prima facie case under Section 420 IPC was made out. Key Evidence and Findings The Tribunal relied on the FIR and the allegations therein, which detailed the conspiracy between the appellant company and NSE officials to intercept calls under the guise of conducting a cyber vulnerabilities study. The Tribunal found that the payments made to the appellant constituted proceeds of crime as defined under the PMLA. Application of Law to Facts The Tribunal applied the legal principles of cheating and money laundering to the facts, concluding that the appellant's actions amounted to an offence under Section 420 IPC. The Tribunal also found that the appellant's activities fell within the ambit of Section 3 of the PMLA, as they involved the proceeds of crime. Treatment of Competing Arguments The appellant argued that no predicate offence was made out, relying on the Delhi High Court's bail order. The Tribunal, however, found that the High Court's decision did not consider the full scope of allegations, particularly the wrongful gain and loss aspect. The Tribunal dismissed the appellant's argument that the interception of private lines did not fall under the Telegraph Act, as it was not relevant to the determination of the PMLA offence. Conclusions The Tribunal concluded that a prima facie case under Section 420 IPC and Section 3 of the PMLA was established against the appellant. The appeal was dismissed, and the provisional attachment order was upheld. SIGNIFICANT HOLDINGS The Tribunal held that the appellant's actions constituted cheating under Section 420 IPC, as there was a dishonest intention to cause wrongful loss to NSE and wrongful gain to the appellant. The Tribunal emphasized that the execution of the agreement with such intent amounted to an offence under Section 420 IPC. The Tribunal also established that the appellant's conduct fell within the definition of money laundering under Section 3 of the PMLA, as the proceeds from the NSE were projected as legitimate income, constituting proceeds of crime. The Tribunal noted that the Delhi High Court's bail order did not preclude the finding of a predicate offence, as the allegations of wrongful gain and loss were not fully considered in that decision. The Tribunal's decision reinforced the principle that the mere execution of a contract with fraudulent intent could constitute an offence under Section 420 IPC, especially when it results in financial gain to one party and loss to another.
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