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TMI Blog2022 (11) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. The Apex Court answers the issue further holding that if a person is finally discharged/acquitted of the predicate offences or the criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. The Apex Court answers the very issue which is the kernel of the conundrum in the case at hand, in the aforesaid clause of conglomeration of conclusions. The view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence. It is not in dispute that accused 3, 4 and 5 are hauled into the proceedings under the Act only because the property that they have acquired is linked to the criminal activity of accused 1 and 2. Accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and 2. The said conviction was called in question before this Court in Criminal Appeal No.414 of 2016. This Court by its judgment dated 14-08-2018 acquitted accused 1 and 2 of the aforesaid crime on the ground that the prosecution had failed to prove guilt of accused 1 and 2 beyond all reasonable doubt as eye witnesses and several other material witnesses had turned hostile. This Court held that the Sessions Court had wrongly read the evidence and had not considered the legal aspect involved in the case. Judgment and order of conviction of the Sessions Judge was set aside and accused 1 and 2 were acquitted of the charges. During the pendency of the appeal before this Court in Criminal Appeal No.414 of 2016, a complaint came to be registered against all the five accused on 03-05-2018 under Section 45(1) of the Act for offences punishable under Sections 3, 4 and 8(5) of the Act by the respondent in ECIR No.06/BGZO/2017. On filing of the complaint/charge sheet against the petitioners, it is registered as Special C.C.No.303 of 2018 on 21.05.2018. Thereafter, the complaint was entertained and a case was registered during the pendency of the aforesaid criminal appeal. 4. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel would now contend that there is no impediment whatsoever to quash the entire proceedings in the light of the judgment of the Apex Court. 8. The learned counsel appearing for the Enforcement Directorate would seek to contend that the issued is covered by DYANI ANTONY PAUL as proceeds of crime is what is determined by this Court and as such, the proceedings should be permitted to continue as the charges are already framed and trial is in progress. He would further submit that this very petitioner was a party to the judgment in the case of DYANI ANTONY PAUL (supra) and this very contention has been considered and rejected. Therefore, inter partes, the judgment and the rejection of the contention so advanced has become final and it having become final, the petition should be dismissed. 9. I have bestowed my anxious consideration to the respective submissions made by the learned senior counsel Sri.Kiran.S.Javali, appearing for petitioners and learned counsel Sri.Madhukar Deshpande, appearing for respondent in both the cases and have perused the material on record. 10. The afore-narrated facts are not in dispute. Accused 1 to 5 - petitioners in both these cases are proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ife of accused No.1, accused No.4 is the wife of accused No.2 and accused No.5 is the father of accused No.1. Therefore, the allegation in the subject crime i.e., Special C.C.No.303 of 2018 is that the wealth the petitioners are in their possession is the proceeds of crime in the predicate offence. As observed hereinabove, the complaint in the cases at hand was filed on 03-05-2018 during the pendency of the appeal before the Division Bench of this Court. The entire narration in the complaint is that the allegations in the complaint is a direct result of the criminal activity relating to IPC offences as several properties are indicated to have been acquired by the petitioners right from 2005 to 2015. After the registration of the complaint and the crime in Special C.C.No.303 of 2018 the order of acquittal comes about. They are arrayed for framing of charges and the concerned Court on 20-11-2021 rejecting the submission of the petitioners therein framed charges against the accused herein for offences punishable under Sections 3 and 4 of the Act. The reason rendered while framing charges reads as follows: 6. On perusal of the papers, it reveals that Jayalakshmipuram Police and Hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e launched against him and the property held by him could be attached if found involved in any process or activities connected with the proceeds of crime. The schedule offence is a substrata condition for giving rise to proceeds of crime and commission of schedule offence is a pre-condition for proceeding under PMLA. As such arguments urged in this aspect is not acceptable one. 10. The material allegations made in the complaint and the documents annexed to the complaint prima facie reveal about the involvement of the accused in laundering the money. The case against the accused registered under the Organized Crime Act. The material further reveals that accused No. 1 and 2 have acquired the properties out of crime proceeds. The other accused knowingly assisted the accused No.1, to acquire the properties from the proceeds of crime. 11. It is to be noted that in view of settled principles of law held by the Hon ble Apex Court while framing charge under Section 227 of Cr.P.C. the prima facie material is sufficient and there is no need to revolve around entire evidence. The material allegations made in the case prima facie establishes that accused were actively involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealing 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, reads thus: 3. Offence of money-laundering.- Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the 456[proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. Explanation .-For the removal of doubts, it is hereby clarified that,- (i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:- (a) concealment; or (b) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t about the need to retain the clause of projecting or claiming the property as untainted property. However, the Explanation inserted by way of amendment of 2019 was only to restate the stand taken by India in the proceedings before the FATF, as recorded in its 8th Follow-Up Report Mutual Evaluation of India June 2013 under heading Core Recommendations . This stand had to be taken by India notwithstanding the amendment of 2013 vide Act 2 of 2013 (w.e.f. 15.2.2013) and explanation offered by the then Minister of Finance during his address in the Parliament on 17.12.2012 as noted above. Suffice it to note that the municipal law (Act of 2002) had been amended from time to time to incorporate the concerns and recommendations noted by the international body. We may usefully refer to the Core Recommendations of the FATF concerning India of June 2013, which reads thus: Core Recommendations Recommendations Rating Summary of Factors underlying Rating Actions taken to remedy deficiencies 1-ML offence PC (High) monetary threshold condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed. (emphasis supplied) 265. To put it differently, the section as it stood prior to 2019 had itself incorporated the expression including , which is indicative of reference made to the different process or activity connected with the proceeds of crime. Thus, the principal provision (as also the Explanation) predicates that if a person is found to be directly or indirectly involved in any process or activity connected with the proceeds of crime must be held guilty of offence of money-laundering. If the interpretation set forth by the petitioners was to be accepted, it would follow that it is only upon projecting or claiming the property in question as untainted property, the offence would be complete. This would undermine the efficacy of the legislative intent behind Section 3 of the Act and also will be in disregard of the view expressed by the FATF in connection with the occurrence of the word and preceding the expression projecting or claiming therein. This Court in Pratap Singh v. State of Jharkhand, enunciated that the international treaties, covenants and conventions although may not be a part of municipal law, the same be referred to and fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Ishwar Singh Bindra v. The State of U.P., Joint Director of Mines Safety and Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd, interpreted the word and in the concerned legislation(s) as word or to give full effect to the legislative intent. 267. The Explanation as inserted in 2019, therefore, does not entail in expanding the purport of Section 3 as it stood prior to 2019, but is only clarificatory in nature. Inasmuch as Section 3 is widely worded with a view to not only investigate the offence of money-laundering but also to prevent and regulate that offence. This provision plainly indicates that any (every) process or activity connected with the proceeds of crime results in offence of money-laundering. Projecting or claiming the proceeds of crime as untainted property, in itself, is an attempt to indulge in or being involved in money-laundering, just as knowingly concealing, possessing, acquiring or using of proceeds of crime, directly or indirectly. This is reinforced by the statement presented along with the Finance Bill, 2019 before the Parliament on 18.7.2019 as noted above. 268. Independent of the above, we have no hesitation in construing the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act - for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money-laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till 31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all. 271. As mentioned earlier, the rudim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and I think we should do the same. Whenever a statute comes up for consideration it must be remembered that it is not within human powers to foresee the manifold sets of facts which may arise, and, even if it were, it is not possible to provide for them in terms free from all ambiguity. The English language is not an instrument of mathematical precision. Our literature would be much the poorer if it were. This is where the draftsmen of Acts of Parliament have often been unfairly criticized. A judge, believing himself to be fettered by the supposed rule that he must look to the language and nothing else, laments that the draftsmen have not provided for this or that, or have been guilty of some or other ambiguity. It would certainly save the judges trouble if Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it, when a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it, and of the mischief whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same. (emphasis supplied) 276. However, in the present case we find that the Explanation only sets forth in motion to clear the mist around the main definition, if any. It is not to widen the ambit of Section 3 of the 2002 Act as such. Further, the meaning ascribed to the expression and to be read as or is in consonance with the contemporary thinking of the international community and in consonance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and not simply a money-laundering (penal) Act. Today, if one dives deep into the financial systems, anywhere in the world, it is seen that once a financial mastermind can integrate the illegitimate money into the bloodstream of an economy, it is almost indistinguishable. In fact, the money can be simply wired abroad at one click of the mouse. It is also well known that once this money leaves the country, it is almost impossible to get it back. Hence, a simplistic argument or the view that Section 3 should only find force once the money has been laundered, does not commend to us. That has never been the intention of the Parliament nor the international Conventions. 280. We may also note that argument that removing the necessity of projection from the definition will render the predicate offence and money-laundering indistinguishable. This, in our view, is ill founded and fallacious. This plea cannot hold water for the simple reason that the scheduled offences in the 2002 Act as it stands (amended up to date) are independent criminal acts. It is only when money is generated as a result of such acts that the 2002 Act steps in as soon as proceeds of crime are involved in any pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation inserted to Section 3 by way of amendment of 2019 does not expand the purport of Section 3 but is only clarificatory in nature. It clarifies the word and preceding the expression projecting or claiming as or ; and being a clarificatory amendment, it would make no difference even if it is introduced by way of Finance Act or otherwise. (b) Independent of the above, we are clearly of the view that the expression and occurring in Section 3 has to be construed as or , to give full play to the said provision so as to include every process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity. (c) The interpretation suggested by the petitioners, that only upon projecting or claiming the property in question as untainted property that the offence of Section 3 would be complete, stands rejected. (d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1) of Section 44 of the 2002 Act is to be regarded as directory in nature and this provision is also read down to mean that the Special Court may exercise judicial discretion on case-to-case basis. (b) We do not find merit in the challenge to Section 44 being arbitrary or unconstitutional. However, the eventualities referred to in this section shall be dealt with by the Court concerned and by the Authority concerned in accordance with the interpretation given in this judgment. (xiii)(a) The reasons which weighed with this Court in Nikesh Tarachand Shah for declaring the twin conditions in Section 45(1) of the 2002 Act, as it stood at the relevant time, as unconstitutional in no way obliterated the provision from the statute book; and it was open to the Parliament to cure the defect noted by this Court so as to revive the same provision in the existing form. (b) We are unable to agree with the observations in Nikesh Tarachand Shah distinguishing the enunciation of the Constitution Bench decision in Kartar Singh and other observations suggestive of doubting the perception of Parliament in regard to the seriousness of the offence of money-laundering, includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok into the relevant records presented by the authorised representative of ED for answering the issue of need for his/her continued detention in connection with the offence of money-laundering. (xix) Even when ED manual is not to be published being an internal departmental document issued for the guidance of the Authorities (ED officials), the department ought to explore the desirability of placing information on its website which may broadly outline the scope of the authority of the functionaries under the Act and measures to be adopted by them as also the options/remedies available to the person concerned before the Authority and before the Special Court. (xx) The petitioners are justified in expressing serious concern bordering on causing injustice owing to the vacancies in the Appellate Tribunal. We deem it necessary to impress upon the executive to take corrective measures in this regard expeditiously. (xxi) The argument about proportionality of punishment with reference to the nature of scheduled offence is wholly unfounded and stands rejected. (Emphasis supplied) Clause (v) of the conclusion assumes significance. Clause (v) is answering the interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. Learned ASG appearing for the respondent, in all fairness, does not dispute the above position of law declared by this Court. The result of the discussion aforesaid is that the view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence. In view of the above, this appeal succeeds and is allowed. The impugned judgment and order dated 17.12.2020 is set aside and the order dated 04.01.2019 as passed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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