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TMI Blog2023 (1) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... uld also be caught within the net of Section 3. In the case on hand, on a reading of the complaint, the allegation is that, but for the role played by the petitioner, the loans could not have been sanctioned and disbursed to A-1. Prima facie , these allegations would attract Section 3 of the PML Act. The conclusion have been arrived at in the light of a recent decision of the Supreme Court in DIRECTORATE OF ENFORCEMENT VERSUS PADMANABHAN KISHORE [ 2022 (11) TMI 53 - SUPREME COURT] , wherein, it was observed that By handing over money with the intent of giving bribe, such person will be assisting or will knowingly be a party to an activity connected with the proceeds of crime. Without such active participation on part of the person concerned, the money would not assume the character of being proceeds of crime. The relevant expressions from Section 3 of the PML Act are thus wide enough to cover the role played by such person. The case set up in paragraph 10.6 of the complaint is that, A-5 had sanctioned and disbursed the credit facilities/loan. But, for the alleged active participation and assistance of the petitioner/A-5 the money so disbursed would not have assumed the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the notice of this Court that the petitioner was convicted and sentenced along with the other accused persons and aggrieved by the same, an appeal was filed by the petitioner/A-5 and the same is pending. 2.4. The respondent filed a complaint under Section 45(1) of the Prevention of Money-Laundering Act, 2002 (hereinafter referred to as the PML Act ) before the Special Court, as against five accused persons, for the alleged offence under Section 3 of the PML Act, which is punishable under Section 4 of the PML Act and consequently to confiscate the property involved in money-laundering in terms of Sub-Section 5 of Section 8 of the PML Act. The petitioner has been arrayed as A-5 in this complaint. 3. The specific allegations made against the petitioner in the complaint are extracted hereunder, for proper appreciation : 10.6. Shri R. Kannan, the then Chief Manager of Union Bank of India, Mount Road Branch, Chennai in pursuance of a criminal conspiracy had actually connived with Shri M.Kamalchand Jain and Shri Anuraag Jain in the aforesaid criminal acts and by abetting their motive to fraudulently secure sanction and disbursement of credit facilities from the Union Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted; in view of the same, whatever defence is available to the petitioner, can only be put forth during the course of the trial and there are absolutely no grounds to quash the proceedings. Hence, the learned Special Public Prosecutor sought for the dismissal of this quash petition. 6. The learned Special Public Prosecutor, in order to substantiate his submissions, relied upon the following judgments : (a)Vijay Madanlal Choudhary and Others Vs. Union of India and Others (2022 SCC OnLine SC 929) and (b)Priti Saraf and Another Vs. State of NCT of Delhi and Another (2021 SCC OnLine SC 206). 7. We carefully considered the submissions made on either side and the materials available on record. 8. To appreciate the rival contentions, it is first necessary to set out the definition of the offence of money-laundering contained in Section 3 of the PML Act, which is as under: 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 proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m proceeds of crime and it has been held as follows : 251. The proceeds of crime being the core of the ingredients constituting the offence of money-laundering, that expression needs to be construed strictly. In that, all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime. There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act - so long as the whole or some portion of the property has been derived or obtained by any person as a result of criminal activity relating to the stated scheduled offence. To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is purchased or derived from the proceeds of crime even such subsequently acquired property must be regarded as tainted property and actionable under the Act. For, it would become property for the purpose of taking action under the 2002 Act which is being used in the commission of offence of money-laundering. Such purposive interpretation would be necessary to uphold the purposes and objects for enactment of 2002 Act. 253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression derived or obtained is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of proceeds of crime under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as proceeds of crime despite such adjudication by a Court of competent jurisdiction. It is well within the jurisdiction of the concerned Court trying the scheduled offence to pronounce on that matter. 282. Be it noted that the authority of the Authorised Officer under the 2002 Act to prosecute any person for offence of mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l points in issue in the following terms:- (v)(a) ... ... (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. 10. Prior to the decision in Vijay Madanlal, supra , the scope of Section 2(1)(u) was considered by a two judge bench in Nikesh Tarachand Shah v. Union of India [(2018) 11 SCC 1] . Adverting to the definition of proceeds of crime and the ingredients of the offence of money-laundering under Section 3 of the PML Act, the Court observed: Section 3, therefore, contains all the aforesaid ingredients, and before somebody can be adjudged as guilty under the said provision, the said person must not only be involved in any process or activity connected with proceeds of crime, but must also project or claim it as being untainted property. (emphasis supplied) Thus, the requirement of the offence, in terms of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffence of money-laundering under Section 3 of the PML Act. 12. In the case on hand, the proceeds of crime is the sum of Rs.6.25 crores that was sanctioned to A-1 on the basis of the alleged fraudulent approvals granted by the petitioner. The question, therefore, is whether the role played by the petitioner would be sufficient to rope him in as an accused for the alleged commission of an offence of money-laundering under Section 3 of the PML Act. 13. As stated supra , the predicate offence against the petitioner is that he fraudulently sanctioned and disbursed the loan. The loan is, therefore, the proceeds of crime. It is necessary to notice that the scope of Section 3 is wide enough to cover all persons who 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 proceeds of crime . It is clear that even a person who knowingly assists in any process or activity connected with the proceeds of crime would also be caught within the net of Section 3. In the case on hand, on a reading of the complaint, the allegation is that, but for the role played by the petitioner, the loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the petitioner/A-5 the money so disbursed would not have assumed the character of proceeds of crime. Consequently, it cannot be said that the alleged role played by the petitioner does not come within the net of the definition of proceeds of crime under Section 3 of the PML Act. 15. It is true that a Division Bench of this Court, in which, one of us (PNPJ) was a member, in R.Chandrasekaran Vs. The Deputy Director, Directorate of Enforcement (Crl.O.P.Nos.26898 and 26902 of 2017 decided on 20.01.2022) and N.Raveendranatha Reddy Vs. The Deputy Director, Directorate of Enforcement (Crl.O.P.No.29533 of 2015 decided on 27.01.2022), had taken a view different from the one taken in the instant case and had quashed the prosecutions against bank managers, by relying upon the law laid down by the Supreme Court in Nikesh Tarachand , supra. However, Nikesh Tarachand, supra, has been overruled by Vijay Madanlal, supr a. That apart, in Padmanabhan Kishore , supra , the Supreme Court has reversed the quashment of a prosecution by a Division Bench of this Court, in which, one of us (PNPJ) was a member, by holding that if the accused had, in any manner, involved in the process ..... X X X X Extracts X X X X X X X X Extracts X X X X
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