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TMI Blog2024 (7) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, while dealing with a case where the FIR in respect of the predicate offence was quashed on the basis of settlement has held that the proceedings initiated under PMLA, 2002 provisions cannot stand in isolation in the absence of any scheduled offence. The Telangana High Court in Manturi Shashi Kumar v. Director, Directorate of Enforcement, [ 2023 (4) TMI 1199 - TELANGANA HIGH COURT ] has also quashed a complaint under Section 3 of the PMLA, 2002 on the grounds of the accused being discharged/acquitted of the scheduled offence. This Court, in the case of Prakash Industries Ltd. v. Directorate of Enforecement [ 2022 (7) TMI 877 - DELHI HIGH COURT ], has taken a view that once it is found that a criminal offence does not stand evidenced, the question of any property being derived or obtained therefrom or its confiscation or attachment would not arise at all. A bare perusal of the facts of the present case would show that the Trial Court had already acquitted the appellant-Jeevan Kumar of all the charges framed against him and the same has remained unchallenged by the respondent. Therefore, his acquittal in the scheduled offence breaks the entire chain leading to the other appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty being Plot No. 77, allotted to M/s Anchal Paper (P) Ltd. / Shri. Raghuvinder Singh in Eco Tech, Greater NOIDA (UP), from M/s Anchal Paper Products Pvt. Ltd., which had earlier entered into an agreement to sell with the appellant-Jeevan Kumar. It is the case of the respondent that the said property was allegedly bought by the appellant-Jeevan Kumar using the proceeds of crime and on the basis of the said fact, the PAO was passed. However, the said agreement to sell qua the property attached is stated to have been cancelled and the concerned property was subsequently alleged to have been sold to the appellant- M/S N.R. Merchant Pvt. Ltd. Though the name of the appellant-M/S N.R. Merchant Pvt. Ltd. does not find mention in the PAO, however, it is aggrieved as it purchased the said property at a later point of time, allegedly being unaware about the attachment proceedings. 5. Vide aforesaid PAO dated 09.09.2010, the following properties and bank accounts came to be attached qua the appellants mentioned below : - Appellant s Name Properties attached Bank accounts attached 1. Jeevan Kumar i. Residential premises at EC-II, C-102, Essel Tower Complex, Gurgaon (Haryana). ii. Plot No. 77, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffences, including offence punishable under Section 307 of the IPC, which is a scheduled offence under Paragraph 1 of Part B of the Schedule appended to PMLA, 2002. 11. Thereafter, on 09.09.2010, PAO No.6/2010 was passed in ECIR/07/DZ/2008, whereby, various properties of all the appellants herein were attached, prohibiting further alienation. The concluding paragraphs of the order dated 09.09.2010 read as under:- 15. AND WHEREAS from the Investigation conducted so far under PMLA, 2002, it is revealed that illegal kidney transplantation was the main source of income for Dr. Jeevan Kumar, The money so generated by him was none other than proceeds of crime. By investing the tainted money (Proceeds of crime) so earned in purchase of these properties, Dr. Jeevan Kumar was projecting the same to be untainted property. Investigation. made so far further revealed that some of the properties were financed by banks but the installments towards repayment to the bank (principal as well as interest) were being paid by Dr. Jeevan Kumar out of said proceeds of crime. Even though Jeevan Kumar made deposits in his bank accounts and tried to show the money as untainted. The payments / made by Dr. Je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been acquitted by the trial court vide judgment dated 22.03.2013 and that the said judgment has not been challenged till date, there can be no offence of money laundering under section 3 of PMLA against the petitioner. Accordingly, the ECIR bearing no. ECIR/7/DZ/2008 is quashed along with all consequential proceedings arising therefrom stated to be pending before the concerned court. 17. Additionally, on 15.01.2024 itself, vide a separate judgment in Crl. Rev. P. No.438/2012, the order on charge dated 24.12.2012 qua the appellant-Rajiv Channa under Sections 3 and 4 of PMLA, 2002 also came to be quashed by this Court. SUBMISSIONS 18. Mr. Vikas Pahwa, learned senior counsel appearing for the appellants, firstly submitted that when the appellant-Jeevan Kumar has already been acquitted in the predicate offence on merits vide a detailed judgment dated 22.03.2013, there is no reason to sustain the attachment of properties of the appellants. He submitted that as per the prosecution complaint dated 02.07.2011, the allegation against the appellants is that of laundering the proceeds of crime, generated by the appellant-Jeevan Kumar, and the same is the solitary link attempted to be establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionale to affirm the attachment proceedings qua the subject property. 22. Per contra, Mr. Anurag Ahluwalia, learned Central Government Standing Counsel appearing for the respondent, while bringing the attention of this Court to the order dated 10.02.2023, passed by the Hon ble Supreme Court in SLP (Crl.) Diary No.42315/2022 titled as Directorate of Enforcement v. Gagan Deep Singh made a limited submission that the issue whether proceedings under PMLA, 2002 would survive upon acquittal/discharge of the accused in a scheduled offence is still pending before the Hon ble Supreme Court. He, therefore, contended that in light of the fact that the issue involved herein is pending consideration before the Hon ble Supreme Court, the hearing of the present matter be deferred awaiting the outcome of the said proceedings. 23. In rejoinder submissions, learned senior counsel for the appellants vehemently opposed the submissions made by the learned counsel for the respondent and submitted that merely on the pretext of pendency of the Special Leave Petition, without there being any order of stay, the proceedings in the instant appeal cannot be deferred. On this aspect, he has placed reliance on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the country, then the property equivalent in value held within the country or abroad; Explanation. For the removal of doubts, it is hereby clarified that proceeds of crime‟ include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. 30. Thus, the proceeds of crime allude to any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. It may also include the value of any such property or in cases where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. The Explanation to Section 2(1)(u) of PMLA, 2002 further clarifies that the proceeds of crime would include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a consequence of any criminal activity pertaining to the scheduled offence. 31. Section 2(1)(y) of PMLA, 2002 defines scheduled offence to mean (i) offences specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause proceeds of crime , as it obtains as of now. *** 281. The next question is : whether the offence under Section 3 is a standalone offence? Indeed, it is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. Nevertheless, it is concerning the process or activity connected with such property, which constitutes offence of money-laundering. The property must qualify the definition of proceeds of crime under Section 2(1)(u) of the 2002 Act. As observed earlier, all or whole of the crime property linked to scheduled offence need not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheduled offence are quashed in its entirety, the scheduled offence will not exist, and therefore, no one can be prosecuted for the offence punishable under Section 3 of the PMLA as there will not be any proceeds of crime. Thus, in such a case, the accused against whom the complaint under Section 3 of the PMLA is filed will benefit from the scheduled offence ending by acquittal or discharge of all the accused. Similarly, he will get the benefit of quashing the proceedings of the scheduled offence. However, an accused in the PMLA case who comes into the picture after the scheduled offence is committed by assisting in the concealment or use of proceeds of crime need not be an accused in the scheduled offence. Such an accused can still be prosecuted under PMLA so long as the scheduled offence exists. Thus, the second contention raised by the learned senior counsel appearing for the appellant on the ground that the appellant was not shown as an accused in the chargesheets filed in the scheduled offences deserves to be rejected. 35. A similar view was taken in the case of Parvathi Kollur v. State [2022 SCC OnLine SC 1975], wherein, while affirming the discharge order of the Trial Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. 10. 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 by the Trial Court, allowing discharge application of the appellants, is restored. [Emphasis supplied] 36. In Nik Nish Retail Ltd. v. Assistant Director, Enforcement Directorate [2022 SCC OnLine Cal 4044], the Calcutta High Court, while dealing with a case where the FIR in respect of the predicate offence was quashed on the basis of settlement has held that the proceedings initiated under PMLA, 2002 provisions cannot stand in isolation in the absence of any scheduled offence. The relevant paragraph of the said decision reads as under:- 34. The quashing of FIR of regular case automatically created a situation that the offences, stated and alleged in the FIR has no existence; thus the Scheduled Offence has also no existence after quashing of the FIR. When there is no Scheduled Offen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus comes to the definite conclusion, that while the offense of money laundering may have been correctly described as a stand-alone offense in the sense of being a condition precedent for an allegation of money laundering being raised, that in itself would not infuse jurisdiction in proceedings that may be initiated under the Act even after a competent court has come to hold that no criminal offense stands committed or situations where the primary accused is discharged of the offense or proceedings quashed. When the offense of money laundering is described as a stand-alone offense, all that is sought to be conveyed is that it is to be tried separately in accordance with the procedure prescribed under the Act. It is evident from a reading of the Act that while the commission of a predicate offense constitutes the trigger for initiation of proceedings under the Act, the offense of money laundering must be tried and established separately. However, the Court finds itself unable to hold that a charge of money laundering would survive even after the charges in respect of the predicate offense are quashed or the accused is discharged upon the competent court finding that no offense is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent regarding the deferment of the adjudication of the present case in light of the issue being sub judice before the Hon ble Supreme Court in the case of Gagan Deep Singh (supra) is concerned, we do not find any merit in the argument of the respondents. The said order can neither expressly nor impliedly be construed to be any kind of stay on adjudication of the present proceedings. Further, this issue is no longer res-integra and in this context, we may allude to a judgment of the Hon ble Supreme Court in the case of Union Territory of Ladakh (supra), relevant paragraph of which is extracted hereunder for reference: 35. We are seeing before us judgments and orders by High Courts not deciding cases on the ground that the leading judgment of this Court on this subject is either referred to a larger Bench or a review petition relating thereto is pending. We have also come across examples of High Courts refusing deference to judgments of this Court on the score that a later Coordinate Bench has doubted its correctness. In this regard, we lay down the position in law. We make it absolutely clear that the High Courts will proceed to decide matters on the basis of the law as it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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