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TMI Blog2024 (10) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, which has been further clarified by insertion of Explanation vide Finance (No. 2) Act, 2019, Section 3, as amended. Mere possession of proceeds of crime would be sufficient to invoke the provisions of PMLA. Using the proceeds of crime by itself is an offence. Since the scope of Section 3 is wider enough to cover various circumstances in order to curb the economic offences, High Court cannot restrict its meaning so as to restrain the Authorities from invoking the provisions of PMLA. Section 24 of PMLA denotes Burden of Proof . In any proceeding relating to proceeds of crime under PMLA in a case of a person charged with offence of money laundering under Section 3, the authority or Court shall unless the contrary is proved presume that such proceeds of crime are involved in money laundering and in the case of any other person, the authority or Court may presume that such proceeds of crime involved in money laundering . Therefore, the presumptions of the authorities, investigation conducted and documents collected would be sufficient to proceed against a person under PMLA. Unless contrary is proved, presume that such proceeds of crime are involved in money laundering. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51 of 2014 filed charge sheets while C.C.No.7 of 2016 and 3 of 2019 respectively under Section 120B read with Section 420 of IPC, Sections 7, 8, 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 against Mr. L. Balasubramanian and other before the Learned Special Court for CBI Cases, Chennai. The Designated Court, after considering the charge sheets and the connected materials, has taken the co-gnisance of the same and the trial is in progress. 5. The offences under Sections 120B, 420 and 472 of IPC and offences under Sections 7, 9 and 13 of the Prevention of Corruption Act, 1988 are scheduled offences under the Prevention of Money-Laundering Act, 2002 [hereinafter referred as PMLA ], which empowers the Enforcement Directorate to investigate in respect of offences committed under Section 3 of PMLA. 6. The respondent after receiving the documents from the CBI, Chennai and having found that there is prima facie case made out under the provisions of PMLA recorded Enforcement Case Information Report (ECIR) No.5 of 2015 dated 16.04.2015 and took up the investigation. 7. During the course of investigation under the provisions of the PMLA, the depositions were reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... life time managing trustee along the petitioner and one Mr. R. Masilamani as nominated trustees. Further allegation is that Mr. L. Balasubramanian used the trust as conduit for siphoning of funds legitimately due to the Union and its members and the said Mr. L. Balasubramanian / A1 colluded with many regional union representatives to collect the illegal gratification for the absorption of the employees to the lower level posts. Further money was collected for transfer etc. There is no specific allegation against the petitioner / A2 that he had received any illegal gratification and transferred the amount to the said trust were he was one of the trustees. Even under the statement given by Mr. L. Balasubramanian / A1 under Section 50 of PMLA, there is no incriminating materials made available against the petitioner / A2. A1 and A3 died and therefore, the statement under Section 50 of PMLA cannot be used against the petitioner. Admittedly, the petitioner / A2 had not purchased any movable or immovable property out of the funds of the trust and he was not enjoying any benefits as a trustee. He was neither in possession nor in use any of the property purchased by the trust at the insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fonder Trustee along with the aforesaid Shri. S. Srinivasan and Shri. Masilamani, the then Treasurer of the Union, as the Trustees; that the Union had provided 5% of the monthly subscription received by the Union from its members during the years 2007 and 2009; that the AIOBEU Trust had taken a property belonging to the Union on lease for a period of 29 years at a very nominal rent of Rs. 5000/- per month; that this property comprised of six grounds land with a building of 28000 square feet; that the AIOBEU Trust had leased this property (from the Union') initially for the purpose of having their office (in the property); that Shri. L. Balasubramanian, the Founder Trustee controls the activities of the AIOBEU Trust; that the AIOBEU Trust had without informing the Union or taking the Union's permission /approval to let out the property as a Marriage Hall, had started giving the property on commercial rates for rent to the Public for conducting functions like marriage etc.; that the AIOBEU Trust did not enter into any fresh agreement with the Uni n for converting their (Union) premises into a commercial Marriage cum Function Hall and thereby earning a huge amount of profit; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral public at lucrative rates; that the Union was also put to monetary loss as the rent paid to the Union by the Trust was very less compared to the prevailing market rates for a property located in a prime locality; that the money earned by the Trust out of the Marriage hall had not benefited either the Union or its members till date; that the word AIOBEU in the name of the Trust, i.e., All India Overseas Bank Employees Union Welfare Charitable and Endowment Trust is misleading giving an impression that the object of the Trust is meant for the welfare of the members, whereas till date no welfare activity for the members of the Union had taken place either monetarily or otherwise; that the principal office bearers of the Union were also the Trustees of the AIOBEU Trust; that they only took the decision to lease out the Union's property for a period of 29 years; that this lease Deed was a means to diversify the funds of the Union to the said Trust which were due to it from its property i.e., the aforesaid Marriage Hall; that the AIOBEU Trust is managed and controlled by its Managing Trustee Shri. L. Balasubramanian; that the AIOBEU Trust is nothing but a front for the said Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax to the tune of many lakhs of rupee annually. 7.7. As per the statements given by S/Shri. L. Balasubramanian and R. Masilamani (one of the Trustees and who was later looking after the accounts cum administration, of the said property which is being used as a Function Hall), no significant charity work was being done by the Trust. 7.8. Shri. R. Masilamani, who was one of the Trustees, was also being paid a monthly salary for looking after the accounts of the AIOBEU Trust and he had stated that the AIOBEU Trust was collecting the rent for the Marriage Hall in the form of two cheques, i.e. one would be deposited as rent, and the other would be deposited as Corpus fund. An examination of the bank statements of the two accounts of the AIOBEU Trust confirmed the same. The rent was being deposited in a/c no. 34567 and the amount collected as corpus fund was being deposited in a/c no. 70000 which was designated as Corpus account. 7.9. The money thus accumulated had been deposited as Fixed Deposits in the All India Overseas Bank Employees Co-operative Credit Society, which was partially used to purchase a deluxe flat measuring around 1500 square feet at AR Regalia, General Patte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deed of Sale of Undivided Shares in Land dated 15.07.2016 with M/s Balaji Real Estates and Lease Deed dated 06.03.2009, Construction Agreement dated 19.6.2019 with M/s A.R Estates and Investments. 17. Subsequent to the registration of FIR, out of apprehension and anticipation, the petitioner has submitted his resignation letter on 11.8.2014. However, no document produced in support of his contention nor there is any such confirmation as to if the resignation letter has been accepted by the Founder Trustee Shri. L. Balasubramanian. By virtue of Section 46 of Indian Trusts Act, 1882, a trustee, who has accepted the trust cannot afterwards renounce it except (a) with the permission of a Principal Civil Court of Original Jurisdiction, or (b) if the beneficiary is competent to contract, with his consent, or (c) by virtue of a special power in the instrument of trust. 18. Further, Section 72 of the Act vested the power with the Principal Court of Civil Jurisdiction to discharge a Trustee from his office if sufficient reasons or cause is made out. The petitioner herein cannot unilaterally claim that he had relinquished his office, when the Trust instrument of Accused No.4 has not specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laint along with necessary annexures, detailing the proceeds of crime before this court. 26. The PMLA, being a special and standalone statute, the trial proceedings under this Act does not have any bearing on the trial proceedings or the outcome of the trial proceedings of the Scheduled Offence. 27. The petitioner herein had abetted the Accused-1 in acquisition, possession and use of the proceeds of crime and in projecting such proceeds of crime as untainted properties. 28. Section 24 of the Prevention of Money Laundering Act places the burden of proof on the person charged with the offence of money laundering under Section 3. LEGAL POSITION: 29. Section 2(1) (u) defines proceeds of crime means 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 any 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 relevant to consider the scope of Section 3 which provides offence of money laundering. 30. Section 3 stipulates that Whosoever directly or indirectly attempts to indulge or knowi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g relating to proceeds of crime under PMLA in a case of a person charged with offence of money laundering under Section 3, the authority or Court shall unless the contrary is proved presume that such proceeds of crime are involved in money laundering and in the case of any other person, the authority or Court may presume that such proceeds of crime involved in money laundering . Therefore, the presumptions of the authorities, investigation conducted and documents collected would be sufficient to proceed against a person under PMLA. Unless contrary is proved, presume that such proceeds of crime are involved in money laundering. Therefore, the burden of proof lies on the affected person, who in turn has to prove his innocence during the course of trial. Adjudication of those materials placed by the petitioners would be unnecessary for this Court, while dealing with the discharge petitions. CONCLUSION: 34. The Trial Court considered the allegations set out in the complaint and formed an opinion that the petitioner has failed to made out prima facie case for discharge. We do not find any infirmity or perversity with reference to the findings made by the Special Court rejecting the disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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