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TMI Blog2024 (11) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... he authorities. From the objects and reasons of the 2002 Act , it becomes evident that the money laundering posed a serious threat not only to the financial system of the countries but also to their integrity and sovereignty. The 2002 Act was enacted to prevent money laundering and connected activities. The act of money laundering is a multi-layered, complex and complicated diversion of the property, which is required to be prevented. Consequently, the definition of proceeds of crime has undergone transformative changes from time to time so as to include all the complex acts involved in the offence of money laundering. It is not disputed that the Supreme Court in Vijay Madanlal Chaudhary s case [ 2022 (7) TMI 1316 - SUPREME COURT] was examining the scope of the 2002 Act including definition of phrase proceeds of crime . The submission put forth by the learned counsel that the phrase or the value of any such property is superfluous was rejected by the Court and it was held that the definition of proceeds of crime is wide enough to not only include to the property derived or obtained as a result of criminal activity related to a schedule offence but also any other property of equival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the search carried out by the Enforcement Directorate substantial material has been found to prima facie establish not only the offence of money laundering but also large scale illegal mining of boulders, gravel, sand on the basis of fake, invalid e-Rawana invoices. There is material on record to show that the mined material has been transferred without e-Rawana invoices. There is a huge discrepancy in the minerals mined and sold. This FIR has been filed on the complaint filed by a person authorized to investigate the offences mentioned in the schedule. Hence, requirement of first proviso to Section 5 (1) stands fulfilled. Significance of the expression 'immediately' and its interpretation - HELD THAT:- It is evident that in Rao Mahmood Ahmed Khan Vs. Ranbir Singh, [ 1995 (2) TMI 359 - SUPREME COURT] , the word immediately and forthwith were treated as synonyms. Moreover, if failure to follow the statutory provision provides no express consequences, the procedural requirement shall be considered to be directory . Disputed questins of fact - HELD THAT:- Vehicles carrying mined material have not been provided with the GPS system and mining has been carried out beyond th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon'ble Supreme Court and followed by various High Courts? B. Whether the impugned PAO is also without jurisdiction on account of non-compliance of mandatory provisions of Section 5 (1) i.e. reason to believe as was held by the Hon'ble Supreme Court in Vijay Madanlal Choudhary others v. Union of India others 2022 SCC Online SC 929 and Radha Krishan Industries Vs. State of Himachal, 2021 (6) SCC 771? C. Whether the impugned order is liable to be set-aside on account of non-compliance of various provisions of PMLA Act: i. In gross violation of First Proviso to Section 5 (1) as no final report was submitted in 3 of the 8 FIRs coupled with the fact that cancelation report was presented in 2 FIRs and the petitioner was not charge sheeted in the other 3 FIRs; ii. In gross violation of Section 5 (2) read with Rule 3 5 of 2005 Rules, as the copy of the Impugned PAO alongwith the material in possession of respondent ED was not immediately forwarded to Ld. Adjudicating Authority since the Impugned PAO was passed on 09.08.2024 and the compliance of Section 5 (2) was admittedly made only on 12.08.2024; iii. Completely false plea taken in the Impugned PAO with regards to violati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it petitions have been filed under Article 226/227 of the Constitution of India, challenging the correctness of the aforesaid PAO in which Enforcement Directorate (in short ED ) has already filed its reply. 2. Submissions made by the rival parties: 2.1 Learned counsel representing the parties have also filed their written submissions apart from oral arguments. 2.2 The Petitioner s counsel while referring to the definition of proceeds of crime in Section 2 (1) (u) of Prevention of Money Laundering Act, 2002 (in short 2002 Act ), relying upon judgments in Pavana Dibbur Vs. Directorate of Enforcement, 2023 SCC (online) 1586, Seema Garg Vs. Deputy Director, Directorate of Enforcement, 2020(2) RCR (Criminal) 701, Abdullah Ali Balsharaf Vs. Directorate of Enforcement, 2019(3) RCR (Criminal) 798, Kumar Pappu Singh Vs. Union of India, 2021(3) ALT 571, HDFC Bank Limited Vs. Government of India and others, 2021 Criminal Law Journal 3969, M/s Himachal Emta Power Limited Vs. Union of India, WP (Civil)5537 of 2018, decided on 23.08.2018 and Hemanshu Rajnikant Shah Vs. Assistant Director, Enforcement Directorate, 2023 Criminal Law Journal 1999, submits that the attached properties were purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 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] proceeds of crime, means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to the 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. Explanation -For removal of doubts, it is hereby clarified that proceeds of crime including 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 3.2 In light of the Division Bench s judgment in Seema Garg s case (supra), this Bench would have been obligated to either follow it or refer the matter to a Larger Bench. However, the Supreme Court in Vijay Madanlal Chaudhary s case (supra) has interpreted the provision in para 298, which is extracted as under:- It was also urged before us that the attachment of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeds of crime, but were held abroad, to be liable to attachment. In 2019, the explanation has been added so as to give a wider scope to the authorities. From the objects and reasons of the 2002 Act , it becomes evident that the money laundering posed a serious threat not only to the financial system of the countries but also to their integrity and sovereignty. The 2002 Act was enacted to prevent money laundering and connected activities. The act of money laundering is a multi-layered, complex and complicated diversion of the property, which is required to be prevented. Consequently, the definition of proceeds of crime has undergone transformative changes from time to time so as to include all the complex acts involved in the offence of money laundering. 3.5 In Axis Bank s case (Supra), the Delhi High Court has dissected the definition in three parts while covering tainted property and untainted property held in India; and the proceeds of crime taken out of the country or any other property of equivalent value thereof. However, this Court is of the considered view that the definition can be divided into two broader categories namely tainted properties and untainted properties. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of the statute. 3.8 Moreover, the reasoning adopted in Seema Garg s case (supra) to the effect that there was no need to insert third part in the definition of the proceeds of crime and that value of such property is superfluous does not appear sound. It appears that transformative journey of the definition of phrase proceeds of crime was not brought to the notice of the Division Bench in Seema Garg s case (supra) . In Abdullah Ali Balsharaf s case (supra), Delhi High Court inadvertently overlooked the sub-category (i) of second part of definition of proceeds of crime . Similarly, Andhra Pradesh High Court in Kumar Pappu Singh s case (supra) was not properly assisted. Furthermore, the attention of Patna High Court was not drawn to part 2 (i) in HDFC Bank s case (supra). Similar is the position in M/s Himachal Amta Power Limited s case (supra). In this case, the attention of the Bench was not drawn to the second broader category of the definition. In Hemanshu Rajnikant Shah s case (supra) the Court relied upon Seema Garg s case (supra) and held that the properties acquired before the alleged crime and before the enforcement of the 2002 Act cannot be attached. 3.9 On the other han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the order that more than Rs.337 crores have been laundered and provisional attachment of property worth Rs.122 crores was ordered. 3.13 Dilbag Singh, Rajinder Singh, Manoj Wadhwa, Kulwinder Singh have already transferred some of the properties to their children/spouses or sold to third parties. It is recorded in the impugned order that the proceeds are likely to be concealed, transferred or otherwise dealt with in some manner after the search was conducted. After the search was carried, the vehicles were found transporting mined material without e-Rawana bills. There has been a mention of large scale illegal mining by using heavy machinery to mine boulders, gravel, sand being carried out during the odd hours while diverting the flow of Yamuna river despite being banned by the National Green Tribunal. 3.14 In the considered opinion of the Court, the PAO has fulfilled the mandatory requirement of recording the reasons to believe . This is only a provisional attachment order, which is subject to adjudication and confirmation within a period of 180 days by the competent authority in which opportunity has been provided to the petitioner. The reliance placed on para 287 of Vijay Mada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be in possession of only the accused named in the FIR relating to scheduled offences, Section 5 (1)(a) refers to any person and not only the accused. Secondly, Clause (a) and (b) provide for two conditions namely the person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating the proceedings related to confiscation of such proceeds of crime. 3.18 The first proviso to Section 5 (1) is divided in the following three parts:- (i) The order of attachment shall be made only if a report has been forwarded to a Magistrate under Section 173 of Cr.P.C. in relation to a scheduled offence. (ii) The attachment order shall not be made unless a complaint has been filed by a person authorized to investigate the offence mentioned in the schedule before a Magistrate or Court for taking cognizance of the scheduled offence as the case may be. (iii) The attachment shall not be made unless a similar report or complaint has been made or filed under the corresponding law in any other Country. 3.19 Thus, it is evident that forwarding of a report to a Magistrate under Section 173 of Cr.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IMMEDIATELY AND ITS INTERPRETATION:- 3.21 The next argument with respect to the failure of the Enforcement Directorate to immediately forward the impugned PAO along with the material in its possession to the adjudicating authority cannot be accepted because the PAO was passed on Friday evening i.e. 09.08.2024. On 10.08.2024 and 11.08.2024, the offices were closed on account of holidays. The POA along with the material in possession was forwarded to the adjudicating authority by Enforcement Directorate on 12.08.2024. Though, learned counsel for respondent has made reference to Section 10 of General Clauses Act, 1897, which provides for computation of time, however, in this case, no time limit has been prescribed. In fact this issue will not restrict the Court in light of a recent judgment passed by the Supreme Court in Shento Varghese Vs. Julfikar Husen and others, Criminal Appeal No. 2531-2532 of 2024, decided on 13.05.2024, wherein, the word forthwith as used in Section 102 (3) of Cr.P.C. has been explained in the following manner:- 19. The meaning of the word forthwith as used in Section 102 (3) has not received judicial construction by this Court. However, this Court has examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in which it travels and would take its colour depending upon the prevailing circumstances which can be variable. 24. Therefore, in deciding whether the police officer has properly discharged his obligation under Section 102 (3) Cr.P.C., the Magistrate would have to, firstly, examine whether the seizure was reported forthwith. In doing so, it ought to have regard to the interpretation of the expression, forthwith as discussed above. If it finds that the report was not sent forthwith, then it must examine whether there is any explanation offered in support of the delay. If the Magistrate finds that the delay has been properly explained, it would leave the matter at that. However, if it finds that there is no reasonable explanation for the delay or that the official has acted with deliberate disregard/ wanton negligence, then it may direct for appropriate departmental action to be initiated against such erring official. We once again reiterate that the act of seizure would not get vitiated by virtue of such delay, as discussed in detail herein above. 3.22 It is evident that in Rao Mahmood Ahmed Khan Vs. Ranbir Singh, 1995 (supp.) (4) SCC 275, the word immediately and forthwith were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplaints be considered part of the original complaint by the Special Court. Moreover, sine qua non to proceed under the 2002 Act is the offence of money laundering which is wholly dependent upon the proceeds of crime. It is evident that the proceeds of crime should be the result of criminal activity related to a scheduled offence included in the Schedule attached to the Act which includes offence under Section 420 of the Indian Penal Code, 1860 (hereinafter referred to as IPC ). In that context, the offence of money laundering is dependent upon the proceeds of crime from criminal activity relating to a scheduled offence, however, the registration of FIR in the scheduled offence is not sine qua non for initiating the proceedings under the 2002 Act. Section 66 of the 2002 Act is not dependent on the predicate offence as explained by the Supreme Court in Pavana Dibbur v. Directorate of Enforcement 2023 SCC Online SC 1586. VII. AVAILABILITY OF AN EFFICACIOUS ALTERNATIVE REMEDY:- 3.25 The Enforcement Directorate s counsel has contended that the petitioner has efficacious remedy before the adjudicating authority under Section 8 of 2002 Act . He asserts that the petitioner has an alternat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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