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TMI Blog2023 (1) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... arge sheet in Spl.C.C.No.188/2013 and a second charge sheet in Spl.C.C.No.190/2013 and on the same facts, the third charge sheet in Spl.C.C.No.189/2013. Therefore, the proceedings against the petitioner were in Spl.C.C.Nos.188/2013, 189/2013, 190/2013. 4. During the pendency of those proceedings, the respondents registers an Enforcement Case Information Report ('ECIR' for short) in ECIR No.BGZO/05/2015 Summons/2790 and issued summons to the petitioner and again on 02.11.2018, issued the very summons that were earlier issued for seeking his presence before the concerned. It is at that juncture, the petitioner knocks at the doors of this Court seeking quashment of the entire proceedings in ECIR No.BGZO/05/2015 Summons/2790. 5. At the time when the petition was filed calling in question the aforesaid summons, the law with regard to, whether the proceedings initiated by the Enforcement Directorate would continue after the acquittal of an accused in the predicate offence, was fluid and not lucid. The law is now clear and crystalised by the judgment of the Apex Court in the case of VIJAY MADANLAL CHOUDHARY & ORS. V/s UNION OF INDIA & ORS reported in 2022 SCC Online SC 92 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever." 264. This section was first amended vide Act 2 of 2013. The expression "proceeds of crime and projecting" was substituted by expression "proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming". We are not so much concerned with this change introduced vide Act 2 of 2013. In o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a of June 2013, which reads thus: "Core Recommendations Recommendations Rating Summary of Actors underlying Rating Action taken of remedy deficiencies 1- ML offence PC (High Monetary ) threshold condition for most ML Predicates Amendments to india's prevention of money laundering act (PMLA) were enacted by Parliament on 17 December 2012 and came into force on 15 February 2013 All predicate offences previously contained in Part B of the Schedule (46 offences with a threshold value of INR 3 million ("30 lakh rupees" of USD 60000) were added in Part A without a threshold value. Part C of the Schedule now includes all offences listed in Part A, supplemented by all offences covered by Chapter XVII of the Penal Code, 1860, when these offences have cross-border implications. All in all, the list of predicate offences continues to include 156 offences under 28 different statutes but without any monetary threshold. As result, the major technical deficiency identified in relation to R.1 is fully addressed. ML Provision does not cover physical concealment of criminal proceeds Amendment to the PMLA were enacted by p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the international treaties, covenants and conventions although may not be a part of municipal law, the same be referred to and followed by the Courts having regard to the fact that India is a party to the said treaties. This Court went on to observe that the Constitution of India and other ongoing statutes have been read consistently with the rules of international law. It is also observed that the Constitution of India and the enactments made by Parliament must necessarily be understood in the context of the present-day scenario and having regard to the international treaties and convention as our constitution takes note of the institutions of the world community which had been created. In Apparel Export Promotion Council v. A.K. Chopra, the Court observed that domestic Courts are under an obligation to give due regard to the international conventions and norms for construing the domestic laws, more so, when there is no inconsistency between them and there is a void in domestic law. This view has been restated in Githa Hariharan, as also in People's Union for Civil Liberties, and National Legal Services Authority v. Union of India. 266. In the Core Recommendations of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 before the Parliament on 18.7.2019 as noted above. 268. Independent of the above, we have no hesitation in construing the expression "and" in Section 3 as "or", to give full play to the said provision so as to include "every" process or activity indulged into by anyone, including projecting or claiming the property as untainted property to constitute an offence of money-laundering on its own. The act of projecting or claiming proceeds of crime to be untainted property presupposes that the person is in possession of or is using the same (proceeds of crime), also an independent activity constituting offence of money-laundering. In other words, it is not open to read the different activities conjunctively because of the word "and". If that interpretation is accepted, the effectiveness of Section 3 of the 2002 Act can be easily frustrated by the simple device of one person possessing proceeds of crime and his accomplice would indulge in projecting or claiming it to be untainted property so that neither is covered under Section 3 of the 2002 Act. 269. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 is of no consequence as it does not alter or enlarge the scope of Section 3 at all. 271. As mentioned earlier, the rudimentary understanding of 'money-laundering' is that there are three generally accepted stages to money-laundering, they are: (a) Placement : which is to move the funds from direct association of the crime. (b) Layering : which is disguising the trail to foil pursuit. (c) Integration : which is making the money available to the criminal from what seem to be legitimate sources. 272. It is common experience world over that money-laundering can be a threat to the good functioning of a financial system. However, it is also the most suitable mode for the criminals deal in such money. It is the means of livelihood of drug dealers, terrorist, white collar criminals and so on. Tainted money breeds discontent in any society and in turn leads to more crime and civil unrest. Thus, the onus on the Government and the people to identify and seize such money is heavy. If there are any proactive steps towards such a cause, we cannot but facilitate the good steps. However, passions aside we must first balance the law to be able to save the basic tenets of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute, but also from a consideration of the social conditions which gave rise to it, and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give "force and life" to the intention of the legislature. That was clearly laid down by the resolution of the judges in Heydon's case, and it is the safest guide today. Good practical advice on the subject was given about the same time by Plowden in his second volume Eyston v. Studd. Put into homely metaphor it is this: A judge should ask himself the question : If the makers of the Act had themselves come across this ruck in the texture of it, how would they have straightened it out? He must then do as they would have done. A judge must not alter the material of which it is woven, but he can and should iron out the creases." (emphasis supplied) 275. Let us now also refer to the various cases that have been pressed into service by the petitioners. The same deal with the proposition as to the scope of an Explanation and the limits upto which it can stretch. Yet given the present scenario, we cannot find a strong footing to rely on the same in understating Section 3 of the 2002 Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... temporary thinking of the international community and in consonance with the Vienna and Palermo Conventions. 277. Reference has also been made to judgments which refer to the purport of side notes in the interpretation of a statute in Thakurain Balraj Kunwar v. Rae Jagatpal Singhhttps://www.scconline.com/Members/SearchResult.asp x - FN0479, Nalinakhya Bysack v. Shyam Sunder Haldar, Chandroji Rao v. Commissioner of Income Tax, M.P., Nagpur, Board of Muslim Wakfs, Rajasthan v. Radha Kishan, Tara Prasad Singh v. Union of India, Sakshi v. Union of India, Guntaiah v. Hambamma and C.Gupta v. Glaxo- Smithkline Pharmaceuticals Ltd. However, we find them of no use in the present case as we have already held that the Explanation only goes on to clarify the main or original provision. Other cases, which are of no help to the present issue, are the cases of D.R. Fraser & Co. Ltd. v. The Minister of National Revenue, Tofan Singh and Ashok Munilal Jain. Reference has also been made to Nikesh Tarachand Shah. However, there the questions raised were not in respect of the meaning of money-laundering and pertinently the amendment has come post the judgment, hence, will have no real bearing, unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generated as a result of such acts that the 2002 Act steps in as soon as proceeds of crime are involved in any process or activity. Dealing with such proceeds of crime can be in any form --being process or activity. Thus, even assisting in the process or activity is a part of the crime of money-laundering. We must keep in mind that for being liable to suffer legal consequences of ones action of indulging in the process or activity, is sufficient and not only upon projection of the ill-gotten money as untainted money. Many members of a crime syndicate could then simply keep the money with them for years to come, the hands of the law in such a situation cannot be bound and stopped from proceeding against such person, if information of such illegitimate monies is revealed even from an unknown source." Answering those arguments the Apex Court concludes as follows: "CONCLUSION 467. In light of the above analysis, we now proceed to summarize our conclusion on seminal points in issue in the following terms:-- (i) The question as to whether some of the amendments to the Prevention of Money-laundering Act, 2002 could not have been enacted by the Parliament by way of a Finance Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the 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. (vi) Section 5 of the 2002 Act is constitutionally valid. It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards as delineated by us hereinabove are effective measures to protect the interests of person concerned. (vii) The challenge to the validity of sub- section (4) of Section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seriousness of the offence of money-laundering, including about it posing serious threat to the sovereignty and integrity of the country. (c) The provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness. (d) As regards the prayer for grant of bail, irrespective of the nature of proceedings, including those under Section 438 of the 1973 Code or even upon invoking the jurisdiction of Constitutional Courts, the underlying principles and rigours of Section 45 may apply. (xiv) The beneficial provision of Section 436A of the 1973 Code could be invoked by the accused arrested for offence punishable under the 2002 Act. (xv)(a) The process envisaged by Section 50 of the 2002 Act is in the nature of an inquiry against the proceeds of crime and is not "investigation" in strict sense of the term for initiating prosecution; and the Authorities under the 2002 Act (referred to in Section 48), are not police officers as such. (b) The statements recorded by the Authorities under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the interpretation of Section 3 and holds that the offence under Section 3 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 which constitutes the offence of money laundering. The Apex Court holds that the authorities under the Act cannot prosecute any person on notional basis or on the assumption that the 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. 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. 13. It is germane to notice, the Apex Court in its j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Trial Court, allowing discharge application of the appellants, is restored." The Apex Court in the case of PARVATHI KOLLUR (supra) notices the judgment in the case of VIJAY MADANLAL CHOUDHARY and records the admission of the Union of India and quashes the proceedings. On the bedrock of what the Apex Court declares, the case at hand merits consideration. 14. 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. Accused 1 and 2 are into the proceedings under the Act for the reason of allegations of money laundering under Section 3, as according to the prosecution it is proceeds of crime. Therefore, the entire issue initiated by the Enforcement Directorate against the accused herein would revolve round Section 3 of the Act. Section 3 of the Act is interpreted by the Apex Court (supra). The conclusion of the Apex Court is that if they are discharged/acquitted or the criminal case against them is quashed, there can be no offence of money laundering against them or anyone claiming such property being the property linked to the scheduled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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