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TMI Blog2024 (12) TMI 1557X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. FACTUAL BACKGROUND 4. The present case is infamously known as the 'vote for note' case. In brief, the relevant facts are that, on 28.05.2015, Mr. Elvis Stephenson [hereinafter 'Complainant'], a sitting MLA then, addressed a letter to the Anti-Corruption Bureau, Telangana [hereinafter 'ACB'] stating that he was offered Rs. 5.00 crore bribe to vote in favour of Mr. Vem Narendar Reddy, a candidate of the Telugu Desam Party in the MLC elections or abstain from voting in the said elections. It is pertinent to note that the said Mr. Vem Narendar Reddy is the father of the present Petitioner. 5. The Complainant stated that the bribe was offered by Mr. A. Revanth Reddy [hereinafter 'A1'], who was assisted by Bishop Harry Sebastian [hereinafter 'A2'], Mr. Rudra Siva Kumar Uday Simha [hereinafter 'A3'] and Mr. Mataiah Jerusalem [hereinafter 'A4']. The Complainant informed the ACB that, A1 was willing to offer Rs. 50 lakhs as advance to cast the vote in favour of Vem Narendar Reddy. After receiving the information,the ACB asked the complainant to fix a meeting place. At the meeting place, the ACB officers fixed audio and video devices to record the meeting between the Complainant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accused persons by arranging the bribe of Rs. 50 lakhs. After registration of the impugned prosecution complaint, the Special Court issued summons dated 09.08.2021. The Petitioner challenges the entire criminal proceedings arising out of the impugned prosecution complaint including the summons issued to him. CONTENTIONS OF THE PETITIONER 10. The Petitioner is not an accused in the predicate offence registered by the ACB. Moreover, the Petitioner deposed as a witness i.e., PW22 in the proceedings of the predicate offence. The prosecution complaint wrongly states that a predicate offence was registered under Section 12 of the PCA and Section 120B of the IPC against the Petitioner. Therefore, as there is no predicate offence against the Petitioner, the present proceedings under the PMLA are not maintainable. Reliance was placed on Vijay Madanlal Chaudhary v. Union of India 2022 SCC OnLine SC 929. 11. The Respondent did not collect additional material to register a case under Section 3 of the PMLA. Sole reliance was placed on the contents of the Supplementary Charge Sheet, in which the Petitioner was not named as an accused. Therefore, the proceedings under the PMLA are not maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unter affidavit, it was contended that both Section 12 of the PCA and Section 120B of the IPC were invoked as the scheduled offences. Therefore, it was contended that as the scheduled offence was pending, the filing of the impugned prosecution complaint was legal. 21. Section 12 of the PCA was incorporated in the Schedule to the PMLA with effect from 28.07.2018. The ECIR, in the present case, was registered on 26.11.2018. Therefore, as on the date of registration of the ECIR, Section 12 of the PCA was a scheduled offence. Assuming, arguendo, it was contended that the offence of money laundering is a continuing offence and the date of commission of the scheduled offence may not be relevant. 22. Even if a person is not named as an accused in the predicate offence, he/she can still be prosecuted for the offence of money laundering. Reliance was placed on Vijay Madanlal Chaudhary (supra), Directorate of Enforcement v. Aditya Tirupathi 2023 SCC OnLine SC 619. , and P. Rajendran v. Assistant Director 2022 SCC OnLine Mad 9007. . 23. Reiterating the allegations stated in the predicate offence and the impugned prosecution complaint, it was contended that the Petitioner herein was directl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of proceeds of crime. 26. The phrase 'proceeds of crime' is defined under Section 2(1)(u) of the PMLA as follows: (u) "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; 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; 27. The above definition states that 'proceeds of crime' means any property which is derived or obtained as a result of a criminal activity. Such criminal activity relates to the offences included in the Schedule to the PMLA. In other words, any property derived or obtained as a result of commission of any of the offences mentioned in the Schedule to the PMLA will be treated as 'proceeds of crime'. 28. Simply put, unless the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. XXX 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 offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form-be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money-laundering. This offence otherwise has nothing to do with the criminal activity rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of sub-section (1) of Section 3 of the PMLA. 18. In a given case, if the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of the 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 le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is evident that the proceeds of crime have been generated by one set of accused persons against whom the CBI case has been registered. However, the petitioner herein was roped in subsequently for laundering the proceeds of crime which had been generated by the accused persons in the predicate offence. Merely because those persons against whom the predicate offence has been registered, are also an accused under PMLA case would not in any way dilute or impact the involvement of the present petitioner whose role essentially has been determined to be in laundering the proceeds of crime. The argument, therefore, as projected by the petitioner, is not tenable. 35. This Court agrees with the view expressed by the Allahabad High Court and the Delhi High Court. Merely because a person is shown as a witness in the predicate offence, it cannot be said that money laundering proceedings cannot be invoked against him/her. 36. The next ground raised by the Petitioner was that no scheduled offence as alleged existed when the FIR in relation to the predicate offence was registered. In support of the said ground, the Petitioner advanced two arguments. Firstly, that when the ECIR was registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udhary (supra) is imperative: 270. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of money-laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act-for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money laundering is not dependent on or linked to the date on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeds of crime in question. 42. In the present case, the question is whether as on the date of registration of the ECIR, there was material with the Respondent to show that the Petitioner or the other accused were dealing with any part of the proceeds of crime. As per the ECIR dated 26.11.2018, the alleged proceeds of crime is the alleged bribe amount of Rs. 5 crore. As on the date of registration of the ECIR, only Rs. 50 lakhs were seized. It is reasonable to draw an inference that the remaining part of the alleged proceeds of crime worth Rs. 4.5 crore were either being concealed or used or being projected as untainted money or were in possession of any or all of the accused. Therefore, there is enough prima facie material to hold that as on the date of the registration of the ECIR, i.e., 26.11.2018, the offence of money laundering was continuing. This begs the question whether any scheduled offence existed in relation to the alleged proceeds of crime as on the date of registration of the ECIR, i.e., 26.11.2018. Going by the record, the alleged scheduled offences were Section 120B of the IPC and Section 12 of the PCA. Both of the said offences were part of the Schedule to the PML ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. 45. In Y. Balaji (supra), the Supreme Court held that an offence of corruption constitutes and the generation of proceedings are like 'Siamese twins'. Therefore, there is sufficient material to justify the filing of the impugned prosecution complaint and to continue the proceedings under the PMLA. 46. The Petitioner also contended that as the proceedings in the predicate offence are stayed by the Supreme Court, the proceedings under the PMLA shall also be stayed. The said contention cannot be accepted. As held in Vijay Madanlal Chaudhary (supra), unless the accused in the scheduled offence "is finally absolved by a court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case", the offence of money laundering is maintainable. In the present case, the proceedings in the predicate offence are merely stayed and such a stay cannot be extended to the proceedings under the PMLA. 47. In light of the aforesaid r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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