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2024 (5) TMI 725 - CALCUTTA HIGH COURT Money Laundering

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Money laundering investigation actions upheld as valid with proper authorization hierarchy under Section 17(1) PML Act
The Calcutta HC dismissed a writ petition challenging money laundering investigation actions. The court held it had territorial jurisdiction under Article 226(2) to hear the petition since part of the cause of action arose within its jurisdiction, despite the original case being from another state. The investigation revealed illegal proceeds from online gaming operations were laundered through associates. The court found the search, seizure, and freezing orders valid, noting proper authorization hierarchy under Section 17(1) of PML Act where Director authorized Deputy Director who then authorized Assistant Director. The statutory provisions prevailed over any apparent rule inconsistencies, and show cause notices were properly issued.

Territorial jurisdiction under Article 226 - search and seizure under PMLA Section 17 - freezing and retention of property under PMLA Section 17(1A) and Section 20 - delegation of authority within the Enforcement Directorate - requirement of recording reasons and provision of RUDs to the affected person - prevailing effect of statute over inconsistent rulesTerritorial jurisdiction under Article 226 - Maintainability of writ petition before the Calcutta High Court despite investigation having been initiated in another State. - HELD THAT: - The Court held that Article 226(2) empowers a High Court to entertain a writ petition where the whole or part of the cause of action arises within its territorial jurisdiction. The search, seizure and communication of freezing/continuation of freezing occurred within the territorial jurisdiction of this Court and the petitioners suffered legal and financial injury within that jurisdiction. Reliance on precedent establishing that infringement of a legal right within the territorial limits is sufficient for maintainability was accepted. Hence, the origin of the predicate FIR in another State did not oust this Court's jurisdiction to entertain the petition. [Paras 6, 7, 8]Writ petition is maintainable before the Calcutta High Court.Search and seizure under PMLA Section 17 - freezing and retention of property under PMLA Section 17(1A) and Section 20 - delegation of authority within the Enforcement Directorate - prevailing effect of statute over inconsistent rules - Validity of the search, seizure, freezing and continuation/retention orders impugned by the petitioners on grounds of lack of authorisation or procedural infirmity. - HELD THAT: - The Court examined the chain of authorisation and found that the Director had, by internal authorisation, empowered the Deputy Director to record 'reason to believe' under Section 17(1). The Deputy Director recorded the reason to believe, issued Search Authorisation No.116 of 2023 and authorised an Assistant Director to execute the search; the Assistant Director conducted the search, issued the Seizure Memo in Form II and freezing orders dated 10.09.2023. The Deputy Director subsequently recorded reasons under Section 20(1) for continuation/retention and that decision was communicated to the petitioners by the Assistant Director. The Court held that such delegation within the statutory framework and the execution by the authorised subordinate officer was consistent with Section 17(1) and 17(1A), and that where Rules are apparently inconsistent with the amended statutory provision, the statute prevails (citing the principle applied in Vijay Madanlal Choudhary). Consequently, the contention that the Assistant Director lacked authority to issue/communicate continuation was not sustainable and there was no material procedural illegality in the sequence of steps taken by ED. [Paras 12, 13, 14, 15, 17]Search, seizure, freezing and continuation/retention orders were validly authorised and intra vires the PMLA; no merit in challenge to their validity.Requirement of recording reasons and provision of RUDs to the affected person - Validity of the show cause notice issued by the Adjudicating Authority and the contention that RUDs were not supplied. - HELD THAT: - The Court observed that copies of the recorded reasons (RUDs) were provided to the petitioners by the Adjudicating Authority and that the RUDs were annexed to the writ petition itself. The petitioners had participated in the adjudication process and filed replies thereto. On this factual basis, the Court concluded that the challenge to the SCN on the ground of non-supply of recorded reasons lacked merit. [Paras 16]Show cause notice under Section 8(1) is not vitiated for non-supply of recorded reasons; contention in this regard fails.Final Conclusion: All contentions raised by the petitioners were rejected; the writ petition is dismissed for lack of merit. There shall be no order as to costs.

2024 (5) TMI 724 - ALLAHABAD HIGH COURT Money Laundering

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Issues Involved:
1. Validity of the proceedings initiated under the Prevention of Money Laundering Act (PMLA).
2. Applicant's involvement in the predicate offences.
3. Applicant's connection to the proceeds of crime.
4. Conditions for granting bail under Section 45 of the PMLA.

Summary:

1. Validity of the Proceedings Initiated Under PMLA:
The applicant, a sitting MLA, was arraigned as an accused in ECIR/ALSZO/27/2021 for offences punishable u/s 3 read with Section 4 of the PMLA. The proceedings were based on investigations from three FIRs relating to predicate offences, primarily FIR No.129 of 2020, which alleged encroachment on public property by M/s Vikas Construction.

2. Applicant's Involvement in the Predicate Offences:
The applicant was not named or chargesheeted in FIR No.185 of 2021. However, FIR No.236 of 2020 implicated him along with his family members in usurping government land. The investigating agency did not allege that any proceeds of crime were generated from the predicate offence in FIR No.236 of 2020.

3. Applicant's Connection to the Proceeds of Crime:
The investigating agency alleged that proceeds of crime were generated from FIR No.129 of 2020. The agency claimed that M/s Vikas Construction, controlled by the applicant's family, generated proceeds of crime through illegal activities. The applicant allegedly received money from family members, which was used for personal expenses, including importing firearms. The applicant could not satisfactorily explain the source of funds in his account.

4. Conditions for Granting Bail Under Section 45 of the PMLA:
The court considered whether the conditions for bail u/s 45 of the PMLA were satisfied. The prosecution opposed the bail, and the court had to determine if there were reasonable grounds to believe the applicant was not guilty and would not commit any offence if granted bail. The court found that the applicant's explanations lacked credibility and there was material linking him to the proceeds of crime. The court could not form a prima facie satisfaction that the applicant was not guilty or would not commit an offence on bail.

Conclusion:
The court rejected the bail application, noting the gravity of the offence, the applicant's inability to explain the transactions, and the potential influence the applicant could exert on witnesses. The trial court was directed to expedite the trial process.

Bail denied in money laundering case over property encroachment proceeds and falsified construction records under Section 45 PMLA
The Allahabad HC rejected a bail application in a money laundering case involving proceeds of crime from property encroachment. The applicant was allegedly connected to M/s Vikas Construction, which generated proceeds through falsification of records. Despite the applicant's claim of no direct involvement, the court found prima facie evidence linking him to fund movements between firms through flow charts and financial trails. The court noted the applicant's initial non-cooperation with summons and inability to explain transactions, relying on family members for funds. Under Section 45 of PMLA, the court could not satisfy itself that the applicant was not guilty or unlikely to commit offenses on bail, resulting in rejection.

Offence of money-laundering under Section 3 of the PMLA - Proceeds of crime - Twin conditions under Section 45 for grant of bail - Prima facie satisfaction required for bail - Continuing activity and the relevant date for money laundering - Statutory presumption under Section 24Twin conditions under Section 45 for grant of bail - Prima facie satisfaction required for bail - Application for bail under Section 45 of the PMLA was to be considered and decided - HELD THAT: - The Court applied the mandatory twin conditions of Section 45 - (i) that the Public Prosecutor be given an opportunity to oppose bail, and (ii) where opposed, the court must be satisfied on reasonable grounds that the accused is not guilty of the offence and is not likely to commit any offence while on bail. The court observed that it need not conduct a mini trial but must form a prima facie view on broad probabilities based on the material collected during investigation. Considering the nature and gravity of the accusation, the severity of punishment under the PMLA, the existence of voluminous documentary evidence and flow charts tracing funds, the applicant's family antecedents and conduct during investigation (including initial evasion and the circumstances of arrest), and the fact that witnesses were yet to be examined, the Court was unable to form the requisite prima facie satisfaction that the applicant is not guilty or would not commit an offence on bail. Consequently the bail application was rejected. [Paras 38, 39, 40, 41, 42]Bail application under Section 45 of the PMLA rejected for failure to satisfy the twin conditions.Offence of money-laundering under Section 3 of the PMLA - Proceeds of crime - Continuing activity and the relevant date for money laundering - Statutory presumption under Section 24 - Whether there was prima facie material to link the applicant with proceeds of crime and the offence of money laundering - HELD THAT: - On examination of the ECIR, complaint and supplementary complaint and the material collected during investigation, the Court found prima facie evidence of a pattern of transactions linking two family controlled firms to transfers into and out of the applicant's bank account. The investigation disclosed transfers from M/s Vikas Construction to M/s Aaghaaz and thereafter to the applicant, utilization of funds by the applicant for personal expenditures (including foreign trips and importing firearms) and unexplained cash withdrawals; statements and documentary material and flow charts were relied upon to trace the trail. The Court noted the wide and inclusive definition of 'proceeds of crime' and of the offence in Section 3, the concept of continuing activity and that involvement in any process connected with proceeds (concealment, possession, acquisition or use) may attract liability. Having regard to these materials and to the applicant's explanations being found not fully credible, the Court was satisfied prima facie that the applicant was linked to the movement and use of funds alleged to be proceeds of crime. [Paras 36, 37, 38, 40, 41]Prima facie material exists linking the applicant to proceeds of crime and to activities falling within Section 3 of the PMLA.Final Conclusion: The High Court, applying the statutory tests and settled precedents, found prima facie material linking the applicant to proceeds of crime and, unable to form the requisite satisfaction under Section 45 that the applicant was not guilty or would not offend while on bail, rejected the bail application and directed expeditious trial.

2024 (5) TMI 569 - DELHI HIGH COURT Money Laundering

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PMLA regular bail on broad probabilities: Court found Section 45 conditions satisfied despite pending predicate-offence link
In a PMLA regular bail plea, the Court applied the twin conditions under Section 45 on broad probabilities and without conducting a mini-trial. It held that pardon in the predicate offence did not amount to absolute absolution in the money-laundering case, because PMLA liability remains independent while still linked to the scheduled offence and proceeds of crime. On the material then available, the applicant was not shown to be a key managerial person or part of day-to-day management, and his alleged role and knowledge that the funds were proceeds of crime were not conclusively established at the bail stage. Bail was granted, taking into account parity, non-arrest of similarly placed persons, filing of the complaint, and custody already undergone.

Approver and pardon in predicate offence and its effect on prosecution under the PMLA - Requirement of a scheduled offence and "proceeds of crime" for offence under Section 3 PMLA - Section 45 PMLA twin conditions for grant of bail - "reasonable grounds for believing" and risk of re-offending - Evidentiary role of statements recorded under Section 50 PMLA at the bail stage - Parity doctrine / relevance of non-arrest of similarly placed co-accused in bail considerationsApprover and pardon in predicate offence and its effect on prosecution under the PMLA - Requirement of a scheduled offence and "proceeds of crime" for offence under Section 3 PMLA - Legal effect of the applicant's grant of pardon/approver status in the predicate scheduled offence on the continuance of proceedings under the PMLA. - HELD THAT: - The Court examined whether pardon granted to the applicant in the predicate proceeding (making him an approver/witness) ipso facto absolves him from prosecution under the PMLA. Relying on the principles in Vijay Madanlal Choudhary and Pavana Dibbur and on the distinction between dismissal/quashing/acquittal of the scheduled offence and grant of pardon/approver status, the Court held that pardon under Sections 306-308 CrPC converts the accused into a witness subject to statutory conditions but does not amount to an absolute acquittal for purposes of PMLA proceedings. The Court accepted the view that a prosecution under Section 3 PMLA requires the existence of a scheduled offence and proceeds of crime; if the scheduled offence is finally extinguished by acquittal/discharge/quashing, PMLA prosecution cannot continue. However, grant of pardon/approver status in the predicate case does not by itself fall within the category of being "finally absolved" so as to disable PMLA proceedings, and the evidence that the approver gives in the predicate matter cannot be used in the PMLA unless conditions under CrPC are met. Consequently, the applicant's approver status is relevant only to the limited extent provided by law and does not automatically preclude PMLA prosecution against him. [Paras 16, 17, 18, 19, 20]Grant of pardon/approver status in the predicate offence does not automatically bar prosecution under the PMLA; the approver becomes a witness subject to CrPC conditions and evidence given in those proceedings cannot be freely used in the PMLA.Section 45 PMLA twin conditions for grant of bail - "reasonable grounds for believing" and risk of re-offending - Evidentiary role of statements recorded under Section 50 PMLA at the bail stage - Whether the applicant satisfied the twin conditions prescribed by Section 45 PMLA for grant of bail on the materials on record. - HELD THAT: - The Court applied the settled test under Section 45 PMLA, emphasising that at the bail stage the court must assess only broad probabilities and whether there are reasonable grounds for believing that the accused has not committed the offence and would not commit an offence while on bail. The Court considered the prosecution material - principally the statements recorded under Section 50 PMLA and the allegations in the complaint - and held that Section 50 statements are admissible for limited evaluation at the bail stage to ascertain broad probabilities, though their full probative value is to be assessed at trial. On the material, the applicant was shown to have been a non-managerial field operative who repeatedly stated that he acted on instructions and was paid commission; none of his statements affirmatively established knowledge that the routed funds were bank loan proceeds or that he was a beneficiary of proceeds of crime. No asset of the applicant has been shown to be derived from proceeds of crime. The Court also noted that similarly placed co-accused had not been arrested and that the applicant had cooperated with investigation and had been in custody for a prolonged period. Applying the Section 45 framework on broad probabilities, the Court found absence of sufficient material demonstrating requisite mens rea or that the applicant would commit an offence if released. [Paras 26, 27, 28, 29, 31]The applicant satisfied the twin conditions of Section 45 PMLA on the available material; bail was accordingly granted subject to conditions.Evidentiary role of statements recorded under Section 50 PMLA at the bail stage - Parity doctrine / relevance of non-arrest of similarly placed co-accused in bail considerations - Whether statements under Section 50 PMLA and non-arrest of similarly placed co-accused can be considered in determining bail. - HELD THAT: - The Court reiterated that statements recorded under Section 50 PMLA are judicially significant and admissible, yet at the bail stage they must be examined only for broad probabilities rather than through a mini-trial; self-contradictions or material inconsistencies in such statements may benefit the accused at bail stage. The Court further accepted that selective non-arrest or non-custodial treatment of similarly placed co-accused is a relevant factor in assessing parity and the reasonableness of continued detention. Given that several co-accused with similar roles were not placed in custody and some were merely witnesses or granted bail in predicate matters, parity and the nature of the applicant's recorded statements weighed in favour of bail. [Paras 24, 30]Section 50 statements can be used to assess broad probabilities at bail stage; parity arising from non-arrest of similarly placed co-accused is a relevant factor favouring grant of bail.Final Conclusion: On the material placed before it and applying the twin conditions of Section 45 PMLA on broad probabilities, the Court found that the applicant had not been shown to possess the requisite mens rea or to be a beneficiary of proceeds of crime and that considerations of parity and cooperation with investigation favoured release; bail was therefore allowed subject to specified conditions.

2024 (5) TMI 788 - CALCUTTA HIGH COURT Money Laundering

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Prolonged custody did not override PMLA bail restrictions where Section 45 conditions were unmet and investigation was still active.
In a PMLA prosecution, prolonged custody and delay in trial were held insufficient to justify bail where the accused had not satisfied the twin conditions under Section 45. The Court relied on the continuing investigation, the alleged use of dummy firms, routing of funds through bank accounts, and the link to proceeds of crime and related assets, and found that the matter remained at a crucial investigative stage. Constitutional arguments based on personal liberty and speedy trial were considered, but they did not override the statutory bail restriction on these facts. Bail was declined.

Bail under Prevention of Money Laundering Act - twin conditions of Section 45 of PMLA - right to speedy trial and Article 21 - delay in trial and Section 436A CrPC - presumption of innocence and burden on accused - economic offences as grave offencesBail under Prevention of Money Laundering Act - twin conditions of Section 45 of PMLA - presumption of innocence and burden on accused - economic offences as grave offences - Admission to bail of the petitioner charged under PMLA - HELD THAT: - The Court examined the bail application in the context of the twin conditions prescribed by Section 45 of the PMLA and the jurisprudence recognising Article 21 and the right to speedy trial. The petitioner, a chartered accountant, was alleged to have participated in opening and managing dummy accounts, receiving substantial commission and facilitating concealment of proceeds of crime; cash seizures and documents were relied upon by the Enforcement Directorate. While the Court acknowledged principles permitting bail where prolonged detention and unlikely speedy trial make continued custody untenable, it found that the investigation remains at a crucial stage (including tracing immovable assets domestically and abroad) and that the petitioner had not prima facie discharged the burden of showing he is not guilty and would not commit an offence while on bail. The Court applied relevant precedents concerning economic offences, the applicability of Section 436A of the CrPC as a yardstick for delay, and the balancing of Article 21 against statutory bail restrictions, but concluded that on the facts and material before it the statutory twin conditions were not satisfied. [Paras 32, 33, 34, 35, 36]Bail application rejected; petition dismissed.Final Conclusion: The High Court refused bail under the PMLA, holding that the petitioner failed to satisfy the twin conditions of Section 45 and that ongoing investigation and tracing of immovable assets precluded release despite period of custody; the bail petition is dismissed.

2024 (5) TMI 420 - BOMBAY HIGH COURT Money Laundering

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72-year-old cancer patient granted bail for treatment and caring for terminally ill wife under PMLA Section 45(1)
The Bombay HC granted bail on medical grounds to a 72-year-old accused in a money laundering case under PMLA Section 45(1) first proviso. The petitioner suffered from duodenal cancer and his wife had terminal cancer, causing mental distress. The court noted that while adequate hospital treatment was available, there exists qualitative difference between treatment as an undertrial prisoner versus a free citizen. Considering the petitioner's advanced age, cancer diagnosis, recommended treatment risks, other ailments, and wife's critical condition, the court exercised discretion to grant limited bail for cancer treatment and attending to his terminally ill wife.

Proviso to Section 45(1) of the PMLA - sick or infirm - medical bail - exercise of judicial discretion - right to life under Article 21 - adequate and effective medical treatment in custody - personal libertyProviso to Section 45(1) of the PMLA - sick or infirm - exercise of judicial discretion - medical bail - Applicant entitled to bail under the proviso to Section 45(1) of the PMLA on medical grounds and the Court's exercise of discretion thereunder - HELD THAT: - The Court analysed the scope of the proviso to Section 45(1) of the PMLA which permits release on bail of a person who is "sick or infirm" and observed that the proviso was inserted to mitigate the rigour of the main bail bar. The words "sick" and "infirm" are disjunctive; not every illness qualifies and the court must assess severity. Medical reports establish that the applicant suffers from multifocal duodenal neuroendocrine tumours with spread to D1-D3, for which Whipple's surgery (a high risk supramajor procedure) was recommended but declined in favour of chemotherapy; he also has other ailments and severe depression. The wife suffers from recurrent, life threatening cancer and requires the applicant as primary caretaker. Considering the applicant's age, comorbidities, the critical condition of his wife, and the cumulative impact on his physical and mental health, the Court concluded that the applicant falls within the proviso and that discretion should be exercised to grant bail for a limited period. The Court emphasised that such discretion must be judicious and fact sensitive, and that falling within the proviso does not render the main part of Section 45(1) irrelevant but allows exceptional relief when circumstances justify it. [Paras 14, 15, 16, 29, 32]Applicant to be released on bail for a limited period under the proviso to Section 45(1) PMLAAdequate and effective medical treatment in custody - personal liberty - right to life under Article 21 - Availability of hospital treatment does not automatically preclude grant of medical bail and personal liberty considerations weigh in favour of release - HELD THAT: - The Court rejected a narrow approach that if adequate treatment is available in hospital (including hospital of choice) then bail must be denied. While recognising the State's obligation to provide requisite treatment in custody, the Court held there is a qualitative difference between treatment received as an undertrial and treatment as a person at liberty, and that insisting solely on adequacy of in custody treatment would render the proviso otiose. The Court noted precedents which require judicial satisfaction that in custody treatment is inadequate before denying bail, but here the cumulative facts (age, nature and spread of malignancy, other ailments, mental infirmity, and wife's condition) justified release despite the availability of care in hospital. [Paras 30, 31, 32]Availability of treatment in custody did not preclude granting limited medical bailExercise of judicial discretion - conditions of bail - Bail to be subject to stringent conditions and limited duration to allay prosecution's apprehensions of flight and tampering with evidence - HELD THAT: - The Court found prima facie that the applicant has roots in society and that risks of flight or tampering with evidence were remote. Nonetheless, to address prosecution concerns the Court imposed stringent conditions: two months' bail, PR bond and sureties, jurisdictional restriction to Greater Mumbai, surrender of passport, furnishing contact details, prohibition on tampering with evidence or contacting co accused, and undertaking to abide by conditions. Breach would render bail liable to cancellation. The Court emphasised the limited scope of its observations to the bail question and not on merits of the prosecution. [Paras 33, 34]Grant of bail for two months subject to specified conditions; violation to attract cancellation of bailFinal Conclusion: Bail partly allowed: the applicant, suffering from advanced neuroendocrine duodenal tumours and affected by his wife's terminal illness, falls within the proviso to Section 45(1) PMLA; the Court exercised discretion to grant limited medical bail for two months subject to stringent conditions while restricting its observations to the question of bail only.

2024 (6) TMI 588 - JHARKHAND HIGH COURT Money Laundering

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Issues: (i) Whether summons issued under Section 50(2) of the Prevention of Money-Laundering Act, 2002 were without jurisdiction or illegal for want of disclosed predicate offence and supporting material; (ii) Whether the arrest of the petitioner and the order of remand were illegal, and whether the writ could be treated as a habeas corpus challenge; (iii) Whether the subject property and related materials furnished a valid basis to treat the petitioner as involved in money-laundering under Sections 3 and 2(1)(u) of the Prevention of Money-Laundering Act, 2002.

Issue (i): Whether summons issued under Section 50(2) of the Prevention of Money-Laundering Act, 2002 were without jurisdiction or illegal for want of disclosed predicate offence and supporting material?

Analysis: The power to summon under Section 50(2) is wide and extends to summoning any person whose attendance is considered necessary in the course of investigation or proceedings under the Act. The Court held that the summons could not be invalidated merely because some of them did not contain detailed particulars of the crime or because the petitioner was asked to explain possession and source of the subject property. The material collected during investigation, including statements and seized records, was sufficient to justify issuance of summons.

Conclusion: The challenge to the summons failed and the summons were upheld in favour of the respondents.

Issue (ii): Whether the arrest of the petitioner and the order of remand were illegal, and whether the writ could be treated as a habeas corpus challenge?

Analysis: An order of remand passed by a competent court is a judicial act and, as a general rule, cannot be assailed through habeas corpus. The Court recognized that habeas corpus may lie where mandatory statutory safeguards are wholly ignored, but held that no such case was made out here. The grounds of arrest, arrest memo and related compliance under Section 19 were furnished, and subsequent remand orders were not all challenged. The arrest was thus tested against the statutory requirement of reason to believe and was found supported by prima facie material.

Conclusion: The arrest and remand were not held illegal, and the habeas corpus-style challenge was rejected in favour of the respondents.

Issue (iii): Whether the subject property and related materials furnished a valid basis to treat the petitioner as involved in money-laundering under Sections 3 and 2(1)(u) of the Prevention of Money-Laundering Act, 2002?

Analysis: The Court applied the principle that money-laundering is an independent offence and that continued possession, concealment, acquisition or use of proceeds of crime can constitute a continuing offence. On the material placed, including the survey, seized revenue records, statements recorded under Section 50, WhatsApp chats and the investigation into forged land records, the Court held that there was prima facie material connecting the petitioner with possession and use of the subject property and with the alleged process of laundering. The absence of the property in the petitioner's name was held not decisive in view of the broader statutory definition and the nature of the alleged conduct.

Conclusion: The Court found sufficient prima facie material to justify the PMLA action and rejected the petitioner's challenge in favour of the respondents.

Final Conclusion: The writ petition was held to be without merit; the impugned summons, arrest-related action and remand challenge did not warrant interference, and the petitioner was left to pursue any other statutory remedies available in law.

Ratio Decidendi: Under the Prevention of Money-Laundering Act, 2002, money-laundering is an independent and continuing offence, and where prima facie material shows possession, concealment or use of proceeds of crime, the authorities may lawfully issue summons, arrest on recorded reason to believe, and proceed notwithstanding that the property is not standing in the accused's name.

Money-laundering summons and arrest under PMLA upheld where prima facie material showed possession and use of proceeds of crime.
Under the Prevention of Money-Laundering Act, 2002, summons under Section 50(2) were treated as valid where investigation material, statements and seized records justified calling a person to explain possession and source of property, even if every summons did not disclose full crime particulars. Arrest and remand were not treated as illegal because arrest memo, grounds of arrest and Section 19 compliance were furnished, and a competent remand order is generally not amenable to habeas corpus challenge absent wholesale statutory non-compliance. The Court also accepted prima facie material showing possession, concealment and use of alleged proceeds of crime, and the fact that the property was not in the petitioner's name was not decisive.

Powers of summons under Section 50(2) of the PMLA - Reason to believe and arrest under Section 19 of the PMLA - Validity of remand orders and scope of habeas corpus - Proceeds of crime - continuing offence and attempt to legalise tainted property - Rebuttable presumption under Section 24 of the PMLA - Allegation of mala fides in criminal prosecutionPowers of summons under Section 50(2) of the PMLA - The summons issued to the petitioner under Section 50(2) of the PMLA were not vitiated for want of detailed disclosure of predicate offence or ECIR and cannot be quashed on that ground. - HELD THAT: - The Court held that the power under Section 50(2) is wide and intended to advance the object of the PMLA. Non supply of the ECIR or non disclosure of all investigative material in the summons does not render the summons ex facie illegal; contemporaneous disclosure of grounds of arrest suffices (as explained in Vijay Madanlal Choudhary). A request that summons be quashed merely because they did not specify full details of the scheduled offence or proceeds of crime was rejected. The Court observed that an inquiry into possession and sources of properties falls within Section 50(2) and that preventing disclosure of certain materials during ongoing investigation is permissible to protect investigation integrity.Summons under Section 50(2) upheld; challenge to summons for lack of detailed disclosure rejected.Reason to believe and arrest under Section 19 of the PMLA - The arrest of the petitioner under Section 19 of the PMLA and the remand order dated 2nd February 2024 were not shown to be illegal on the material before the Court. - HELD THAT: - The Court applied the subjective statutory test of 'reason to believe' under Section 19, noting that the arresting officer's satisfaction need only be formed bona fide on reasonable grounds and may rest on intelligence or secret material. Having regard to seized registers, statements under Section 50, survey findings, recovered electronic material and seizure from the petitioner's residence, the Court found prima facie material to justify arrest and remand. The Court emphasized that adequacy of reasons or weight of material is not for the High Court to re weigh at this stage, and the statutory and judicial remedies for challenging remand orders lie under the statutory scheme; absence of challenge to subsequent remands undermined the present challenge.Arrest and challenged remand order not declared illegal on the material before the Court.Validity of remand orders and scope of habeas corpus - Filing the writ petition did not convert it into an impermissible habeas corpus challenge to remand orders, but the Court will not ordinarily review judicial remand orders in a habeas corpus proceeding except in cases of total non compliance with statutory mandates. - HELD THAT: - The Court reiterated settled precedent that judicial remand is a judicial function and ordinarily cannot be challenged by way of habeas corpus; however, the High Court retains power under Article 226 to examine illegality in arrest and remand where there is non compliance with mandatory provisions or total non application of mind. The petition was not reduced to an impermissible habeas corpus proceeding simply because remand was challenged, and the Court declined to be hyper technical, but found no such statutory non compliance or wholly illegal remand that would justify extraordinary relief.Writ petition maintainable to the extent of challenging legality, but no illegality of remand established to warrant habeas corpus relief.Proceeds of crime - continuing offence and attempt to legalise tainted property - Rebuttable presumption under Section 24 of the PMLA - The Court held that possession of allegedly tainted immovable property, attempts to falsify records and continued use/possession can constitute 'process or activity connected with proceeds of crime' and attract PMLA liability; Section 24 creates a rebuttable presumption which can be contested at trial. - HELD THAT: - Relying on Vijay Madanlal Choudhary and subsequent authorities, the Court accepted that money laundering under Section 3 may be a continuing offence and that involvement in processes connected with proceeds of crime (including attempts to forge records to legalise property) falls within the statutory definition. The Court found prima facie material - seized registers, survey report, statements, WhatsApp material and seizure from the petitioner's residence - supporting the ED's view that the subject land was being portrayed as untainted and was in the petitioner's possession. The Court noted that Section 24 presumption is rebuttable and issues of admissibility and proof are matters for the Special Court at trial.The ED's case that the subject property is proceeds of crime and that continued possession/attempts to legalise it prima facie attract PMLA was accepted for the limited purpose of the present challenge; factual and evidentiary disputes to be addressed in trial.Allegation of mala fides in criminal prosecution - Allegations of political vendetta and mala fide by the petitioner were rejected in the absence of specific factual foundation demonstrating oblique motive; mere assertions were insufficient to quash proceedings. - HELD THAT: - The Court recalled settled law that mala fide allegations in criminal prosecutions require strong, specific material to displace the presumption of bona fide exercise of power. It applied authorities holding that political animus alone is not a ground to quash FIRs or investigative action where investigative material exists. Given the abundance of materials placed on record by the ED, the Court held that the petitioner had not established an extraordinary case of gross abuse of power warranting interference.Mala fide and political vendetta pleas rejected for lack of convincing supporting material.Final Conclusion: Writ petition dismissed. The Court upheld the validity of the summons and the arrest/remand on the prima facie material produced by the ED, accepted the ED's case that continued possession and attempts to legalise tainted property may attract the PMLA, and found no sufficient proof of mala fides to quash the proceedings; observations are prima facie and without prejudice to the petitioner's rights at trial or under the statutory remedy.

2024 (5) TMI 203 - DELHI HIGH COURT Money Laundering

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Issues Involved:
1. Legality of the discharge of respondents from the offence of money laundering u/s 3 of the PMLA.
2. Release of attached properties and bank accounts following the acquittal in the predicate offence.
3. Impact of the pending appeal against the acquittal in the predicate offence on the PMLA proceedings.

Summary:

1. Discharge from Money Laundering Offence u/s 3 of PMLA:
The petition challenged the order dated 09.10.2023 by the Special Judge discharging respondents from offences u/s 3 of the PMLA. The Special Judge observed that since the respondents were acquitted in the scheduled offence, the PMLA proceedings could not continue. The Supreme Court in Vijay Madanlal Choudhry vs. UOI emphasized that the offence under Section 3 of the PMLA depends on illegal gain from a scheduled offence. If acquitted in the scheduled offence, there can be no money laundering offence.

2. Release of Attached Properties and Bank Accounts:
Following the discharge, the Special Judge ordered the release of attached properties and bank accounts on 07.11.2023. The court noted that the properties could not be considered proceeds of crime after the acquittal. Section 8(6) of the PMLA mandates the release of attached properties if the accused is acquitted, as reiterated in Parvathi Kollur vs. Enforcement of Directorate and other cases.

3. Impact of Pending Appeal Against Acquittal:
The petitioner argued that the acquittal had not attained finality due to a pending appeal by the State of Jharkhand. However, the court held that mere filing of an appeal does not negate the effects of acquittal. The PMLA proceedings cannot be sustained post-acquittal unless the acquittal is reversed. The Supreme Court in M/s Nik Nish Retail Ltd. clarified that if the acquittal is reversed, PMLA proceedings can be revived.

Conclusion:
The court dismissed the petition, affirming that no proceedings under the PMLA could be sustained after the acquittal in the predicate offence. The discharge of respondents and the release of attached properties were upheld as legally sound.

PMLA proceedings cannot continue after acquittal in predicate offence, attached properties must be released
Delhi HC held that PMLA proceedings cannot continue after acquittal in predicate offence. Following SC precedent in Vijay Madanlal Choudhry, the court ruled that money laundering charges require actual scheduled offence, not notional basis. When accused were acquitted in predicate offence, the foundation for PMLA proceedings was knocked out, making attached properties no longer proceeds of crime. Special Judge correctly discharged respondents from PMLA offences and ordered release of attached properties. Mere filing of appeal against acquittal does not sustain PMLA proceedings. Petition dismissed.

Offence under Section 3 of the Prevention of Money Laundering Act being dependent on commission of a scheduled offence - proceeds of crime as property derived or obtained from criminal activity relating to a scheduled offence - release of properties attached under the PMLA upon acquittal/discharge in the predicate offence - pending appeal against acquittal not precluding release of attached propertyOffence under Section 3 of the Prevention of Money Laundering Act being dependent on commission of a scheduled offence - proceeds of crime as property derived or obtained from criminal activity relating to a scheduled offence - Whether proceedings under the PMLA can be continued after the accused are acquitted/discharged in the predicate (scheduled) offence - HELD THAT: - The Court held that the foundation of a charge under Section 3 of the PMLA is the existence of property which qualifies as "proceeds of crime", meaning property "derived or obtained" as a result of criminal activity relating to a scheduled offence. Relying on the reasoning in Vijay Madanlal Choudhry (as reiterated in Parvathi Kollur and Pavana Dibbur ), if the person accused of the scheduled offence is finally discharged or acquitted, there can be no money laundering offence in respect of property linked to that scheduled offence because the predicate criminal activity is held not to have occurred. The Court applied these principles and concluded that once the respondents were acquitted in the predicate FIR, the PMLA proceedings against them could not be sustained as there would be no proceeds of crime to constitute money laundering. The Court further noted consistent decisions of this Court and other benches reaching the same conclusion. The Special Judge's discharge order was therefore held to be correct. [Paras 28, 32]Proceedings under the PMLA could not be continued after the acquittal/discharge of the respondents in the predicate offence; the Special Judge rightly discharged the respondents.Release of properties attached under the PMLA upon acquittal/discharge in the predicate offence - pending appeal against acquittal not precluding release of attached property - Whether attached bank accounts and immovable properties must be released notwithstanding the pendency of an appeal against the predicate offence acquittal - HELD THAT: - The Court observed that Section 8(6) of the PMLA requires the Special Court to order release of property where, on conclusion of trial under the Act, the Special Court finds that money laundering has not taken place or the property is not involved in money laundering. Applying the principle that acquittal in the scheduled offence negates the existence of proceeds of crime (see Vijay Madanlal Choudhry , Nik Nish Retail Ltd. and Parvathi Kollur ), the Court held that the Special Judge was obliged to release attached properties once the respondents were acquitted. The Court rejected the contention that mere pendency of an appeal against the acquittal amounts to continuation of trial or prevents release; until an appellate court reverses the acquittal, the effects of the acquittal operate and the attached properties cannot be retained as proceeds of crime. The Court noted that if the acquittal is later reversed on appeal, the ED can revive PMLA proceedings. [Paras 29, 32]The Special Judge correctly ordered release/defreezing of the attached immovable properties and bank accounts; pendency of an appeal against acquittal does not bar such release.Final Conclusion: The petition is dismissed. The High Court upheld the Special Judge's discharge of the respondents from PMLA offences and the orders directing release/defreezing of attached properties and bank accounts; pendency of an appeal against the predicate acquittal does not prevent release, and, if the acquittal is reversed on appeal, the ED may revive proceedings.

2024 (4) TMI 1205 - CALCUTTA HIGH COURT Money Laundering

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PMLA bail remains barred where seizure material and inquiry statements show a prima facie laundering link despite custody and health pleas.
In a PMLA bail matter, the Court found that seizure material, documents and statements recorded during inquiry disclosed a prima facie case linking the accused to companies and properties allegedly used to launder proceeds of crime. It held that the statutory embargo on bail under section 45 continued to apply at the bail stage. Long custody, advanced age, medical ailments and delay in trial were considered, but on the facts they did not override the special statutory requirements for release. Bail was therefore refused and custody continued.

Bail under the Prevention of Money Laundering Act, 2002 (Section 45) - twin satisfaction test - admissibility and probative value of statements recorded under Section 50 of PMLA - continuing activity in money laundering as per Explanation to Section 3 of PMLA - gravity of economic offences and higher benchmark in bail assessment - medical infirmity and custodial detention as grounds for bailBail under the Prevention of Money Laundering Act, 2002 (Section 45) - twin satisfaction test - gravity of economic offences and higher benchmark in bail assessment - Whether the petitioner is entitled to bail under the PMLA having regard to the twin conditions in Section 45 and the gravity of the alleged economic offences - HELD THAT: - The High Court applied the statutory framework governing bail under PMLA and the established principle that economic offences attract a higher standard of scrutiny. The court examined the materials collected during investigation - including large seizures of cash, jewellery and immovable property, corporate structures allegedly used for layering and concealment, and consistent statements pointing to control and benefit by the petitioner - and concluded that the petitioner failed to satisfy the statutory satisfaction required for grant of bail under PMLA. The court observed that the seizures, corroborative documentary material and witness statements demonstrably link the petitioner with processes and activities connected to proceeds of crime, and on the basis of broad probabilities the twin conditions under Section 45 were not overcome. Having balanced the right to liberty against the seriousness, organised nature and impact of the alleged economic offence, the court refused bail.Petition for bail under PMLA rejected; petitioner has not satisfied the statutory twin conditions and bail is refused.Admissibility and probative value of statements recorded under Section 50 of PMLA - continuing activity in money laundering as per Explanation to Section 3 of PMLA - Whether statements made under Section 50 of the PMLA and the Explanation to Section 3 can be relied upon at the bail stage to make out a prima facie case of involvement in money laundering - HELD THAT: - The Court accepted the settled position in the cited Supreme Court precedents that statements recorded under Section 50 are admissible and may constitute formidable prima facie material at the stage of considering bail. The judge noted that the Section 50 statement of a key co accused, together with seized documents, corporate records and other witness statements, furnished corroboration of the prosecution case that proceeds of crime were being concealed, used and projected through companies and proxy arrangements. The Explanation to Section 3 describing money laundering as a continuing activity was held relevant to the assessment that the accused continued processes connected with proceeds of crime. On this basis the Court found the Section 50 material and other corroborative evidence sufficient, at least on broad probabilities, to defeat the bail application.Section 50 statements and related material may be relied upon to establish prima facie involvement in money laundering; such material contributes to refusal of bail.Medical infirmity and custodial detention as grounds for bail - bail under the Prevention of Money Laundering Act, 2002 (Section 45) - twin satisfaction test - Whether the petitioner's age, medical conditions and the period of pre trial custody justify bail despite the prosecution case under PMLA - HELD THAT: - The Court considered submissions concerning the petitioner's septuagenarian age, multiple ailments and prolonged custody, and reviewed authorities recognizing medical infirmity and prolonged detention as factors in bail decisions. However, it held that these factors do not automatically satisfy the proviso or otherwise displace the mandatory twin conditions of Section 45. On the facts, the court found that medical and custodial-duration arguments did not outweigh the gravity of the allegations and the prima facie material linking the petitioner to proceeds of crime. Consequently, the court declined to grant bail on medical or delay grounds in the face of the prosecution's material.Age, illness and period of custody were considered but insufficient to justify bail; application dismissed.Final Conclusion: The High Court, after evaluating the seizures, corporate and documentary material and statements recorded during inquiry, concluded that the petitioner has not discharged the burden required to satisfy the twin conditions for grant of bail under the PMLA; accordingly the bail application is dismissed.

2024 (5) TMI 1406 - JAMMU AND KASHMIR HIGH COURT Money Laundering

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Prima facie challenge to PMLA cognizance secured interim protection and stay of complaint proceedings.
A challenge to arraignment in a PMLA complaint and the cognizance order raised a prima facie case where the petitioners were not shown as accused in the connected scheduled-offence matters and the complaint, as against them, lacked a clear basis. The High Court noted that the cognizance order was brief and did not show meaningful consideration of the complaint in relation to the petitioners. Pending notice and objections, the Court granted interim protection and stayed further proceedings in the complaint against the petitioners until the next date of hearing.

Inherent jurisdiction under Section 482 CrPC - cognizance of complaint - PMLA jurisdiction and investigation by Enforcement Directorate - prima facie satisfaction for interim relief - stay of proceedingsInherent jurisdiction under Section 482 CrPC - cognizance of complaint - prima facie satisfaction for interim relief - stay of proceedings - Whether the High Court should exercise its inherent jurisdiction under Section 482 CrPC to grant interim relief by staying the proceedings in the PMLA complaint against the petitioners. - HELD THAT: - The petitioners, not named in the earlier CBI charge-sheets arising from the original FIRs, were subsequently included by the Enforcement Directorate in a 280-page complaint which the Special Judge (Anti-Corruption) took cognizance of by an order directing issuance of process. The petitioners challenged their inclusion and the retrospective dating of institution, contending there was no statutory basis or culpable material linking them to the scheduled offences, and that the Special Judge had not applied mind before taking cognizance. On an examination of the complaint as averred in the petition, the Court found that a prima facie case for interference under its inherent jurisdiction was made out - in particular because the order taking cognizance appeared cryptic and no adequate examination of the basis for implicating the petitioners was reflected. In view of these aspects and until the respondent is heard, the Court directed interim protection by staying further proceedings in the complaint against the petitioners until the next date of hearing, while issuing notice to the respondent for service and listing the matter for hearing. [Paras 42, 46]Interim stay granted - proceedings in the complaint against the petitioners are stayed till the next date of hearing; notice issued to the respondent and matter listed for further hearing.Final Conclusion: The High Court, invoking its inherent jurisdiction under Section 482 CrPC, recorded that a prima facie case for interim relief was made out and ordered a stay of proceedings in the Enforcement Directorate's complaint against the petitioners until the next date of hearing, subject to service of notice on the respondent.

2024 (5) TMI 778 - MADRAS HIGH COURT Money Laundering

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Actual possession of attached property under PMLA cannot be confined to symbolic possession once attachment is confirmed.
Under Section 8(4) of the Prevention of Money Laundering Act, 2002, once an attachment is confirmed under Section 8(3), the authorised officer is empowered to take actual physical possession of the attached property. The court noted that Section 71 gives the Act overriding effect over inconsistent laws, so possession cannot be confined to symbolic or constructive possession merely because rights under other enactments may be affected. The statutory scheme, including the amended provision and possession-taking rules, supports physical possession of attached immovable property, and the contrary direction to restore possession was unsustainable.

Interpretation of "possession" under Section 8(4) of the Prevention of Money Laundering Act - Overriding effect of the Act under the non obstante clause - Physical possession following confirmation of attachment - Effect of subsequent legislative amendment on statutory interpretationInterpretation of "possession" under Section 8(4) of the Prevention of Money Laundering Act - Effect of subsequent legislative amendment on statutory interpretation - Whether the term "possession" in Section 8(4) PMLA (as originally enacted) must be read as limited to symbolic/constructive possession or includes taking actual physical possession after confirmation of attachment, and the impact of subsequent amendment. - HELD THAT: - The Court examined the unamended text of Section 8(4) which provides that on confirmation of attachment the Director or authorised officer "shall forthwith take the possession of the attached property". The Single Judge had construed "possession" as only symbolic or constructive, primarily to avoid affecting rights available under other enactments. The High Court held that such reasoning is untenable in view of the Act's non obstante clause which gives the PMLA overriding effect over inconsistent laws, and that the legislative amendment subsequently enacted (which explicitly contemplates taking possession and prescribes manner and rules) confirms Parliament's intention that physical possession may be taken following confirmation of attachment. Having regard to the unamended wording, the overriding provision and the later amendment and rules, the Court concluded that "possession" cannot be restricted to purely symbolic possession and that physical possession after confirmation is consistent with the object of the Act. [Paras 8, 10, 11, 13, 15]The Single Judge's reading down of "possession" to mean only symbolic/constructive possession is incorrect; the Act, reinforced by the non obstante clause and subsequent amendment, contemplates taking physical possession upon confirmation of attachment.Overriding effect of the Act under the non obstante clause - Physical possession following confirmation of attachment - Whether the direction of the Single Judge to restore actual physical possession to the writ petitioners should be sustained. - HELD THAT: - The Court observed that the Single Judge's direction to put the writ petitioners back into actual possession flowed from the construal of "possession" as merely constructive. Given the Court's conclusion that the PMLA provides for physical taking of possession after confirmation of attachment and that Section 71 gives the Act overriding effect over inconsistent laws, the direction to hand over actual possession to the petitioners could not stand. The High Court therefore set aside that part of the order while otherwise sustaining the Single Judge's order. [Paras 15, 16]The direction to return actual possession to the respective writ petitioners is set aside; in all other respects the Single Judge's order is maintained.Final Conclusion: Appeals allowed insofar as the Single Judge read down the term "possession" and directed restoration of actual possession; that direction is set aside because the PMLA, read with its non obstante clause and subsequent amendment and rules, contemplates taking physical possession upon confirmation of attachment. The remainder of the Single Judge's order is sustained; no order as to costs.

2024 (4) TMI 1179 - PUNJAB AND HARYANA HIGH COURT Money Laundering

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Issues: (i) Whether proceedings under the Prevention of Money-Laundering Act, 2002 can continue when the predicate offence has ended in discharge or acquittal; (ii) Whether the ECIR and all consequential proceedings arising from it deserve to be closed under the Court's inherent jurisdiction.

Issue (i): Whether proceedings under the Prevention of Money-Laundering Act, 2002 can continue when the predicate offence has ended in discharge or acquittal.

Analysis: The foundation of an offence under Section 3 of the Prevention of Money-Laundering Act, 2002 is the existence of a scheduled offence and the resulting proceeds of crime. The Court applied the settled principle that where the predicate offence ends in discharge, acquittal, or complete quashing, the basis for alleging money-laundering disappears for the concerned accused. The reasoning treats the scheduled offence as the necessary foundation for proceedings under the Act, while recognising that a separate accused may still be proceeded against only so long as the scheduled offence survives.

Conclusion: Yes. Once the predicate offence had resulted in discharge or acquittal, the money-laundering proceedings could not validly continue against the petitioners.

Issue (ii): Whether the ECIR and all consequential proceedings arising from it deserve to be closed under the Court's inherent jurisdiction.

Analysis: The Court distinguished between a mere challenge to an ECIR and a broader challenge to the downstream actions founded upon it. It held that, even if ECIR is an internal administrative record, the Court is not precluded from examining consequential proceedings where the very foundation of those proceedings has failed. Since the petitioners stood discharged or acquitted in the predicate case, the summons, notice, communication, and further action under the money-laundering proceedings lacked a surviving basis. The Court also preserved liberty to revive proceedings if the predicate foundation is later restored.

Conclusion: Yes. The ECIR-linked proceedings were ordered to be closed, with liberty to revive if the predicate offence order is reversed.

Final Conclusion: The petitioners were granted relief because the money-laundering proceedings could not survive after the collapse of the predicate offence foundation, and the consequential action was brought to an end with a limited liberty of revival in appropriate future circumstances.

Ratio Decidendi: For a prosecution under the Prevention of Money-Laundering Act, 2002, the existence of a scheduled offence and proceeds of crime is a condition precedent; if the predicate offence ends in discharge or acquittal, the consequential PMLA proceedings against the concerned accused cannot survive, though revival remains possible if the predicate foundation is later restored.

Predicate offence discharge defeats money-laundering proceedings, with ECIR-linked action closed subject to revival.
Proceedings under the Prevention of Money-Laundering Act, 2002 depend on the existence of a scheduled offence and proceeds of crime as the foundation of the allegation. Where the predicate offence ends in discharge, acquittal, or complete quashing, the money-laundering proceedings against the concerned accused cannot survive. On that basis, consequential action arising from the ECIR, including summons, notices and related proceedings, may be closed because the underlying foundation has failed. Liberty may be preserved to revive proceedings if the predicate offence order is later reversed and the foundation is restored.

Offence of money laundering - proceeds of crime as condition precedent - scheduled offence as predicate for PMLA proceedings - ECIR as an internal departmental document - quashing under Section 482 Cr.P.C. - closure/closure report and complaint under Section 44 PMLA - application of Code of Criminal Procedure to PMLA proceedings (Section 65) - liberty to revive proceedings on reversal of predicate outcomeScheduled offence as predicate for PMLA proceedings - proceeds of crime as condition precedent - Offence of money laundering - Continuation of PMLA proceedings when the predicate/scheduled offence has been closed, discharged or acquitted - HELD THAT: - The Court held that offences under the PMLA are secondary and depend on the existence of a scheduled (predicate) offence; the existence of 'proceeds of crime' is a condition precedent for Section 3 to be attracted. Where the competent forum in the predicate prosecution has accepted a closure report or discharged/acquitted the accused such that the scheduled offence no longer exists, consequential proceedings under the PMLA in respect of the same subject matter cannot be permitted to survive indefinitely. The judgment applies the principle that if the foundational scheduled offence is removed, the PMLA superstructure linked to proceeds derived therefrom ordinarily falls. The Court relied on and treated as determinative the line of authority including Vijay Madanlal Chaudhary , Pavana Dibbur , Indrani Patnail and Yash Tuteja , which recognise that the condition precedent for the existence of 'proceeds of crime' is the existence of a scheduled offence and that, accordingly, PMLA prosecution may not proceed where the scheduled offence has been finally negated. The Court also noted that the Special Court's powers under Sections 200-204 Cr.P.C. apply when a complaint is filed under Section 44(1)(b) PMLA and that the Special Court must examine whether a prima facie case under Section 3 is made out before prosecuting further.PMLA proceedings arising from the ECIR in question cannot continue in the face of closure/discharge in the predicate offence; the ED's complaint/proceedings in respect of the ECIR are closed.ECIR as an internal departmental document - quashing under Section 482 Cr.P.C. - liberty to revive proceedings on reversal of predicate outcome - application of Code of Criminal Procedure to PMLA proceedings (Section 65) - Whether quashing of ECIR and consequential ED proceedings was permissible under Section 482 Cr.P.C., and the nature of the relief granted - HELD THAT: - The Court recognised that an ECIR is an internal administrative record of the Enforcement Directorate and is not equivalent to an FIR under Section 154 Cr.P.C.; quashing an ECIR alone may often be of little practical effect. Nonetheless, the Court found that where the predicate offence has been closed or the accused discharged, it was appropriate in the facts before it to order closure of the ED's complaint and all consequential proceedings arising from the impugned ECIR. The Court balanced this relief with the statutory scheme by (a) recording that the Code of Criminal Procedure applies to PMLA proceedings insofar as not inconsistent (Section 65), and (b) granting liberty to the Enforcement Directorate to revive proceedings if the closure/discharge/acquittal in the predicate matter is later set aside or if competent appellate or review orders change the legal position. The order therefore closes the present PMLA proceedings but expressly preserves the ED's right to reopen or file fresh complaint in case the predicate outcome is reversed, and excludes delay caused by the pendency or reversal of predicate litigation for limitation or other procedural purposes.The Court closed the PMLA proceedings and all consequential actions arising out of the ECIR, while granting liberty to the Enforcement Directorate to revive proceedings if the predicate outcome is subsequently reversed or altered.Final Conclusion: The petitions are allowed: the Enforcement Directorate's proceedings arising from ECIR No. JLZO/01/2013 are closed in view of the closure/discharge in the predicate offence, subject to liberty for the ED to revive or file fresh proceedings if the predicate decision is subsequently set aside or altered; all pending applications are disposed of.

2024 (5) TMI 568 - ORISSA HIGH COURT Money Laundering

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Exemption from personal appearance under CrPC Section 205 remains maintainable in PMLA proceedings, subject to judicial discretion.
An application for exemption from personal appearance under Section 205 CrPC was held maintainable in a prosecution under the Prevention of Money Laundering Act, 2002, and the bar in Section 45 of that Act was held not to control such a request. The trial court was required to exercise Section 205 discretion cautiously on the basis of sufficient and cogent reasons showing the accused's inability to attend, and to decide the request on its own merits in accordance with law. The order rejecting exemption was therefore held unsustainable, set aside, and the matter remanded for fresh consideration of the Section 205 application.

Applicability of Section 205 Cr. P.C. to trials under the PMLA Act, 2002 - discretion under Section 205 Cr. P.C. to grant exemption from personal attendance - restrictive provisions of the PMLA Act and Section 45 not constituting an absolute bar to exemption under Section 205 Cr. P.C. - requirement of sufficient and cogent reasons and circumspection in exercising discretion under Section 205 Cr. P.C. - remand for fresh consideration of an application under Section 205 Cr. P.C.Applicability of Section 205 Cr. P.C. to trials under the PMLA Act, 2002 - restrictive provisions of the PMLA Act and Section 45 not constituting an absolute bar to exemption under Section 205 Cr. P.C. - discretion under Section 205 Cr. P.C. to grant exemption from personal attendance - requirement of sufficient and cogent reasons and circumspection in exercising discretion under Section 205 Cr. P.C. - Whether an application under Section 205 Cr. P.C. for exemption from personal attendance is maintainable in proceedings under the PMLA Act, 2002 and the manner in which the trial court must exercise the discretion vested in it. - HELD THAT: - The Court held that an application under Section 205 Cr. P.C. is maintainable in proceedings under the PMLA Act and that Section 45 of the PMLA Act does not operate as an absolute bar to consideration of such an application. The trial court must exercise the discretion conferred by Section 205 Cr. P.C. with circumspection and caution and should be satisfied on the sufficiency and cogency of reasons demonstrating the accused's inability to appear personally. The discretion is to be sparingly exercised only where personal appearance would cause great hardship or where sufficient and cogent grounds are shown; it is not to be used as a substitute for bail nor to be granted routinely. The Court relied on the Coordinate Bench's reasoning and the Supreme Court's direction in the related Chintan Joshi proceedings that exemption cannot be granted as a blanket right but may be considered on merits when cogent reasons are shown, and therefore the trial court must decide applications under Section 205 Cr. P.C. on the materials placed before it and in accordance with law. [Paras 16, 18]Application under Section 205 Cr. P.C. is maintainable in PMLA trials; Section 45 PMLA does not preclude consideration of such application and the trial court must consider it with circumspection, requiring sufficient and cogent reasons.Remand for fresh consideration of an application under Section 205 Cr. P.C. - direction to decide the application on its merits within a specified time - Whether the impugned order rejecting the petition under Section 205 Cr. P.C. should be set aside and the matter remanded for fresh consideration. - HELD THAT: - On review of the trial court's reliance on Section 45 of the PMLA Act and its consideration of the application in a manner found to be unsustainable in law, the High Court set aside the impugned order. The Court remanded the application to the Sessions Judge-cum-Special Judge, Khurda at Bhubaneswar for fresh consideration of the petitioner's Section 205 Cr. P.C. application, directing that the trial court take into account the grounds and materials placed on record by the petitioner and the observations of the Supreme Court in the related matter. The trial court was directed to dispose of the application within six weeks from receipt of a certified copy of this judgment. [Paras 18]Impugned order set aside and the matter remanded to the trial court for fresh consideration of the Section 205 Cr. P.C. application, to be decided within six weeks.Final Conclusion: The High Court set aside the trial court's order rejecting exemption from personal attendance under Section 205 Cr. P.C., held that Section 45 of the PMLA Act does not bar consideration of such applications, directed that the trial court exercise its discretion with circumspection on the basis of sufficient and cogent reasons, and remanded the matter for fresh disposal within six weeks.

2024 (4) TMI 1275 - KERALA HIGH COURT Money Laundering

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Urgent Medical Need Prompts Expedited Fund Withdrawal Review for Critical Healthcare Support
HC ruled that due to the petitioner's wife's critical medical condition requiring expensive treatment, the 2nd respondent must promptly review and process any request to withdraw funds from specified bank accounts. The respondent is mandated to decide and issue orders within one week of receiving such a request, with a follow-up hearing scheduled.

2024 (4) TMI 1189 - DELHI HIGH COURT Money Laundering

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Bail principles in conspiracy and corruption cases: custody is not punishment where trial remains at an early stage.
Bail under Section 439 CrPC was granted in a conspiracy and corruption matter after applying settled factors of gravity of accusation, character of evidence, risk of flight, and possible influence on witnesses. The applicant had remained in custody since June 2022, but the trial was still at an early stage with many witnesses and untranslated documents pending. No specific apprehension of absconding was shown, and bail had already been granted to the main accused in related proceedings. The Court reiterated that pre-trial custody is meant to secure attendance, not punish, and that any misuse of liberty can be addressed through cancellation of bail.

Grant of bail in non-bailable offences - Factors for bail: nature of offence, character of evidence, risk of absconding, tampering with witnesses - Custody during trial is not punitive but to ensure presence at trial - Parity with co-accused released on bail as relevant consideration - Power to cancel bail on proof of misuse - Imposition of preventive and monitoring conditions on bailGrant of bail in non-bailable offences - Factors for bail: nature of offence, character of evidence, risk of absconding, tampering with witnesses - Parity with co-accused released on bail as relevant consideration - Imposition of preventive and monitoring conditions on bail - Power to cancel bail on proof of misuse - Application under Section 439 Cr.P.C. by the applicant for grant of bail was allowed subject to conditions. - HELD THAT: - The Court applied settled principles for consideration of bail, including the nature and seriousness of the offence, character of evidence, likelihood of absconding, and risk of tampering with witnesses. The applicant had been in custody since 09.06.2022; principal co-accused had already been released on bail by higher fora and another co-accused granted anticipatory bail. The prosecution did not demonstrate a risk of the applicant absconding and the alleged risk of influencing witnesses was not shown to be greater than that posed by other co-accused who are on bail. The Court noted that custody is to secure presence at trial and that if the prosecution later establishes misuse of liberty, it may move for cancellation of bail. In these circumstances and having perused the chargesheet and stage of trial, the applicant was held to have made out a case for bail, and the Court imposed preventive conditions (personal bond with local surety, address disclosure, appearance obligations, provision of mobile numbers with location on, prohibition on contacting witnesses/co-accused), preserving the prosecution's remedy to seek cancellation if needed. [Paras 16, 17, 18]Applicant released on bail in FIR No. RC0102020A0019 dated 21.09.2020 on furnishing a personal bond and one local surety, subject to specified conditions and liberty to prosecution to seek cancellation if bail is misused.Final Conclusion: Bail application under Section 439 Cr.P.C. allowed; applicant discharged on bail subject to monetary bond, local surety and conditions (address disclosure, attendance, mobile-tracking, non-contact with witnesses/co-accused); prosecution entitled to seek cancellation on misuse.

2024 (6) TMI 774 - KARNATAKA HIGH COURT Money Laundering

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PMLA attachment cannot survive after quashing of the predicate offence, because the scheduled offence is the statutory foundation.
Provisional attachment under the Prevention of Money Laundering Act, 2002 cannot survive once the predicate scheduled offence has been finally quashed. The text states that, on the reasoning in Vijay Madanlal Choudhary, money-laundering action under Sections 3 and 4 depends on the existence of a scheduled offence, so discharge, quashment, or acquittal of the predicate case removes the statutory foundation for attachment and related proceedings. On that basis, the attachment order was held unsustainable and quashed.

Predicate offence - proceedings under the PMLA - money-laundering - provisional attachment - quashment of proceedings - automatic consequence of quashing predicate offence - restoration of proceedings upon reversalPredicate offence - provisional attachment - automatic consequence of quashing predicate offence - proceedings under the PMLA - Validity of the attachment order dated 22.12.2021 passed under the PMLA in the light of quashment of the predicate offence - HELD THAT: - The Court found that the predicate offence registered in Crime No. 54/2012 had been finally quashed as to the wife in 2016 and as to the husband (petitioner) by this Court in 2023, and that no interim stay had been granted by the Apex Court in the pending SLP. Relying on the binding principle articulated by the Apex Court in Vijay Madanlal Choudhary (summary reproduced in the judgment), the Court accepted that when the predicate offence is obliterated by discharge, quashment or acquittal by a competent court, the offences under the PMLA founded on that predicate offence also cease to exist. Applying that legal principle, the Court held that the foundation for the PMLA proceedings having been removed, the consequential orders of provisional attachment made under the PMLA necessarily fall away. The Court rejected the respondent's contention that the ED proceedings should nonetheless continue on the possibility that the predicate proceedings might be restored, observing that a contingent future event cannot justify maintaining proceedings which have been quashed; however, the Court granted liberty to the ED to resume proceedings if the Apex Court in the pending SLP restores the predicate proceedings, in which event the PMLA proceedings and attachments would stand revived. [Paras 8, 9, 11, 12]The attachment order dated 22.12.2021 under the PMLA is quashed as the predicate offence has been quashed; liberty granted to the Enforcement Directorate to resume proceedings if the Apex Court restores the predicate offence.Final Conclusion: Writ petition allowed; the Adjudicating Authority's order dated 22.12.2021 under the PMLA is quashed because the predicate offence has been quashed, subject to restoration of all proceedings if the Apex Court sets aside the quashment of the predicate offence.

2024 (5) TMI 673 - BOMBAY HIGH COURT Money Laundering

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Look Out Circular quashed against petitioner in money laundering case due to lack of evidence and cooperation shown
The Bombay HC quashed the Look Out Circular (LOC) issued by ED against petitioner in a money laundering case. Petitioner, working in Bahrain since education, appeared before ED seven times from December 2020 after returning to India during COVID-19. Despite ED's investigation since 2019 and petitioner's cooperation, no material evidence was found against him. Court held detention cannot be based solely on non-cooperation, especially when petitioner had been deprived of livelihood since December 2020. Given petitioner's two-decade work history in Middle East and lack of incriminating material, continued detention was inappropriate. Petition allowed.

Look Out Circular - quashing of administrative travel restrictions - renewal requirement under Ministry of Home Affairs guidelines for LOCs - non-cooperation not amounting to grounds for continued detention - conditional liberty subject to undertaking and disclosure of contact detailsLook Out Circular - renewal requirement under Ministry of Home Affairs guidelines for LOCs - quashing of administrative travel restrictions - Validity of the LOC dated 17th January 2020 issued against the petitioner. - HELD THAT: - The Court found that the Enforcement Directorate had not produced material establishing the petitioner's complicity in the PMLA investigation and that no renewals of the LOC had been placed on record as required by the MHA guidelines. In view of the absence of incriminating material against the petitioner despite his having appeared before the ED on multiple occasions, and the lack of documentary proof of periodic renewal of the LOC, the continued operation of the impugned LOC could not be sustained. The Court therefore held that the LOC issued on 17th January 2020 was not maintainable and warranted quashing. [Paras 6, 8, 9]Impugned LOC dated 17th January 2020 quashed and set aside.Non-cooperation not amounting to grounds for continued detention - conditional liberty subject to undertaking and disclosure of contact details - Whether alleged non-cooperation justified continued restriction on the petitioner's liberty and what conditions, if any, should govern his release. - HELD THAT: - The Court rejected the submission that mere non-cooperation justified detention, noting that non-cooperation may arise from an absence of any relevant information with the person and cannot alone be the basis for depriving livelihood or freedom. Taking into account the petitioner's long overseas employment, the absence of material implicating him, and his undertaking to cooperate and disclose residence and contact details, the Court exercised its supervisory jurisdiction to grant relief subject to safeguards. The relief was made conditional on the petitioner's undertaking already filed, requirement of minimum seven days' notice for any summon to return, prompt disclosure of overseas address and contact details before going abroad and on change, prohibition on contacting the accused, and liberty for the ED to issue a fresh LOC if new material emerges. [Paras 8, 9]Petitioner released from the effects of the LOC subject to the undertaking and specified conditions; ED remains free to issue a fresh LOC if occasion arises.Final Conclusion: The petition is allowed: the LOC dated 17th January 2020 is quashed; liberty is granted subject to the petitioner's undertaking to cooperate, notification and contact conditions, seven days' notice for summons, prohibition on contacting the accused, and the ED's right to issue a fresh LOC if new material emerges.

2024 (4) TMI 629 - BOMBAY HIGH COURT Money Laundering

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Issues: (i) Whether the petitioner's arrest and remand were illegal for alleged non-compliance with the requirement of production within 24 hours and before the nearest Magistrate. (ii) Whether recording the petitioner's statement late at night under summons issued under the PMLA was improper and warranted directions to the Enforcement Directorate.

Issue (i): Whether the petitioner's arrest and remand were illegal for alleged non-compliance with the requirement of production within 24 hours and before the nearest Magistrate.

Analysis: The petitioner entered the Enforcement Directorate office pursuant to a summons under Section 50 of the PMLA and was not treated as an accused at that stage. The Court held that a person summoned under Section 50 is "any person" and not necessarily an accused, while arrest takes place only under Section 19 of the PMLA when material exists to form the requisite belief. On the facts, the petitioner was arrested at 5:30 a.m. and produced before the Special Court at about 5:00 p.m. the same day. Even if the period spent in travel from Delhi to Mumbai was excluded, production was still within the permissible time. The Court also held that the expression "nearest Magistrate" in Section 167 is relevant where the jurisdictional court cannot be reached within 24 hours, and no illegality arose from production directly before the Special Court in Mumbai.

Conclusion: The arrest and remand were not illegal and this issue was decided against the petitioner.

Issue (ii): Whether recording the petitioner's statement late at night under summons issued under the PMLA was improper and warranted directions to the Enforcement Directorate.

Analysis: The Court deprecated the practice of recording statements under Section 50 of the PMLA at unearthly hours. It held that a person summoned under that provision should ordinarily have the statement recorded during earthly hours, since such person is not yet an accused and cannot be deprived of basic human needs such as sleep beyond a reasonable time. The Court treated the deprivation of sleep as inconsistent with Article 21 and observed that consent to late-night recording was immaterial. It therefore directed the Enforcement Directorate to issue appropriate circulars or directions regarding timings for recording statements under Section 50.

Conclusion: The practice was disapproved and directions were issued to the Enforcement Directorate, but it did not alter the dismissal of the petition.

Final Conclusion: The petition failed on the challenge to arrest and remand, while the Court separately issued advisory directions to curb late-night recording of statements under PMLA summons.

Ratio Decidendi: A person summoned under Section 50 of the PMLA is not an accused until arrest under Section 19, and where production before the Special Court occurs within 24 hours of arrest after excluding travel time, no illegality in arrest or remand is made out.

PMLA summons and arrest safeguards: late-night examination deprecated, but arrest and remand upheld within 24-hour limits.
A person summoned under Section 50 of the PMLA is not treated as an accused until arrest under Section 19, and production before the Special Court within 24 hours of arrest, even after excluding travel time, does not render arrest or remand illegal. The Court also deprecated recording Section 50 statements at late-night hours, holding that summonsed persons should ordinarily be examined during reasonable hours because prolonged sleep deprivation is inconsistent with Article 21. It directed the Enforcement Directorate to issue appropriate circulars on timing, but this did not affect the outcome on arrest and remand.

Production before Court within 24 hours under Article 22(2) and Section 19 PMLA - Summons, statement-recording and status under Section 50 PMLA - 'Nearest Magistrate' concept in Section 167 Cr.P.C. and transit remand - Right to sleep as facet of Article 21Production before Court within 24 hours under Article 22(2) and Section 19 PMLA - Summons, statement-recording and status under Section 50 PMLA - Legality of the petitioner's arrest and whether he was produced before the Special Court within the prescribed period - HELD THAT: - The Court accepted the ED's chronology and held that a person summoned under Section 50 of the PMLA is not an accused until arrest is effected under Section 19 on the basis of material giving rise to a reason to believe. The petitioner attended the ED pursuant to a Section 50 summons and was therefore not in custody from the time he entered the ED office. The Court found that the arrest was effected on 08.08.2023 at 5:30 a.m., and the petitioner was produced before the Special Court on the same day well within 24 hours of arrest. Even if the earlier time of entry to the ED office were treated as the commencement of detention, exclusion of travel time still resulted in production within 24 hours. On this basis the Court found no illegality in arrest or remand and held there was no contravention of Article 22(2) or the scheme of Section 19 of the PMLA. [Paras 11, 12, 14]Arrest and remand were not illegal; petitioner was produced within the statutory period and the petition on this ground is dismissed.'Nearest Magistrate' concept in Section 167 Cr.P.C. and transit remand - Whether the petitioner should have been produced before the nearest Magistrate prior to being taken to the jurisdictional Special Court - HELD THAT: - The Court explained that the phrase 'nearest Magistrate' in Section 167 Cr.P.C. is intended for situations where it is not possible to produce the arrestee before the jurisdictional Magistrate within 24 hours and thus permits seeking transit remand. If the arrestee can be safely produced before the jurisdictional Court within 24 hours, there is no requirement to first produce him before the nearest Magistrate. Applying that principle, the Court found no merit in the contention that production before the nearest Magistrate was necessary in the facts of this case. [Paras 8, 13]No obligation arose to take the petitioner first before the nearest Magistrate; the procedure followed did not render the arrest illegal.Right to sleep as facet of Article 21 - Timing of recording statements summoned under Section 50 PMLA - Whether the late-night recording of the petitioner's statement and the deprivation of sleep violated fundamental rights and required remedial directions - HELD THAT: - The Court noted that proceedings under Section 50 are treated as judicial proceedings and persons summoned need not be treated as accused until arrest. The Court observed that recording statements in unearthly hours can deprive persons of the basic human requirement of sleep, impair cognitive faculties and amount to an unacceptable practice. Although the petitioner had apparently consented, the Court held that consent is immaterial where basic human rights are affected. The Court deprecated the practice of recording statements late at night and directed the ED to issue appropriate circulars or directions regarding timings for recording statements when summons under Section 50 are issued. [Paras 16, 17, 18, 19, 20]Practice of recording statements at unearthly hours is disapproved; ED directed to issue timings/directions for recording statements to safeguard the right to sleep under Article 21.Final Conclusion: The petition is dismissed: the arrest and remand were held lawful and compliant with the statutory and constitutional timelines, but the Court issued supervisory directions deprecating late night recording of statements under Section 50 PMLA and directed the ED to issue appropriate timings/directions to prevent deprivation of the right to sleep.

2024 (6) TMI 1118 - JHARKHAND HIGH COURT Money Laundering

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PMLA anticipatory bail threshold: special statutory restrictions and prima facie material defeated pre-arrest protection
In a PMLA prosecution, the Court applied the special bail restrictions under Section 45 and held that anticipatory bail depends on satisfaction, from the material on record, that the accused is not guilty and is unlikely to commit an offence while on bail. The complaint and investigation materials disclosed a prima facie link to routing, possession, concealment and use of proceeds of crime, and the Court treated the proviso for women, sick or infirm persons as discretionary rather than automatic. Given the gravity of the allegations and the statutory scheme, the petitioners did not satisfy the bail threshold and pre-arrest protection was declined.

Anticipatory bail under Section 438 Cr.P.C. - offence of money laundering under Section 3 PMLA - twin conditions for bail in Section 45 PMLA - first proviso to Section 45 (discretionary benefit for woman/sick/infirm/ minor) - statutory presumption under Section 24 PMLA - power to summon and record statements under Section 50 PMLA - special nature of economic offences and investigative prejudiceAnticipatory bail under Section 438 Cr.P.C. - offence of money laundering under Section 3 PMLA - twin conditions for bail in Section 45 PMLA - special nature of economic offences and investigative prejudice - Whether pre arrest bail should be granted to the petitioners in ECIR related to alleged money laundering - HELD THAT: - The Court applied the settled principles governing anticipatory bail and the particular rigours of the PMLA. It observed that Section 45 imposes mandatory twin conditions which the court must be satisfied of before releasing an accused on bail, and that money laundering is an economic offence involving stages of placement, layering and integration where premature grant of anticipatory bail may hamper systematic investigation. The Court examined the prosecution complaint and investigative material, including admissions and bank statement analysis, which prima facie linked the petitioners to acquisition, possession and projection of proceeds of crime. Having balanced the factors listed in Siddharam Mhetre and later authorities and having regard to the stage and nature of the investigation, the Court held that anticipatory bail was not warranted in the facts of this case. [Paras 57, 58, 60, 69, 70]Prayer for anticipatory bail dismissedTwin conditions for bail in Section 45 PMLA - statutory presumption under Section 24 PMLA - Legal effect of Section 45 and Section 24 PMLA on bail applications under the PMLA - HELD THAT: - The Court expounded that the twin conditions in Section 45 - that the Public Prosecutor be afforded opportunity to oppose and that the court be satisfied there are reasonable grounds to believe the accused is not guilty and not likely to commit an offence while on bail - are mandatory requirements which must be complied with when considering bail (including anticipatory bail) in PMLA matters. The Court noted the statutory presumption under Section 24 that proceeds of crime are involved in money laundering unless the contrary is proved, and that this presumption informs the threshold the applicant must meet. Authorities of the Supreme Court were followed to the effect that PMLA's special regime and overriding effect require strict application of these conditions. [Paras 38, 40, 41, 42, 43]Section 45's twin conditions and Section 24's presumption apply and must be satisfied before grant of bailFirst proviso to Section 45 (discretionary benefit for woman/sick/infirm/ minor) - Whether the proviso to Section 45 (relief in favour of a woman or sick/infirm person) mandates grant of bail to the petitioners - HELD THAT: - The Court held that the first proviso to Section 45 uses the word 'may' and thus confers a discretion on the Special Court; it is not an automatic or absolute right. The discretion must be exercised judiciously having regard to extent of involvement, nature of evidence and facts of each case. Reliance on recent Supreme Court observations was placed to stress that the proviso does not oblige release as of right merely because the applicant is a woman or sick/infirm. [Paras 63, 64, 65, 66, 67]Proviso to Section 45 is discretionary and does not oblige the court to grant bail merely on account of the petitioners being a woman or a sick personPower to summon and record statements under Section 50 PMLA - Admissibility and role of statements recorded under Section 50 in the investigation and their relevance to bail - HELD THAT: - The Court referred to the law explaining Section 50 as enabling the Authority to summon and record evidence for inquiry into proceeds of crime; such proceedings are part of inquiry and may lead to disclosure of offences. The Court noted that statements recorded under Section 50 can be material in forming prima facie satisfaction for action under the Act, and that Article 20(3) protection applies only if the person is already an accused at the relevant time; accordingly, statements and other material arising under Section 50 formed part of the material relied upon to assess the bail plea. [Paras 32, 34, 35]Statements recorded under Section 50 are relevant to the inquiry and may be relied upon to form prima facie view for prosecutorial action and for bail considerationPrima facie involvement based on bank records and admissions - Whether the prosecution material established prima facie involvement of the petitioners in laundering proceeds of crime - HELD THAT: - The Court considered specific averments in the prosecution complaint: bank credits into the petitioners' accounts traced to entry provider firms, admissions in co accused's statements that such credits arose from commission/bribe, acquisition of immovable properties and other assets, and contemporaneous investigative findings. The Court concluded that, on the material before it, there was a prima facie case that the petitioners knowingly assisted in possession, concealment and projection of proceeds of crime. [Paras 47, 48, 49, 60, 61]Material on record prima facie links the petitioners to money laundering activitiesFinal Conclusion: Having considered the PMLA regime, the mandatory twin conditions of Section 45 read with the statutory presumption under Section 24, and the prosecution material (including bank records and admissions), the Court found a prima facie case against the petitioners and, in view of the gravity and stage of the investigation, dismissed their applications for anticipatory (pre arrest) bail. The observations are confined to the bail stage and shall not influence the trial.

2024 (5) TMI 525 - JHARKHAND HIGH COURT Money Laundering

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Issues: (i) Whether the petitioner was entitled to regular bail under the Prevention of Money Laundering Act, 2002, having regard to the statutory twin conditions and the material collected during investigation. (ii) Whether the petitioner could succeed on the plea that he was not shown as an accused in the predicate offence and on the plea of parity with a co-accused.

Issue (i): Whether the petitioner was entitled to regular bail under the Prevention of Money Laundering Act, 2002, having regard to the statutory twin conditions and the material collected during investigation.

Analysis: Bail under Section 45 of the Prevention of Money Laundering Act, 2002 is controlled by mandatory twin conditions, namely, the existence of reasonable grounds for believing that the is not guilty and the absence of likelihood of reoffending while on bail. The Court examined the complaint, witness statements under Section 50, seizure material, and the investigation narrative, which indicated involvement in concealment, acquisition, use, and projection of proceeds of crime through illegal mining, transportation of stone chips, and cash deposits used for obtaining ferry tender benefits. The Court also relied on the settled principle that money-laundering is a continuing and independent offence, and that the evidentiary burden under Section 24 operates against the accused at the bail stage.

Conclusion: The petitioner failed to satisfy the twin conditions, and regular bail was not warranted.

Issue (ii): Whether the petitioner could succeed on the plea that he was not shown as an accused in the predicate offence and on the plea of parity with a co-accused.

Analysis: The Court held that being named in the scheduled offence is not a prerequisite for prosecution under Section 3 of the Act if the person knowingly assists or is involved in the process connected with proceeds of crime. It further held that the plea of parity was unavailable because the role attributed to the petitioner was materially distinct from the co-accused whose bail had been granted, and negative equality cannot be invoked to repeat an allegedly erroneous benefit. The Court also noted that economic offences require a stricter approach at the bail stage.

Conclusion: The petitioner's objections on the absence of predicate-offence accusation and on parity were rejected.

Final Conclusion: The application for regular bail was not fit to be allowed in view of the prima facie material indicating involvement in money-laundering and the failure to meet the statutory bail threshold.

Ratio Decidendi: In prosecutions under the Prevention of Money Laundering Act, 2002, bail can be granted only if the Court forms a prima facie view that the accused satisfies the mandatory twin conditions under Section 45, and a person need not be an accused in the scheduled offence if the material shows knowing involvement in the process or activity connected with proceeds of crime.

PMLA bail turns on mandatory twin conditions, continuing offence principles, and material showing involvement in proceeds of crime.
Bail under the Prevention of Money Laundering Act, 2002 is governed by the mandatory twin conditions in Section 45, requiring reasonable grounds to believe the accused is not guilty and no likelihood of reoffending. The court examined complaint material, Section 50 statements, seizure evidence and the investigation record, and treated money-laundering as a continuing, independent offence with the Section 24 burden operating against the accused at the bail stage. It also noted that a person need not be named in the scheduled offence if the material shows knowing involvement in proceeds of crime. Parity with a co-accused was rejected because the attributed role was materially different.

Offence of money laundering under Section 3 PMLA - definition of "proceeds of crime" and its explanation - twin conditions for grant of bail under Section 45(1) PMLA - statutory presumption under Section 24 PMLA and burden of proof - admissibility and evidentiary value of statements recorded under Section 50 PMLA - principle of parity in grant of bail - overriding effect of PMLA over CrPC (Section 71)Twin conditions for grant of bail under Section 45(1) PMLA - overriding effect of PMLA over CrPC (Section 71) - Whether the petitioner is entitled to regular bail in proceedings under PMLA - HELD THAT: - The Court applied the mandatory twin tests in Section 45(1)(i)-(ii) and held that those conditions must be satisfied even when bail is sought under Section 439 CrPC due to the overriding effect of PMLA. On a prima facie consideration of materials collected during investigation (including statements, seized documents and bank records), the Court was not satisfied that there are reasonable grounds for believing that the petitioner is not guilty of the offence or that he is not likely to commit an offence while on bail. The Court further observed that PMLA changes the usual bail paradigm and requires a stricter approach for economic offences. Taking into account the nature and gravity of allegations and the evidence surfaced, the petitioner failed to discharge the statutory threshold for grant of regular bail. [Paras 75, 93, 94, 95, 96]Bail application dismissed; petitioner not granted regular bail.Offence of money laundering under Section 3 PMLA - definition of "proceeds of crime" and its explanation - Whether prima facie ingredients of Section 3 PMLA are attracted against the petitioner - HELD THAT: - The Court analysed Section 3's tripartite structure (person, process/activity, product) and the expanded definition of "proceeds of crime" (including property directly or indirectly derived from criminal activity). It held that Section 3 encompasses acts such as 'use' or 'acquisition' and that a person need not be accused in the predicate offence to be liable under Section 3. On the material in the prosecution complaint (cash deposits, bank transactions, role in procuring tender, seized registers and corroborative Section 50 statements), the Court found sufficient prima facie material to infer the petitioner's involvement in processes or activities connected with proceeds of crime. [Paras 55, 56, 57, 58, 60]Court concluded there is prima facie material that the offence under Section 3 PMLA is attracted against the petitioner.Admissibility and evidentiary value of statements recorded under Section 50 PMLA - Whether statements recorded under Section 50 of PMLA constitute admissible and significant material for prima facie satisfaction - HELD THAT: - Relying on precedent and the statutory scheme, the Court held that statements recorded under Section 50 (summons and recording of evidence) are admissible and form important material in the prosecution complaint. The complained of statements and documents seized and relied upon in the prosecution complaint were treated as significant evidence that prima facie implicates the petitioner in money laundering activities. [Paras 21, 54, 55, 73]Statements recorded under Section 50 PMLA were treated as admissible and material supporting the prosecution's prima facie case.Statutory presumption under Section 24 PMLA and burden of proof - Effect of Section 24 PMLA and placement of burden in bail proceedings - HELD THAT: - The Court reiterated that Section 24 permits the authority or court to presume involvement of proceeds of crime in money laundering unless the contrary is proved, thereby placing an onus on the accused to rebut that presumption. In bail proceedings under PMLA the petitioner bears the burden to satisfy the court that the statutory presumption does not apply and the twin conditions of Section 45 are met; the petitioner failed to discharge this burden on the materials before the Court. [Paras 30, 31, 47]Statutory presumption under Section 24 operates and burden lies on the petitioner; he failed to rebut it for bail purposes.Principle of parity in grant of bail - Whether the petitioner is entitled to bail on the ground of parity with a co accused who was granted bail - HELD THAT: - The Court reviewed the scope of parity and held that parity applies only where the factual matrix and role of the accused are substantially identical. The Court found the petitioner's alleged role materially distinguishable from the co accused who had earlier been enlarged on bail (differences in alleged involvement, seizure of proceeds and proximity to the prime accused). The Court also noted that parity cannot be invoked to perpetuate an illegality or to secure 'negative equality' where earlier orders were passed on different materials or considerations. [Paras 85, 86, 87, 88, 89]Parity not available; petitioner's bail cannot be granted by mere reliance on co accused's bail order.Delay in registration of ECIR and its effect - Whether delay of instituting ECIR after FIR undermines the prosecution and entitles petitioner to bail - HELD THAT: - The Court rejected the contention that the two year gap between FIR and ECIR renders the prosecution an afterthought. It observed that neither an immediate registration nor delay is determinative-ED's timing may be challenged but not presumptively fatal-and that the available material justifies continuing proceedings. The Court treated the delay argument as insufficient to meet the Section 45 threshold for bail. [Paras 52]Delay in registration of ECIR does not vitiate the prosecution nor warrant grant of bail in this case.Final Conclusion: On a prima facie appraisal of the materials (seized documents, bank records, tender related deposits and statements recorded under Section 50), and applying the mandatory twin conditions of Section 45(1) PMLA together with the statutory presumption under Section 24, the High Court found that the petitioner failed to satisfy the threshold for release; the petition for regular bail is dismissed.

2024 (4) TMI 1349 - JHARKHAND HIGH COURT Money Laundering

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PMLA bail and Section 45 twin conditions defeated where prima facie material showed involvement in laundering proceeds of crime.
Under the Prevention of Money Laundering Act, 2002, regular bail depends on the mandatory twin conditions in Section 45, read with the statutory presumption in Section 24 and the special statute's overriding effect. On the prima facie material, including Section 50 statements, search-and-seizure results, routing of funds through relatives' and intermediaries' accounts, and alleged acquisition and projection of assets as untainted property, the Court treated the record as showing direct involvement in handling proceeds of crime. Bail was refused because the petitioner failed to show reasonable grounds for believing he was not guilty or that he would not reoffend, and completion of investigation or absence from the predicate FIR did not by itself justify release.

Money Laundering - Grant of Bail - proceeds of crime - proceeds of crime acquired in the form of commission/bribe in lieu of allotment of tenders by the present petitioner - opening of bank accounts on the basis of forged documents - HELD THAT:- The “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 - the reason for giving explanation under Section 2(1)(u) is by way of clarification to the effect that whether as per the substantive provision of Section 2(1)(u), the 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 but by way of explanation the proceeds of crime has been given broader implication by 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. It is evident that the “scheduled offence” means the offences specified under Part A of the Schedule; or the offences specified under Part B of the Schedule if the total value involved in such offences is [one crore rupees] or more; or the offences specified under Part C of the Schedule - the “offence of money-laundering” means whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. The Hon’ble Apex Court in the case of Tarun Kumar vs. Assistant Director Directorate of Enforcement, [2023 (11) TMI 904 - SUPREME COURT] by taking into consideration the law laid down by the Larger Bench of the Hon’ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. [2022 (7) TMI 1316 - SUPREME COURT (LB)], has laid down that since the conditions specified under Section 45 are mandatory, they need to be complied with. The Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail. Admittedly, the petitioner is a Government Employee posted as Chief Engineer in the Rural Development Special Zone and Rural Works Department, both under Govt. of Jharkhand. It appears that he acquired huge movable and immovable assets by misusing his official position/post. He used to take commission for every tender work allotted thereby directly involved in the generation of proceeds of crime. He acquired the ill-gotten funds or the proceeds of crime and arranged routing to the bank accounts of his family members, and further, these funds are used in acquiring immovable and movable properties in their name thus projecting tainted money as untainted. The petitioner and his family are also found to be living a luxurious lifestyle which is not possible with the salary income of the petitioner who is the only earning member of his family - Investigation disclosed that huge funds which are proceeds of crime were received in the bank accounts of the wife and father of the petitioner, firstly Rs. 9.30 crores approximately during the period FY 2014-15 to FY 2018-19 in the joint account of Rajkumari and petitioner, secondly Rs. 4.5 crores in the account of his father Genda Ram from December 2022 to January 2023. The present petitioner has directly indulged in the process of acquisition, possession, use, and concealment of huge money by receiving the said money from the commission/ bribe amount misusing his post while working and posted in a different capacity at Rural Development (Special Zone) and Rural Works Department, Government of Jharkhand. He was also found to be directly indulged in projecting the immovable properties worth of Rs. 38.8 crores at Delhi and 03 vehicles in the name of his wife Rajkumari and son Ayush Rapson to the tune of Rs. 1.27 crores approx., as untainted property by routing the same from Delhi based accounts. Further the offence of money laundering as contemplated in Section 3 of the PMLA has been elaborately dealt with by the three Judge Bench in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], in which it has been observed that Section 3 has a wider reach. The offence as defined captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and is not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money laundering. Of course, the authority of the Authorised Officer under the Act to prosecute any person for the offence of money laundering gets triggered only if there exist proceeds of crime within the meaning of Section 2(1)(u) of the Act and further it is involved in any process or activity. In the instant case, it has been found that during the course of investigation from the statements of witnesses recorded under Section 50 that the petitioner Veerendra Ram had directly indulged, knowingly is as the party and is actually involved in all the activities connected with the offence of money laundering. i.e., use or acquisition, possession, concealment, and projecting or claiming as untainted property - at this juncture this Court thinks fit to revisit the scope of section 45 of the PML Act 2002. As discussed in preceding paragraphs that Section 45 of the PMLA Act, 2002 provides twin test. First “reason to believe” is to be there for the purpose of reaching to the conclusion that there is no prima facie case and second condition is that the accused is not likely to commit any offence while on bail. This Court, based upon the imputation as has been discovered in course of investigation, is of the view that what has been argued on behalf of the petitioner that proceeds cannot be said to be proceeds of crime but as would appear from the preceding paragraphs, money which has been obtained by the accused person Veerendra Kumar Ram has been routed by this petitioner and he has also withdrawn the money from different fake accounts and transferred it into the account of the accused persons - there is no reason to believe by this Court that the petitioner is not involved managing the money said to be proceeds of crime. This Court, in view of the material available against the petitioner, is of the view, that in such a grave nature of offence, which is available on the face of the material, applying the principle of grant of bail wherein the principle of having prima facie case is to be followed, the nature of allegation since is grave and as such, it is not a fit case of grant of bail - Having regard to the entirety of the facts and circumstances of the case, this Court is of the opinion that the appellant has miserably failed to satisfy this Court that there are reasonable grounds for believing that he is not guilty of the alleged offences. On the contrary, there is sufficient material collected by the respondent-ED to show that he is prima facie guilty of the alleged offences - Therefore, this Court, based upon the reasons herein above, is of the view that the grounds upon which the prayer for bail has been sought for, is having no substance. Since the petitioner has failed to make out a special case to exercise the power to grant bail and considering the facts and parameters, necessary to be considered for adjudication of bail, this Court does not find any exceptional ground to exercise its discretionary jurisdiction to grant bail - bail application dismissed.

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