2010 (8) TMI 1064 - HC - Money Laundering

Court Upholds Prosecution under Money Laundering Act, Emphasizes Focus on Laundering Activities

Hari Narayan Rai Versus Union of India

The court upheld the prosecution under the Prevention of Money Laundering Act, 2002, rejecting the challenge based on the timing of the offenses and ... Money Laundering - violates the fundamental right under Article 20 (1) - In substance, the argument is that the money alleged to have been acquired will not fall within the definition of 'proceeds of crime' because the acts leading to its generation were not among the offences listed in the Schedule, as it stood on the date when those acts were committed. The argument is misconceived. It has also been argued that the detention of the petitioner is illegal. This argument is based upon the allegation that the grounds for detention were not communicated as required by Section 19. There is only a prayer for quashing the judicial remand order dated 13.10.2009. HELD THAT:- A perusal of that remand order shows that no such ground was taken before the Court below at the time when the petitioner was being remanded for detention by a judicial order of the Court below. Being a Pure question of fact, not raised before the Court below, this cannot be permitted to be raised for the first time in writ jurisdiction. Moreover, there is a denial of this fact in the counter affidavit making it a disputed question of fact. Most important of all, after the remand dated 13.10.2009 there would have been several other judicial remand orders which are not under challenge. Therefore, the prayer for quashing the remand order dated 13.10.2009 is redundant. I do not consider it appropriate to go into the greater details as it might embarrass the trial. Therefore, the writ petition fails and it is dismissed. In the circumstances, I am of the view that the petitioner is not being prosecuted merely for any act which was not a scheduled offence on the date when it was committed. Therefore, the fundamental right of the petitioner guaranteed by Article 20 (1) is not being violated. Issues:1. Prosecution under the Prevention of Money Laundering Act, 2002.2. Violation of fundamental rights under Article 20(1) of the Constitution of India.3. Interpretation of the relevant date for 'proceeds of crime.'4. Legality of detention and communication of grounds under Section 19 of the Act.Prosecution under the Prevention of Money Laundering Act, 2002:The petitioner challenged the prosecution under Section 3 of the Prevention of Money Laundering Act, 2002, alleging a violation of fundamental rights. The argument centered on the contention that the offenses generating money were committed before the inclusion of these offenses in the Act's Schedule in 2009. The court examined the definition of 'proceeds of crime' under Section 2(u) and emphasized that the focus of the Act is on the 'laundering of money' acquired through scheduled crimes. The court clarified that the relevant date is not the acquisition of illicit money but the date when such money is processed to appear legitimate. It rejected the argument that the money acquired did not fall within the definition of 'proceeds of crime' due to the timing of the offenses.Violation of fundamental rights under Article 20(1) of the Constitution of India:The petitioner contended that the prosecution violated their fundamental rights under Article 20(1) by targeting acts committed before the offenses were included in the Act's Schedule. The court held that the petitioner was not prosecuted for acts that were not scheduled offenses at the time of their commission. It emphasized that the Act aims to prevent the laundering of money obtained through criminal activities, regardless of when the crimes generating the money occurred. Thus, the fundamental rights of the petitioner were not deemed to be violated.Interpretation of the relevant date for 'proceeds of crime':The court clarified that the critical date for determining 'proceeds of crime' under the Act is when the money is being processed to appear untainted, not when it was illicitly acquired. It highlighted that the Act targets the laundering of money acquired through scheduled crimes, focusing on the date of money laundering activities rather than the date of criminal acts generating the money. This interpretation guided the court's decision regarding the application of the Act in the case.Legality of detention and communication of grounds under Section 19 of the Act:The petitioner raised concerns about the legality of their detention, arguing that the grounds were not communicated as required by Section 19 of the Act. However, the court noted that the petition did not seek Habeas Corpus relief but aimed to quash a remand order. It observed that the specific ground regarding the detention was not raised during the initial remand proceedings and could not be introduced for the first time in a writ petition. The court also highlighted that subsequent remand orders were not challenged, rendering the prayer to quash the initial remand order redundant. Ultimately, the court dismissed the writ petition, emphasizing the need to avoid delving into excessive details to prevent trial complications.