2016 (7) TMI 1444 - HC - Money Laundering

Validity of PMLA Investigation Upheld Despite Timing Challenge

The court upheld the validity of the investigation under the Prevention of Money Laundering Act, dismissing the petitioner's challenge based on the timing ... Offences u/s 7 and 13(1)(e) of the Prevention of Corruption Act - allegation against the petitioner was that he was in possession of assets which is disproportionate to his known source of income - Held that:- The investigation was commenced against the petitioner on a suspicion that he has committed the offence under Section 3 of the Act. The investigation is in progress. As such, merely for the reason that the information report filed for initiation of investigation does not disclose all the ingredients of the offence under Section 3 of the Act, the investigation cannot be interfered with. The writ petition, in the circumstances, is without merits and the same is, accordingly, dismissed. Issues: Allegation of disproportionate assets under Prevention of Corruption Act, validity of investigation under Prevention of Money Laundering Act, violation of fundamental rights under Article 20(1) of the Constitution.Analysis:1. The petitioner, a Deputy Chief Controller of Explosives, faced prosecution under Sections 7 and 13(1)(e) of the Prevention of Corruption Act for possessing assets disproportionate to his known income. Subsequently, a case was registered under the Prevention of Money Laundering Act, 2002 (PMLA) based on an Information Report (Ext.P2). The petitioner challenged the sustainability of the investigation under PMLA, citing non-existence of the Act during the alleged offences and violation of Article 20(1) of the Constitution.2. The petitioner contended that the PMLA investigation stemmed from his conviction under the Prevention of Corruption Act for amassing wealth beyond known sources from 1997 to 2002, while the PMLA came into force in 2013. However, the court clarified that the PMLA focuses on money laundering, independent of the scheduled offences, dealing with proceeds of crime concealment, possession, acquisition, or use. The timing of scheduled offences is irrelevant for PMLA prosecution; what matters is the timing of money laundering acts, thus dismissing the Article 20(1) violation argument.3. The court highlighted that the PMLA investigation was initiated based on suspicion of the petitioner's involvement in money laundering under Section 3 of the Act, with the investigation ongoing. The court emphasized that the absence of all Section 3 offence elements in the Information Report doesn't warrant interference with the investigation. Consequently, the court dismissed the writ petition, deeming it meritless in challenging the PMLA investigation's validity under the circumstances.