2019 (4) TMI 1982 - HC - Money Laundering

Court rules PMLA cases can't transfer solely for bank fraud, ED must file proper application

The court dismissed the Criminal Original Petition, ruling that the cases pending before the CBI Court cannot be transferred to the Special Court for PMLA ... Transfer of proceedings to Special Court constituted for PMLA - Constitutional Validity of Section 45(1) of the PMLA - HELD THAT:- A reading of the Section 44 of the PMLA, makes it clear that only the offences punishable under the said Act and connected schedule offences alone are to be tried by the Special Court constituted for the said Act. The impugned proceedings, which are sought to be transferred from the CBI Court by the Petitioner/A1, are not under the PMLA, but under the provisions of IPC and the Prevention of Corruption Act, 1988, which are pending before the Additional Chief Metropolitan Magistrate, Egmore, Chennai - Admittedly, the Petitioner was prosecuted by the 1st Respondent/CBI for having committed serious bank frauds to the tune of ₹ 77.39 crores and accordingly, the charge sheet was filed under the provisions of IPC, namely, Section 420 of IPC. Mere filing of the private complaint to proceed against the Petitioner for the same serious bank frauds, on the basis of the materials collected by the 1st Respondent/CBI will not entitle the Petitioner to seek transfer the impugned proceedings initiated by the 1st Respondent/CBI to the Special Court constituted for the said Act to be tried jointly. This Court is of the firm opinion that the cases, arising out of money laundering, pending before the other Courts other than the Special Court cannot be transferred and such a Court can only commit the cases to the Special Court on filling necessary application by the authority concerned, seeking permission to file the complaint under the Prevention of Money Laundering Act. Therefore, the question of transferring the impugned proceedings to the Special Court for Prevention of Money Laundering Act does not arise at all. Therefore, the relief sought for by the petitioners cannot be sustained, at this stage. This Court is of the view that the cases, which are pending on the file of the CBI Court in connection with various offences, which were investigated in the year 2013, cannot be transferred to the Special Court for Prevention of Money Laundering as sought for by the Petitioner/A1. Consequently, this Court is not inclined to entertain the present Criminal Original Petition - Petition dismissed. Issues Involved:1. Jurisdiction of the Additional Chief Metropolitan Magistrate versus the Special Court under PMLA.2. Application of Section 44 of the Prevention of Money Laundering Act (PMLA).3. The impact of pending proceedings and the filing of a discharge petition.4. The possibility of joint trials for offences under IPC and PMLA.Detailed Analysis:Jurisdiction of the Additional Chief Metropolitan Magistrate versus the Special Court under PMLA:The petitioner sought to adjourn the proceedings in CC.No.9635 of 2014, pending before the Additional Chief Metropolitan Magistrate, Egmore, Chennai, sine die until the case could be transferred to the Special Court under PMLA. The petitioner argued that the Special Court, constituted under Section 43(1) of PMLA, should try the case as it is connected to a schedule offence under PMLA. The court, however, concluded that the impugned proceedings, which include offences under IPC and the Prevention of Corruption Act, are not under PMLA and thus do not fall under the jurisdiction of the Special Court for PMLA. The court emphasized that the Additional Chief Metropolitan Magistrate retains jurisdiction over these proceedings.Application of Section 44 of the Prevention of Money Laundering Act (PMLA):Section 44 of PMLA was scrutinized, which states that offences under PMLA and any connected scheduled offences should be tried by the Special Court. However, the court noted that the impugned proceedings are under IPC and the Prevention of Corruption Act, not under PMLA. The court clarified that Section 44(1)(c) of PMLA allows the Special Court to deal with the case from the stage at which it is committed, but this requires an application from the authorized authority. The court concluded that the petitioner cannot seek the transfer of the case to the Special Court under PMLA based solely on the connection to a scheduled offence.The impact of pending proceedings and the filing of a discharge petition:The petitioner had filed a discharge petition in Crl.MP.No.752 of 2016, which was pending before the Additional Chief Metropolitan Magistrate. The court noted that the impugned proceedings, initiated by CBI, had been pending since 2014 and were at the stage of framing charges. The court emphasized that the mere filing of a private complaint by the Enforcement Directorate (ED) under PMLA does not entitle the petitioner to seek a transfer of the impugned proceedings to the Special Court. The court held that allowing the trial to continue in the CBI Court would not cause any prejudice to the petitioner and that the evidence in each case must be assessed independently.The possibility of joint trials for offences under IPC and PMLA:The petitioner argued for a joint trial of the scheduled offence and the complaint under PMLA, citing a Supreme Court judgment and a Bombay High Court decision. The court, however, found that these decisions did not apply to the current case as they did not address the issue of joint trials for predicate offences and PMLA offences. The court reiterated that the main objective of constituting a Special Court under PMLA is for the speedy trial of money laundering offences. The court concluded that transferring the impugned proceedings to the Special Court would lead to unnecessary delays and protraction of the criminal prosecution initiated by CBI.Conclusion:The court dismissed the Criminal Original Petition, stating that the relief sought by the petitioner cannot be sustained. The court held that the cases pending before the CBI Court cannot be transferred to the Special Court for PMLA merely because they involve serious bank frauds. The court noted that the Enforcement Directorate is taking steps to file the necessary application under Section 44(1)(c) of PMLA for transferring the case. Consequently, the connected MP was also closed.