2017 (12) TMI 1824 - DSC - Money Laundering

Court acquits accused of money laundering under PMLA for lack of crime proceeds. Properties released, bail bonds ordered.

The court acquitted all the accused of charges of money laundering under the Prevention of Money Laundering Act (PMLA) due to the absence of proceeds of ... Money Laundering - allegations of irregularities and bribery - attachment of the properties, being the proceeds of crime - HELD THAT:- There is a schedule attached to the Act. It contains a list of various enactments and the offences created thereunder, which are to be treated as scheduled offences. Prevention of Corruption Act, 1988 is one of the Acts mentioned in the schedule. Section 7 of this Act pertains to public servant taking gratification other than legal remuneration in respect of an official act and Section 13 relates to criminal misconduct by a public servant. Both of these offences are thus scheduled offences as per Section 2(1)(y) of the Act - “proceeds of crime” is a property derived by any person as a result of criminal activity relating to a scheduled offence. Anyone who 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 proceeds of crime, including its concealment, possession, acquisition or use and projecting or claiming it as untainted property commits the offence of money­laundering. Thus, for commission of an offence of money­laundering, there should be a scheduled offence and out of that offence, the accused must have derived or obtained proceeds of crime and having obtained such proceeds, must have projected or claimed it as untainted. Thus, “Proceeds of crime” is the essence and an indispensable element of the offence of money­laundering. It is the core constituent of the offence. Without the existence of proceeds of crime, there cannot be any commission of an offence of money­laundering. It is only when “proceeds of crime” is projected or attempted to be projected as untainted property, the offence of money­ laundering arises. In nutshell, the existence of a scheduled offence and emergence of “proceeds of crime” therefrom, is sine qua non for the existence of the offence of money­laundering. It is the case of the prosecution that subsequently on the registration of criminal case by CBI and arrest of Sh. A. Raja, this amount was returned and this was done by executing several ex­post documents to project this amount as untainted, that is, regular commercial transactions. Hence, this amount of ₹ 200 crore was derived from a criminal activity relating to a scheduled offence and, as such, constituted “proceeds of crime” and these “proceeds of crime” were projected, both during transfer from Dynamix Realty to Kalaignar TV (P) Limited and vice versa, as genuine business transactions and these acts constituted an offence of money­laundering by all the accused involved in the case - in the present case, the alleged “proceeds of crime” were generated for the favours allegedly shown by Sh. A. Raja to STPL in the matter of grant of thirteen UAS licences. Thus, the entire case hinges upon “proceeds of crime” of ₹ 200 crore, which were generated when DB Group paid an illegal gratification of ₹ 200 crore to Sh. A. Raja, which was parked in Kalaignar TV (P) Limited. Since there are no “proceeds of crime”, there is no need to discuss other issues based on evidence led by the parties, as that would amount to an exercise, not only in speculation but also in futility, as the very basic fact required for constitution of an offence of moneylaundering, that is, “proceeds of crime”, is knocked out - all accused are entitled to be acquitted and are acquitted. Application disposed off. Issues Involved:1. Allegations of irregularities in the issuance of Unified Access Service (UAS) licenses.2. Allegations of illegal gratification and bribery.3. Allegations of money laundering under the Prevention of Money Laundering Act (PMLA).Detailed Analysis:1. Allegations of Irregularities in the Issuance of UAS Licenses:The case revolves around the issuance of UAS licenses by the Department of Telecommunications (DoT) to various companies, including Swan Telecom (P) Limited (STPL). The allegations suggest that the process was marred by irregularities and favoritism. It was alleged that STPL was an 'Associate' of Reliance ADA group and was ineligible to apply for the licenses as per UASL Guidelines. Despite this, STPL was granted licenses and allocated spectrum.2. Allegations of Illegal Gratification and Bribery:The prosecution alleged that illegal gratification of Rs. 200 crore was paid by DB Group companies to A. Raja, the then Minister of Communications and Information Technology, for granting UAS licenses and spectrum allocation to STPL. This amount was purportedly transferred to Kalaignar TV (P) Limited through a series of transactions involving Dynamix Realty, Kusegaon Fruits and Vegetables (P) Limited, and Cineyug Films (P) Limited. The prosecution argued that these transactions were designed to disguise the illegal gratification as legitimate business transactions.3. Allegations of Money Laundering under PMLA:The prosecution's case under PMLA was built on the premise that the Rs. 200 crore constituted 'proceeds of crime' generated from the scheduled offence of bribery and corruption. The prosecution argued that the accused engaged in 'money laundering' by projecting the proceeds of crime as untainted property through a series of transactions.Judgment Analysis:Acquittal in the Case of Scheduled Offence:The court acquitted all the accused in the case related to the scheduled offence of bribery and corruption. Consequently, the court held that there were no 'proceeds of crime' as the foundational fact for the offence of money laundering was missing. The court emphasized that without the existence of proceeds of crime, there could be no offence of money laundering.Detailed Examination of Transactions:The court examined the transactions between the entities involved, including Dynamix Realty, Kusegaon Fruits and Vegetables (P) Limited, Cineyug Films (P) Limited, and Kalaignar TV (P) Limited. The court noted that these transactions were executed with great speed and involved several ex-post documents to project the transactions as regular business dealings. However, the court concluded that these transactions did not constitute money laundering in the absence of proceeds of crime.Legal Provisions and Case Law:The court referred to various legal provisions under the PMLA and relevant case law to emphasize that the existence of proceeds of crime is a sine qua non for the offence of money laundering. The court cited several judgments, including M. Shobana Vs. The Assistant Director, Directorate of Enforcement, and others, to support its conclusion that the offence of money laundering arises only when there are proceeds of crime derived from a scheduled offence.Disposal of Attached Property:In light of the acquittal, the court ordered the release of the attached properties to the persons from whom they were attached. The court referred to Section 8(6) of the PMLA, which mandates the release of attached properties if the court finds that the offence of money laundering has not taken place.Conclusion:The court acquitted all the accused of the charges of money laundering under PMLA, holding that there were no proceeds of crime as the accused were acquitted in the case related to the scheduled offence. The court ordered the release of attached properties and directed the accused to furnish bail bonds for appearance before the appellate court if required.