Court Rules Senior Branch Manager Cannot Be Prosecuted Under PML Act for Same Offenses

The court held that the petitioner, a Senior Branch Manager, cannot be prosecuted under the Prevention of Money Laundering Act (PML Act) for the same acts he is already facing charges for under the Indian Penal Code and the Prevention of Corruption Act. The court emphasized that for money laundering to be established, the proceeds of crime must be projected as untainted property. The amendments made to the PML Act by Act 23 of 2019 were held not to create new offenses or widen the scope of penal provisions. As a result, the prosecutions under the PML Act were deemed an abuse of process of law, and the charges against the petitioner were quashed.

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Issues Involved:
1. Whether the petitioner can be prosecuted under Section 3 read with Section 4 of the Prevention of Money Laundering Act (PML Act) for the same act for which he is already facing prosecution under the Indian Penal Code (IPC) and the Prevention of Corruption Act.
2. Interpretation of "proceeds of crime" under Section 2(1)(u) and Section 3 of the PML Act.
3. Applicability of the amendments made to the PML Act by Act 23 of 2019.

Detailed Analysis:

Issue 1: Prosecution under PML Act
The petitioner, a Senior Branch Manager, is facing prosecution for sanctioning housing and personal loans based on forged documents, which became Non-Performing Assets (NPAs). The Central Bureau of Investigation (CBI) filed charge sheets against him for offenses under Section 120-B IPC read with Sections 420, 468, and 471 IPC and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act. Subsequently, the Enforcement Directorate (ED) filed complaints under Section 3 read with Section 4 of the PML Act. The petitioner argued that he cannot be prosecuted under the PML Act for the same act he is already being prosecuted for under the IPC and Prevention of Corruption Act.

Issue 2: Interpretation of "Proceeds of Crime"
The learned Special Public Prosecutors argued that mere participation in a criminal activity that led to the generation of "proceeds of crime" would attract the provisions of Section 3 read with Section 4 of the PML Act. They cited the Hon'ble Finance Minister's speech and the amendments to Section 2(1)(u) and Section 3 of the PML Act via Act 23 of 2019. However, the court held that for the offense of money laundering to be established, it is necessary that the proceeds of crime should be projected as untainted property. This interpretation aligns with the Supreme Court's ruling in Nikesh Tarachand Shah Vs. Union of India and Another, which stated that mere involvement in a process or activity connected with proceeds of crime without projecting it as untainted property does not constitute money laundering.

Issue 3: Applicability of Amendments by Act 23 of 2019
The court noted that the explanations added to Section 2(1)(u) and Section 3 of the PML Act by Act 23 of 2019 do not alter the legal position established by the Supreme Court. The explanations cannot expand the scope of the penal provisions to create a new offense. The court emphasized that the amendments should harmonize with the main section and not widen its ambit. The interpretation that mere generation and possession of proceeds of crime would attract the PML Act was rejected as it could lead to absurd results, such as prosecuting every robber under the PML Act.

Conclusion:
The court concluded that the allegations against the petitioner in the complaints under the PML Act pertain to his sanctioning of loans based on forged documents, a matter for which he is already facing prosecution under the IPC and Prevention of Corruption Act. There was no material to show that the petitioner had projected the loan amounts as untainted property. Therefore, the prosecutions under the PML Act were deemed an abuse of process of law. The criminal original petitions were allowed, and the prosecutions against the petitioner in C.C.No.49 of 2016 and C.C.No.20 of 2015 were quashed.

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