2019 (9) TMI 1196 - AT - Money Laundering

Appeals allowed, attachments released for late charge-sheet filing. Scheduled offence proceedings to continue. No costs awarded.

The appeals were allowed, and the attachments were released due to the failure to file the charge-sheet within the prescribed period. The proceedings ... Money Laundering - attachment of properties - non-filing of charge sheet at the time of passing the confirmation order - proceeds of crime - relationship of proceeds with alleged crime - whether the attachment lapses in the absence of non-filing of the charge-sheet at the time of passing the confirmation order before the Adjudicating Authority? HELD THAT:- It is admitted on behalf of respondent in its written-submission that the amendment dated 19.04.2018 amending section 8(3) of PMLA, 2002 brings into the effect that order confirming the attachment passed under section 8(3) would only subsist during the period of investigation for a period not exceeding 90 days. In other words, the prosecution complaint shall be filed under 45(1) PMLA, 2002 within 90 days of confirmation of provisional attachment order. This amendment is prospective in nature and not retrospective. Following the amendment, prosecution complaint under section 45(1) PMLA, 2002 was filed on 11.06.2018 which is within the time limit of 90 days prescribed by the amendment from the date it became effective. Section 8(3)(a) of the Prevention of Money Laundering Act, 2002 was amended through Section 207-208 of the Finance Act, 2018. As per Section 207 of the Finance Act, 2018, the Central Government was required to notify the date for coming in to force of Section 208 of the said Act. Notification bearing no. G.S.R.383(E) dated19.4.2018 issued by the Department of Revenue, Ministry of Finance, Government of India, appointed “19.04.2018” as the date for coming into force of Section 208 of the Finance Act,2018 which amended Section 8(3)(a) of the PMLA. Section 44(1)(b) of PMLA underwent an amendment where the words “upon perusal of police report of the case(s) which constitute an offence” was deleted and thus by deletion, it is clear that cognizance of offence u/s 3 PMLA can be taken only upon a complaint in writing and not on a Police report, i.e. charge sheet filed by Police u/s 173(5) Cr.PC. PMLA does not define “complaint” but “complaint” is defined under Section 2(d) CrPC as allegation made orally or written to be Magistrate for taking action against the persons who have committed the offence. It is clear after going through the scheme of the Act that being a Special Act, all PMLA proceedings are to be conducted within the four corners of Act. These are stringent provisions. Criminal liabilities are involved at the end of the day if the charges are proved. Different meaning or interpretation cannot be given if the language of the said provisions are simple and understandable. Since the charge-sheet/prosecution complaint has not been filed under the provision of Section 8(3)(a) of the Act within the prescribed period of time, the attachments stand lapsed, thus, the same are released. Therefore, there is no need to go into the merit of the case. Appeal allowed. Issues Involved:1. Scheduled Offence2. Registration of ECIR3. PMLA Investigation4. Case of the Appellants5. Reply by the Respondent6. Applicability of Police Investigation7. Jurisdictional Issue and Timeliness of Filing Charge-sheetDetailed Analysis:Scheduled Offence:The Superintendent of Police, CBI, Cochin, forwarded a consolidated Final Report under Section 173(2) Cr. PC, detailing multiple FIRs against several accused for offences under Sections 120B, 420 IPC, and various provisions of the Lotteries (Regulation) Act, 1988, and Lotteries (Regulation) Rules, 2010. The charges involved non-remittance of sale proceeds and prize money to the Sikkim Government, printing lottery tickets from a non-security press, and manipulating unsold prize-winning tickets to claim money from the Sikkim Government.Registration of ECIR:Based on the information, an Enforcement Case Information Report (ECIR) was registered on 19.08.2014 under Section 3 of PMLA. The investigation targeted several individuals and entities, including Future Gaming Solutions India Pvt. Ltd. and its representatives. Additional suspects were later included in the investigation.PMLA Investigation:The Directorate of Enforcement initiated an investigation under PMLA, 2002. A provisional attachment order was issued on 31.03.2016, which was challenged by the appellants in the Kerala High Court. The High Court permitted the continuation of proceedings but restrained further actions under Section 8(4) of PMLA until further orders. The prosecution complaint was eventually filed on 11.06.2018.Case of the Appellants:The appellants argued that the FIRs filed in Kerala were unconstitutional and aimed at banning Sikkim lotteries while promoting Kerala's own lotteries. They contended that the offences under the Lotteries Regulation Act are not scheduled offences under PMLA. They also highlighted that the State of Sikkim had issued No Dues Certificates, indicating no financial loss. The appellants further argued that the lack of a complaint from Sikkim negates the charges under Section 420 IPC.Reply by the Respondent:The respondent argued that the lack of a complaint from Sikkim is irrelevant to PMLA proceedings, which were based on a CBI charge sheet indicating wrongful loss to the Sikkim Government. They contended that the investigation revealed manipulation of prize-winning tickets and that the proceeds of crime were calculated based on average principles. They also emphasized that the PMLA investigation is independent of the scheduled offence and does not require all offences to be scheduled offences.Applicability of Police Investigation:The court clarified that PMLA proceedings are independent and have their own mechanism. The enforcement of PMLA does not rely on the outcomes of investigations under other laws, such as the Cr.P.C. The court also referenced a Delhi High Court judgment, which stated that PMLA proceedings must be conducted within the framework of the Act, and the powers under Cr.P.C. do not apply to PMLA investigations.Jurisdictional Issue and Timeliness of Filing Charge-sheet:The appellants argued that the attachment orders lapsed because the charge-sheet was not filed within the prescribed period. The court noted that various amendments to Section 8(3)(a) of PMLA extended the period for filing the charge-sheet. However, since the charge-sheet was filed more than a year and eight months after the confirmation order, the attachment orders were deemed to have lapsed. Consequently, the court ordered the release of the attached properties.Conclusion:The appeals were allowed, and the attachments were released due to the failure to file the charge-sheet within the prescribed period. The proceedings under the scheduled offence will continue independently. No costs were awarded.