2020 (1) TMI 1076 - HC - Money Laundering

High Court Upholds Money Laundering Act Charges & Arrest Warrants

Shyam Sunder Singhvi, Dr. Ashok Singhvi, Tamanna Begum Widow Of Late Mohammad Sher Khan, Pushkar Raj Ameta S/o Shri Indra Lal Ameta, Pankaj Gehlot, Dr. Ashok Singhvi, Shyam Sunder Singhvi, Mohammad Rashid Sheikh, Dheerendra Singh @ Chintoo S/o Shri Surya Baksh Singh Versus Union of India, Umanand Vijay, Assistant Director Enforcement Directorate, Enforcement Directorate

The High Court upheld the trial court's order taking cognizance under Sections 3 & 4 of the Prevention of Money Laundering Act, 2002, and issuing ... Money Laundering - proceeds of crime - offence punishable under Sections 3 & 4 of the Prevention of Money Laundering Act, 2002 - main allegation in the FIR was with regard to misuse of official position of the accused and to hatch criminal conspiracy to cause loss of revenue to the State Exchequer - criminal breach of trust - HELD THAT:- This court finds that in the present facts of the case, the trial court has taken into account the complaint which was filed against the accused persons and after going through the various statements and documents produced by the prosecution, the Sessions Judge found that there are sufficient grounds for taking cognizance against the accused persons and as such after considering contents of the complaint and material, the order of cognizance has been passed - This court finds that in exercise of revisional power, High Court should not interfere only because it forms a different opinion on the same material. The High Court, unless finds that the order impugned is perverse on face of it and the court below did not exercise its jurisdiction or there is an illegality or irregularity on the face of order impugned, should not interfere with the order passed by the court below while exercising powers under Sections 397 and 401 Cr.P.C. The satisfaction of the court taking cognizance, if based on the material placed before it, discloses that cognizance of an offence is required to be taken, the said order will not be termed as a perverse order. This court finds that the Legislature has enacted the PMLA, 2002 with object to prevent money-laundering and connected activities, as it posed a serious threat not only to the financial systems but also to the integrity and sovereignty of the Country - This court finds that if offence of money laundering, as defined in Section 3 of the PMLA, 2002, is to be alleged against the accused persons, the Investigating Agency is required to look into the basic ingredients for commission of such offence. The very purpose of the PMLA, 2002 is to nab the activities, which ultimately result into money laundering. This court finds that reading of Section 3 of the PMLA, 2002 reveals that the offence of money laundering is an offence regarding indulging in any process or activity connected with proceeds of crime including its concealment, possession, acquisition or use and further projecting and claiming the same to be untainted property. The said definition given in Section 3 of the PMLA, 2002 was later on clarified by adding explanation and as such it does not change the basic ingredients which were required to be alleged against a person for committing an offence under Section 3 of the PMLA, 2002. The clarification which has been added in fact was for removal of doubts, may be due to somewhat ambiguous definition inserted in the main provision of Section 3 of the PMLA, 2002. This court finds that position of law which emerges is that offence of money laundering under Section 3 of the PMLA, 2002 is an independent offence and money laundering is a stand alone offence under the PMLA, 2002 - this court finds that the order passed by the court below of taking cognizance dated 21.01.2019 does not require any interference by this court. Revision petitions dismissed. Issues Involved:1. Legality of the order dated 21.01.2019 passed by the Special Sessions Court, Jaipur, taking cognizance under Sections 3 & 4 of the Prevention of Money Laundering Act, 2002 (PMLA) and issuing arrest warrants.2. Refusal of the Trial Court to convert arrest warrants into bailable warrants under Section 70(2) Cr.P.C.Issue-Wise Detailed Analysis:1. Legality of the Cognizance Order and Issuance of Arrest Warrants:Facts and Allegations:The Anti-Corruption Bureau (ACB) registered an FIR on 19.09.2015 against several accused for misuse of official positions, criminal conspiracy, and causing loss to the State Exchequer. The ACB filed a charge sheet on 04.11.2015 for offences under the Prevention of Corruption Act and IPC. The Directorate of Enforcement registered an Enforcement Case Information Report (ECIR) on 30.10.2015 against the accused for money laundering under Sections 3 & 4 of PMLA, 2002. A prosecution complaint was filed on 16.07.2018.Arguments by Petitioners:Petitioners argued that the Special Court took cognizance in a mechanical manner without applying judicial mind, as the essential ingredients of the offence under Section 3 of PMLA were not disclosed. They contended that the charge-sheet did not reflect that illegal gratification was accepted or projected as untainted property. They also argued that the amendments to Section 3 of PMLA, 2002, being punitive, should be applied prospectively.Court's Analysis:The Court noted that the trial court took cognizance based on the complaint and material presented, finding sufficient grounds to proceed. The Court emphasized that the power of revision under Sections 397 and 401 Cr.P.C. should be exercised sparingly and only in exceptional cases. The Court found that the trial court's order was not perverse and was based on sufficient material.The Court further held that the PMLA, 2002, aims to prevent money laundering, posing a serious threat to the financial system and the country's integrity. The Court rejected the argument that placement, layering, and integration of proceeds of crime were not established, noting that the prosecution had alleged such activities.The Court also clarified that the explanation added to Section 3 by the Finance Act, 2019, was merely clarificatory and did not change the basic ingredients of the offence. The Court concluded that the trial court's decision to take cognizance and issue arrest warrants was justified.2. Refusal to Convert Arrest Warrants into Bailable Warrants:Arguments by Petitioners:Petitioners argued that the trial court erred in not converting arrest warrants into bailable warrants, despite their cooperation during the investigation. They contended that non-bailable warrants should not be issued without exhausting other methods to secure their presence, citing the Supreme Court's judgment in Inder Mohan Goswami Vs. State of Uttranchal.Court's Analysis:The Court referred to the principles laid down by the Supreme Court in Inder Mohan Goswami, emphasizing that non-bailable warrants should be issued only when summons or bailable warrants are unlikely to secure the accused's presence. The Court noted that economic offences require a strict approach due to their impact on the nation's economy.The Court found that the trial court had considered the nature of allegations, the severity of the offence, and the impact on society before issuing non-bailable warrants. The Court also noted that the offences under PMLA, 2002, are cognizable and non-bailable as per Section 45 of the Act.The Court concluded that the trial court's refusal to convert arrest warrants into bailable warrants was justified and dismissed the petitions.Conclusion:The High Court upheld the trial court's order taking cognizance under Sections 3 & 4 of PMLA, 2002, and issuing arrest warrants. The Court also upheld the trial court's refusal to convert arrest warrants into bailable warrants, emphasizing the need for a strict approach in dealing with economic offences. The petitions were dismissed, and the trial court was directed to proceed independently in accordance with the law.