2022 (6) TMI 586 - HC - Money Laundering

Court Upholds Money Laundering Act in Loan Case: Double Jeopardy, Jurisdiction, Continuing Offense

Satish Kumar and another Versus Directorate of Enforcement, Government of India

The court dismissed the petition, ruling that the Prevention of Money Laundering Act (PMLA) is applicable despite loan repayment. Simultaneous proceedings ... Money Laundering - proceeds of crime - validity of simultaneous proceedings under different statutes - obtaining bank form loan with the help of forged documents - offences punishable under Sections 511, 109, 34, 120-B, 406, 409, 420, 405, 417 and 426 IPC - HELD THAT:- It is a petition under Section 482 of the Code. The jurisdiction is too wide to ensure the ends of justice. It is guided by the principles of law, as laid down by the Hon’ble Supreme Court in a catena of decisions - In the case of INDIAN OIL CORPORATION VERSUS NEPC INDIA LTD & ORS [2006 (7) TMI 575 - SUPREME COURT], it was held that As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transaction or breach of contract, for which a civil remedy is available or has been availed, is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not. In the instant case, complaint has been filed by a public servant in discharge of his official duties. Therefore, apparently there is no need to examine the complainant and the witnesses under Sections 200 and 202 of the Code before issuance of the process. A bare perusal of Section 3 of the Act, makes it abundantly clear that it provides for punishment for involvement in any process or activity connected with the proceeds of crime - What is the allegation in the instant case is that the petitioners prepared forged documents, used them as genuine and untainted. In the instant case, the FIR was filed for offences under Indian Penal Code, 1860 (IPC) and here, in the instant case, the complaint is filed under Sections 3 and 4 of the Act. Both are distinct offences. The acts are also different. They are not the same offence. Therefore, apparently the provisions of Article 20(2) of the Constitution of India are not attracted in the instant case. Instant complaint case is not a second trial. The petitioners have never been tried before - In so far as Section 300 of the Code is concerned, it is also not applicable, it deals with the situation when the person once convicted or acquitted is tried for the same offence again. This Section bars such trial. Instant complaint case is not a second trial. The petitioners have never been tried out. This act is not an offence under the IPC, under which FIR was filed and charge-sheet has been submitted, of which the trial is pending. This is distinct offence, defined under the Act. Therefore, mere pendency of criminal trial for the offences based on FIR lodged against the petitioners on 23.07.2009, it cannot be said that the complaint may not proceed further. In the instant case, it is the allegation against the petitioner that he used Proceeds of Crime, he concealed it by layering, by integrating it. Merely because the petitioners have already deposited the money, it does not absolve the petitioners of any liability under the Act. Section 3(ii) of the Act, does not bar the prosecution. Petition dismissed. Issues Involved:1. Applicability of the Prevention of Money Laundering Act (PMLA) despite loan repayment.2. Simultaneous proceedings under different laws and double jeopardy.3. Time-barred proceedings under Section 468 of the Code of Criminal Procedure.4. Jurisdiction of the court in Dehradun.5. Necessity of inquiry under Sections 200 and 202 of the Code of Criminal Procedure.6. Impact of previous repayment on the applicability of the PMLA.Issue-wise Detailed Analysis:1. Applicability of the PMLA despite loan repayment:The petitioners argued that the provisions of the PMLA are not attracted since the loan has already been paid. However, the court clarified that Section 3(ii) of the PMLA defines the process or activity connected with proceeds of crime as a continuing activity until the person is no longer enjoying the proceeds. Therefore, repayment of the loan does not absolve the petitioners of liability under the Act.2. Simultaneous proceedings under different laws and double jeopardy:The petitioners contended that simultaneous proceedings are barred by Section 26 of the General Clauses Act, Section 300 of the Code of Criminal Procedure, and Article 20(2) of the Constitution of India. The court noted that the FIR was filed under the IPC, while the current complaint is under Sections 3 and 4 of the PMLA, which are distinct offences. Thus, the principle of double jeopardy does not apply as the petitioners have not been tried for the same offence before.3. Time-barred proceedings under Section 468 of the Code of Criminal Procedure:The petitioners argued that the proceedings are time-barred. However, the court did not find merit in this argument, given the continuing nature of the offence under the PMLA.4. Jurisdiction of the court in Dehradun:The petitioners claimed that the court in Dehradun lacks jurisdiction since proceedings under Section 5 of the PMLA were initiated in Ludhiana. The court referred to Section 44 of the PMLA, which allows the Special Court in the area where the offence was committed to take cognizance. Since the loan was taken from a bank in Roorkee, the court in Dehradun has jurisdiction.5. Necessity of inquiry under Sections 200 and 202 of the Code of Criminal Procedure:The petitioners argued that summoning was done without inquiry under Sections 200 and 202 of the Code. The court clarified that since the complaint was filed by a public servant in discharge of official duties, there was no need for such an inquiry before issuing the process.6. Impact of previous repayment on the applicability of the PMLA:The petitioners argued that since they had repaid the loan, nothing survives in the matter. The court emphasized that the repayment does not negate the offence under the PMLA, as the act of laundering proceeds of crime is a separate and continuing offence.Conclusion:The court dismissed the petition, stating that there is no merit in the arguments presented. The proceedings under the PMLA will continue as the offences under the Act are distinct and separate from those under the IPC, and the court in Dehradun has proper jurisdiction. The repayment of the loan does not absolve the petitioners from liability under the PMLA.