2024 (4) TMI 116 - HC - Money Laundering

PMLA proceedings can continue despite pending predicate offence trial but prosecution must prove accused's connection to tainted property

HC dismissed petition challenging PMLA proceedings. Court held that unconcluded predicate offence trial does not bar PMLA proceedings, citing SC precedent ... Money Laundering - illegal mining of granite, causing damages to human life and properties using explosives - scheduled offences - predicate offences - purchase from proceeds of crime or not - prosecution on the basis of presumption or not - HELD THAT:- Unconcluded predicate offence trial is not a bar for proceeding under the PMLA. The said grounds raised by A6 and A7 is not sustainable in view of the Supreme Court judgment in Vijay Madanlal Choudhary and others vs. Union of India and others [2022 (7) TMI 1316 - SUPREME COURT]. The Hon'ble Supreme Court after considering the object of the PMLA and the expression 'proceeds of crime' and 'money laundering' used by the legislators had held that, PMLA is a stand alone Act. The pre-requisite is a commission of a predicate offence. It is not even necessary that the person accused in the PMLA case must be an accused in the predicate offence. Law even permits joint trial of both the cases and it is not appropriate to canvass that only after the trial in predicate offence end in conviction, the proceeding in PMLA should commence. The complainant had arrived at a conclusion that the subject landed property measuring 35 cents of land in S.No.310/2B, at Melur Village is property involved in money laundering. Whereas, the records relied by the complainant indicates that A14 is the owner of the property and A15 is the purchaser of it. This transaction was on 11.07.2017. For arriving at a prima facie satisfaction that this property possessed by A1 which he purchased out of proceeds of crime, the complainant has to show material that the said property is in possession and enjoyment of A1 - In the absence of these link material, the conclusion arrived by the complainant remains without base. There is no material to show the sale price for the sale deed executed in favour of Siddique Raja through her Power Agent Bilal Mohammed was actually paid by A1. To attract prosecution under PMLA, there must be a predicate offence and the proceeds in that crime must have been attempted to be laundered. In this case, it is not the case of the complainant that the property of the Manimegalai which she sold to Siddique Raja, was in possession of A1after he got the Power of Attorney from A14 paying Rs. 6,60,000/- or after the sale agreement in favour of his brother Azad Mohammed (A11). In the absence of material to link the possession or enjoyment of the property with A1, the inference of the complainant is highly preposterous. The above reasoning equally applies to Siddique Raja (A15) also, since there is no material to show he only lend his name for A1 and he is a benami for A1 or the whole or part sale consideration emanated from A1. Merely because, the conveyance deed show undervaluation than the guideline value, it may be a ground to suspect tainted money been used in the said transaction. All tainted money need not be proceeds of crime. In the absence of link that the tainted money was the proceeds of the predicate offence, in which A1 and others facing, the prosecution under PMLA has to fall to ground, since it cannot stand without the basic ingredient. Petition dismissed. Issues Involved:1. Quashing of complaint under the Prevention of Money Laundering Act, 2002 (PMLA).2. Allegations of illegal granite quarrying and related offences.3. Connection of accused with the proceeds of crime.4. Specific allegations against individual accused and their involvement in money laundering.5. Legal principles regarding simultaneous prosecution under PMLA and predicate offences.Summary:Issue 1: Quashing of Complaint under PMLAThe petitioners, accused in C.C.No.9 of 2018, sought to quash the complaint against them for offences under the PMLA. The predicate offence involved illegal granite mining registered by the Inspector of Police, Keelavalavu, based on a complaint by the Village Administrative Officer, Keelaiyur, Melur Taluk, Madurai. The final report filed on 01.10.2013, charged 22 persons under various sections of IPC, TNPPDL Act, and Explosive Substances Act.Issue 2: Allegations of Illegal Granite Quarrying and Related OffencesThe complaint alleged that the accused indulged in illegal quarrying of granites, causing damage to human life and properties using explosives. The accused unlawfully assembled, trespassed into government land, and carried out mining using deadly explosives, causing a loss of Rs. 277.42 Crores to the Government Exchequer. The offences under IPC and Explosive Substances Act are scheduled offences under PMLA.Issue 3: Connection of Accused with the Proceeds of CrimeThe Directorate of Enforcement registered E.C.I.R. on 30.06.2014, finding that the accused indulged in money laundering by layering crime proceeds into properties, converting them into untainted properties. The complaint detailed the illegal mining by the accused and the presumptive unlawful gain quantified in crores. The accused were alleged to have invested the proceeds of crime in properties in the names of family members.Issue 4: Specific Allegations Against Individual Accused and Their Involvement in Money LaunderingThe complaint detailed transactions involving properties originally held by Manimegalai (A14) and transferred to Siddique Raja (A15), alleging that these transactions were part of the money laundering process. The complaint alleged that Panneer Mohammed (A1) and others conspired to conceal the proceeds of crime through various property transactions, undervaluation, and creation of multiple documents.Issue 5: Legal Principles Regarding Simultaneous Prosecution under PMLA and Predicate OffencesThe court held that an unconcluded predicate offence trial is not a bar for proceeding under PMLA, citing the Supreme Court judgment in Vijay Madanlal Choudhary and others vs. Union of India and others. The PMLA is a standalone Act, and simultaneous investigation or prosecution of both predicate and money laundering offences is permissible. The court emphasized that the PMLA prosecution is independent of the predicate offence trial.Conclusion:The petitions filed by Yasar Arabath (A6) and R.Rahuman (A7) were dismissed, while the petitions filed by Manimegalai (A14) and Siddique Raja (A15) were allowed, quashing the prosecution against them in C.C.No.9 of 2018. The court found no material to link the possession or enjoyment of the property with A1, and the inference of the complainant was deemed preposterous. Consequently, the prosecution against A14 and A15 was quashed.