TaxTMI 
TaxTMI 
2016 (5) TMI 1385
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.... that Directorate of Enforcement, Lucknow Zone registered a case lodged by Special Investigation Branch C.I.D. (Co-operative) against Govind Saran Srivastava and Anil Kumar Agarwal who were Chief Engineer and Accountant in the U.P. Labour and Construction Cooperative Federation Ltd. (in short LACCFED) for embezzlement of Government fund to the tune of more than Rs. 12,23,83,000/- during the year 2010-2011. The Special Investigation Branch C.I.D., after completion of investigation filed charge-sheet on 03.11.2012 against eight persons for violation of provisions of Prevention of Corruption Act. Thereafter supplementary charge-sheet was also filed against four persons on 12.03.2013. Thereafter on 25.09.2013 another second supplementary charge-sheet was filed against two persons, one of them was the petitioner and the other was Babu Singh Kushwaha, Ex Minister of U.P. Government. It was also stated in the complaint that all the chargesheeted accused persons were facing trial in the court of Special Judge (P.C. Act), Lucknow. In respect of the petitioner, it was stated that he was absconding and consequently a process under sections 82 and 83 Cr.P.C. was issued by the Court declaring h....
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....s further prayed that an order be issued for confiscation of the property in terms of section 8 (5) of the Prevention of Money Laundering Act which were provisionally attached under section 5 of the Act. The learned Sessions Judge, Lucknow on perusal of the complaint formed an opinion that a case under section 3 of the Prevention of Money Laundering Act punishable under section 4 of the Act, is made out against the petitioner and accordingly he took cognizance and issued summons to him fixing a date for appearance. The aforesaid summoning order has been challenged by the petitioner before this Court by means of this petition under section 482 Cr.P.C. The submission on behalf of the petitioner is that the offence of section 3 which is punishable under section 4 of the Act, requires possession of proceeds of crime as a necessary ingredient to attract the offence of section 3 of the Act. Therefore, unless it is prima facie proved that the petitioner is in possession of proceeds of crime, the cognizance under section 3 of Prevention of Money Laundering Act can not be taken. The proceeds of crime has been defined under section 2(1)(u) of the Act which means any property derived or ob....
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....ce in connivance with the petitioner, was also false and concocted. It was also held by the learned trial court that Praveen Singh was neither the P.R.O. of the petitioner nor the petitioner had any right or authority to appoint the P.R.O. It was only after the aforesaid judgment and order dated 12.02.2015 that the petitioner moved an application under section 227 Cr.P.C. for his discharge. It has also been submitted on behalf of the petitioner that it was stated in the complaint filed by the opposite party that the trial in respect of scheduled offences against the petitioner was pending while as a matter of fact, before filing the complaint on 26.06.2015, the discharge order had already been passed and as such no trial was pending on the date when the court took cognizance. The order dated 17.03.2015 passed on the discharge application of the petitioner, makes it clear that the petitioner has neither committed any scheduled offence nor committed any criminal activity nor derived any proceeds of crime from the alleged scheduled offences. The authorities of the Directorate of Enforcement have illegally and unlawfully investigated the scheduled offences and fabricated and concocted ....
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.... and is not guilty of scheduled offence, the case of the opposite parties that the petitioner derived proceeds of crime as a result of criminal activity relating to scheduled offence, is absolutely unfounded and misleading. The opposite parties have concealed in the complaint filed by them that the petitioner has already been held not guilty for any of the scheduled offences. The petitioner was admittedly elected as Chairman of the Society on 06.04.2010 and the committee of management remained effective till 10.01.2012. It is not disputed that P.N. Singh Yadav, General Manager (Administration) of the aforesaid Society lodged the FIR regarding embezzlement of funds on 21.02.2012. The petitioner was neither named therein nor there was any allegation against him. It has been admitted by the informant that the embezzlement of money was done between February 2011 to September 2011 and the trial court placing full reliance on it, examined the matter in detail and came to the conclusion that there is absolutely no evidence to the effect that the petitioner received any proceeds of crime during this period. The petitioner is a government contractor and has its registered firm M/s. Arpita A....
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....cheduled offences, he can still be prosecuted for the offence of section 3 of Prevention of Money Laundering Act. The learned counsel for the Union of India has relied upon a Supreme Court decision which has been rendered by the Hon'ble Supreme Court in the case of Binod Kumar v. State of Jharkhand. In this case the Hon'ble Jharkhand High Court had directed the C.B.I. to investigate the scheduled offences with the allegation of offence under Prevention of Money Laundering Act against Binod Kumar. This order passed by the Hon'ble Jharkhand High Court was challenged by him before the Hon'ble Supreme Court on the ground that the scheduled offences connected with the Prevention of Money Laundering Act could only be investigated under the Prevention of Money Laundering Act and not by the C.B.I. The Hon'ble Supreme Court dismissed the appeal. In another case Smt. Janata Jha and another v. Assistant Director the Hon'ble Orissa High Court held that the Prevention of Money Laundering Act being a special statute has overriding effect over all other acts. The Hon'ble Orissa High Court observed this by relying upon a Supreme Court decision which was rendered i....
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....l in respect of such offence, it cannot be said that he cannot be prosecuted for the offence of money laundering. The opposite parties while filing supplementary counter-affidavit have given details of the property acquired or purchased by the petitioner during the period he held the office of Chairman of the Society. A list of 12 properties has been given to show that these properties were purchased or acquired worth several crores of rupees and the source of acquiring such properties has not been disclosed by the petitioner which goes to suggest that these properties were acquired by him out of the proceeds of crime which he received during his tenure of holding the office of Chairman of the Society. It has also been submitted that by the order dated 09.12.2014, the aforesaid property has been attached by the competent authority relying upon the complaint, documents and the investigation conducted. The said properties are still under attachment. The discharge of the petitioner from the scheduled offence does not in any way affect his prosecution under section 3 of the Prevention of Money Laundering Act. The provision of the Act makes it clear that the petitioner need not be ch....
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....e property of the petitioner has already been attached by the competent authority and the contents of the complaint fully disclose the nature of the crime and the manner in which the crime has been committed, it will be decided only after trial as to whether the petitioner should be held guilty and punished or not. There is no ground for quashing of the summoning order when there is sufficient material on record to show that the offence has been committed by the petitioner. After hearing the learned counsel for the parties and their pleadings and on perusal of the record, I find that the main controversy is as to whether the petitioner can be prosecuted for the offence of money laundering even in a case where he has been discharged of all the scheduled offences. If it is found that the petitioner can still be prosecuted even after discharge from the scheduled offences, the petitioner has no case but in case it is found that the offence of money laundering would be attracted only if the proceeds of crime have been received by committing the scheduled offences, then in that case he cannot be prosecuted for the offence of money laundering. Before discussing the matter, it would ....
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....rgument on behalf of the petitioner in this case was that after the amendment in section 3 of the Act, there is now no need to demonstrate the presence of mens rea to prosecute any person accused of money laundering. This circumstance, according to the petitioner, was never intended by the legislation. The amended section is, therefore, violative of Articles 14 and 21 of the Constitution of India. It was also contended on behalf of the petitioner that after the amendment the scheme of the Act envisaged two parallel proceedings. Firstly, in terms of section 5 of the Act, where the authorized officer can provisionally attach the property for a period of 180 days; and secondly, prosecution and punishment under sections 3 and 4 of the Act. The argument was that prior to the amendment, if a person is acquitted in the scheduled offence, the attachment of property would cease to have effect, meaning thereby that if there was no crime, there could be no question of the existence of proceeds of crime. Under the 2013 Amendment Act, the entire scheme is changed. After the amendment even if the person is acquitted of a scheduled offence, he could still be prosecuted under sections 3 and 4 of t....
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....eedings under the PML Act coming to a close. In other words, without the guilt of the accused in the scheduled offence being proved there could be no proceedings under sections 3 and 4 of the PML Act. The Hon'ble Karnataka High Court held that there is substance in this contention of the petitioner because the definition of the phrase proceeds of crime read with section 3 if construed strictly, it can be said that having regard to the meaning attributed to proceeds of crime under the PML Act, whereby the crime contemplated is the alleged scheduled offence, the proceeds of crime, contemplated under sections 3 and 4 are linked to the scheduled offence and it is not possible to envision an offence under PML Act as a stand alone offence without the guilt of the offender in the scheduled offence being established. Thus, upon consideration of the law laid down by the Hon'ble Karnataka High Court, it is clear that the amendment incorporated in the Money Laundering Act was not held unconstitutional and ultra virus, but it was observed by the Karnataka High Court that the property of a person can be attached without there being any prosecution for the offence of Money Laundering,....
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....nt of sale consideration was made through demand draft and it has not been alleged that the amount in the bank account of the petitioner was obtained by him as a result of commission of any scheduled offence or receiving of proceeds of crime. So far as the other properties are concerned, the said properties were purchased prior to the period of offence as is evident from the dates of the sale-deeds executed by their respective owners. The crime period during which the offence is alleged to have been committed, is between February 2011 to September 2011. This is mentioned in the FIR itself which is the basis of prosecution of the petitioner and other accused persons. If there would have been any allegation of criminal activity relating to misappropriation of funds or deriving any proceeds of crime relating to the society, the informant must have named the petitioner in the FIR itself. The list of properties and the dates of purchase mentioned in front of each property, clearly reveals that all these properties were acquired by the petitioner prior to February 2011 which is earlier to the crime period mentioned in the FIR. The learned counsel for the petitioner has relied upon a r....
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....osite party No. 2 against the petitioner was filed after the petitioner was discharged from all the scheduled offences by the court of competent jurisdiction and this order of discharge was not passed on technical grounds but on merits and a specific finding was recorded by the trial court that none of the offences as alleged are made out against the petitioner. It is also not disputed that in the FIR, the petitioner was not named and there was absolutely no allegation against him with regard to the embezzlement of government funds. It was during the course of investigation that the names of several other accused persons including the petitioner came into light and chargesheet and thereafter supplementary chargesheets were filed in the court. The present complaint in which the impugned summoning order has been passed, was filed by the opposite party No. 2 and after the order for discharge of the petitioner from all the scheduled offences was passed and this fact was not disclosed in the complaint. The allegation against the petitioner is that during his tenure as Chairman of the society, he embezzled government fund of more than rupees twelve crores. It was also alleged in the c....
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....es and his property can also be provisionally attached irrespective of the fact as to whether he has been found guilty of the scheduled offences. The prosecution is not required to wait for the result of the conviction for the scheduled offences in order to initiate proceedings under section 3 of the PML Act. However, the person against whom there is an allegation of the offence of money laundering, can approach appropriate forum in order to show his bonafide and innocence that he is not guilty of the offence of money laundering and has not acquired any proceeds of crime or any property out of the proceeds of crime. The opposite parties had challenged the order of discharge before this Court but this Court has upheld the order of discharge passed by the trial court. The said order has become final. The Hon'ble Delhi High Court in the case of Rajeev Chanana v. Deputy Director Directorate of Enforcement Crl. Misc. Case No. 5508 of 2014 decided on 09.04.2015 has held that after the acquittal of a person from a scheduled offence, his trial for an offence under section 3 of the Money-Laundering Act will not survive. The observation of the Hon'ble Delhi High Court is that it i....