TaxTMI 
TaxTMI 
2019 (10) TMI 1408
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....2) and (3) of Section 50 of PMLA. It is urged that the commission of a scheduled offence is a sine qua non for attracting the applicability of PMLA and the offences, the petitioners are sought to be charged with, being the offences punishable under Sections 406 and 409 RPC are not the scheduled offences enumerated in Schedule A of PMLA. The offence of criminal conspiracy punishable under Section 120-B RPC without predicate offence being a scheduled offence is not amenable to the jurisdiction of Enforcement Directorate. Unless it is demonstrated that the conspiracy has been hatched for commission of a scheduled offence, the provisions of PMLA would not be attracted. It is, thus, submitted that any proceedings initiated by the respondents under the provisions of PMLA including the summons issued under Sub-Sections (2) and (3) of Section 50 of PMLA would be de hors the law and without jurisdiction. It is also argued on behalf of the petitioners that the alleged offences with which the petitioners have been charged i.e. offences under Sections 406,409 and 120-B RPC are not the scheduled offences under PMLA and, therefore, for that reason also, the applicability of PMLA is ruled out and....
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....tend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required". 6 From reading of two clauses reproduced above, it is abundantly clear that for exercising the jurisdiction, the initiation of investigation or proceedings under PMLA is a sine qua non. For registration of the crime under PMLA and initiation of investigation or proceedings under PMLA, there should be a prima facie material to demonstrate that an offence under Section 3 of PMLA has been committed. Section 3 defines offence of money-laundering and Section 4 provides for punishment for the offence of money-laundering. Aforesaid two sections of PMLA read thus: "Section 3- Offence of money-laundering.-Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering. Section 4 - Punishment for Money-Laundering-Whoever commits the offenc....
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....Schedule are termed as the 'scheduled offences' for the purpose of 'proceeds of crime' and the commission of offence of money-laundering. Apart from various offences enlisted in Schedule A, offence of criminal conspiracy punishable under Section 120-B of IPC figures on top of the Schedule, but the offences under Sections 406 and 409 of Indian Penal Code do not find place in any Part of the Schedule and, therefore, are not the scheduled offences in terms of Section 2(1)(y) of PMLA. Section 2(2) of PMLA which has been strongly relied upon by learned ASGI appearing for the respondents also deserves to be noticed which reads as under: "Section 2(2)-Any reference, in this Act or the Schedule, to any enactment or any provision thereof shall, in relation to an area in which such enactment or such provision is not in force, be construed as a reference to the corresponding law or the relevant provisions of the corresponding law, if any, in force in that area". 10 There is another important definition in PMLA given in Section 2(1)(ia) which was introduced/inserted by Act 2 of 2013 w.e.f 15.02.2013. The inserted clause defines 'corresponding law' to mean any law of any foreign cou....
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....rom or involved in money-laundering and for matters connected therewith. The statement of objects and reasons recognizes that money- laundering poses a serious threat not only to the financial system of the country, but also to its integrity and sovereignty. 15 PMLA was enacted to implement Political Declaration and Global Programme of Action adopted by the General Assembly of the United Nations at its 17th Special Session on 23rd of February 1990 and the Political Declaration adopted by Special Session of United Nations General Assembly, held on 8th to 10th June, 1998 calling upon the Member States to adopt national money- laundering legislation and programme. The nation got the enactment aimed at preventing the money-laundering on 17.01.2003. PMLA applies and extends to the whole of India. Since its enforcement w.e.f 17.01.2003, PMLA has undergone various amendments, latest being the amendment made by Act 2 of 2013. 16 As is apparent from the statement of objects and reasons of Amendment Act 2 of 2013, the amendment was necessitated, inter alia, to seek introduction of concept of 'corresponding law' to link the provisions of Indian law with the laws of foreign countries and....
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....e) confer power upon the Director to call for records of transactions or any additional information that may be required for the purposes of the Prevention of money-laundering and also to make enquiries for non compliance of reporting obligations cast upon them; (f) make the reporting entity, its designated directors on the Board and employees responsible for omissions or commissions in relation to the reporting obligations under Chapter IV of the Act; (g) provide that in any proceedings relating to proceeds of crime under the aforesaid Act, unless the contrary is proved, it shall be presumed that such proceeds of crime is involved in money-laundering; (h) provide for appeal against the orders of the Appellate Tribunal directly to the Supreme Court; (i) provide for the process of transfer of the cases of scheduled offence pending in a court which had taken cognizance of the offence to the Special Court for trial of offence of money-laundering and also provide that the Special Court shall, on receipt of such case proceed to deal with it from the stage at which it is committed; (j) putting all the offences listed in Part A and Part B of th....
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.... of PMLA to interpret the term 'area' as used in Sub-section 2 of Section 2 of PMLA. That apart, in the absence of specific definition of the term 'area' as used in Section 2(2) of PMLA, it is only logical to understand the term 'area' to mean the area to which PMLA extends i.e. whole of India which includes the State of J&K. The Indian Penal Code applies to the whole of India except State of J&K, but there is corresponding law known as RPC in operation in the State of J&K to which PMLA clearly extends. 20. It is well accepted that a statute must be construed according to the intention of the Legislature and the Courts should act upon the true intention of the legislation while applying law and while interpreting law, if a statutory provision is open to more than one meaning, the Court has to choose the interpretation which represents the intention of the Legislature. In this connection, the following observations made by the Hon'ble Supreme Court in the case of District Mining Officer vs. Tata Iron and Steel Co., (2001) 7 SCC 358, may be noticed: " ....A statute is an edit of the Legislature and in construing a statute, it is necessary, to seek the intention of its mak....
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....le that the offence of criminal conspiracy defined under section 120-A RPC and punishable under section 120- B RPC is a deemed scheduled offence for the purpose of Section 3 read with clause (u) of Sub-section 1 of Section 2 of PMLA. 23 It is next contended by learned counsel for the petitioner that even if it is assumed that 120- B RPC could be taken to be a scheduled offence, yet unless it is demonstrated that the offence of criminal conspiracy has been committed in relation to a predicate scheduled offence, no offence under Section 3 is made out. That being so, the respondents would not assume any jurisdiction to launch any investigation or action under PMLA. It is contended that since the offences allegedly committed by the petitioners are the offences under Sections 120-B, 406 and 409 RPC out which the predicate offences i.e. offences under sections 406 and 409 RPC are not the scheduled offence. It is, thus. contended that the offence of money laundering as defined under Section 3 shall not be made out, unless the offence of criminal conspiracy punishable under section 120-B RPC has been committed in relation to one or more of scheduled offences. It is, thus, urged that the....
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....AIR 1962 SC 876 wherein the Hon'ble Supreme Court drew distinction between abetment as defined in second clause of Section 107 of IPC and that of criminal conspiracy under Section 120-A IPC by elucidating that in the former offence, a mere combination of persons or agreement between them is not enough. In other words, for abetment by conspiracy, actus reus must take place in pursuance of the conspiracy and in order to do a thing conspired for. In the latter offence i.e offence of criminal conspiracy under Section 120 A IPC, the very agreement or plot is an act in itself and is the gist of an offence, though for illegal means, some act besides the agreement is necessary. 28 In the recent case, the High Court of Karnataka was confronted with the similar issue. Justice Aravind Kumar, who heard the matter i.e Writ Petition No. 5299/2019 titled Sri Sachin Narayan vs The Income Tax Department and another, has extensively deliberated on the issue in its judgment, pronounced on 29th August, 2019. Relying upon the judgment of Supreme Court in the case of Sudhir Shantilal Mehta vs Central Bureau of Investigation, (2009) 8 SCC 1 and R Venkatkrishanan vs Central Burea of Invesitgation, AIR ....
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....sion "scheduled offence" has been defined under Section 2(y) to mean the offences specified under Part-A or the offences specified in Part-B (the total value in such offences is 1 Crore rupees or more); or the offences specified under Part-C of the schedule. The expression "Scheduled" is defined under Section 2(x) of PML Act to mean the offences specified in the Schedule to the Act. Under Part-A, Paragraph-1 offences under the Indian Penal Code, as morefully described thereunder has been described as offences constituting Schedule offence under the PML Act. Likewise, under Part 'A' at Paragraphs - 2 to 29 the offences under different enactments have been specified to be an offence attracting the provisions of PML Act. In other words, offences which are specified in Part 'A' or Part 'B' or Part 'C' would automatically attract the offence punishable under the PML Act. Under Part 'A' of the Schedule, Section 120B of IPC has been incorporated to be an offence for the provisions of PML Act. 29 I am persuaded to take the view which has been taken by the Karnataka High Court in the judgment supra, for, the view taken by the Karnataka High Court i....