TaxTMI 
TaxTMI 
2021 (12) TMI 432
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....firmity in taking cognizance of the Enforcement Directorate complaint by the learned Special Judge without registering F.I.R. at the commencement of its investigation as provided under Section 154 of Cr.P.C. (ii) Secondly, the adjudicating proceedings initiated under the PMLA against the petitioner herein for provisional attachment of his property was held to be unsustainable by the adjudicating authority, vide order dated 11.10.2019. While a competent authority has held that the property possessed by the petitioner herein does not fall within the meaning of 'proceeds of crime' as defined under the PMLA, under the same proceedings i.e., in ECIR/CEZO/11/2013, the Enforcement Directorate cannot continue the prosecution against the petitioner under Section 45 read with Sections 70 and 8(5) of the PMLA. The background of the case:- 4. Based on the complaint given by the Village Administrative Officer, Keelavalavu Village, Madurai District, a case in Crime No. 161 of 2012 was registered against this petitioner and two others for the offences under Section 120-B read with Sections 447, 379, 430, 420, 465, 467, 468, 471, 116, 202, 409, 304, 511, 109, 114 and Section 34 of I.P.....
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.... provisional attachment of the properties of the petitioner, vide P.A.O., dated 23.04.2019 and the properties standing in the name of the petitioner are not involved in money-laundering. (b) The Enforcement Directorate failed to annex the translated version in English while filing the relied upon documents [RUD] before him. None of the said statements have referred to the name of the petitioner herein in relation to the business activities of the first accused. All of them have referred to the name of the second accused in relation to the activities of the first accused. Significantly, none of them have assigned any role or involved in relation to the quarrying activities referred to in the charge sheet and as referred to by the Enforcement Directorate in the course of investigation. Nothing is deposed by the named witnesses, who have given statements under Section 50 of the PMLA against the petitioner herein, in relation to any activity of laundering of the proceeds of crime.'' 7. In the above said circumstances, the complaint filed by the Enforcement Directorate before the Special Court to proceed against the petitioner and two others was taken on file and summons were....
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.... confiscating the properties involved in money-laundering. The said complaint was taken cognizance by the Special Court, numbered as C.C. No. 3 of 2020. The causation of summon in the said complaint is the subject matter of this Petition. 11. The learned counsel appearing for the petitioner vehemently argued that when the adjudicating authority had held that the properties sought to be provisionally attached does not fall within the meaning of proceeds of crime, the plea to confiscate the same by virtue of Section 8(5) of the PMLA, is premature, illegal and beyond the scope of Sections 45 and 70 of the Act. Further, it was submitted that issuance of summons based on the complaint on the assumption that the petitioner had involved in the activity of money-laundering is contrary to the finding of the adjudicating authority recorded after giving due opportunity to the parties concerned. 12. Per contra, the learned Assistant Solicitor General of India appearing for the respondents besides filing a detailed reply, would contend that the proceedings initiated for provisional attachment of the property under Chapter - III of the PMLA is independent to the criminal prosecution initiated ....
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....nature. Whereas the possession of Corpus delicti is adjudicated under Chapter - III of the PMLA. The said adjudication is preventive in nature. As far as the offence of money-laundering is concerned, it commences from commission of crime and end with laundering the illicit money by layering and moving it into a system to show it as if it is a licit income or untainted property. For launching prosecution, the proceeds of crime derived out of the predicate offence may be available or may not be available. If available, it may in the hands of the person, who has commissioned the scheduled crime or by any third party. Even assuming the authorities unable to establish the fact that the assets available in the hands of the petitioner herein is proceeds of crime, it will not take away the rigour of prosecuting him for the commission of crime. Therefore, the crime of money-laundering, which is now the subject matter of C.C. No. 3 of 2020, cannot be whittle down or quashed for the reason that the adjudication proceedings for provisional attachment is set aside. Prosecution under Section 45 of the PMLA not dependant on the action of Provisional Attachment or the result of the Provisional Att....
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....g shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine. Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words ''which may extend to seven years'', the words ''which may extend to ten years'' had been substituted. 5. Attachment of property involved in money-laundering.- (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that-- (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such proper....
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....- For the purposes of this sub-section ''person interested'', in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority. 8. Adjudication.-- (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an offence under section 3 or is in possession of proceeds of crime, it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized or frozen under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or an....
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....xcluded. (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the possession of the property attached under Section 5 or frozen under sub-section (1-A) of Section 17, in such manner as may be prescribed: Provided that if it is not practicable to take possession of a property frozen under sub-section (1-A) of Section 17, the order of confiscation shall have the same effect as if the property had been taken possession of. (5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7)....
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....f the Court which has taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money-laundering under sub-clause (b), it shall, on an application by the authority authorised to file a complaint under this Act, commit the case relating to the scheduled offence to the Special Court and the Special Court shall, on receipt of such case proceed to deal with it from the stage at which it is committed; (d) a Special Court while trying the scheduled offence or the offence of money-laundering shall hold trial in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), as it applies to a trial before a Court of Session. Explanation.- For the removal of doubts, it is clarified that,- (i) the jurisdiction of the Special Court while dealing with the offence under this Act, during investigation, enquiry or trial under this Act, shall not be dependent upon any orders passed in respect of the scheduled offence, and the trial of both sets of offences by the same Court shall not be construed as joint trial; (ii) the complaint shall be deemed to include any subsequent complaint in respect....
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....rocedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. Explanation.- For the removal of doubts, it is clarified that the expression ''Offences to be cognizable and non-bailable'' shall mean and shall be deemed to have always meant that all offences under this Act shall be cognizable offences and non-bailable offences notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1973 (2 of 1974), and accordingly, the officers authorised under this Act are empowered to arrest an accused without warrant, subject to the fulfillment of conditions under Section 19 and subject to the conditions enshrined under this section.'' 18. A careful reading of the above provisions of the PMLA, will expose the dual fallacies in the petitioner's submission. Firstly, the impugned complaint filed by the respondent, reads as below:- ''The complainant is the Assistant Director, Directorate of Enforcement, Ministry of Finance, Government of India and the complaint is being filed under Section 45 of the Prevention of Money-Laundering Act, 2002 [hereinafter referred to as PMLA, 2002], for commission of off....
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.... not conceal, transfer or deal with in any manner which may result in frustrating any proceedings relating to confiscation. 23. In the subject complaint [C.C. No. 3 of 2020], the respondent herein pray for two reliefs. One to proceed against the accused persons for money-laundering and second to confiscate the proceeds of crime. As far as the punishment for money-laundering is concerned, Section 4 of the Act prescribes rigorous imprisonment for a period of not less than three years, but which may extend to seven years and shall also be liable to fine. Provided the proceeds of crime involved in money-laundering relating to offences under the Narcotic Drugs and Psychotropic Substances Act, the period of imprisonment may extend to ten years. The finding of the adjudicating authority is not a clean chit to the petitioner herein for the offence of money-laundering. At the most, it is only a finding regarding the properties, which were sought to be provisionally attached are not proceeds of crime. The said finding of the adjudicating authority not to be understood that the petitioner has not committed a crime of money-laundering. At the risk of repetition, the relevant provision regardi....
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....egarding certain properties, no way stand in the way of prosecuting the person accused of the offence of money-laundering, which covers not only possession but also use or concealment. 26. Now, coming to the plea raised by the petitioner herein that he is no way connected with the first accused Company, this Court finds that this plea is a self-serving statement, contrary to the statement of the witnesses recorded by the respondent and the records collected during the investigation. Even if the said self-serving statement of the petitioner herein is true, the same has to be proved in the course of trial and a petition to quash the proceedings is not the recourse for the petitioner. 27. It is to be noted that the adjudicating authority though found the listed properties, which are in the name of the petitioner, are not proceeds of crime, at the same time, it has confirmed the PAO in respect of the Company viz., M/s. Olympus Granites Private Limited, in which, the petitioner herein has pecuniary interest. 28. At this juncture, it would be appropriate to peruse the provisions of Section 70 of the PMLA, which reads as below:- ''70. Offences by companies.- (1) Where a per....