TaxTMI 
TaxTMI 
2023 (1) TMI 809
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....ter, he approached the PMLA court for closure of the prosecution in view of such quashing of the proceeding in connection with T.R. No.35 of 2017 pending in the court of learned Special Judge (Vigilance), Cuttack, however, the same was rejected by order dated 23rd October, 2019 on the ground that the offence under Section 3 of PMLA is a distinct offence in respect of which cognizance has already been taken earlier. The petitioner pleads that when the Vigilance proceeding vis-à-vis the schedule offence was quashed in CRLREV No.596 of 2018 attributing no role played by him in the distribution of coal allegedly to the non-existent or non-functional or fake functional MSMEs, nothing was left to sustain a prosecution under Section 3 of the PMLA Act. 3. Elaborating the facts pleaded, it is made to appear that the Vigilance Department initiated an action and registered Cuttack Vigilance P.S. Case No.37 dated 2nd June, 2010 under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 besides Sections 420, 468, 471 and 120-B IPC as well as Cuttack Vigilance P.S. Case No.36 dated 2nd June, 2010 under the selfsame offences against the petitioner and others ....
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....on gain of property as a result of criminal activity relating to a schedule offences and it is concerning the process or activity connected with such property which constitutes the offence of money laundering and the authorities under the said Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. It is contended by Mr. Mohanty, learned Senior Advocate that in the said decision it has been clearly held that if the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by a court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to the scheduled offence through him. By placing reliance on said authority of the Apex Court, Mr. Mohanty, learned Senior Advocate would contend that the prosecution which has been launched under the PMLA before the Special court cannot be allowed to continue and any such continuation would be a futile e....
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....ion that when the offence of money laundering is a distinct and independent offence, irrespective of quashing of the Vigilance prosecution, the complaint which is filed under Section 45 of the PMLA shall remain. While advancing such an argument, Mr.Nayak, learned counsel for the ED cited the following decisions, such as, Smt. Janata Jha and Another Vrs. Assistant Director, Directorate of Enforcement 2014 Crl.LJ 2006; Radha Mohan Lakhotia Vrs. Deputy Director, PMLA, Directorate of Enforcement 2010 SCC OnLine Bom 1116; VGN Developers Private Limited and Others Vrs. The Deputy Director, Directorate of Enforcement AIR Online 2019 Mad 844; and Babulal Verma and Another Vrs. Enforcement Directorate and Another decided in Criminal Application Nos.201 and 974 of 2021. It is contended that in Smt. Janata Jha (supra), this Court declined to quash the proceeding while considering a similar question with the conclusion that the ambit and scope of trial under the PMLA is totally different from that of the Indian Penal Code, wherein, the prosecution is to prove the guilt of the accused beyond reasonable doubt whereas in the former, the onus rests on the accused to prove that the properties seize....
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....ed of on 3rd November, 2022, it has been held therein that if the accused stands discharged of the scheduled offence, in view of the law declared in Vijay Madanlal Choudhury (supra), there could arise no question of him being prosecuted for illegal gain of property as a result of the criminal activity relating to the alleged scheduled offence and that being the position, there lies no reason to allow the prosecution under the PMLA. 8. The PMLA Act was brought into force in the year 2005 to prevent money laundering and to provide mechanism to deal with the proceeds of the crime and matters related thereto. In terms of Section 3 of the PMLA Act, for an offence of money laundering to be made out, a person ought to have attempted to indulge directly or indirectly or knowingly assisted or has been a party to any such activity connected with the proceeds with the crime including its possession, concealment, acquisition or use and projecting or claiming it as untainted property. The expression 'proceeds of crime' is defined in Section 2(1)(u) of the PMLA Act to mean any property derived or obtained directly or indirectly by any person as a result of criminal activity relating to a schedu....
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.... Directorate of Enforcement in contrast reached at a conclusion that in cases where scheduled offences is itself negated, the fundamental premise of continuing proceedings under PMLA also vanishes. The aforesaid view stands supported in Rajib Chanana Vrs. Deputy Director, Directorate of Enforcement 2014 SCC OnLine Delhi 4889 and Sushil Kumar Katiyar Vrs. Union of India 2016 SCC OnLine All 2632. 11. The Parliament amended the PMLA in 2018. Among the amendments, one is the Explanation to Section 44 of the PMLA as stated earlier. After such an Explanation introduced, the Bombay High Court in Babulal Verma (supra) held that notwithstanding the outcome of the investigation with regard to the scheduled offence and closure report filed and accepted by the court of competent jurisdiction, it will not wipe out or ceased to continue investigation by the E.D. in respect of the money laundering offences till it reaches the stage as contemplated in Section 44 of the PMLA. Likewise, in Jagati Publication Vrs. Enforcement Directorate decided in Criminal Petition No. 1073 of 2021, the Telangana High Court held that after the Explanation to Section 44 is introduced, the trial concerning the money ....