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2023 (1) TMI 919
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....anctioned amount, a pay order was issued for Rs.4.25 crores to the Standard Chartered Bank, for the taking over of the existing liability of the above said company. The petitioner/A-5 was working as the Chief Manager during the relevant point of time at Union Bank of India and he was part of the team, which sanctioned and released the loan amount. 2.2. A written complaint was given by the Deputy General Manager of Union Bank of India alleging perpetration of criminal activities in the sanction and disbursement of credit facility to the above said company. Based on the same, an FIR came to be registered by the CBI, BS&FC, Bangalore, in RC.No.8/E/2008-CBI/BS&FC on 25.09.2008, against the petitioner and others, for various offences under the IPC and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. 2.3. The CBI took up the investigation and on completion of the investigation, a final report was filed under Section 173(2) Cr.P.C. before the XI Additional Special Court for CBI Cases, Chennai and the same was taken on file in C.C.No.45 of 2009. It was brought to the notice of this Court that the petitioner was convicted and sentenced along wi....
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....ion of the cash credit facility amounting to Rs.6.25 crores upon fraudulent creation of collateral security on the aforesaid immovable property has actually involved himself in the process or activity of deriving the "proceeds of crime" and it projection as untainted." 4. It is the contention of the learned counsel for the petitioner that no offence has been made out under Section 3 of the PML Act, qua A-5 since no proceeds of crime has been generated by him as specified under Section 2(1)(u) of the PML Act. Hence, the learned counsel contended that the criminal complaint and the charges framed as against the petitioner, are not legally sustainable and hence, the proceedings must be quashed insofar as the petitioner/A-5 is concerned. 5. Per contra, the learned Special Public Prosecutor, after explaining the entire facts of the case, submitted that the petitioner, by sanctioning credit facility amounting to Rs.6.25 crores upon fraudulent creation of collateral security on an immovable property, has involved in the process or activity of deriving the proceeds of crime and its projection as untainted; in view of the same, whatever defence is available to the petitioner, can only....
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....to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad; Explanation.-For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence" The scope of this definition came up for consideration before the Supreme Court in Vijay Madanlal, supra. The Supreme Court observed that every crime property need not be termed as proceeds of crime, but the converse may be true. It was observed that only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished. 9. The Supreme Court in Vijay Madanlal, supra, has dealt with the term proceeds of crime and it has been held as follows : ....
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....nation added in 2019 to the definition of expression "proceeds of crime", it would inevitably include other property which may not have been derived or obtained as a result of any criminal activity relatable to the scheduled offence. As noticed from the definition, it essentially refers to "any property" including abroad derived or obtained directly or indirectly. The Explanation added in 2019 in no way travels beyond that intent of tracking and reaching upto the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence. Therefore, the Explanation is in the nature of clarification and not to increase the width of the main definition "proceeds of crime". The definition of "property" also contains Explanation which is for the removal of doubts and to clarify that the term property includes property of any kind used in the commission of an offence under the 2002 Act or any of the scheduled offences. In the earlier part of this judgment, we have already noted that every crime property need not be termed as proceeds of crime but the converse may be true. Additionally, some other property is purchased or derived from the proceeds....
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....eds of crime can be in any form -being process or activity. Thus, even assisting in the process or activity is a part of the crime of money-laundering. We must keep in mind that for being liable to suffer legal consequences of ones action of indulging in the process or activity, is sufficient and not only upon projection of the ill-gotten money as untainted money. Many members of a crime syndicate could then simply keep the money with them for years to come, the hands of the law in such a situation cannot be bound and stopped from proceeding against such person, if information of such illegitimate monies is revealed even from an unknown source. 281. The next question is : whether the offence under Section 3 is a standalone offence? Indeed, it is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. Nevertheless, it is concerning the process or activity connected with such property, which constitutes offence of money-laundering. The property must qualify the definition of "proceeds of crime" under Section 2(1)(u) of the 2002 Act. As observed earlier, all or whole of the crime property linked to scheduled off....
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....g him to take further action under the Act in that regard. 283. Even though, the 2002 Act is a complete Code in itself, it is only in respect of matters connected with offence of money-laundering, and for that, existence of proceeds of crime within the meaning of Section 2(1)(u) of the Act is quintessential. Absent existence of proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot step in or initiate any prosecution. 284. In other words, the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of "proceeds of crime". Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process. 467. In light of the above analysis, we now proceed to summarise our conclusion on seminal p....
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....013. In other words, the provision as it stood prior to amendment vide Finance (No. 2) Act, 2019 remained as it is. Upon breaking-up of this provision, it would clearly indicate that - it is an offence of money-laundering, in the event of direct or indirect attempt to indulge or knowingly assist or being knowingly party or being actually involved in "any process or activity" connected with the proceeds of crime. The latter part of the provision is only an elaboration of the different process or activity connected with the proceeds of crime, such as its concealment, possession, acquisition, use, or projecting it as untainted property or claiming it to be as untainted property. This position stands clarified by way of Explanation inserted in 2019. If the argument of the petitioners is to be accepted, that projecting or claiming the property as untainted property is the quintessential ingredient of the offence of money-laundering, that would whittle down the sweep of Section 3." (emphasis supplied) Thus, the requirement of projecting the proceedings of crime as untainted property may be one of the modes by which the offence is committed and is no longer a sine qua non for constitut....
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....s thereof but certainly not of bribe. The crucial part therefore is the requisite intent to hand over the amount as bribe and normally such intent must necessarily be antecedent or prior to the moment the amount is handed over. Thus, the requisite intent would always be at the core before the amount is handed over. Such intent having been entertained well before the amount is actually handed over, the person concerned would certainly be involved in the process or activity connected with "proceeds of crime" including inter alia, the aspects of possession or acquisition thereof. By handing over money with the intent of giving bribe, such person will be assisting or will knowingly be a party to an activity connected with the proceeds of crime. Without such active participation on part of the person concerned, the money would not assume the character of being proceeds of crime. The relevant expressions from Section 3 of the PML Act are thus wide enough to cover the role played by such person." 14. At the risk of repetition, the case set up in paragraph 10.6 of the complaint is that, A-5 had sanctioned and disbursed the credit facilities/loan. But, for the alleged active participatio....