TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 1335
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....ekaran (petitioner herein) was the Senior Branch Manager, Housing Finance Branch, Syndicate Bank, Mylapore, Chennai, during 19.05.2006 to 15.11.2008. While he was so functioning, one S.Kumar @ Vijayakumar approached him, for grant of housing loans and personal loans to various borrowers. 3.2. On the strength of the documents produced by the said Vijayakumar and the various borrowers, Chandrasekaran appears to have granted housing loans and personal loans to the tune of Rs.19.69 crores (Rs.5.21 crores + Rs.14.48 crores), during the said period and soon, it came to light that the loans were granted to the said borrowers, based on forged documents. The loans also became Non-Performing Assets. 3.3. The matter came to the notice of the Central Bureau of Investigation and cases were registered in this regard. After completing the investigation, the CBI filed seven charge sheets against Chandrasekaran and others, for the offences under Section 120-B IPC read with Sections 420, 468 and 471 IPC read with Sections 13(1)(d) and Section 13(2) of the Prevention of Corruption Act, 1988, before the Special Court for CBI Cases, Chennai. 3.4. The sum and substance of the allegations in the charg....
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....s definition of 'proceeds of crime' and the Act of 2002 would apply only to such property. The intention of the legislature had always been that the property derived or obtained, directly or indirectly by any person as a result of not only the commission of the scheduled offence but also any criminal activity relatable to the scheduled offence would also fall within the definition of 'proceeds of crime'. Accordingly, a clarification is proposed to be inserted in clause (u) to subsection (1) of section 2 to clarify that 'proceeds of crime' shall include property not only derived or obtained from the commission of 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." 7. Thereafter, the learned Special Public Prosecutors took us through the explanation that was added to Section 2(1)(u) as well Section 3 of the PML Act by Act 23 of 2019 and submitted that mere participation of a person directly or indirectly in a criminal activity that led to the generation of "proceeds of crime", would, by itself, attract the provisions of Section 3 read with....
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....g, acquiring or using such property, would be guilty of the offence, provided such persons also project or claim such property as untainted property. Section 3, therefore, contains all the aforesaid ingredients, and before somebody can be adjudged as guilty under the said provision, the said person must not only be involved in any process or activity connected with proceeds of crime, but must also project or claim it as being untainted property. " (emphasis supplied) 11. We are aware that the explanations to Section 2(1)(u) and Section 3 of the PML Act were added by Act 23 of 2019 only w.e.f. 01.08.2019, subsequent to the judgment of the Supreme Court in Nikesh Tarachand (supra). But, in our considered opinion, that has, in no way, altered the legal position nor set at naught the observations of the Supreme Court in paragraph 11 (supra). 12. The explanation to Section 3 of the PML Act, cannot have the effect of expanding the horizons of the mother penal provision. The 'explanation' by itself cannot create a new offence. As held by the Supreme Court in Bihta Cooperative Development Cane Marketing Union Ltd. and Another Vs Bank of Bihar and Others (AIR 1967 SC 389), the ex....
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....ise of an investigation under the PML Act and use it as an extra-judicial confession in both the prosecutions and thereby, put to prejudice innocent persons even. The Enforcement Directorate would become a parallel police system, in that, they would be forced to record ECIRs, in every case, in which some proceeds of crime gets generated by a criminal activity that finds a place in the schedule of the PML Act. 14. Now, coming to the cases at hand, the allegations against Chandrasekaran in the two complaints are set out below : The allegations set out in paragraph 6.2 of the complaint in C.C.No.20 of 2015, read as follows : "6.2. Shri.R.Chandrasekaran (A-2 herein) has dishonestly processed & sanctioned the loans based on forged and fabricated documents, as submitted by Shri.S.Kumar @ Vijayakumar (A-3 herein) in the names of the accused borrowers (A-4 to A-21) for the purpose of purchase of various housing sites and construction of houses/flats thereof, and has knowingly involved himself in the process and activity connected with the proceeds of the crime. Therefore, Shri.R.Chandrasekaran (A-2 herein) is guilty of offence of money laundering under the PMLA, 2002." Similarly, the ....