AI Drafter 
TaxTMI 
TaxTMI 
2023 (2) TMI 1097
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....egistrar and Ors.'. In both of these petitions, the impugned Provisional Attachment Order (PAO) No. 1/2022 dated 14th January, 2022 issued by the Directorate of Enforcement (ED) under Section 5 of the Prevention of Money Laundering Act (hereinafter 'PMLA') is under challenge. In addition, the Petitioners are also seeking a direction for release of the attached properties. The basis of the PAO is FIR No. 109/2020 dated 7th March, 2020 registered with City Chowk Police Station Aurangabad invoking Sections 420, 406 and 34 of the Indian Penal Code, 1860. 3. The allegations against Mr. Sachin Joshi who is accused no. 5 in the ECIR No. ECIR/03/MBZO-II/20/2020 are as under: - "6.5 Further, "Proceeds of Crime" to the extent of Rs. 80 crores (approx.) as mentioned above in Table No. 6 and 8 gets exhausted in the hands of Sachin Joshi and his Viiking Group of Companies. Mr. Sachin Joshi had utilized the entire Proceeds of Crime of Rs. 80 crores (approx.) for various purposes, as discussed above. The Proceed of Crime of Rs. 80 crores (approx.) will be attached under the provisions of Section 2(1)(u) of PMLA, whereby the value equivalent thereof concept is applied. It is gathered d....
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....ds of crime by Mr. Sachin Joshi. The relevant portions of the said order are extracted as under:- 6. ECIR/MBZO-11/20/2020 was recorded on 16.12.2020 6. based on FIR No.109/2020 in respect of Predicate Offence registered with City Chowk Police Station, Aurangabad. In its investigation it was revealed that, accused Babulal Varma and others have laundered Rs.410 Crores. This amount of Rs.410 Crores was in fact a loan granted by YES Bank to Omkar Realtors and Developers Pvt.Ltd. (for short ORDPL). It was not utilized for the purpose for which it was granted, but the same was siphoned off and projected as untainted. Therefore, this amount Rs.410 Crores is 'Proceeds of Crime' (POC). Present applicant had received an amount of Rs.80/87 Crores from ORDPL, which is part of proceeds of Crime and used it for the personal business expenses. This Rs.80/87 Crores was transferred from the accounts of ORDPL, out of which part amount was transferred into the account of Sachin Joshi and part amount was transferred into the account of Viking Group companies (which are allegedly associated with him), in which the applicant was Director. An amount of Rs.48 Crores approximately was tran....
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.... integration thereof in order to attract Sec.2(1)(u) r.w. Sec.3 & 4 of the Prevention of Money-laundering Act. With these and other grounds relating to non existence of Scheduled Offence and activity relating to Scheduled Offence, he and companies associated with him claimed discharge. I carefully examined these grounds. XXX XXX XXX XXX 25. Basically burden of showing this foundational fact is on complainant-ED and the same is not explained with cogent documentary evidence in order to rebut and falsify whatever contended by Ld. Sr. Counsel Mr. Ponda on the strength of bank statements and dates of disbursements. Prima-facie bank statements and dates of disbursements coupled with details thereof alleged in the Complaint itself indicate that upon consideration of the record of the case and the documents submitted therewith, and after hearing submissions of the accused No.5 and the prosecution ED in this behalf, I am of the clear opinion that, the applicant/Accused No.5 and his companies were never a part of any proceeds of Crime by way of obtaining loan from the YES Bank. Even there is nothing to show that after obtaining such loan (POC) he had any role in p....
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....scharge them for the detailed reason discussed above for doing so, as per Sec.227 Cr.P.C.. Hence, point No is answered in the affirmative and following order is passed. ORDER 1 Application (Exh.139) is allowed. 2 Applicant-Accused No.5 Sachin Jagdish Joshi for himself and entities, companies associated with him (A6 to A11) are hereby discharged as per See 227 Cr.P.C. from PMLA Special Case No.377 of 2021 in respect of EGIR/MBZO-II/20/2020 from offences under Sec.3 punishable under Sec.4 of the PML Act. 3 His bail bonds stand cancelled, and surety is discharged. 4 Accused No.5, Sachin Joshi for himself and Companies associated with him (A6 to A11), was already released on bail. Hence he shall make compliance of Sec.437A. by executing P.R.Bond of Rs.15,000/-with one or two sureties of like amount, to appear before the Hon'ble Higher Court. 5 As all accused persons and companies associated with them have been discharged, Record and Proceedings of this case be sent to the Record Department for preserving the same till further orders. 6 Accused No.5, Sachin Joshi for himself and Companies associated with him (A6 to A11) ....
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....he offence of money-laundering. The Authorities under the 2002 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. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the 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 stated scheduled offence through him." Therefore, in the event that the accused person is discharged in the PMLA case itself, the impugned PAO and the attachment of property resulting from the said PAO, deserves to be quashed. 10. This legal position has been subsequently affirmed by the Supreme Court in the following cases. i. Parvathi Kollur v. Enforcement Directorate [Criminal Appeal No. 1254/2022, decided on 16th August, 2022], ii. Adjudicating Authority v. Shri Ajay Kumar Gupta & Ors. [Criminal Appeal Nos. 391-392/2018, decided on 2nd December, 2022], ....
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....1 expired on 08.05.2018. 5. Thereafter, the Trial Court, by its judgment and order dated 04.01.2019, allowed the application and discharged the Appellants from the offences pertaining to the Act of 2002 while observing that occurrence of a scheduled offences was the basic condition for giving rise to "proceeds of crime"; and commission of scheduled offence was a pre-condition for proceeding under the Act of 2002. 6. Aggrieved by the said discharge order, the Directorate preferred a revision petition before the High Court. The High Court proceeded to set aside the discharge order while observing that the allegations made in the complaint and the material produced, prima facie, made out sufficient ground for proceeding against the Appellants for offences under the Act of 2002. 7. Learned Counsel for the Appellants has contended that the issue as involved in this matter is no more res integra, particularly for the view taken by a 3-Judge Bench of this Court in the case of Vijay Madanlal Choudhary and Ors. v. Union of India and Ors. decided on 27.07.2022 where, the consequence of failure of prosecution for the scheduled offence has been clearly provided in th....
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.... police or pending inquiry by way of complaint before the competent forum; thirdly, in the event there is already a registered scheduled offence but the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or quashing of the criminal case of the scheduled offence, there can be no action for money laundering against not only such a person but also any person claiming through him in relation to the property linked to the stated scheduled offence. In other words no action under PMLA can be resorted to unless there is a substratum of a scheduled offence for the same, which substratum should legally exist in the form of a subsisting (not quashed) criminal complaint/inquiry or if it did exist the accused has since been discharged or acquitted by a Court of competent jurisdiction." 13. The Supreme Court in W.P.(C) 368/2021 titled 'Indrani Patnaik & Anr. v. Enforcement Directorate and Ors.' has recently held that there cannot be any prosecution in relation to an offence for which the accused person has already been discharged. The relevant portion of the said order of the ....