TaxTMI 
TaxTMI 
2022 (9) TMI 1448
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....derabad in S.C.No.1 of 2018. 3. It is stated that petitioner has been accused of committing offences under Sections 420 and 120B read with Section 420 of the Indian Penal Code, 1860 (IPC) as per charge sheet filed by the Central Bureau of Investigation (CBI) in C.C.No.26 of 2013 pending on the file of Principal Special Judge for CBI Cases, Hyderabad. The matter is at the stage of framing of charge. 4. While at that stage, categorizing Sections 420, 471 and 120B IPC as "scheduled offences" under PMLA and in furtherance of the allegation that petitioner had committed the consequential offence of "money laundering", respondent has filed complaint before the Special Court for CBI Cases, Hyderabad (briefly, "Special Court" hereinafter) in S.C.No.1 of 2018. 5. Both C.C.No.26 of 2013 and S.C.No.1 of 2018 filed by the respondent are being heard on the discharge applications filed by the petitioner. 6. According to the petitioner, after arguments in the discharge petitions commenced in C.C.No.26 of 2013, S.C.No.1 of 2018 was posted before the Special Court to hear the petitioner in S.C.No.1 of 2018. Petitioner has stated that it was brought to the notice of the Special Court tha....
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....ated 10.01.2021 is a correct order and calls for no interference. In so far decision of the learned Single Bench of this court in Madhu Koneru (supra) is concerned, he submits that respondent has filed Special Leave Petition before the Supreme Court bearing Diary No.29438 of 2021 which is pending. In so far the decision of this Court dated 10.08.2021 in Crl.P.No.1073 of 2021 and batch is concerned, learned Additional Solicitor General of India submits that the aforesaid judgment is based on sound principles. The same having not been challenged and interfered with, it has attained finality. Therefore, the present case is squarely covered by the aforesaid decision dated 10.08.2021. In the circumstances, learned Additional Solicitor General of India seeks dismissal of the criminal petition. 11. After the case was reserved for judgment, on being mentioned and on memo dated 02.08.2022 being filed, the case was once again listed before the Court. 12. Mr. S.Niranjan Reddy, learned Senior Counsel for the petitioner submits that after the case was reserved for judgment, a three-Judge Bench of the Supreme Court in Vijay Madanlal Choudhary v. Union of India [2022 SCC OnLine SC 929] in p....
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....an accused in the complaint filed by the respondent alleging commission of the offence of money laundering under Section 3 of PMLA by the petitioner. 17. It may be mentioned that petitioner along with other accused had earlier filed miscellaneous petition before the Special Court requesting it to defer all further proceedings in S.C.No.1 of 2018 till the conclusion of adjudication in C.C.No.26 of 2013. By the order dated 17.01.2020, Special Court held that C.C.No.26 of 2013 and S.C.No.1 of 2018 were being posted on every working Friday simultaneously. Following the decision of the Jharkhand High Court in Anosh Ekka v. Enforcement Directorate [W.P. (Crl) No.257 of 2012 and batch, dated 19.02.2013], trial of scheduled offence and trial of offence punishable under PMLA were directed to be proceeded simultaneously. 18. Later on respondent moved the Special Court contending as follows: (a) Through Finance (No.2) Act, 2019, Section 44 of PMLA has been amended by inserting an Explanation to clause (d) of sub-section (1) of Section 44 of the Act. As per the amended provision, it clearly sets out that the trial for the offence of money laundering is independent offence which ....
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....thority is an officer of ED. (g) PMLA starts from assumption, like Section 212 of IPC. Except Section 3 of PMLA, there is no other IPC offence. (h) Person not arrayed in the scheduled offence can be prosecuted under PMLA. Offences are distinct, but the scheduled offence hinges upon the ED complaint. Money laundering offence cannot be tried ahead of the predicate/scheduled offence. (i) Scheduled offence events and money laundering events are one and the same and there are no additional facts in the ED complaint. There is no evidence about the proceeds of crime. Money laundering offence starts at the end of predicate offence, harbouring of offence is a stand-alone offence. (j) Facts in the scheduled offence (C.C.No.26/2013) and facts in money laundering offence (S.C.No.1/2018) are one and the same; offences may be distinct but can be tried simultaneously. Money laundering offence necessarily depends on predicate offence. 18.2. In addition to the above, the following further contentions were also advanced on behalf of the other accused: (a) There is no definition in PMLA about stand-alone offence. Scheduled offence/predicate offence and ....
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....er authority under different Acts. PML Act has overriding effect under Section 71. 33. In view of my discussions above, offence under Money Laundering Act (S.C.No.1/2018) is a stand-alone offence, hence point No.1 is answered in favour of complainant/ED. Scheduled offence (C.C.No.26/2013) cannot precede the offence under money laundering (S.C.No.1/2018) nor can be tried simultaneously, hence point No.3 is answered against the accused. Point No.2: 34. In view of my discussions above, as point No.1 is answered in favour of complainant/ED and the offence under money laundering (S.C.No.1/2018) shall precede the trial of the predicate/scheduled offence (C.C.No.26/2013). Hence, this point is answered accordingly. Point No.4: 35. In the result, the offence under money laundering (S.C.No.1/2018) is a stand-alone offence and shall precede the trial of predicate/scheduled offence (C.C.No.26/2013). 19. At this stage, we may briefly advert to some of the relevant provisions of PMLA. PMLA is an Act which has been enacted to prevent money laundering and to provide for confiscation of property derived from or involved in money laundering and for mat....
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....r knowingly assisted or knowingly is a party or is actually involved in concealment or possession or acquisition or use or projecting as untainted property or claiming as untainted property, in any manner whatsoever. It is further clarified that the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. 19.2. While on Section 3, we may mention that Section 4 provides for punishment for committing the offence of money laundering. 20. Reverting back to Section 2(1)(u), it defines proceeds of crime as under: Section 2(1)(u) 'Proceeds of crime' means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating 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....
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....t shall also try an offence, other than an offence referred to in subsection (1), with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial. 23.1. Thus, as per sub-section (2), while trying an offence under PMLA, a Special Court designated as such under subsection (1) shall also try an offence, other than an offence referred to in sub-section (1), with which the accused may be charged at the same trial under the provisions of CrPC. 24. Section 44 deals with offences triable by Special Courts. Section 44 is extracted as under: 44. Offences triable by Special Courts. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),- (a) an offence punishable under Section 4 and any scheduled offence connected to the offence under that section shall be triable by the Special Court constituted for the area in which the offence has been committed: Provided that the Special Court, trying a scheduled offence before the commencement of this Act, shall continue to try such scheduled offence; or; (b) a Special Court may, upon a complaint made by an authority authorised i....
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.... in CrPC, an offence punishable under Section 4 and any scheduled offence connected to the offence under that section shall be triable by the Special Court constituted for the area in which the offence has been committed. If 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, it shall on an application by the authority authorized to file a complaint under PMLA 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. While trying the scheduled offence or the offence of money laundering, the Special Court shall hold trial in accordance with the provisions of CrPC as it applies to a trial before a Court of Session. 24.2. The Explanation inserted by way of amendment clarifies two things. Firstly, the jurisdiction of the Special Court while dealing with the offence under PMLA during investigation, enquiry or trial shall not be dependent upon any orders passed in respect of the scheduled offence. Trial of both sets of offences by the sa....
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....d that a bare reading of Sections 2(1)(u), 3 and 44(1)(d) of PMLA along with Explanations thereto makes it clear that the offence of money laundering is a standalone offence and the trial proceedings are completely different from that of the scheduled offence. Trial of money laundering offence is an independent trial; it will not meddle with the trial of scheduled offence. On the above basis, learned Single Judge negatived the contention raised that without proving the guilt of the accused in the predicate/scheduled offence, trial of offences under PMLA cannot be proceeded with; and that money laundering offence starts at the end of predicate offence. 26. Keeping the principles of judicial discipline and the doctrine of precedent, this Court would have followed the aforesaid decision of the learned Single Judge dated 10.08.2021 rendered in Crl.P.No.1073 of 2021 and batch, but for the decision of the Supreme Court in Vijay Madanlal Choudhary (supra). 27. In Vijay Madanlal Choudhary (supra), Supreme Court was called upon to deal with the pleas concerning validity and interpretation of certain provisions of PMLA and the procedure followed by the Enforcement Directorate while inq....
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.... as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money-laundering under Section 3 of the Act. ... ... ... ... ... 253. Tersely put, it is 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. The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event 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 because of quashing of the criminal case (scheduled offence) against him/her, there can ....
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....ating to scheduled offence, and if it is established in the court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as proceeds of crime despite such adjudication by a Court of competent jurisdiction. It is well within the jurisdiction of the concerned Court trying the scheduled offence to pronounce on that matter. 282. Be it noted that the authority of the Authorised Officer under the 2002 Act to prosecute any person for offence of money-laundering gets triggered only if there exists proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act and further it is involved in any process or activity. Not even in a case of existence of undisclosed income and irrespective of its volume, the definition of "proceeds of crime" under Sectio....
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....eds of crime, but all properties qualifying the definition of "proceeds of crime" under Section 2(1)(u) will necessarily be crime properties. What is significant, however, to note is the clear enunciation by the Supreme Court that in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to the scheduled offence, and if it is established in the Court of law that the crime property in the concerned case has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex-consequenti proceeds of crime within the meaning of Section 2(1)(u). Supreme Court noted that in the trial in connection with the scheduled offence, the Court would be obliged to direct return of such property as belonging to the person concerned. It would then be paradoxical to still regard such property as proceeds of crime despite such adjudication by a Court of competent jurisdiction. Significantly, Supreme Court also says that it would be well within the jurisdiction of the concerned Court trying the scheduled offence to pronounce on that matter. Though PMLA is a complete Code in itself, it is ....
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....son at a later date pursuant to the order passed by the Court of competent jurisdiction. Moreover, for the view taken by us while interpretating Section 3 of the 2002 Act regarding the offence of money-laundering, it can proceed only if it is established that the person has directly or indirectly derived or obtained proceeds of crime as a result of criminal activity relating to or relatable to a scheduled offence or was involved in any process or activity connected with proceeds of crime. 307. It is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of his acquittal or discharge in connection with the scheduled offence. Resultantly, we would sum up by observing that the provision in the form of Section 8(4) can be resorted to only by way of an exception and not as a rule. The analogy drawn by the Union of India on the basis of decisions of this Court in Divisional Forest Officer v. G.V. Sudhakar Rao [(1985) 4 SCC 573], Biswanath Bhattacharya v. Union of India [(2014) 4 SCC 392], Yogendra Kumar Jaiswal v. State of Bihar [(2016) 3 SCC 183] , will be of no avail in the context of the scheme of attachment, confiscation and ....
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....n, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence claiming him. 31.1. Thus, Supreme Court has rendered a clear and categorical finding that offence under Section 3 of PMLA is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged/acquitted of the scheduled offence or criminal case against him is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him. 32. This decision of the Supreme Court is binding on all Courts and Tribunals in India. As a matter of fact, after rendering of this decision by the Supreme Court, the position has been clarified and it is this law which now has to be followed by the Courts. Therefore, the decision rendered by the learned Single Judge dated 10.08.2021 in Crl.P.No.1073 of 2021 and batch would have to give way to the decision of the Supreme Court in Vijay Madanlal Choudhary (supra). 33. Before parting with the record, it wo....