TaxTMI 
TaxTMI 
2022 (9) TMI 1448
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....ted 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 that the offence of money laundering being preceded b....
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....erence. 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 para 281 has held that the offence under Section 3 of PMLA is d....
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....n 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 is governed by its own provisions and it need not get interfered with by the tria....
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.... (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 offence under money laundering are inextricably linked to each other. (b) Word used in Section 44(1)(d) Explanation is "orders" but not "judgment". Procedure introduced in the ab....
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....avour 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 matters connected therewith or incidental thereto. It may be mentioned that PMLA was last amended by the Finance (No.2) Act, 2019. Section 2 is the definition section. Section 2(1)(p) defines money laundering. It says that money laundering has the meaning assigned to....
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....y 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 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. 20.1. Thus proceeds of crime means any property derived or obtained, di....
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....fence 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 in this behalf under this Act take cognizance of offence under section 3, without the accused being committed to it for trial; Provided that after conclusion of investigation, if no offence of money-laundering is made out requiring filing of such complaint, the said authority shall submit a closure report before the Special Court; or (c) if the court which has taken cognizance of the sched....
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....ty 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 same Court shall not be construed as a joint trial. Secondly, the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence for which complaint has already been filed. 24.3. What is discernible from the above is that if the Court which has taken cognizance of the sch....
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....t 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 inquiring into/investigating offences under PMLA. Following the decision of the Supreme Court in Nikesh Tarachand Shah v. Union of India [(2018) 11 SCC 1], Parliament amended Section 45 of PMLA vide Act 13 of 2018 so as to remove the defect noted in the said decision and to revive the effect of the twin conditions specified in Section 45 to offences under PMLA. Challenge to this amendment was also before the Supreme Court. 27.1. Supreme Court examined in detail ....
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....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 be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause "proceeds of crime", as it obtains as of now. 27.2. Thus, Supre....
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....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 Section 2(1)(u) will get attracted, unless the property has been derived or obtained as a result of criminal activity relating to a scheduled offence. It is possible that in a given case after the discovery of huge volume of undisclosed property, the authorised officer may be advised to send information to the jurisdictional police (under Section 66(2) of the 2002 Act) for registration of a scheduled offence contemporaneously, including for further investigation in a pending case, if any. On receipt of....
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.... 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 only in respect of matters connected with the offence of money laundering, or for that matter, existence of proceeds of crime within the meaning of Section 2(1)(u) of PMLA is quintessential. In the absence of proceeds of crime, the authorities under PMLA cannot step in or initiate any prosecution. 29. While on Vijay Madanlal Choudhary (supra), we may also refer to what the Supreme Court has said regarding taking over physical possession of property. It is in that context, Supreme Court referred to various pr....
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.... 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 vesting of proceeds of crime in the Central Government provided for in the 2002 Act. 30. Thus, Supreme Court expressed the view that it is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of acquittal or discharge of the person in connection with the scheduled offence. The above decision of the Supreme Court has now cleared the legal position. It succinctly sums up that offence under Section 3 is dependent on the wrongful and illegal gain of property as a result of c....
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....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 would be apposite to examine the provisions of Section 44 of PMLA in the light of the decision of the Supreme Court in Vijay Madanlal Choudhary (supra). 34. As already analysed, Section 44 of PMLA clarifies that notwithstanding anything in CrPC, any scheduled offence and an offence punishable under Section 4 of PMLA are to be tried by the Special Court having territorial jurisdiction. However, if the Court which had taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of m....