TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 1199
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....it, appellant No. 1 was arrayed as accused No. 1 in F.I.R.No.369 of 2009 registered before the Patancheru Police Station under Sections 120B, 420, 423, 468 and 471 of the Indian Penal Code, 1860 (IPC). Following investigation carried out by the police, charge sheet was filed in the Court of Additional First Class Judicial Magistrate, Sangareddy, which upon cognizance was registered as C.C.No. 319 of 2010. Following registration of the criminal case, ECIR/02/HZO/2010/1915 was registered under the Prevention of Money Laundering Act, 2002 (briefly, 'the PMLA' hereinafter) by the Enforcement Directorate. Thereafter, provisional attachment order No. 06/2016 dated 30.12.2016 was passed by respondent No. 2 provisionally attaching the following properties of the appellants: (i) 80 guntas of land Sy. No. 151/A, registered vide document No. 5196/2009, dated 30.06.2009 with SRO, Sangareddy (R.O) in the name of Shri Manturi Shashi Kumar. (ii) 19 guntas of land at Sy. No. 122/A, registered vide document No. 1019/2015, dated 26.02.2015 with SRO, Sadasivpet in the name of Smt. Manturi Swapna, W/o. Shri Manturi Shashi Kumar. (iii) 18 guntas of land at Sy. No. 122/A5, registered vide docume....
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....r observed that in the present case, C.C. No. 319 of 2010 has ended in acquittal by way of compromise and not on merit. If exoneration in adjudication proceedings is on technical grounds and not on merit, prosecution may continue. Declining to grant any relief to the appellants, learned Single Judge however granted liberty to the appellants to approach the designated court for release of property by way of an application under Rule 3-A of the Prevention of Money Laundering (Restoration of Property) Rules, 2016, with the further observation that it was for the designated court to take a decision in the matter. Consequently, the writ petition came to be dismissed vide the order dated 17.10.2022. 10. Aggrieved, the present appeal has been filed. 11. On 16.02.2023 this Court while issuing notice, passed the following order: Heard Mr. Vedula Srinivas, learned Senior Counsel for the appellants. Appellants had filed the related writ petition for setting aside of the attachment of properties following closure of C.C.No. 319 of 2010. Learned Single Judge held that acquittal of the appellants in C.C.No. 319 of 2010 was on compromise; it was not on merit. Learned Senior Counse....
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....that appellants have filed a criminal petition before this Court under Section 482 Cr.P.C, being Crl.P.No. 13439 of 2018, for quashing of proceedings in S.C. No. 342 of 2018. Instead of pursuing the criminal petition, appellants have filed the related writ petition which was rightly not entertained by the learned Single Judge. 14. Submissions made by learned counsel for the parties have received the due consideration of the Court. 15. Facts in the present appeal lie within a narrow compass. As already noted above, appellant No. 1 was an accused in the criminal case for offences which are considered as predicate offences under PMLA. In view thereof, a case was registered under PMLA following which the properties mentioned above were provisionally attached. Subsequently, the provisional attachment was confirmed by the adjudicating authority whereafter complaint was lodged before the designated court based on which S.C.No. 342 of 2018 has been registered. 16. In the meanwhile, in view of the settlement arrived at between the de facto complainant and appellant No. 1, the criminal court referred the matter to Lok Adalat and when the matter was settled in Lok Adalat, the criminal cour....
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....any such property or where such property is taken or held outside the country, then the property equivalent in value held with the country or abroad. As per the Explanation, it has been 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 related to the scheduled offence. 21. Thus the expression "proceeds of crime" is intrinsically related to a scheduled offence. It must be derived as a result of criminal activity relatable to a scheduled offence. 22. Before we deal with the decision of the Supreme Court in Vijay Madanlal Choudhary v. Union of India 2022 SCC OnLine SC 929, we may briefly advert to the Prevention of Money Laundering (Restoration of Property) Rules, 2016, on which much reliance has been placed by Mr. V.Ramakrishna Reddy, learned counsel for the Enforcement Directorate. From the title of the said rules itself it is evident that the said rules have been framed for the purpose of restoration of property attached and confiscated in the course of proceedings under PMLA. While Rule 3 deals with the manner ....
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....Section 2(1)(u) of the 2002 Act - so long as the whole or some portion of the property has been derived or obtained by any person "as a result of" criminal activity relating to the stated scheduled offence. To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, "as a result of" criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the concerned case (crime), it may still not be proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violation and yet, will not be regarded as proceeds of crime unless the concerned tax legislation prescribes such violation as an offence and such offence is included in the Schedule of the 2002 Act. For being regarded as proceeds of crime, the property associated with the scheduled offence must have been derived or obtained by a person "as a result of" criminal activity relating to the concerned scheduled offence. This distinction must be borne in mind while reckoning any property referred to i....
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....eme Court held that offence under Section 3 is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. Authorised officer under PMLA gets the authority to prosecute any person for the offence of money laundering only if there exists proceeds of crime within the meaning of Section 2(1)(u) of PMLA. Even though the PMLA is a complete code in itself, it is only in respect of matters connected with the offence of money laundering and for that, existence of proceeds of crime within the meaning of Section 2(1)(u) of PMLA is quintessential. Absent existence of proceeds of crime, the authorities under PMLA cannot step in or initiate any prosecution. Supreme Court held as follows: 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....
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.... the colour of proceeds of crime under Section 2(1)(u) of the 2002 Act, enabling 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. 27. Finally, in paragraph 467, S....