TaxTMI 
TaxTMI 
2024 (5) TMI 724
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.... and 4 of Prevention of Damages to Public Property Act, 1984 against M/s Vikas Constructions through its partner. In the instant case, the allegation is that the partners of M/s Vikas Construction had encroached on public property by falsification of records. (ii) The other FIR is bearing No.185 of 2021 registered under Sections 419, 420, 468, 471, 120-B, 467 IPC against the accused of the said FIR. In the said FIR, significantly, the present applicant has neither been named nor he has been chargesheeted. Nevertheless, the allegations in the said FIR is that one of the co-accused in the said FIR, namely Mukhtar Ansari had taken funds from the MLA fund to build a school though no school was built and the land is being used for agricultural purposes. (iii) The third FIR is bearing No.236 of 2020 registered under Sections 120-B, 420, 467, 468, 471 IPC read with Section 3 of Prevention of Damages to Public Property Act, 1984 against the applicant, his brother Umar Ansari and his father Mukhtar Ansari. In the said FIR, it has been stated that the accused alongwith the other two co-accused knowing that the property in question is owned and vested with the government but....
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....he account of the applicant. 7. Mr. Sibal has submitted that the present applicant is in no way connected to the firm M/s. Vikas Construction nor the present applicant had anything directly or indirectly to do with the daily affairs of the said firm M/s. Vikas Construction. The said firm operates its own business through its partner and the present applicant is neither a partner nor an authorized signatory nor he has any authority or control to deal with the funds belonging to the said partnership firm. There is no material to indicate that the applicant had any connection with the properties acquired by the said firm or in respect of the money/funds of the said firm. Merely because some partners in the firm M/s. Vikas Construction are related to the applicant, it does not mean that he too is a partner in crime. Hence, the applicant has been falsely implicated and even though in the investigation the trail of money has not been satisfactorily connected to the applicant yet he has been apprehended and is languishing in jail since 04.11.2022. 8. It is further submitted that the entire case of the prosecution revolves around the theory that the present applicant received money f....
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....titive purposes cannot be treated as proceeds of crime in the hands of the applicant. 14. 'Unaccounted money' cannot be taken as a synonym for 'proceeds of crime' as both are distinct and separate concepts. Any amount which may be unaccounted but acquired from legitimate means cannot be treated as proceeds of crime unless it is established that it has been generated from a scheduled offence. On the aforesaid touch stone the investigating agency has not been able to make out a case against the applicant, hence the bail applications deserves to be allowed. 15. It has further been argued by Mr. Sibal that Section 45 of the PMLA provides for a twin condition to be satisfied while considering an application for bail (i) the public prosecutor is given an opportunity to oppose the application for bail; (ii) where the bail application is opposed, the court must be satisfied that there are reasonable grounds to believe that the applicant is not guilty of an offence and that he is not likely to commit any offence while on bail. 16. In the instant case, in so far as the first condition is concerned, the same stands complied with as prosecution is duly represented and ....
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....iated in context with three FIRs relating to predicate offence and as per the learned Senior Counsel for the applicant, no case is made out against the applicant in the predicate offence, accordingly the proceedings against the applicant for the offence under the PMLA will also falter, is not quite correct. 19. It is urged that Section 3 of the PMLA operates in a different sphere. From the statement recorded by the investigating agency and looking into the Bank details, balance sheet and other documents, it clearly indicates the commissioning of the predicate offence. The proceeds generated from the predicate offence have clearly been traced to and for the benefit of the present applicant which is enough to establish complicity of the applicant to the offence of money laundering in terms of Section 3 of the Act 2002 and then it is the applicant who has to establish his innocence regarding non commissioning of an offence under the PMLA. 20. Mr. Tripathi has further argued that language used in Section 3 of the PMLA is very wide and inclusive. From the record it can clearly been seen that the proceeds of crime have been generated from the firm M/s Vikas Construction which is cl....
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....nds in the account of the applicant which was utilized by the applicant for his personal expenses, his foreign trips as well as for importing arms for his participation in the sport on rifle shooting in such circumstances it cannot be said that the applicant has not been a direct beneficiary nor it can be said that he was not aware from where the funds were sourced or their origin. 23. In the aforesaid circumstances where the applicant knowingly has been a user of the proceeds of crime, hence he is prima facie, liable for the offence coupled with the fact that the status of the applicant as a sitting member of the Legislative Assembly, the influence yielded by his family including his deceased father, who had more than fifty criminal cases to his credit is enough to create a bonafide assumption that the applicant can very well influence any witness and this can also be corroborated from the fact that while the applicant was incarcerated in Chitrakoot Jail in connection with other cases against the applicant yet he was using the jail premise as his personal fiefdom with active connivance of the police and the Jail Authority, hence for all the aforesaid reasons the bail applicatio....
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....ntainted property shall be guilty of offence of money-laundering. [Explanation- For the removal of doubts, it is hereby clarified that - (i) a person shall be guilty of offence of money laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:- (a) concealment, or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) 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] 4. Punishment for money-laundering:- Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a terms which shall not b....
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....ing in force on granting of bail. [Explanation- For the removal of doubts, it is clarified that the expression "Offences to be cognizable and nonbailable" shall mean and shall be deemed to have always meant that all offences under this Act shall be cognizable offences and non-bailable offences notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1973 (2 of 1974), and accordingly the officers authorised under this Act are empowered to arrest an accused without warrant, subject to the fulfillment of conditions under Section 19 and subject to the conditions enshrined under this section.] 30. Having taken a glance at the aforesaid statutory provisions it now will be worthwhile to notice certain decisions of the Apex Court on the issue of the offence of money laundering and the approach of courts while dealing with an application for bail. 31. The Apex Court in Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46 has held as under:- "19. The sweep of Section 45 of the 2002 Act is no more res intergra. In a recent decision of this Court in Gautam Kundu v. Directorate of Enforcement (2015) 16 SCC 1, this Court has had an occ....
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....sions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant." (emphasis supplied) 20. In para 34, this Court reiterated as follows : (Gautam Kundu case, SCC p. 16) "34. ... We have noted that Section 45 of PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. As mentioned earlier, Section 45 of PMLA imposes two conditions for grant of bail, specified under the said Act. We have not missed the proviso to Section 45 of the said Act which indicates that the legislature has carved out an exception for grant of bail by a Special Court when any person is under the age of 16 years or is a woman or is sick or infirm. Therefore, there is no doubt that the conditions laid down under Section 45-A of PMLA, wo....
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....which is an offence under the Act after grant of bail. 31. Suffice it to observe that the appellant has not succeeded in persuading us about the inapplicability of the threshold stipulation under Section 45 of the Act. In the facts of the present case, we are in agreement with the view taken by the Sessions Court and by the High Court. We have independently examined the materials relied upon by the prosecution and also noted the inexplicable silence or reluctance of the appellant in disclosing the source from where such huge value of demonetised currency and also new currency has been acquired by him. The prosecution is relying on statements of 26 witnesses/accused already recorded, out of which 7 were considered by the Delhi High Court. These statements are admissible in evidence, in view of Section 50 of the 2002 Act. The same makes out a formidable case about the involvement of the appellant in commission of a serious offence of money laundering. It is, therefore, not possible for us to record satisfaction that there are reasonable grounds for believing that the appellant is not guilty of such offence. Further, the courts below have justly adverted to the antecedents of....
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....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." 33. In Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929 the Apex Court has held as under:- "269. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form - be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money-laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled ....
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....that he is not likely to commit any offence while on bail. Considering the purposes and objects of the legislation in the form of 2002 Act and the background in which it had been enacted owing to the commitment made to the international bodies and on their recommendations, it is plainly clear that it is a special legislation to deal with the subject of money-laundering activities having transnational impact on the financial systems including sovereignty and integrity of the countries. This is not an ordinary offence. To deal with such serious offence, stringent measures are provided in the 2002 Act for prevention of money-laundering and combating menace of money-laundering, including for attachment and confiscation of proceeds of crime and to prosecute persons involved in the process or activity connected with the proceeds of crime. In view of the gravity of the fallout of money-laundering activities having transnational impact, a special procedural law for prevention and regulation, including to prosecute the person involved, has been enacted, grouping the offenders involved in the process or activity connected with the proceeds of crime as a separate class from ordinary criminals....
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....as to why the applicant has been granted or denied the privilege of bail. 46. The duty of the court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. However, while dealing with a special statute like MCOCA having regard to the provisions contained in sub-section (4) of Section 21 of the Act, the court may have to probe into the matter deeper so as to enable it to arrive at a finding that the materials collected against the accused during the investigation may not justify a judgment of conviction. The findings recorded by the court while granting or refusing bail undoubtedly would be tentative in nature, which may not have any bearing on the merit of the case and the trial court would, thus, be free to decide the case on the basis of evidence adduced at the trial, without in any manner being prejudiced thereby" (emphasis supplied) 401. We are in agreement with the observation made by the Court in Ranjitsing Brahmajeetsing Sharma. The Court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the Court based on available materi....
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....d with. The Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail. It is needless to say that as per the statutory presumption permitted under Section 24 of the Act, the Court or the Authority is entitled to presume unless the contrary is proved, that in any proceedings relating to proceeds of crime under the Act, in the case of a person charged with the offence of money laundering under Section 3, such proceeds of crime are involved in money laundering. Such conditions enumerated in Section 45 of PML Act will have to be complied with even in respect of an application for bail made under Section 439 Cr. P.C. in view of the overriding effect given to the PML Act over the other law for the time being in force, under Section 71 of the PML Act." 35. Again, the Apex Court in Pavana Dibbur v. Enforcement Directorate, 2023 SCC OnLine SC 1586 has held as under:- 15. The condition precedent for the existence of proceeds of crime is the existence of a scheduled offence. On this aspect, it is necessary to refer to the decision of this Court in the cas....
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....d offence - except the proceeds of crime derived or obtained as a result of that crime. 270. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of money laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money laundering under the 2002 Act - for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence ....
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....st and second submissions canvassed by the learned senior counsel appearing for the appellant, the third submission must be upheld. Our conclusions are: a. It is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged, must have been shown as the accused in the scheduled offence; b. Even if an accused shown in the complaint under the PMLA is not an accused in the scheduled offence, he will benefit from the acquittal of all the accused in the scheduled offence or discharge of all the accused in the scheduled offence. Similarly, he will get the benefit of the order of quashing the proceedings of the scheduled offence; c. The first property cannot be said to have any connection with the proceeds of the crime as the acts constituting scheduled offence were committed after the property was acquired; d. The issue of whether the appellant has used tainted money forming part of the proceeds of crime for acquiring the second property can be decided only at the time of trial; and e. The offence punishable under Section 120-B of the IPC will become a scheduled offence only if the conspiracy alleged is of committi....
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.... rates which were substantially much lower than the market price. (iii) Certain properties have been sold to certain individuals while there was no apparent need to sell the property and the amount received from such sale was deposited into the account of M/s.Vikas Construction and M/s. Aaghaaz and also withdrawn in cash. (iv) Money was transferred into the bank account of the applicant from M/s. Vikas Construction which was thereafter transferred to a firm, namely, M/s Laggar Industries Ltd for providing bullet proof modification of the vehicle belonging to the present applicant. The investigation revealed that the transactions made in and from the account of the applicant has been used by the applicant for not only getting his vehicle bullet proofed but also for his foreign visit and purchase/import of guns and fire arms but what is more important is that whenever these transactions have been done they have either been sourced through M/s Vikas Construction and prior thereto cash deposits have been made in M/s Vikas Construction and the same trail has been noticed through various bank transfers and into the hands of the applicant. (v) The record further....
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.... verified from the organizations which as per the applicant used the professional talent of the applicant. On the contrary it was denied by the organizations that neither they had any panel of trainers wherein the applicant was a mentor/trainer. Hence, the statements of the applicant was not found credible. Even otherwise the applicant feigned ignorance regarding several transactions which were done in and from the account of the applicant. Merely to state that whenever he needed funds, he would inform his mother and his maternal uncle and maternal grand father and they would arrange for the funds which were received and the applicant did not know anything beyond that. This explanation does not reflect credibility especially from the applicant who is a sitting MLA and an elected representative of the people. 37. Section 2(1)(u) defines the phrase 'proceeds of crime' which clearly indicates that any person who derives any property or obtains, directly or indirectly as a result of a criminal activity would be treated as proceeds of crime. The word 'property' as defined in Section 2(1) (v) includes both movable and immovable property as also tangible or intangible, ....