TaxTMI 
TaxTMI 
2024 (7) TMI 555
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....8/DLI/2011, whereby, the first appeals of the appellants against the confirmation order dated 04.02.2011 passed in OC No.66/2010, arising from the provisional attachment order ["PAO"] No.6/2010 dated 09.09.2010 in ECIR/07/DZ/2008 under the provisions of PMLA, 2002, were dismissed by the Appellate Tribunal. DESCRIPTION OF APPELLANTS 2. The appellant-Jeevan Kumar [in Misc. Appeal (PMLA) 14/2023] is stated to have been allegedly involved in an illegal racket of kidney transplantation and had allegedly committed various offences including the offences punishable under Section 307 of the Indian Penal Code, 1860 ["IPC"] and Sections 18, 19 and 20 of the Transplantation of Human Organs Act, 1994 ["TOHO Act, 1994"]. Since the alleged offences constituted a scheduled offence under PMLA, 2002, the PAO was passed against the appellant-Jeevan Kumar. 3. It is also alleged that the money belonging to the appellant- Jeevan Kumar was invested into the properties developed by the appellant-Rajiv Channa [in Misc. Appeal (PMLA) 13/2023] albeit he was not made an accused in the predicate offence i.e., the FIR/ Regular Case ("RC") registered by the CBI. Since the appellant-Rajiv Channa was alleged t....
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....anchsheel Park Branch 6. On account of similitude of facts and questions of law involved in the present appeals, the same are being decided by this common judgment. FACTUAL MATRIX 7. The facts which are necessary for disposal of the present appeals are that on 25.01.2008, a written complaint was filed at PS Palam Vihar, Gurgaon which was registered as FIR No.27/2008 against the appellant-Jeevan Kumar and others for offences punishable under Section 420 of the IPC and Sections 18/19 of the TOHO Act, 1994. 8. On 08.02.2008, the investigation in the abovementioned FIR was entrusted to the CBI and in pursuance of the same, a case being RC/1(E)/08/CBI/EOU-VII/ND was registered under Section 120B read with Sections 326, 342, 417, 465, 473, 307 and 506 of the IPC and Sections 18, 19 and 20 of the TOHO Act, 1994 against various persons, including the appellant-Jeevan Kumar. 9. After conclusion of investigation, the chargesheet was filed by the CBI on 29.04.2008 and consequently, a regular case was registered as CBI Case No.7 of 2008. The trial was conducted by the Court of ASJ/Special Judge (CBI), Panchkula, Haryana ("the Trial Court"). 10. On 12.05.2008, an Enforcement Case....
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...., disposed, parted with or otherwise dealt with in any manner, whatsoever, until or unless specially permitted to do so by the undersigned. Relied upon documents are mentioned in Annexure "A"." 12. A complaint under Section 5(5) of PMLA, 2002 was subsequently preferred by the ED on 05.10.2010 before the Adjudicating Authority under PMLA, 2002 seeking adjudication and confirmation of the abovementioned PAO. On 04.02.2011, the Adjudicating Authority confirmed the PAO No.6/2010 in OC No.66/2010. 13. In March 2011, the appellants preferred statutory appeals being FPA-PMLA-169/DLI/2011, FPA-PMLA-167/DLI/2011 and FPA- PMLA-168/DLI/2011 against the abovementioned confirmation order, before the Appellate Tribunal under PMLA, 2002. 14. On 24.04.2012, charges were framed against the appellant-Rajiv Channa under Sections 3 and 4 of PMLA, 2002 in ECIR/07/DZ/2008, wherein, he pleaded not guilty and claimed trial. 15. In the meantime, on 22.03.2013, in CBI Case No.7/2008, the Trial Court acquitted the appellant-Jeevan Kumar from all the charges. The said decision remained unchallenged and has attained finality. 16. Subsequently, vide judgment dated 15.01.2024, this Court in Crl. M.C. No.162....
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.... Ltd. were never arrayed as an accused in the FIR registered by the CBI i.e., RC/1(E)/08/CBI/EOU-VII/ND and thus, they had no role or link with the generation of alleged proceeds of crime or the scheduled offence in question. 20. The third prong of the submission advanced by the learned senior counsel was that vide separate judgments dated 15.01.2024, this Court in Crl. M.C. No.1622/2013 and Crl. Rev. P. No.438/2012, quashed the ECIR bearing No. ECIR/07/DZ/2008 alongwith all the consequential proceedings arising therefrom and the charge framed against the appellant-Rajiv Channa vide order dated 24.04.2012, respectively. He, therefore, submitted that in light of the quashing of the prosecution complaint, all the proceedings in furtherance of prosecution, including attachment would also not sustain and are therefore, liable to be quashed. He relied upon the decision of the Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary v. Union of India, [2022 SCC OnLine SC 929] to substantiate his arguments. 21. With respect to the appellant-M/S N.R. Merchant Pvt. Ltd., it is urged that the said appellant is a bonafide purchaser of the property being Plot No. 77, allotted to M/s Anc....
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....cused i.e., Jeevan Kumar from the predicate offence and quashing of criminal proceedings mentioned above qua the appellant-Rajiv Channa, shall also lead to the cessation of the attachment proceedings. 27. It is significant to primarily refer to Section 2 of PMLA, 2002 which defines various words and expressions appearing in the said Act. According to Section 2(1)(p) of PMLA, 2002, the expression "money- laundering" has the meaning assigned to it in Section 3 of the said Act which deals with the "offence of money-laundering". Section 3 of PMLA, 2002 stipulates that "whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering". 28. Thus, for the commission of an offence of money laundering, the essential preconditions which emerge from the aforesaid provisions are that firstly, it requires an involvement in any process or activity connected with the proceeds of crime; and secondly, projection of the same....
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....re likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed; ***" 33. Having examined the bare provisions dealing with the proceeds of crime, scheduled offence and attachment of property involved in money laundering, it is apposite to advert to the judicial pronouncements which squarely answer the issue which has arisen for consideration in the cases at hand. In Vijay Madanlal Choudhary (supra), the Hon'ble Supreme Court explicated the meaning and intent of Section 2(1)(u) read with Section 3 of PMLA, 2002 and held as under:- "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....
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.... 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. *** 467. In light of the above analysis, we now proceed to summarise our conclusion on seminal points in issue in the following terms:- ... (d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the 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-lau....
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....l 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 v. Union of India decided on 27.07.2022 where, the consequence of failure of prosecution for the scheduled offence has been clearly provided in the following terms: "187. .......(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the 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....
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....iction, there can be no offence of money laundering against the accused. Appropriate proceedings can be always filed by the concerned parties for challenging the order by which predicate offence was quashed. If the said order is set aside and the case is revived, it will be always open for the petitioner to revive the proceedings under the Prevention of Money Laundering Act, 2002. The Special Leave Petition is accordingly disposed of." 38. The Telangana High Court in Manturi Shashi Kumar v. Director, Directorate of Enforcement, [2023 SCC OnLine TS 1098] has also quashed a complaint under Section 3 of the PMLA, 2002 on the grounds of the accused being discharged/acquitted of the scheduled offence. The relevant observations of the said judgment are set out below:- "28. Thus, according to Supreme Court, the 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 or acquitted of the scheduled offence or the criminal case against him is quashed by the court, there can be no offence of money laundering against him or anyone claiming such property being the propert....
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.... of the abovementioned judicial pronouncements would make it sufficiently clear that since the appellant-Jeevan Kumar has already been acquitted of the scheduled offence, there can be no action for money-laundering against the other appellants in relation to the property linked to the stated scheduled offence. An inference can plausibly be drawn from the legal maxim sublato fundamento cadit opus which means that upon removal of the foundation, the work collapses. Thus, the plain and literal interpretation of Section 2(1)(u) read with Section 3 of PMLA, 2002 which has been enunciated in Vijay Madanlal Choudhary (supra) and reiterated by the Hon'ble Supreme Court in Pavana Dibbur (supra) and by this Court in Prakash Industries (supra), suggests that if the elementary foundation i.e., the scheduled offence is itself removed, consequential proceedings emanating therefrom shall also fall. 41. A bare perusal of the facts of the present case would show that the Trial Court had already acquitted the appellant-Jeevan Kumar of all the charges framed against him vide judgment dated 22.03.2013 and the same has remained unchallenged by the respondent. Therefore, his acquittal in the scheduled ....