TaxTMI 
TaxTMI 
2025 (2) TMI 748
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.... short 'PML Act, 2002'], is that a complaint case under the PML Act, 2002 was initiated against the petitioner on the basis of FIR registered by the CBI, ACB, Dhanbad being RC1(A)/2020-D dated 10.02.2020. 3. It is alleged in the aforesaid FIR, which was registered on the basis of complaint made by one Amit Sarawgi, Director of M/s Adi Ispat (P) Limited, that the petitioner had demanded a bribe of Rs. 2,00,000/- per month for showing leniency in the insolvency resolution process for extending CIR process from 09 months to 02 years and also demanded Rs. 20,00,000/- for obtaining favourable forensic audit/valuation report from his chosen Forensic Auditor/Valuer and for helping in re-possession of plant/company. The petitioner had offered him that SME, the complainant was entitled to participate in the auction proceeding of the Bank and if he met the demands, he would prepare his report leniently enabling him re-possess his plant/company. The complaint was discreetly verified. Trap team was constituted and raid was conducted at Giridih at the Company office, where the petitioner was caught read handed on 11.2.2020 in the presence of independent witnesses accepting the illegal gratif....
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.... submitted that first meeting of Committee of Creditors [CoC] was held on 21.12.2019 in accordance with Code and Regulations made thereunder and it was decided that petitioner was to be appointed as Resolution Professional [RP] entrusted with the functioning of the company in question. As such, in terms of Section 16(5) of the Code, with the appointment of petitioner as RP, the terms of the petitioner as Interim Resolution Professional [IRP] came to an end w.e.f. 21.12.2019. 11. It has been submitted that soon after commencement of CIRP, Amit Sarawgi, who was the director of M/s Adi Ispat Pvt. Ltd. and M/s Sri Bir Ispat Pvt. Ltd., illegally and unlawfully operated the bank account of Corporate Debtor, namely, M/s Adi Ispat Pvt. Ltd with Andhra Bnak, Giridih Branchi on 24.12.2019 and withdrew Rs. 10.00 lacs in cash. It has been stated that the said Amit Sarawgi, deliberately and intentionally neither disclosed about the bank account of Corporate Debtor to the petitioner nor handed over the cheque book and bank statement to the petitioner. Thus, the petitioner was never made aware of the existence of the Bank Account by Amit Sarawgi till he came to know of the same through his sou....
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....olvency and Bankruptcy Code, 2016 and to be a "Public Servant" as per Sections 232 and 233 of the Code, which specifically show that Resolution Professional acts only as a 'facilitator, and does not have adjudicating power and is not paid any remuneration/fee by the Government unlike the liquidator, receiver or commissioner. 19. Herein, the appointment of the petitioner by the CoC cannot be termed to be an authorization by a court of justice to perform any duty, in connection with the administration of justice. It is further submitted that petitioner is neither an employee nor an officer nor authorized representative of the IBBI/NCLT rather he is a Chartered Accountant and a private practitioner and also registered as an independent Insolvency Professional with IBBI. The continuity of his registration as Insolvency Professional is subject to compliance of the Insolvency Professional Regulations. The petitioner has absolute discretion either to give his consent or reject any assignment offered to him by the Financial Creditor of the Company/Corporate Debtor. 20. It has further been submitted that in the present case the petitioner ceased to be an IRP with effect from 21.12.201....
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....tioner alleging commission of any offence, therefore, on this ground also the entire prosecution case stands vitiated. 27. Learned counsel for the petitioner based upon the aforesaid ground has submitted the learned trial court has failed to appreciate these facts into consideration and as such the impugned order dated 08.06.2023 is liable to be quashed and set aside. Argument on behalf of the learned counsel for the opposite party-Enforcement Directorate: 28. While on the other hand, Mr. Amit Kumar Das, learned counsel for the opposite party - Enforcement Directorate has seriously opposed the said submissions/grounds, on facts and on law as referred hereinabove, on the strength of counter affidavit filed on behalf of respondent-ED. 29. It has been submitted that sufficient material has been collected to come to the conclusion that all the conditions as stipulated under Section 3 of the PML Act, 2002 read with Section 2 (1) (u) of the PML Act, 2002 are satisfied. 30. It has been submitted that during investigation it has come that the petitioner-Sanjay Kumar Agarwal demanded a bribe of Rs. 2 lacs per month from Amit Sarawgi for showing leniency in the insolvency reso....
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....v) & (viii) of the PC Act.." 35. Therefore, plea of the Petitioner that he is not a Public Servant within the meaning of the PC Act is not sustainable in the eyes of law. 36. Further submission has been made that the investigating officer has found sufficient material against the petitioner and accordingly, submitted charge sheet for commission of offence defined under Section 3 of PMLA, 2002 and punishable under Section 4 of PMLA against him. Further, paragraph 6.5, 6.6, 6.8, 6.9, and 7 etc. of the prosecution complaint clearly depicts that the ill-gotten money i.e. proceeds of crime was found in the possession of the petitioner. 37. Submission has been made that the learned trial court considering the aforesaid fact into consideration has found that there are sufficient materials against the petitioner for framing charge for the offence u/s 4 of P.M.L. Act in the instant case. Hence, the petition for discharge filed on behalf of the petitioner was rejected, which requires no interference by this Court. Analysis 38. Heard the learned counsel for the parties, gone across the pleading available on record as also the finding recorded by learned court. 39. This Court....
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.... to their integrity and sovereignty. Some of the initiatives taken by the international community to obviate such threat are outlined below:- (a) the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to which India is a party, calls for prevention of laundering of proceeds of drug crimes and other connected activities and confiscation of proceeds derived from such offence. (b) the Basle Statement of Principles, enunciated in 1989, outlined basic policies and procedures that banks should follow in order to assist the law enforcement agencies in tackling the problem of money-laundering. (c) the Financial Action Task Force established at the summit of seven major industrial nations, held in Paris from 14th to 16th July, 1989, to examine the problem of money-laundering has made forty recommendations, which provide the foundation material for comprehensive legislation to combat the problem of money-laundering. The recommendations were classified under various heads. Some of the important heads are- (i) declaration of laundering of monies carried through serious crimes a criminal offence; (ii) to ....
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....r where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. 45. In the explanation it has been referred that for 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. The aforesaid explanation has been inserted in the statute book by way of Act 23 of 2019. 46. It is, thus, evident that the reason for giving explanation under Section 2 (1) (u) is by way of clarification to the effect that whether as per the substantive provision of Section 2 (1) (u), the 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 but by way of explanation the proceeds of crime has been given broader implication by including property not only derived or obtained from the scheduled offence but also any property which may direct....
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....cess 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.]" 51. It is evident from the aforesaid provision that "offence of money-laundering" means 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. 52. It is further evident 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. 53. The punishment for money laundering has been provided under S....
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....ort Promotion Council v. A.K. Chopra, the Court observed that domestic Courts are under an obligation to give due regard to the international conventions and norms for construing the domestic laws, more so, when there is no inconsistency between them and there is a void in domestic law. This view has been restated in Githa Hariharan, as also in People's Union for Civil Liberties, and National Legal Services Authority v. Union of India." 56. It is evident from the observation so made as above that the purposes and objects of the 2002 Act for which it has been enacted, is not limited to punishment for offence of money-laundering, but also to provide measures for prevention of money-laundering. It is also to provide for attachment of proceeds of crime, which are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceeding relating to confiscation of such proceeds under the 2002 Act. This Act is also to compel the banking companies, financial institutions and intermediaries to maintain records of the transactions, to furnish information of such transactions within the prescribed time in terms of Chapter IV of the 2002 Act. 57.....
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.... of law that at the stage of framing of charge, the probable defence of the accused is not to be considered and the materials, which are relevant for consideration, are the allegations made in the First Information Report/complaint, the statement of the witnesses recorded in course of investigation, the documents on which the prosecution relies and the report of investigation submitted by the prosecuting agency. The probative value of the defence is to be tested at the stage of trial and not at the stage of framing of charge and at the stage of framing of charge minute scrutiny of the evidence is not to be made and even on a very strong suspicion charges can be framed. 62. Further it is settled position of law that at the stage of framing the charge, the trial Court is not required to meticulously examine and marshal the material available on record as to whether there is sufficient material against the accused which would ultimately result in conviction. The Court is prima facie required to consider whether there is sufficient material against the accused to presume the commission of the offence. Even strong suspicion about commission of offence is sufficient for framing the ch....
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....mudi, (2007) 1 MLJ (Cri) 100], the court has not sifted the materials for the purpose of finding out whether or not there is sufficient ground for proceeding against the accused but whether that would warrant a conviction. We are of the opinion that this was not the stage where the court should have appraised the evidence and discharged the accused as if it was passing an order of acquittal. Further, defect in investigation itself cannot be a ground for discharge. In our opinion, the order impugned [N. Suresh Rajan v. Inspector of Police, Criminal Revision Case (MD) No. 528 of 2009, order dated 10-12-2010 (Mad)] suffers from grave error and calls for rectification. 33. Any observation made by us in this judgment is for the purpose of disposal of these appeals and shall have no bearing on the trial. The surviving respondents are directed to appear before the respective courts on 3-2-2014. The Court shall proceed with the trial from the stage of charge in accordance with law and make endeavour to dispose of the same expeditiously. 34. In the result, we allow these appeals and set aside the order of discharge with the aforesaid observations." 64. It has been furth....
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.... State of Rajasthan, 2018 SCC OnLine Raj 3468] and order, which are reproduced hereinabove. 11. While considering the legality of the impugned judgment [Ashok Kumar Kashyap v. State of Rajasthan, 2018 SCC OnLine Raj 3468] and order passed by the High Court, the law on the subject and few decisions of this Court are required to be referred to. 11.1. In P. Vijayan [P. Vijayan v. State of Kerala, (2010) 2 SCC 398 : (2010) 1 SCC (Cri) 1488] , this Court had an occasion to consider Section 227 CrPC What is required to be considered at the time of framing of the charge and/or considering the discharge application has been considered elaborately in the said decision. It is observed and held that at the stage of Section 227, the Judge has merely to sift the evidence in order to find out whether or not there is sufficient ground for proceeding against the accused. It is observed that in other words, the sufficiency of grounds would take within its fold the nature of the evidence recorded by the police or the documents produced before the court which ex facie disclose that there are suspicious circumstances against the accused so as to frame a charge against him. It is furt....
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....bative value, it can frame the charge; though for conviction, the court has to come to the conclusion that the accused has committed the offence. The law does not permit a mini trial at this stage.'" 12. We shall now apply the principles enunciated above to the present case in order to find out whether in the facts and circumstances of the case, the High Court was justified in discharging the accused for the offence under Section 7 of the PC Act. 13. Having considered the reasoning given by the High Court and the grounds which are weighed with the High Court while discharging the accused, we are of the opinion that the High Court has exceeded in its jurisdiction in exercise of the revisional jurisdiction and has acted beyond the scope of Section 227/239 CrPC. While discharging the accused, the High Court has gone into the merits of the case and has considered whether on the basis of the material on record, the accused is likely to be convicted or not. For the aforesaid, the High Court has considered in detail the transcript of the conversation between the complainant and the accused which exercise at this stage to consider the discharge application and/or fram....
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....er dealt with the proper basis for framing of charge in the case of Onkar Nath Mishra & Ors Vs. State (NCT of Delhi) and Anr. wherein at paragraphs 11, 12 and 14 it has been held as under: - "11. It is trite that at the stage of framing of charge the court is required to evaluate the material and documents on record with a view to finding out if the facts emerging therefrom, taken at their face value, disclosed the existence of all the ingredients constituting the alleged offence. At that stage, the court is not expected to go deep into the probative value of the material on record. What needs to be considered is whether there is a ground for presuming that the offence has been committed and not a ground for convicting the accused has been made out. At that stage, even strong suspicion founded on material which leads the court to form a presumptive opinion as to the existence of the factual ingredients constituting the offence alleged would justify the framing of charge against the accused in respect of the commission of that offence. 12. In State of Karnataka v. L.Muniswamy [(1977) 2 SCC 699 : 1977 SCC (Cri) 404], a three-Judge Bench of this Court had observed th....
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....Apex Court in Stree Atyachar Virodhi Parishad v. Dilip Nathumal Chordia, (1989) 1 SCC 715. 69. In the backdrop of aforesaid case laws and judicial deduction, this Court is now proceeding to examine the fact so as to come to the conclusion as to whether the evidence which has been collected in course of investigation and has been brought on record, as would be available in the impugned order prima facie case against the petitioner is made out or not? 70. This Court deems it fit and proper to scrutinize the evidence collected in course of investigation by the investigating agency as has been recorded in the charge-sheet which is appended to the instant petitions. 71. It is evident from the factual aspects that the NCLT vide its order dated 22.11.2019 and 06.01.2020 appointed the petitioner, as interim Resolution Professional (IRP) for Corporate Debtors, M/s Adi Ispat Private limited and M/s Bir Ispat Pvt. Ltd., Giridih in terms of Section 7(3)(b) r/w Section 16 of IBC, 2016 and later his appointment was confirmed by the committee of creditors under Section 22. 72. The complainant is Amit Sarawgi, Director of M/s Adi Ispat (P) Limited and it is alleged that Resolution Prof....
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....inst him. 77. The learned Single Judge of this Court vide order dated 05.04.2023 passed in the aforesaid Petition being Cr.M.P. No. 1048 of 2021 while taking in to consideration the aforesaid ground of the petitioner has observed that from nature of assignment and duty to be performed by the RP and his office entails performance of functions which are in the nature of public duty and therefore will come within the meaning of public servant both under sections 2 (c) (v) & (viii) of the PC Act. For ready reference the relevant paragraph of the aforesaid Judgment is being quoted as under: "18. This court is of the view that resolution professional will come within the meaning of a public servant under Section 2(c) the PC Act for the reason that definition of public servant as given under the PC Act is very wide and expansive. It is not limited to those serving under the Government or its instrumentalities and drawing salary from the public exchequer. Apart from the list of the functionaries given in Section 2 (c), the definition also lays down the functional criteria to include within its fold those discharging public duty or any duty authorized by a court of justice, in c....
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....f Resolution Professional is not sustainable. 21. Considering the fact that the appointment of Resolution Professional is made during the resolution process before the Company Law Tribunal with its approval, he will be a public servant under Section 2 (c) (v) of the P.C. Act. 26. From the aforesaid discussion it is manifest that the appointment of resolution professional is made by the National Company Law Tribunal, which is the Adjudicating Authority for the insolvency resolution process of the companies under the I & B Code, 2016. Resolution Professional has a key role to play in the insolvency resolution process and to protect the assets of the corporate debtors. From his nature of assignment and duty to be performed his office entails performance of functions which are in the nature of public duty and therefore will come within the meaning of public servant both under sections 2 (c) (v) & (viii) of the PC Act." 78. Thus, from the aforesaid order it is evident that the learned Single Judge of this Court has categorically held that Resolution Professional is made during the resolution process before the Company Law Tribunal with its approval, he will be a pub....
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....are closely linked to bank loans that accept public deposits; as a result, it can be said that RP is carrying out public functions. 85. Further, Sec 7(1) of the Code states that "A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor,...". This signifies that the legislature by including "any person" under the said Section has intended that, even though such debt is not due and payable to that person, such person can initiate CIRP u/s 7(1). It is thus inferred that FC's, majority of them being banks are dealing with public money which is in turn dealt by RP. This makes him accountable for his actions towards public. 86. This Court is of the view that since the duties performed by RP are public in nature, they are public servants and Sec 2(c) of Prevention of Corruption Act is pretty clear that an individual who performs public duties are public servants for the purpose of the Act and hence, the legislature would have felt that there are no explicit provisions are required. Although the RP might not possess adjudicatory powers but he undeniably possesses administrative powers, therefore, RP will ....
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....value, it can frame the charge; though for conviction, the court has to come to the conclusion that the accused has committed the offence. The law does not permit a mini trial at this stage. 92. The position of law that emerges is that at the stage of discharge/framing of charge, the Judge is merely required to take note of the material on record in order to find out whether or not there is sufficient ground for proceeding against the accused. 93. In the purview of aforesaid settled legal position this Court is now adverting to the facts of the case. 94. It needs to refer herein that from the impugned order it appears that earlier the present petitioner had filed an application for discharge before special Judge vide M.C.A. No. 2275/2022 which was premature, hence the same was withdrawn vide order dated 04.02.2023 with a cost of Rs. 1,000/- 95. From the factual aspect it is evident that the CBI, ACB, Dhanbad investigated the matter and filed the charge-sheet u/s 7 of PC Act (Amended in 2018) which revealed that the said Amit Sarawgi availed credit facilities to the tune of Rs. 74 Crores and Rs. 3.6 Crores in the names of his companies namely M/s Adi Ispat Pvt. Ltd. and ....
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...., 6.8, 6.9, and 7 etc. of the prosecution complaint depict that the ill-gotten money i.e. "proceeds of crime" was found in the possession of the petitioner. 100. It needs to refer herein that based upon the definition Clause (u) of sub-section (1) of Section 2 of the Act 2002 which defines "proceeds of crime", it is evident that clause (v) of sub-section (1) of Section 2 of PMLA defines "property" to mean any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible. 101. To constitute any property as proceeds of crime, it must be derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. The explanation clarifies that the proceeds of crime include property, not only derived or obtained from 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. Clause (u) also clarifies that even the value of any such property will also be the proceeds of crime. 102. Carving out a line between the material evidences available in the complaint and the gr....
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....ty so that neither is covered under Section 3 of the 2002 Act. Thus, a person who is as longer as in possession and enjoyment of Proceeds of Crime, PMLA can certainly be invoked. 107. The question that whether mere receipt of bribe money is an act of money laundering or not is elaborately considered by the Apex Court of India in the case of Y. Balaji v. Karthik Dasari as reported in 2023 OnLine SC 645 follows:- "100. It is this bribe money that constitutes the „proceeds of crime' within the meaning of section 2 (1) (u) of PMLA. It is no rocket science to know that a public servant receiving illegal gratification is in possession of proceeds of crime. The argument that the mere generation of proceeds of crime is not sufficient to constitute the offence of money-laundering, is actually preposterous. As we could see from Section 3, there are six processes or activities identified therein. They are, (i) concealment; (ii) possession; (iii) acquisition; (iv) use; (v) projecting as untainted property; and (vi) claiming as untainted property. If a person takes a bribe, he acquires proceeds of crime. So, ....
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.... would not doubt the case of the prosecution unduly and extend its jurisdiction to quash the charge in haste. A Bench of this Court in State of Maharashtra v. Som Nath Thapa (1996) 4 SCC 659 referred to the meaning of the word "presume" while relying upon Black's Law Dictionary. It was defined to mean "to believe or accept upon probable evidence"; "to take as proved until evidence to the contrary is forthcoming". In other words, the truth of the matter has to come out when the prosecution evidence is led, the witnesses are cross-examined by the defence, the incriminating material and evidence is put to the accused in terms of Section 313 of the Code and then the accused is provided an opportunity to lead defence, if any. It is only upon completion of such steps that the trial concludes with the court forming its final opinion and delivering its judgment. Merely because there was a civil transaction between the parties would not by itself alter the status of the allegations constituting the criminal offence. 110. Thus, it is evident that the law regarding the approach to be adopted by the court while considering an application for discharge of the accused persons under Sectio....
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....to be construed as "or" so as to include "every" process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money laundering on its own, being an independent process or activity. The interpretation suggested that only upon projecting or claiming the property in question as untainted property that the offence of Section 3 would be complete, is not tenable. 114. In the backdrop of the aforesaid settled legal position and in the light of contention of the learned counsel for the petitioner that in the alleged trap case the alleged money which has been allegedly trapped from this petitioner was under deemed custody of CBI (ACB), because it was having ambush watch over the entire episode hence, the petitioner was never put in possession of the alleged cash, which is said to have been recovered from the possession of the petitioner, therefore alleged offence is not made out herein, this Court is going to revisit the factual aspects of the instant case. 115. It has come in the investigation that during the trap laid by the CBI, Shree Amit Sarwagi gave bribe of Rs. 5 Lakh to Shri Sanjay kumar Agarwal (petition....
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....ctly, such person shall be guilty of offence of money laundering. In the instant case, prima facie it appears that the petitioner has knowingly acquired, possessed and had projected the proceeds of crime (illegal gratification) in such a manner as if it was untainted money and therefore, ingredients of offence of money laundering as per the provisions of Section 3 of PMLA is available herein. 120. In view of the fact, it appears that the complaint contains material evidences for prosecution, thus, the petitioner has to prove her innocence by undergoing the trial therefore, the aforesaid contention of the learned counsel for the petitioner that the alleged money which has been allegedly trapped from this petitioner was under deemed custody of CBI (ACB), and the petitioner was never put in possession of the alleged cash, which is said to have been recovered from the possession of the petitioner, therefore alleged offence is not made out, cannot be adjudicated herein in the light of aforesaid discussion and settled position of law as mentioned in the preceding paragraph. 121. This Court on the basis of aforesaid discussion factual aspect as also the legal position is of the view....