TaxTMI 
TaxTMI 
2025 (3) TMI 1250
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....irst case was registered vide Complaint No. 3/2021, in which following three entities/individuals have been arrayed as accused: (i) Peoples International & Services Pvt. Ltd. (PISPL) (ii) S.N. Vijaywargiya (Director from 22.7.2008) (iii) Ram Vilas Vijaywargiya (Ex-Director) from 22.7.2008 to 11.8.2015) Second complaint was registered vide Complaint No. 10/2021 in which following three entities/individuals were arrayed as accused: (i) PGH International Pvt. Ltd (ii) S.N. Vijaywargiya (Director from 19.5.2003) (iii) Ram Vilas Vijaywargiya (Ex-Director) (from 19.5.2003 to 11.8.2015) and third complaint was registered vide Complaint No. 12/2021 in which following entities/individual were arrayed as accused. (i) M/s Peoples General Hospital Pvt. Ltd. (PGHPL) (ii) S.N. Vijaywargiya (Managing Director) (iii) Ishtiyaq Hussain Siddiqui (whole time Director) (iv) Ram Vilas Vijaywargiya (whole time Director liable upto 11.8.2015) 3. The aforesaid complaint cases have been registered against the applicant, four companies, one Public Trust and two other individuals. The role of the pre....
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....ot be prosecuted under the provisions of the PMLA, 2002. 5. Learned counsel for the applicant contends that the present case now stands in a narrow compass, inasmuch as, the present applicant along with other co-accused was being prosecuted on the strength of the complaint filed under Section 447 of the Companies Act, 2013. The said proceedings so initiated by the Registrar of the Companies were culminated in filing of a complaint against the applicant under Section 3 & 4 of the PMLA and as the complaint for the predicate offence i.e. Section 447 of the Companies Act, 2013 has already been quashed by this Court, the prosecution of the applicant under Section 3 & 4 of the PMLA, 2002 is an exercise in futility and, therefore, the impugned complaint deserves to be quashed. It is further contended that the order dated 20.12.2024 passed by the coordinate Bench in M.Cr.C. No. 6919 of 2024 has not been assailed by the Registrar of the Companies before the Apex Court as on date, therefore, the said order has attained finality. The order dated 20.12.2024 deals with the entire aspect of the matter. It is further contended that one of the co-accused had approached the Gwalior Bench of this....
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....013 is concerned and therefore, the applicant's prosecution under Sections 3 & 4 of the PMLA,2002 is not sustainable as the proceedings under Sections 3 & 4 of the PMLA, 2002 are consequential to the proceedings pertaining to commission of a predicate offence. It is also contended that in order to lodge the prosecution, the foundational ingredients of statutory provisions should be directly applicable and when no such provision is applicable, the proceedings can be quashed. The reliance has been placed by the counsel for the applicant on a decision of a Division Bench of this Court in M.Cr.C. No. 492 of 2022 (D.K. Khare Vs. State of M.P. ) dated 7.5.2022. Thus, it is submitted that in view of the aforesaid, the impugned complaint is liable to be quashed. 6. Conversely, learned counsel for the respondent submits that the present petition filed by the applicant is grossly misconceived and is liable to be dismissed. It is submitted that the applicant is guilty of "Suppressio veri and suggestio falsi". The applicant, while filing the petition M.Cr.C. No. 6919 of 2024 challenging the complaint under Section 447 of the Companies Act did not bring all the aspect to the notice of th....
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....actions and one or more such transactions is or are proved to be involved in money-laundering, then for the purposes of adjudication or confiscation under section 8 or for the trial of the money-laundering offence, unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court, it shall be presumed that the remaining transactions form part of such inter-connected transactions. 7. It is contended by the counsel for the respondent that it is the burden of the accused person to prove that the proceeds of crime are not involved in money-laundering and such statutory onus is required to be discharged by the accused person. In the present case that stage is yet to come and, therefore, at this pre-mature stage, no interference is warranted. There was continued cause of action and as per the definition of money-laundering as detailed in Section 3 of the PMLA, 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. It is, thus, contended that similar petition filed by Peoples General Hospital Pvt. Ltd. (PGHPL) of which the present appli....
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.... Companies Act, 2013 was taken note of. It is contended that all the aforesaid important facts could not be brought to the notice of the coordinate Bench of this Court at the time of hearing of M.Cr.C. No. 6919 of 2024, inasmuch as, the Directorate of Enforcement was not a party to the said litigation. Even the bail application so filed by the applicant was dismissed by this Court and this Court while dealing with the bail application of the applicant had elaborately dealt with the aspect that involvement of the applicant was apparent and accordingly as there was prima facie case, this Court had declined to accede to the prayer for grant of bail to the applicant and accordingly, the bail application was dismissed. Thus, the applicant is not entitled for any relief merely on the ground of quashment of the complaint under Section 447 of the Companies Act, therefore, this petition be dismissed. 9. No other point is argued or pressed by the counsel for the parties. 10. Heard submissions advanced on behalf of the parties and perused the record. 11. The main question which has cropped up in the present petition is that if the complaint in regard to a scheduled offence has been q....
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....ct, is a scheduled offence for the purposes of the PMLA, 2002 and as per Paragraph 29 of the schedule appended to PMLA, 2002, an offence under Section 447, which stipulates punishment for fraud, is a scheduled offence. 14. The expression "scheduled offence" has been defined in Section 2(1)(y). This provision assumes significance as it has direct link with the definition of "proceeds of crime". In that, the property derived or obtained as a result of criminal activity relating to notified offences, termed as scheduled offence, is regarded as tainted property and dealing with such property in any manner is an offence of money-laundering. The Schedule is in three parts, namely, Part A, B and C. Part A of the Schedule consists of 29 paragraphs. These paragraphs deal with respective enactments and the offences specified thereunder which are regarded as scheduled offences. Similarly, Part B deals with offence under the Customs Act specifically and Part C is in relation to offence of cross-border implications. 15. To deal with the aforesaid question, which requires pensive consideration by this Court, it would be necessary to pave way in the scheme of PMLA, 2002. As per the object o....
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.... 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 of 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 term which shall not be less than three years but which may extend to seven years and shall also be liable to fine. Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under para....
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....ctly or indirectly, by any person "as a result of" criminal activity "relating to" a scheduled offence [mentioned in Section 2(1)(y) read with Schedule to the Act] or the value of any such property. Vide the Finance Act, 2015, it further included such property (being proceeds of crime) which is taken or held outside the country, then the property equivalent in value held within the country and by further amendment vide Act 13 of 2018, it also added property which is abroad. By further amendment vide Finance (No. 2) Act, 2019, Explanation has been added which is obviously a clarificatory amendment. That is evident from the plain language of the inserted Explanation itself. The fact that it also includes any property which may, directly or indirectly, be derived as a result of any criminal activity relatable to scheduled offence does not transcend beyond the original provision. In that, the word "relating to" (associated with/has to do with) used in the main provision is a present participle of word "relate" and the word "relatable" is only an adjective. The thrust of the original provision itself is to indicate that any property is derived or obtained, directly or indirectly, as a r....
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....th proceeds of crime by way of any process or activity constitutes offence of money laundering under Section 3 PMLA. 21. Further, the Apex Court in Vijay Madanlal Choudhary (supra) in Para-107 observed that a property derived directly or indirectly as a result of criminal activity relating to a scheduled offence would be liable for prosecution under the provisions of the PMLA, 2002. The Apex Court further held that the explanation, which is added to Section 2(1)(u) and which provides for definition of proceeds of crime, does not travel beyond the intent of tracking and reaching up to the property derived or obtained directly or indirectly as a result of criminal activity relating to a schedule offence. The Apex Court in Para- 109 observed as under:- 109. 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 that 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 must be proceeds of crime and that a scheduled offence has been committ....
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....duled offence, and if it is established in the court of law that the crime property in the case concerned has been rightfully owned and possessed by him, such 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) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the court would be obliged to direct return of such property 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 court concerned trying the scheduled offence to pronounce on that matter. 24. The Apex Court in Para 382.8 has also observed as under:- 382.8. 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 sche....
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....not sustainable in the eyes of law and such proceedings can be quashed by this court exercising the power provided under Section 482 of CrPC. (iii) So far as the third submission made on behalf of the respondent about exercising power by this court at this stage is also not sustainable inasmuch as it is a settled principle of law that if on the basis of allegations contained in FIR, the court finds considering the same to be true at its face value, the offence registered is not formulated and prosecution can be considered to be malicious prosecution, same can be quashed." 28. From the aforesaid, it is clear that the co-ordinate Bench of this Court concluded that the prosecution launched under Section 447 of the Companies Act as was an attempt to apply statutory provision with retrospective effect, which was not permissible and therefore, concluded that the prosecution was illegal. Even the co-ordinate Bench proceeded ahead to label the prosecution to be malicious. The Court also concluded that upon due consideration of the allegations as set out in the FIR, if the offence registered is not formulated and the prosecution is considered to be malicious, the proceedings can....