TaxTMI 
TaxTMI 
2025 (6) TMI 19
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.... the Prevention of Money Laundering Act, 2002 in the Court of Special Judge (C.B.I.), Court No. III, Lucknow, qua the applicant. 3. Briefly stated, facts of the case are that initially on 27.12.2008, the Chief Regional Manager, Indian Overseas Bank, Zonal Office, Lucknow sent a complaint to the Superintendent of Police, C.B.I., Bank Securities and Frauds Cell, New Delhi complaining about certain fraudulent transactions and stating that : - 'It would thus be clear from the above that the functioning of the Branch during the tenure of Shri. A.K. Dutta was anything but proper. The investigation report also gives clear indications that Shri. Vijay Kumar Jaiswal was inclined to use all his means, fair and mostly unfair, to have his ways and that Shri. A.K. Dutta was willing to co-operate with him even at the cost of exposing the Bank to huge risks and losses. Some of the contents of the investigation report detailed below point to undesirable and criminal acts on the part of the duo. 'Handing over signed Bankers Cheques to M/s. Shiva Distributors / M/s. Vinayak Distributors without debiting their a/c, or without accounting for the BCs in the books of the Bank. ....
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....roprietor of M/s Shiva Distributors, Varanasi and (3) other unknown persons. 5. On 06.02.2009 itself, F.I.R. No. RCBD1/2009/E/0003 was lodged at Police Station C.B.I/Bank Securities and Fraud Cell, New Delhi under Sections 120-B, 420, 468 and 471 I.P.C. and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 and substantive offences thereunder against - (1) Sri A. K. Dutta, the then Senior Manager, Indian Overseas Bank, Varanasi and (2) Sri Vijay Kumar Jaiswal, Proprietor of M/s Shiva Distributors, Varanasi and (3) other unknown persons, on the basis of the aforesaid complaint dated 27.12.2008 6. After investigation, a charge-sheet was submitted on 10.06.2010 for the offences under Section 120-B read with Section 420, 477-A, 201 IPC and Section 13(2) read with 13(1)(c) and (d) of Prevention of Corruption Act and substantive Offences thereof against six persons ' (1) Ashok Kumar Dutta, the then Senior Manager, Indian Overseas Bank, Cantt., Varanasi, (2) Vijay Kumar Jaiswal, (3) Vishnu Prabhakar, the then Assistant Manager, Indian Overseas Bank, Cantt., Varanasi (the applicant), (4) Vivek Ballabh Chaturvedi, the then Senior Manager, Indian Oversea....
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....es instituted on the allegation that he has participated in commission of offence through which the proceeds of crime have been generated by the co-accused Vijay Kumar Jaiswal. He has submitted that providing assistance in generation of proceeds of crime does not make out the offence of money laundering under PMLA. He has placed reliance on the judgment of the Hon'ble Supreme Court in the case of Vijay Madan Lal Chaudhari Vs. Union of India and Others: (2023) 12 SCC 1 = 2022 SCC OnLine SC 929. 10. Per contra, Sri Kuldeep Srivastava, the learned counsel for the ED has submitted that acquisition of proceeds of crime and providing assistance in acquisition of proceeds of crime are included in the definition of money laundering contained in Section 3 of the PMLA. He has placed reliance upon the following passage from the judgment of the Hon'ble Supreme Court in the case of Y. Balaji Vs. Kartik Desari and Another: 2023 SCC OnLine SC 645 : - '100....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....
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.... (Supra) in the following manner: - '124. This section was first amended vide Act 2 of 2013. The expression 'proceeds of crime and projecting' was substituted by the expression 'proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming'. We are not so much concerned with this change introduced vide Act 2 of 2013. In other words, the provision as it stood prior to amendment vide Finance (No. 2) Act, 2019 remained as it is. Upon breaking-up of this provision, it would clearly indicate that' it is an offence of money laundering, in the event of direct or indirect attempt to indulge or knowingly assist or being knowingly party or being actually involved in 'any process or activity' connected with the proceeds of crime. The latter part of the provision is only an elaboration of the different process or activity connected with the proceeds of crime, such as its concealment, possession, acquisition, use, or projecting it as untainted property or claiming it to be as untainted property. This position stands clarified by way of Explanation inserted in 2019. * * * 128. To put it differently, the section as it stood....
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....laundering. In other words, it is not open to read the different activities conjunctively because of the word 'and'. If that interpretation is accepted, the effectiveness of Section 3 of the 2002 Act can be easily frustrated by the simple device of one person possessing proceeds of crime and his accomplice would indulge in projecting or claiming it to be untainted property so that neither is covered under Section 3 of the 2002 Act. 134. 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 schedule....
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....at removing the necessity of projection from the definition will render the predicate offence and money laundering indistinguishable. This, in our view, is ill founded and fallacious. This plea cannot hold water for the simple reason that the scheduled offences in the 2002 Act as it stands (amended up to date) are independent criminal acts. It is only when money is generated as a result of such acts that the 2002 Act steps in as soon as proceeds of crime are involved in any process or activity. Dealing with such proceeds of crime can be in any form ' being process or activity. Thus, even assisting in the process or activity is a part of the crime of money laundering. We must keep in mind that for being liable to suffer legal consequences of one's action of indulging in the process or activity, is sufficient and not only upon projection of the ill-gotten money as untainted money. Many members of a crime syndicate could then simply keep the money with them for years to come, the hands of the law in such a situation cannot be bound and stopped from proceeding against such person, if information of such illegitimate monies is revealed even from an unknown source. 148. The ....
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....o 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, the activity of 'acquisition' takes place. Even if he does not retain it but 'uses' it, he will be guilty of the offence of money-laundering, since 'use' is one of the six activities mentioned in Section 3. 101. The FIRs for the predicate offences identify all the three components of Section 3, namely, (i) persons; (ii) process; and (iii) product. Persons accused in the FIRs are those who have indulged in the process or activity. The illegal gratification that they have taken, represents the proceeds of crime. The (i) acquisition of such illegal gratification in the first instance; (ii) the possession of the tainted money b....
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....cused herein had committed offences included in the Schedule by taking illegal gratification for providing appointment to several persons in the Public Transport Corporation. In one case it is alleged that a sum of more than Rs. 2 crores had been collected and in another case a sum of Rs. 95 lakhs had been collected. It is this bribe money that constitutes the 'proceeds of crime' within the meaning of Section 2(1)(u). 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, the activity of 'acquisition' takes place. Even if he does not retain it but 'uses' it, he will be guilty of the offence of money-laundering, since 'use' is one of the six activities mentioned i....
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....ranting undue facilities to Vijay Kumar Jaiswal and thus he did not follow the guidelines of the bank. 20. In Parasa Raja Manikyala Rao v. State of A.P.: (2003) 12 SCC 306, the Hon'ble Supreme Court held that: - '9. Each case, more particularly a criminal case, depends on its own facts and a close similarity between one case and another is not enough to warrant like treatment because a significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.' 21. As per the law laid down in Vijay Madan Lal Chaudhary (Supra), the process or activity of money laundering can be indulged in only after the property is derived or obtained as a result of a scheduled offence. The fundamental stages of 'money laundering' are ' (1) Placement: which is to move the funds from direct association of the crime, (2) Layering: which is disguising the trail to foil pursuit and (3) Integration: which is making the money available....