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2025 (7) TMI 353
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.... VII.E. Re: Petitioner as 'witness' 61 VII.F. Re: MCOCA and exoneration 65 VII.G. Re: Pick and choose by ED 72 VII.H. Re: Quashing 73 VII.I. Re: Petitioner's Conduct 82 VIII. Conclusion 95 ANISH DAYAL, J. 1. This petition has been filed by the petitioner seeking quashing of ECIR/DLZO-II/54/2021 dated 8th August 2021 ('impugned ECIR') and 2nd supplementary complaint dated 17th August 2022 ('impugned complaint') filed under Sections 3 & 4 of The Prevention of Money Laundering Act 2002, ('PMLA') by the Directorate of Enforcement / Respondent ('ED') and all subsequent proceedings emanating therefrom, pending before the ASJ / Special Court PMLA, Patiala House Courts, Delhi in Complaint Case 123/2021. I. FACTUAL BACKGROUND 2. In August 2021, a complaint was lodged by Mrs. Aditi Shivinder Singh ('complainant / Ms. Aditi Singh') before DCP Special Cell, alleging extortion of crores of money from her since June 2020. She alleged that she had been receiving calls from persons impersonating as senior officials of the Government of India and had been duped into parting with funds of about Rs.200 crores. 3. On 7th August 2021, complainant....
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....uch purchases, Sukesh channelized the proceeds of crime into various bank accounts of his associates, accommodation entry providers in Chennai, Kerala, Mumbai, etc. and arranged payments through banking channels. 10. As part of this modus operandi, Sukesh contacted the petitioner, who was a well-known and reputed actor in the film industry, through accused Pinky Irani. Sukesh was apparently introduced to petitioner as a business tycoon based in South India and owner of Sun TV. 11. It also transpired that aside from the petitioner, a number of other celebrities also received gifts from Sukesh, contact being established through Pinky Irani alias Angel, who was an associate of Sukesh. It is alleged that petitioner received gifts worth at least Rs. 5.71 crores from Sukesh, knowing fully well of his criminal antecedents. The monies were received through Pinky Irani as well as Leepakshi Ellawadi. 12. A broad list of gift items received by the petitioner from Sukesh, as per ED was tabulated as under: Sr.No. Gift Item (i) USD 172913 transferred into foreign bank account of petitioner's sister Geraldine J. Walker (ii) AUD 26740 transferred into foreign bank accoun....
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.... USD 50,000 to her brother in Australia. 13.4 Statement of Shaan Muttathil, make-up artist of petitioner, was recorded on 28th October 2021. He stated that in January 2021, he was contacted by a lady named Angel who introduced him to Sukesh (as Shekhar), through video call and requested to introduce Sukesh to the petitioner. He stated that he got a call which was stated to be from the Home Minister and was asked to get in touch with Sukesh, as he was an important person with the Government (which was a spoof call). 13.5 Statement of Pinky Irani was recorded on 30th November 2021 and 1st December 2022. She stated that she introduced Shaan Muttathil to Sukesh; numbers were exchanged and subsequently, petitioner got in touch with Sukesh. As per instructions of Sukesh, she used to visit showrooms of luxury bags, clothes, shoes and used to select items and after receipt of payment confirmation, she used to pick up those items and deliver them to petitioner, either herself or through her manager Prakash. She further stated that two Gucci shoes, one Louis Vuitton (LV) bag and one sling bag had also been given to Shaan Muttathil. 13.6 Statements of petitioner had....
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.... Laurent), Fendi, Hermes, Bottega Veneta. (iii) 5 number of watches of brands Piaget, Roger Dubuis, Franck Muller, Rolex, Chopard Imperiale. (iv) 32 number of bags of brands Dior, YSL Rive Gauche, Louboutin, Chanel, Dior, Fendi, Hermes, Bottega, Birkin, Louis Vuitton, YSL (Saint Laurent), Balenciaga, Dior, Gucci. (v) 20 number of bags of brands Chanel, Serpenti Viper, Tiffany, Cartier, Louis Vuitton. (vi) 4 sunglasses of brands Dior, Ever Dior, Fendi. (vii) 1 chair of brand Osim. (viii) 1 LG Dishwasher. (ix) 2 Mini Saddles and Whips of brand Hermes. (x) 13 number of belts of brands Louis Vuitton and Gucci. (xi) 1 Dinner Set of brand Versace. (xii) 9 number of paintings. II. CASE PUT UP BY PETITIONER 17. Mr. Sidharth Aggarwal, Senior Counsel for petitioner, highlighted following aspects in context of the factual background stated above: 17.1 Investigation revealed that Sukesh was running a crime syndicate from Rohini Jail. EOW first detected activities of the syndicate in July 2021 after Ms. Aditi Singh's predicate offence complaint on 6th August 2021. Before 6th August 2021, there was no public informati....
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....esh for 12 years. 17.13 Pinky Irani remained a member of the crime syndicate as per ED, as she concealed the real identity of members of the syndicate and never told Bollywood celebrities about Sukesh's real identity. Pinky Irani had to create an aura, status and influence of Sukesh before various Bollywood celebrities so that they come under the influence of Sukesh and he could easily dispose of the proceeds of crime. Petitioner's counsel, therefore, contended that petitioner was ignorant of his criminal status. ED acted in a biased manner by presenting all other celebrities as witnesses while arraying petitioner as an accused. 17.14 Shaan Muttathil shared an article in February 2021 regarding Sukesh with the petitioner. The article had no whisper about the predicate offence of extortion of Rs. 200 crores and only mentioned other things about Sukesh. 17.15 On 15th February 2021 Pinky Irani went to meet the petitioner and re-assured her that Sukesh was a genuine guy and everything mentioned in the article was something of the past and due to political rivalry. She delivered a Tiffany's diamond proposal ring which had 'J' and 'S' initials along with flower....
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....tathil shared the news article, as also, through Pinky Irani. 18.3 The article mentioned the Look-Out Circular ('LOC') issued by the Central Bureau of Investigation ('CBI') against Leena Maria Paul in a bank fraud case and also stated that Leena Maria Paul as being the 'partner' of Sukesh. 18.4 The article further mentions involvement of Sukesh in three criminal cases, namely, arrest in TTV Dinakaran case, arrest of Leena Maria Paul and Sukesh in the 2013 Canara Bank fraud case (Rs. 19 crores) and arrest of Leena Maria Paul and Sukesh in the year 2015 by EOW, Mumbai Police for defrauding people in the name of investments in their bogus firms. 18.5 Petitioner admitted to have found various articles on Google search on Sukesh, which reflected his criminal antecedents and despite that, received gifts and money in cash and through banking channels, between February 2021 to July 2021, till he was arrested by the Delhi Police. 18.6 Petitioner continued to receive financial benefits from Sukesh (which are nothing but proceeds of crime) despite being aware of his criminal activities. 18.7 Petitioner never revealed the truth of financial transact....
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.... by Sukesh in his statements, Pinky Irani's phone data and statements of Shaan Muttathil, etc. 18.15 Petitioner has deliberately tried to create obstacles in the process of investigation and hide the truth. 18.16 Petitioner stated in a statement on 8th December 2021, that in February 2021 she came to know the real identity of accused Sukesh at the instance of Shaan Muttathil. In a statement dated 20th May 2022, she stated she saw various articles about him on Google, in that, he was involved in a bank fraud case. 18.17 A search on Google would show various material in the form of articles and videos reflecting criminal antecedents of Sukesh and Leena Maria Paul, including their images. These articles exist even today and have been there since 2013. 18.18 In the months of March, May and June 2021, transfers were made to the bank accounts of petitioner's sister and brother, even though, she was only introduced to Sukesh as "Shekhar Ratna Vela" in February 2021 i.e. within 14 days of petitioner having spoken to Sukesh and them video calling each other on WhatsApp. The above conduct of petitioner attributes knowledge and mens rea. 18.19 ....
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....received 02 cars. However she did not provide the purchase value of the cars. Ref. (Ans to Q2 and Q3 of statement dated 19.07.2024) Misled the investigation w.r.t. Car and money gifted to her sister She stated that "As far as I know my sister did not receive any car from Sukash." Ref. Statement 20.10.2021-Q2 (See Ann. P-4 @ Pg. 78) Sukash statement dated 12.10.2021 (Q-26) wherein he stated that "she had received a lots of expensive gifts like bag, jewellery, high end clothing, apart from these, I have helped her sister in USA with a new BMW X5 and amount of approx 180,000USD sent through Deepak Ramnani also bought her parents Maserati car and her mother Porsche car in Bahrain also gave 50k USD to her brother in Australia. (See Pg. 347 Para 12.3(i) & 12.3(iii) of PC) She admitted that "My sister Geraldine 1 walker got received an amount totalling to USD 172913 in her bank account maintained with Wells Fargo". Ref .: Statement dated 08.12.2021- 5th para. (See Ann. P-6 @ Pg. 259) Note: bank account statement of Wells Fargo bank reveals that an amount was indeed transferred to the agency from where the BMW car was purchased. She stated that - "To my knowle....
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....021 registered by the Special Cell, Delhi Police, against unknown person on a complaint by Ms. Aditi Singh alleging extortion of Rs.200 Crores. The impugned ECIR was registered on that basis on 08th August 2021. Petitioner's statements were recorded on five occasions and she was not arrested during the said period. On 02nd November 2021, a charge sheet was filed in the predicate offence against 14 accused including Sukesh. Sections 3(5) and 4 of MCOCA were added since investigation revealed Sukesh along with others operated an organised crime syndicate. 20.2 Petitioner was arrayed as an accused only in the 2nd supplementary prosecution complaint filed on 17th August 2022, on the basis that she had received and enjoyed proceeds of crime. In the 3rd supplementary charge sheet filed in the predicate offence on 14th January 2023, petitioner was presented as a prosecution witness and her statement was recorded on 02nd January 2023. The matter was at the stage of framing of charges. It was submitted that petitioner is, therefore, effectively a witness in the duping case and at the same time accused in PMLA. 20.3 Definition of 'proceeds of crime' under Section 2(i)(u....
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....will have to record evidence on oath in the predicate offence and on the same facts face prosecution under PMLA. Reliance was placed on Explanation to Section 44(1)(d) of PMLA that trial under PMLA and that of the scheduled offence could not be considered as a joint trial. The Trial Court, therefore, did not have power to look into the material of the predicate offence and determine that petitioner's prosecution under PMLA would be antithetical. 20.6 There was no quarrel of attachment of the articles which were given by Sukesh to petitioner, but there was an issue regarding the implication under PMLA. 20.7 There was no evidence with ED to show that petitioner knew of the original event of duping of Ms. Aditi Singh of Rs.200 Crores by Sukesh and his associates. Petitioner herself was a victim of the same modus operandi used in the predicate offence and similarly placed as other victims who had not been prosecuted. The 'pick and choose' manner of prosecution was not permissible. 20.8 ED placed an unreasonable burden on petitioner, expecting knowledge that Sukesh's gift were proceeds of crime. No evidence suggests public knowledge Sukesh's jail s....
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....dational facts to apply the presumption under Section 24 of PMLA. Reliance was placed on Vijay Agarwal Through Parokar v. ED 2023 SCC OnLine Del 3176; C.P Khandelwal v. ED 2023 SCC OnLine Del 1094; Arvind Kejriwal v. ED 2024 SCC OnLine SC 1703. 20.13 Provisions under Sections 3 (5) and 4 of MCOCA are similar to Section 2 (1) (u) of PMLA, as noted above. While MCOCA covers property derived or obtained from 'commission of organized crime', the PMLA provision read under Section 3 of PMLA covers offences related to proceeds of crime. 20.14 Petitioner being exonerated and not charged under MCOCA provisions, is an admission by the prosecution that she does not derive or obtain property from commission of organized crime. Quite in contrast, petitioner has been accused in the PMLA matter. The question is whether one can be prosecuted under PMLA while being a victim under provisions of MCOCA. 20.15 Knowledge / mens rea of an accused under PMLA has to be of 'proceeds of crime' and not that the person from whom the property has been received is a criminal. 20.16 Petitioner's counsel focused on the issue of 'relatability' or 'connection' with the predicate o....
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....r consideration and neither were received as that of an admirer to a fan. 20.21 The question arises whether there is a legal duty to verify articles and the context. Aspects of illegal omission are statutorily provided, for example Section 21 of the Protection of Children from Sexual Offences (POCSO) and Section 39 of Cr.P.C. This aspect gets conflated with use of phrase 'knowingly, actually, willfully' in the PMLA provisions. V. SUBMISSIONS ON BEHALF OF ED 21. Mr. Zoheb Hossain, Counsel for ED, at the very threshold, submitted that petitioner seeks quashing of the FIR at the stage when charges itself have not been framed. ED has questioned the maintainability of the petition itself having been filed without challenge to the cognizance by order dated 1st September 2022, by the Special Court, of the ECIR along with the 2nd supplementary complaint. Further submissions were presented as under: 21.1. Reliance is placed on various decisions of the Supreme Court where the courts have been cautioned for invoking inherent jurisdiction to quash criminal proceedings at the stage of framing of charge. Attention was drawn to the decision in Rathish Babu Unnikrishnan v. ....
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....is the establishment of the foundational facts, which triggers the legal presumption, which then, can be rebutted factually by leading evidence. ED's counsel therefore submitted that accusation on the petitioner includes not only of possession but concealment as well, which comes within the purview of 'process or activity'. Not only did petitioner confess to possession, but also admitted having received considerable and substantial gifts by her and her family only through successive disclosures. He therefore contends that this would amount to an 'act of concealment' which the prosecution would prove during trial. 21.6 ED's counsel relies upon Soma Chakravarty v. State (2007) 5 SCC 403 (paragraph 10) contending that at the stage of framing of charge, the Court can form an opinion that the accused 'might' have committed an offence and there is no requirement to arrive at a conclusion that the accused 'has' committed the offence. 21.7 ED's counsel reiterated that what is enough at this stage is that the accused "might have committed the offence". To displace the implication, accused would have to place evidence in trial. 21.8 Response of ED's counsel to the ....
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.... October 2021 where she stated in question 12 that she would like to correct her earlier statement relating to Advaita Kala. She stated that Sukesh was aware that she was in talks with Advaita Kala for a movie script and he was keen to produce it and then offered to send her an advance of Rs. 15 lakhs cash. He arranged the cash and delivered it through his person, whom petitioner did not know. This aspect has been mentioned in the complaint where it stated that on being asked about cash transactions of Rs. 15 lakhs with Advaita Kala, she denied having sent any money in cash and stated she had only sent chocolates and flowers to her. 21.13 ED's counsel then focused on petitioner's concealment of information by adverting to various gifts which were received by her family. In her statement of 20th October 2021, accused gave details of her family members and was asked whether petitioner's sister Geraldine received USD 1,80,000 from Sukesh and she admitted she had received USD 1,50,000 from Sukesh but qualified the same as a loan from Sukesh for a mortgage on the house which was transferred to her sister's bank account. She was asked about whether Sukesh had purchased a new....
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....sinessman and had been searching about him on Google, it was surprising that she never bothered to find out whether Sukesh owned Kalyan Jewelers or that he had coal mines or that he had 50% ownership of Leela Hotel in Chennai, as had been represented by Sukesh. 21.18 In statement of 27thJune 2022, she admitted that she had deleted her mobile phone data on 11 August 2021 after knowing about the arrest of Sukesh. On being confronted that she had earlier lied about the issue with Advaita Kala and the number of gifts received from Sukesh, she stated that she did it on account of fear or was unable to recollect. It was only when she was confronted with the evidence, she admitted to having received gifts from Sukesh. She stated that she was stressed and she wanted to save the reputation of her and the family members. 21.19 As per the complaint, she also admitted that she had requested Shaan, Leepakshi and Prashant to delete data from their phone with respect to the messages, chats, pictures with Sukesh. 21.20 Accused was shown a news article dated 10th February 2020, which related to Look-Out Notice against actress Leena Maria Paul in CBI case, where cases were....
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....e examined at the stage of trial upon leading evidence. Reliance was on the decision of Supreme Court in Anoop Bartaria v. Dy. Directorate of Enforcement, 2023 INSC 413 in paragraphs 27 and 28 and Bholu Ram v. State of Punjab & Anr., (2008) 9 SCC 140 in paragraph 61. The disputed defence of the accused can only be appreciated by the Trial Court. Reliance was placed on the decision of the Supreme Court in S. Krishnamoorthy v. Chellammal (2015) 14 SCC 559. 21.26 The Supreme Court categorically stated in Anoop Bartaria (supra) that determining knowledge of the accused that they were dealing with the proceeds of crime would be a condition precedent or sine qua non for the prosecution for lodging a complaint. The direct involvement of the petitioners in the activities that the proceeds of crime would require trial. 21.27 There was no bar on prosecution under PMLA if a person is arrayed as a witness in the predicate offence. Reliance was also placed on Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr., 2025 SCC OnLine SC 560 where it was held that in case is involving of such magnitude a trial is imperative to establish the full extent of wrongdoing and t....
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.... and in this offence. 21.32 Section 3(5) and Section 4 of MCOCA and Section 3 of PMLA being similar cannot restrain the ED from prosecuting the petitioner. It was submitted that the offence of money laundering was a standalone offence and the investigation conducted by the predicate agency cannot impact the same and was not binding the ED. Merely because a petitioner is not charge-sheeted it does not mean he is acquitted or exonerated by the investigating agency. Reliance was placed on Laxmipat Choraria (supra) noting that a person is often made a witness or an otherwise being the character of an accused to enable the prosecution to gather evidence against other main accused persons. It was well settled that investigation into money laundering was independent and Parliament being conscious of such eventuality to introduce Explanation (i) to Section 44(1)(d), upheld in Vijay Madan Lal Chaudhary (supra) in paragraph 112. 21.33 Even under Section 319 of Cr.P.C., there is a power to array any person to an accused who may not have been charge-sheeted. Reliance was placed on Sukhpal Singh Khaira v. State of Punjab, (2023) 1 SCC 289. Merely because a petitioner is not ma....
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.... 8 SCC 617 where the Supreme Court stated that one cannot pick and choose at the stage of charge. He further relied on Radha Mohan Lakhotia v. Deputy Director 2010 SCC OnLine Bom 1116, stating that at best, the said proceeds in the hands of the petitioner would be liable for attachment, but not for prosecution. 22.4 The basis of knowledge asserted by ED was twofold - first, the news report, and second, the assumption that petitioner 'ought to have known' about the criminal antecedents of Sukesh. He, therefore, asserted that this cannot impute knowledge to the petitioner that what she had received was coming from the proceeds of crime, i.e. the money of which Ms. Aditi Singh had been defrauded. There could be a possibility, at best, that the proceeds were from legitimate money. The presumption, therefore, being drawn out that the petitioner was in the know, that gifts she had received were coming from proceeds of crime was flawed. 22.5 He contended that knowledge was necessary at the stage of charge as per the decision in State of Maharashtra v. Som Nath Thapa (1996) 4 SCC 659, which dealt with a case of customs officer under whose watch RDX had come through the cu....
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....for possessing unaccountable wealth, petitioner has not been arraigned as an accused by EOW. Two different agencies carrying out investigation of offences intertwined with each other, presenting petitioner in two completely different and contradictory roles. 22.11 Petitioner has been arraigned, as a prosecution witness in the predicate offence, requiring her to be depose on oath before the Trial Court and face cross-examination, while she stands and as an accused in PMLA proceedings before the same Court. EOW had exonerated petitioner in the predicate offence on basis that she did not have any knowledge of the predicate offence and did not participate at any time before the predicate offence or post the commission of the same. 22.12 Reliance has been placed on TD Sonia v. Deputy Director, Director of Enforcement Government of India, Supreme Court order dated 2nd December 2022 in SLP Crl. No. 10667/2022; Swarna Daga Mimani v. Director of Enforcement, Supreme Court order dated 13th March 2023, in SLP Crl. No. 345/2023; T.D. Tataji v. The Deputy Director of Enforcement, Government of India, Supreme Court order dated 21st November 2022 in SLP Crl. No. 10360/2022; and ....
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....ts and omission by accused leading to the offence of money laundering under Section 3 PMLA. Said provision is extracted as under: "3. Offence of money-laundering.-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 26[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. 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 proceed....
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....btained from commission of organized crime and is therefore akin to proceeds of crime under PMLA and petitioner has been exonerated from the predicate offence; (iv) Petitioner herself was a victim of this modus operandi used by the accused Sukesh in the predicate offence; (v) Other victims, similarly placed, of accused Sukesh in the predicate offence have not been proceeded under PMLA; ED is adopting pick-and-choose policy; (vi) ED's best case to impute knowledge to the petitioner regarding proceeds of crime relates to a 2020 article which was given to petitioner in February 2021. Not only is there evidence through statements of co-accused that petitioner was misled into believing that Sukesh was not associated with any real criminality, instead was victim of motivated and instigated actions. Further, at best, petitioner could be accused of an omission to not carry out due diligence regarding criminal antecedents of Sukesh, which, in itself, is not an illegal omission. (vii) There was no dispute on facts of the case; petitioner had admitted receipt of all gifts / articles from Sukesh and therefore, she does not need to be subject to trial for thi....
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....ding for shifting of the burden of proof on the accused, as in the case of Section 24 of the 2002 Act. The constitutional validity of similar provisions has been upheld by this Court from time to time. In the case of Noor Aga, it has been observed that the Court while interpreting the provision, such as Section 24 of the 2002 Act, must keep in mind that the concerned Act has been the outcome of the mandate contained in the international convention, as is the case on hand. Further, only because the burden of proof under certain circumstances is placed on the accused, the same, by itself would not render the legal provision unconstitutional. The question whether the burden on the accused is a legal burden or an evidentiary burden, would depend on the statute and its purport and object. Indeed, it must pass the test of the doctrine of proportionality. In any case, as the burden on the accused would be only an evidentiary burden, it can be discharged by the accused by producing evidence regarding the facts within his personal knowledge. Again, in the case of Seema Silk & Sarees, this Court restated that a legal provision does not become unconstitutional only because it provides for rev....
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.... such proceeds of crime are involved in money-laundering. The fact that the person concerned had no causal connection with such proceeds of crime and he is able to disprove the fact about his involvement in any process or activity connected therewith, by producing evidence in that regard, the legal presumption would stand rebutted. 98. The person falling under the first category being person charged with the offence of money-laundering, presupposes that a formal complaint has already been filed against him by the authority authorised naming him as an accused in the commission of offence of money-laundering. As observed in P.N. Krishna Lal, the Court cannot be oblivious about the purpose of the law. Further, the special provisions or the special enactments as in this case is required to tackle new situations created by human proclivity to amass wealth at the altar of formal financial system of the country including its sovereignty and integrity. While dealing with such provision, reading it down would also defeat the legislative intent. 99. Be it noted that the legal presumption under Section 24(a) of the 2002 Act, would apply when the person is charged with the of....
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.... prosecution witness. The procedure entailed under Section 24 of PMLA was therefore not arbitrary or unreasonable. 37. ED emphasizes, underscores, and reiterates that these three foundational facts have been established in this matter and therefore presumption arising under Section 24 of PMLA can be rebutted by petitioner by leading evidence during trial. Plea for quashing is, therefore, premature and cannot be entertained. 38. This Court prima facie does not see any infirmity in the submission of ED. There is no dispute about the first and second foundational facts and the only issue, at best, arises on the third foundational fact i.e. petitioner is directly or indirectly involved in any process or activity connected with the proceeds of crime. 39. Section 3 of PMLA itself provides the embellishment on what entails a 'process or activity' by virtue of the Explanation. Dissecting the Explanation, the following material aspects become evident: a) Accused can be directly or indirectly involved; b) Accused could have attempted to indulge, knowingly assisted, or knowingly be a party, or actually involved in concealment / possession / acquisition / use / proje....
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....ed as under: "15. Coming back to Section 3 of the PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled offence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing an offence under Section 3 of the PMLA. To give a concrete example, the offences under Sections 384 to 389 of the IPC relating to "extortion" are scheduled offences included in Paragraph 1 of the Schedule to the PMLA. An accused may commit a crime of extortion covered by Sections 384 to 389 of IPC and extort money. Subsequently, a person unconnected with the offence of extortion may assist the said accused in the concealment of the proceeds of extortion. In such a case, the person who assists the accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering. Therefore, 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 ....
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..... Another allegation is that both the first and second properties have been acquired out of the proceeds of crime. The first property, ex-facie, cannot be said to have any connection with the proceeds of crime as the acts constituting the scheduled offence took place after its acquisition. The case of the appellant is that she possessed a substantial amount, as can be seen from the declaration made by her under the Income Declaration Scheme, 2016 in September 2016 and therefore, at the time of the acquisition of the second property, more than sufficient money was available with her to acquire the second property. The issue of whether the appellant used tainted money to acquire the second property can be decided only after the evidence is adduced. This is not a case where any material is placed on record to show that the sale consideration was paid from a particular Bank Account of the appellant. Therefore, it is not possible to record a finding at this stage that the Second property was not acquired by using the proceeds of crime. We also make it clear that we have considered the issue only in the context of the applicability of the PMLA. We have not dealt with the issues of valuat....
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.... or concealing proceeds of crime. The test in Pavana Dibbur (supra), according to petitioner, was not satisfied on the facts of this case. Petitioner contends that possession of gifts can only constitute an offence if petitioner had any knowledge of the predicate offence. VII.C. Re: Petitioner's 'knowledge' 47. Knowledge of the predicate offence, as per petitioner, arose only on the basis of a news article of 2020 which petitioner became aware of in February 2021, handed over by Shaan Muttathil. The news article contained information about involvement of Sukesh along with his wife Leena Maria Paul in bank fraud cases. However, petitioner claims that she was disabused of the criminality of Sukesh on the basis of vehement assertions made by Pinky Irani in favour of Sukesh. Petitioner does not state, in addition, that she had done any due diligence on Sukesh's criminal background subsequently. There are two issues which arise on the aspect of knowledge: i) Firstly, petitioner being mere aware of Sukesh's criminal antecedents in February 2021 and then being disabused of the perception; and ii) Secondly, lack of any due diligence by petitioner in this regard ther....
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.... Ans- No, she was not aware that Sukash/ Shekhar was in jail. Though, once during the time of Valentine's i.e. 14 February, 2021, Shan Mu had inquired me about an article in which it was mentioned something about a lady being in jail with him. But then, I had assured them (Shan and Jacqueline) that since Shekhar was a political bureaucrat and these things keep happening to taint the reputation and that article and the said lady was something of the past. She believed me and then both of them were in good terms again and then she again she started receiving gifts from him. Q5. You are being shown a copy of mail with the subject Reputation Management Inquiry. Please explain the context of it. Ans- I have seen the copy of the mail and have put my dated signatures on it. Shekhar wanted me to inquire about the article that was showing on google during valentines and as Jacqueline was linked to Shekhar, she was scared for being associated with him and put her reputation at stake. Therefore, he asked me to get that article removed and I approached my son Heroines to inquire if that could happen and this is the same mail that he had sent to the concerne....
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....yet again the issue will need to be threshed out in trial. Petitioner's counsel states that the omission, if at all, cannot be an illegal omission since there was no duty cast on the petitioner. The Court, however, is not willing to accept that argument, particularly at this stage. The reason being that it is not merely about the omission being legal or illegal, but also the alleged inaction on the part of the petitioner to cross-check the criminality of Sukesh, particularly in the context of having received vast amounts of gifts for herself and her family. The prosecution's case is that the petitioner chose to brush things under the carpet but retained knowledge, or even a lurking or robust suspicion that there was criminality involved. 54. These are evidently matters of trial, and the plea of the petitioner, at this stage, even before charges are framed, cannot be accepted. The Court is being effectively asked by petitioner to take into account the fact of the newspaper article being disclosed in February 2021, and Pinky Irani's statements (which were misleading), and reach a conclusion that indeed the slate of petitioner's knowledge about Sukesh's criminality ....
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....o be examined. Reliance placed on Amit Katyal v. Union of India (supra) is apposite. Relevant extracts are as under: "97. The objection taken on behalf of the petitioner is that he has been cited as a witness in the said RC, wherein his statement has been recorded under Section 164 of Cr. P.C., 1973. However, in the ECIR, he has been made an accused. This position of the petitioner in the two offences is incongruous and irreconcilable under the law. 98. It is no longer res integra that the predicate offence and the offence under PMLA, 2002 are independent offences and even if the person is not an accused in the predicate offence, he can still be arrayed as an accused under PMLA, 2002. 99. The petitioner may have been an offender by indulging in the scheduled offence, but there is prima facie evidence to show that the proceeds of crime generated through scheduled offences have been laundered by him. The petitioner can be an accused under PMLA, 2002 without being an accused in the said RC/CBI case/predicate offence. 100. This aspect has been clarified by the Apex Court in the case of Pavana Dibbur, (supra) and Vijay Madanlal Chaudhary, (supra)." ....
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....onstrued as joint trials. This, in fact, is reiteration of the earlier part of the same section, which envisages that even though both the trials may proceed before the same Special Court, it must be tried separately as per the provisions of the 1973 Code. In so far as clause (ii) of the Explanation, at the first glance, it does give an impression that the same is unconnected with the earlier part of the section. However, on closer scrutiny of this provision, it is noted that the same is only an enabling provision permitting to take on record material regarding further investigation against any accused person involved in respect of offence of money-laundering for which complaint has already been filed, whether he has been named in the complaint or not. Such a provision, in fact, is a wholesome provision to ensure that no person involved in the commission of offence of money-laundering must go unpunished. It is always open to the Authority authorised to seek permission of the court during the trial of the complaint in respect of which cognizance has already been taken by the court to bring on record further evidence which request can be dealt with by the Special Court in accordance ....
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....o a penalty or forfeiture of any kind. The safeguard to this compulsion is that no such answer which the witness is compelled to give exposes him to any arrest or prosecution or can it be proved against him in any criminal proceeding except a prosecution for giving false evidence by such answer." (emphasis added) 62. The apprehension of petitioner that any evidence would be self- incriminating cannot lead to quashing of the ECIR as statutory and constitutional protections are already provided and will have to be assessed in that rubric. This alone cannot assist the petitioner and release her from the yoke of prosecution under ECIR. VII.F. Re: MCOCA and exoneration 63. As regards the petitioner's assertion that offences under Sections 3(5) and 4 of MCOCA (which form part of the predicate offence) and Section 3 of PMLA are similar, it would be necessary to first extract the said MCOCA provisions hereunder: "Section 2(1)(e) MCOCA: "Definitions.- (1) In this Act, unless the context otherwise requires,- (e) "organised crime" means any continuing unlawful activity by an individual, singly or jointly, either as a member of an organise....
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....ial in accordance with the provisions of the 1973 Code as it applies to a trial before a Court of Session. Going by the plain language of this provision, no fault can be found for conducting trial in the respective cases in the same manner as provided in the 1973 Code. However, the grievance is about the insertion of the Explanation vide Finance (No. 2) Act, 2019. As a matter of fact, this insertion is only a clarificatory provision, as is evident from the opening statement of the provision which says that "for the removal of doubts, it is clarified that". None of the clauses inserted by this amendment travel beyond the principal provision contained in clause (d). Clause (i) of the Explanation enunciates that the jurisdiction of the Special Court while dealing with the offence being tried under this Act, shall not be dependent upon any orders passed in respect of the scheduled offence, and the trial of both sets of offences by the same court shall not be construed as joint trials. This, in fact, is reiteration of the earlier part of the same section, which envisages that even though both the trials may proceed before the same Special Court, it must be tried separately as per the pr....
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....ces were distinct. Relevant paragraph of the said judgment reads as under: "26. What is the meaning of the expression used in Article 20(2) "for the same offence"? What is prohibited under Article 20(2) is, that the second prosecution and conviction must be for the same offence. If the offences are distinct, there is no question of the rule as to double jeopardy being applicable. In Leo Roy Frey v. Supdt., District Jail [AIR 1958 SC 119 : 1958 Cri LJ 260 : 1958 SCR 822], the petitioners therein were found guilty under Section 167(8) of the Sea Customs Act and the goods recovered from their possession were confiscated and heavy personal penalties imposed on them by the authority. Complaints thereafter were lodged by the authorities before the Additional District Magistrate under Section 120- B of the Penal Code, 1860 read with the provisions of the Foreign Exchange Regulation Act, 1947 and the Sea Customs Act. The petitioners approached the Supreme Court for quashing of the proceedings pending against them in the Court of the Magistrate inter alia contending that in view of the provisions of Article 20(2) of the Constitution they could not be prosecuted and punished twice o....
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....e Court, although not under arrest or upon a summons, may be detained by such Court for the purpose of the inquiry into, or trial of, the offence which he appears to have committed. (4) Where the Court proceeds against any person under sub-section (1) then- (a) the proceedings in respect of such person shall be commenced afresh, and the witnesses re-heard; (b) subject to the provisions of clause (a), the case may proceed as if such person had been an accused person when the Court took cognizance of the offence upon which the inquiry or trial was commenced." 75. Also, the determination in Pavana Dibbur (supra), in this regard, is also relevant, which has already been noted in paragraph 43 above. 76. In any event, as per the provisions of MCOCA, prosecution would have to prove that there was an 'organized crime' and an 'organized crime syndicate' and only then, property derived from the same would invite a conviction under Section 3(5) of MCOCA. 77. It would not mean that if the aspect of organized crime could not be proven, the criminality under the provisions of IPC would not subsist i.e. for extortion. 78. Even if the offence under MCOCA were....
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....e: Quashing 87. Aside from the specific issues addressed above, what is most important to be considered is, whether quashing, in any event, can be considered at this stage. ED submits that it is a settled legal proposition that inherent jurisdiction of the Court should not be invoked to quash criminal proceedings at the stage of the framing of charge. 88. In this regard, the ED relies upon the judgment in Rathish Babu Unnikrishnan (supra), in particular, the following paragraphs: "14. Bearing in mind the principles for exercise of jurisdiction in a proceeding for quashing, let us now turn to the materials in this case. On careful reading of the complaint and the order passed by the Magistrate, what is discernible is that a possible view is taken that the cheques drawn were, in discharge of a debt for purchase of shares. In any case, when there is legal presumption, it would not be judicious for the quashing Court to carry out a detailed enquiry on the facts alleged, without first permitting the trial court to evaluate the evidence of the parties. The quashing Court should not take upon itself, the burden of separating the wheat from the chaff where facts are conteste....
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....nality to the accusations levelled by the prosecution/complainant, without allowing the prosecution or the complainant to adduce evidence to substantiate the same." 17. The proposition of law as set out above makes it abundantly clear that the court should be slow to grant the relief of quashing a complaint at a pre- trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption, as in this matter. What is also of note is that the factual defence without having to adduce any evidence need to be of an unimpeachable quality, so as to altogether disprove the allegations made in the complaint. 18. The consequences of scuttling the criminal process at a pre-trial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e. the trial court is ousted from weighing the material evidence. If this is allowed, the accused may be given an unmerited advantage in the criminal process. Also because of the legal presumption, when the cheque and the signature are not....
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....d. The fundamental principle which forms part of the paragraph extracted above is, "Whether, in fact, the accused committed the offence, can only be decided in the trial." 92. For the petitioner to, therefore, push a plea of quashing of the ECIR, at this stage, when the arguments on charge are still going on, before the Trial Court and the charges have yet to be framed, is unwarranted and cannot be accepted. 93. It amounts to essentially making this Court assess the material on record, ignoring the probative value of the same and assuming that no other aspect would emanate during the trial which could potentially further the case of the prosecution. 94. The Court is effectively being asked to conduct a pre-trial trial, basis only the material on record and to arrive at a finding that the ECIR is liable to be quashed and no offence is made out. 95. What is important to underscore is that the petitioner's case itself relies upon the statements of witnesses inter alia Pinky Irani, Shaan Muttathil, the Ramnani brothers. 96. Whether these statements are complete, watertight, non-porous, not capable of eliciting further evidence, are clearly not conclusions that the Co....
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.... the ECIR. The Court referred to State of Haryana v. Bhajan Lal 1992 Supp (1) SCC 335, to highlight that the power to quash a complaint should be exercised very sparingly and with circumspection and that too, in the rarest of rare cases. It would be instructive to extract the relevant passage from the judgment in Bhajan Lal (supra): "102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we have given the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) Where the allegations made in the first i....
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....rge, in a PMLA case. 104. Two aspects are of significance in the decision of Pradeep Nirankarnath Sharma (supra). Firstly, that the Court highlighted that judicial intervention at a preliminary stage must be exercised with caution and proceedings should not be quashed in absence of compelling grounds. Secondly, the concept of continuing offence under the PMLA was dealt with. In this regard the Court stated as under: "31. The illegal diversion and layering of funds have a cascading effect, leading to revenue losses for the state and depriving legitimate sectors of investment and financial resources. It is settled law that in cases involving serious economic offences, judicial intervention at a preliminary stage must be exercised with caution, and proceedings should not be quashed in the absence of compelling legal grounds. The respondent has rightly argued that in cases involving allegations of such magnitude, a trial is imperative to establish the full extent of wrongdoing and to ensure accountability. 32. The PMLA was enacted to combat the menace of money laundering and to curb the use of proceeds of crime in the formal economy. Given the evolving complexity o....
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.... which showed that Sukesh was involved in some political controversy, petitioner did admit that she was extremely upset and scared when she saw the article. In this regard, it may be useful to extract the statement of the petitioner recorded on 27th June 2022: "Q.9 I am showing you the news article dated 10.02.2020 under the headline "Look Out Notice Against Actress Leena Maria. Paul in CBI Case" (Artnexure-2). As per the news article, the following cases were reported against Sukesh Chandrasekhar; (1) TTV Dinakaran Case - Delhi Police (2) Canara Bank Fraud Case (3) EOW Mumbai Case Do you agree? Ans. this was not the article sent to me by Shaan. There was an article with Sukesh and some South Indian politician controversy that was dated 2017. Q.10 I am showing you printouts of whatsapp conversation between Shaan Muthathil and Pinky Irani (Annexure 3) held on 11.02.2021 to 13.02.2021. In this conversation, Shaan Muthathil had shared aforesaid news article dated 10.02.2020 under the headline. "Look Out Notice Against Actress Leena Marla Paul in CBI Case" to Pinky Irani while you stated that Shaan Muthathil had shared the news arti....
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....hat Sukesh Chandrasekhar was lodged in Jail and despite you continued to receive gifts from him and enjoyed the same. Please comment. Ans. After I received the first news article from shaan dated 2017, I then read 2 to 3 more articles on Sukesh on the internet. I was extremely scared when I first saw all these articles and completely stopped talking to both Angel and Sukesh. After 2 days angel showed up to my house unannounced with a ring from Sukesh stating that he is very sorry for not sharing these articles with me and that he was planning to come down to Mumbai for Valentines day and tell me everything. She then went on to explain that in politics and the business world there is very cut throat competition and this scale of media fabrication is normal. And that she knew Sukesh for freely speaking to me, dressed in normal clothes from a normal location. For me there is no way a person if he was in jail would be able to communicate with me so freely and also have access to technology and be able to do purchases whenever he wanted. Q.14 It clearly means that the person introduced to you was not Shekhar Ratna Vella but was Sukesh Chandrasekhar. Was that reason you....
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....ents, but being confronted with the statement of Sukesh, she admitted the same. iv) She later admitted to new disclosures of property being purchased by Sukesh for her in Sri Lanka. v) Initially, in the first statement recorded on 30th August 2021, she disclosed a certain number of gifts but these were increased till 8th December 2021. vi) Disclosure about the relationship with accused Pinky Irani was made only on 8th December 2021. vii) Since data was wiped out from her phone as well as by Sukesh, the investigation is based upon evidence such as disclosures by accused Sukesh and Pinky Irani and statements of Shaan Muttathil and other witnesses. viii) In the month of March, May and June 2021, transfers were made to the bank accounts of the sister and brother of the petitioner to the tune of USD 172913 and AUD 26740. 114. ED had submitted a tabulation to show improvement by petitioner in the statements; the said tabulation is extracted above in paragraph 18.20. 115. Further, ED has given another tabulation in the reply/counter basis the evidences collected during the investigation to provide a timeline/sequence of events. This table....
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.... 7^th August, 2021 night Sukesh Chandrasekhar & his gang members apprehended. Sukesh was found at Rohini Jail. 11^th August,2021 Jacqueline Fernandez deletes her mobile data and also asks her accomplices to delete data from their mobile. On learning about arrest of Sukesh Chandrasekhar from media, Jacqueline Fernandez destroys evidences and asks other too to destroy crucial evidence. Mid Aug, 2021 Searches at Chennai leading seizure of luxurious cars and beach bungalow of Sukesh Chandrasekhar and Leena Paul. More Proceeds of Crime (PoC) recovered. 18.08.2021 & 06.10.2021 Statement of Ms. Advaita Kala giving evidences on funds received from Jacqueline Fernandez. Evidence on funds received from Jacqueline Fernandez. 30^th August, 2021 Jacqueline Fernandez appears before ED & statement recorded. Jacqueline Fernandez denies any monetary transaction with Ms. Advaita Kala and partially discloses receipt of Proceeds of Crime from Sukesh Chandrasekhar. Oct, 2021 ED custody of Sukesh Chandrasekhar, Leena Paul & others wherein Sukesh discloses his relationship with Jacqueline Fernandez. More disclosures on Jacqueline Fernandez. ....
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....o be quashed, stands further endorsed and fortified. 119. ED's reliance on Umesh Kumar (supra) which relied upon Salman Salim khan (supra) is instructive since it highlights that the Court cannot under Section 482 of Cr.P.C weigh the correctness and sufficiency of evidence and exercise may be too premature. Relevant paragraphs of Umesh Kumar (supra) are extracted as under: "30. In State of Maharashtra v. Salman Salim Khan [(2004) 1 SCC 525 : 2004 SCC (Cri) 337 : AIR 2004 SC 1189] this Court deprecated the practice of entertaining the petition under Section 482 CrPC at a premature stage of the proceedings observing as under : (SCC pp. 527-29, paras 4, 8 & 12) "4. ... The arguments regarding the framing of a proper charge are best left to be decided by the trial court at an appropriate stage of the trial. Otherwise, as in this case, proceedings get protracted by the intervention of the superior courts. *** 8. ... The High Court by the impugned order had allowed the said application and quashed the order made by the learned Sessions Judge framing a charge under Section 304 Part II IPC against the respondent herein while it maintained the other ch....