TaxTMI 
TaxTMI 
2026 (1) TMI 1233
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....ourt discharged the accused persons, namely, Papiya Rozario and Stanley Indrajit Rozario, from the case directing return of the articles confiscated and seized from them upon allowing their petition under Section 227 of the Code. FACTS OF THE CASE: 3. The brief facts, essential for the purpose of disposal of this case, are as follows:- a. One Gangaram Kariwal filed a complaint under Section 156(3) of Cr.P.C. before the Learned Additional Chief Metropolitan Magistrate, Kolkata, alleging commission of the offence of fraud, cheating and encashing the redemption proceeds of the Mutual Fund by opening an account producing forged/fabricated documents at the Axis Bank by the suspects named therein. b. Pursuant to the direction passed by the Learned Magistrate, a case was registered, being Jorasanko P.S. Case No. 60 dated 24.03.2009 under Sections 120B/409/419/465/467/468/471 and 474 of the Indian Penal Code (in short 'IPC') against the accused persons, namely, 1. Papiya Rozario, 2. Branch Manager, Axis Bank Limited, 3. S. Mukherjee, Officer, Axis Bank Limited, 4. S. Choudhury, Officer, SS No. S-978, Axis Bank Limited, 5.....
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....dly projecting tainted money as untainted through purchase and sale of immovable property. i. Upon analysis, the Court held that the existence of a scheduled (predicate) offence is a sine qua non for initiation and continuation of proceedings under the Prevention of Money Laundering Act. Without the commission of a scheduled offence, no "proceeds of crime" can arise, and consequently, provisions such as section 5(1) PMLA relating to attachment cannot be invoked. If the scheduled offence itself is negated or not legally sustainable, the very foundation of proceedings under the Act disappears. j. The Court further emphasized that the PMLA is a penal statute and, in view of Article 20(1) of the Constitution, has no retrospective or retroactive operation. The 2009 amendment to the PMLA, which came into force on 1 June 2009, operates purely prospectively. Therefore, offences committed prior to the relevant provisions or their inclusion as scheduled offences cannot attract prosecution or attachment proceedings under the Act. k. It was also observed that where the alleged predicate offence is not established, the basis of attachment ceases to exist, and further ....
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....N BEHALF OF THE PETITIONER: 4. Learned counsel appearing on behalf of the Enforcement Directorate submitted that the learned Trial Court erred in holding that no proceedings under this Act can be initiated or sustained in respect of an offence, which has been committed prior to the Act coming into force and strictly speaking, the said Act has no retrospective operation. 5. Learned counsel further submitted that the Enforcement Directorate had lodged a complaint against the accused persons under Section 3 and punishable under Section 4 of the PMLA in the year 2013, which is a separate and independent offence from the offence punishable under the IPC. Two proceedings have been initiated against the accused persons, firstly, at Jorasanko P.S., Case No. 60, dated 24.03.2009, under Sections 120B/409/419/465/467/468/471, and 474 of the IPC, and secondly, under Section 3 and punishable under Section 4 of the PMLA. Both the offences were given by separate penal provision under two separate statute. Therefore, there is no bar either of the act for simultaneously trial of the offence complained of in the said two cases. Furthermore, Section 467 is the scheduled offence under the PMLA. ....
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....proceeds of crime to be untainted property presupposes that the person is in possession of or is using the same (proceeds of crime), also an independent activity constituting offence of money 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 proc....
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....t. 136.3. Integration : which is making the money available to the criminal from what seem to be legitimate sources. 137. It is common experience world over that money laundering can be a threat to the good functioning of a financial system. However, it is also the most suitable mode for the criminals to deal in such money. It is the means of livelihood of drug dealers, terrorist, white-collar criminals and so on. Tainted money breeds discontent in any society and in turn leads to more crime and civil unrest. Thus, the onus on the Government and the people to identify and seize such money is heavy. If there are any proactive steps towards such a cause, we cannot but facilitate the good steps. However, passions aside we must first balance the law to be able to save the basic tenets of the fundamental rights and laws of this country. After all, condemning an innocent man is a bigger misfortune than letting a criminal go. 138. On a bare reading of Section 3, we find no difficulty in encapsulating the true ambit, given the various arguments advanced. Thus, in the conspectus of things it must follow that the interpretation put forth by the respondent will furt....
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....the version of the complaint, which is omnibus in nature. The entire investigation, which is based on the police report/charge-sheet of Jorasanko PS Case being 60 of 2009 does not illustrate the ingredient of Section 467 of the IPC or how the same is being attracted. 13. If the alleged offence of Section 467 IPC could not be attracted, no other offence has relevance with regard to the instant PMLA case as the section 467 was not scheduled offences at that point of time, when the proceedings under PMLA initiated against the accused persons. 14. That the impugned judgement relies in the case of M/s. obalapuram Mining Company Pvt. Ltd. V Joint Director. Directorate of Enforcement, Government of India and Ors. ILR 2017 KAR 1846 is now pending for disposal in a batch matter proceeding in SLP (Cri) 4466 of 2017. 15. As pointed in the judgement of Sharif Ahmed and Another v State of UP and Another 2024 INSC 363, "Our attention has been drawn to the format prescribed for the State of Uttar Pradesh, which by column 16 requires the investigating officer to state brief facts of the case. In addition, the State of Uttar Pradesh has issued a circular dated 19.09.2023, which refers to a....
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....an Singha Wazir Vs. State (NCT of Delhi) and Ors. 2025 INSC 281; ii. M/s Obulapuram Mining Company Pvt. Ltd. Vs. Joint Director, Directorate of Enforcement, Government of India & Ors. ILR 2017 KAR 1846;. FINDINGS AND ANALYSIS OF THIS COURT: 19. Having heard the arguments and submissions made by the learned counsels appearing on behalf of the respective parties and upon perusal of impugned order of discharge, the principal issue that arises for consideration in the instant case is whether the Learned Special Court was justified in discharging the accused on the ground that section 467 of the IPC was not a scheduled offence at the time of commission of the alleged crime under IPC, and that the PMLA, 2002 has no retrospective application. 20. Before deciding the issue involved in the present case, this court shall firstly ascertain whether the offence punishable under Section 467 of the IPC is a scheduled offence or not and when it was included in the PMLA. 21. The PMLA was enacted to prevent the laundering of proceeds of crime, to deprive offenders of the benefits derived from criminal activity, to protect the integrity of the financial system, and to fulfil Indi....
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....rosecution or criminal action. The original provision prior to amendment vide the Finance Act, 2015 and Finance (No. 2) Act, 2019, took within its sweep any property [mentioned in Section 2(1)(v) PMLA] derived or obtained, directly 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 pr....
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....al activity relating to the scheduled offence concerned. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money laundering under Section 3 PMLA. 107. Be it noted that the definition clause includes any property derived or obtained "indirectly" as well. This would include property derived or obtained from the sale proceeds or in a given case in lieu of or in exchange of the "property" which had been directly derived or obtained as a result of criminal activity relating to a scheduled offence. In the context of the Explanation added in 2019 to the definition of the expression "proceeds of crime", it would inevitably include other property which may not have been derived or obtained as a result of any criminal activity relatable to the scheduled offence. As noticed from the definition, it essentially refers to "any property" including abroad derived or obtained directly or indirectly. The Explanation added in 2019 in no way travels beyond that intent of tracking and reaching up to ....
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....)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of the definition clause "proceeds of crime", as it obtains as of now. Section 3 of the 2002 Act 122. Coming to Section 3 of the 2002 Act, the same defines the offence of money laundering. The expression "money laundering", ordinarily, means the process or activity of placement, layering and finally integrating the tainted property in the formal economy of the country. However, Section 3 has a wider reach. The offence, as defined, captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money laundering. This is amply clear from the original provision, which has been further clarified by insertion of the Explanation vide Finance (No. 2) Act, 2019. Section 3, as amended, reads thus: "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 w....
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....n stands clarified by way of Explanation inserted in 2019. 125. If the argument of the petitioners is to be accepted, that projecting or claiming the property as untainted property is the quintessential ingredient of the offence of money laundering, that would whittle down the sweep of Section 3. Whereas, the expression "including" is a pointer to the preceding part of the section which refers to the essential ingredient of "process or activity" connected with the proceeds of crime. The Explanation inserted by way of amendment of 2019, therefore, has clarified the word "and" preceding the expression "projecting or claiming" as "or". That being only clarificatory, whether introduced by way of the Finance Bill or otherwise, would make no difference to the main original provision as it existed prior to the 2019 Amendment. 126. Indeed, there has been some debate in Parliament about the need to retain the clause of projecting or claiming the property as untainted property. However, the Explanation inserted by way of amendment of 2019 was only to restate the stand taken by India in the proceedings before FATF, as recorded in its 8th Follow-Up Report (Mutual Evaluation o....
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....ctorate do not confine themselves to the mere commission of the predicate offence. On the contrary, the complaint attributes a specific and continuing role to the accused persons in fabricating documents, opening bank accounts, diverting funds, and thereafter projecting and claiming the proceeds of crime as untainted by routing the same through banking channels and acquisition of immovable property. These allegations, if taken at face value at the stage of charge, clearly disclose post-scheduled-offence and post-amendment laundering activity, thereby attracting the rigour of Section 3 of the PMLA. 28. The Learned Special Court erred in holding that the PMLA proceedings were wholly dependent upon the date of commission of scheduled offence and that, in the absence of a concluded finding on the predicate offence, no action under the PMLA could lie. The Supreme Court has unequivocally held that the PMLA proceedings are independent and distinct, and that while the existence of a scheduled offence is a sine qua non for the offence of money-laundering, a conviction in the scheduled offence is not a prerequisite for initiation or continuation of proceedings under the PMLA. What is requ....