Whether S 45 of The Prevention of Money Laundering Act is applicable to Anticipatory bail application?

We have heard learned Counsel appearing on behalf of the respective parties at length. At the outset, it is required to be noted that Respondent No. 1 is apprehending his arrest in connection with the complaint/case by the ED for the offence of money laundering Under Section 3 of the Prevention of Money Laundering Act, 2002 and punishable Under Section 4 of the said Act. An enquiry/investigation is going on against Respondent No. 1 for the scheduled offence in connection with FIR No. 12/2019. Once the enquiry/investigation against Respondent No. 1 is going on for the offence under the Act, 2002, the rigour of Section 45 of the Act, 2002 would be attracted. Section 45 of the Act, 2002 reads as under:

45. Offences to be cognizable and non-bailable.--

(1) [Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person Accused of an offence [under this Act] shall be released on bail or on his own bond unless--]

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:

Provided that a person, who, is under the age of sixteen years, or is a woman or is sick or infirm [or is Accused either on his own or along with other co-Accused of money-laundering a sum of less than one crore rupees], may be released on bail, if the Special Court so directs:

(2) The limitation on granting of bail specified in [* * *] Sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. {Para 5 }

5.1. By the impugned judgment and order, while granting anticipatory bail the High Court has observed that the provisions of Section 45 of the Act, 2002 shall not be applicable with respect to the anticipatory bail applications/proceedings Under Section 438 Code of Criminal Procedure. For which the High Court has relied upon the decision of this Court in the case of Nikesh Tarachand Shah (supra). In the case of Dr. V.C. Mohan (supra), this Court has specifically observed and held that it is the wrong understanding that in the case of Nikesh Tarachand Shah (supra) this Court has held that the rigour of Section 45 of the Act, 2002 shall not be applicable to the application Under Section 438 Code of Criminal Procedure. In the case of Dr. V.C. Mohan (supra) in which the decision of this Court in the case of Nikesh Tarachand Shah (supra) was pressed into service, it is specifically observed by this Court that it is one thing to say that Section 45 of the Act, 2002 to offences under the ordinary law would not get attracted but once the prayer for anticipatory bail is made in connection with offence under the Act, 2002, the underlying principles and rigours of Section 45 of the Act, must get triggered-although the application is Under Section 438 Code of Criminal Procedure. Therefore, the observations made by the High Court that the provisions of Section 45 of the Act, 2002 shall not be applicable in connection with an application Under Section 438 Code of Criminal Procedure is just contrary to the decision in the case of Dr. V.C. Mohan (supra) and the same is on misunderstanding of the observations made in the case of Nikesh Tarachand Shah (supra). Once the rigour Under Section 45 of the Act, 2002 shall be applicable the impugned judgment and order passed by the High Court granting anticipatory bail to Respondent No. 1 is unsustainable.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 534 of 2023 

Decided On: 24.02.2023

The Directorate of Enforcement  Vs. M. Gopal Reddy and Ors.

Hon'ble Judges/Coram:

M.R. Shah and C.T. Ravikumar, JJ.

Author: M.R. Shah, J.

Citation: MANU/SC/0166/2023.

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Whether the trial of the offence of money-laundering should follow the trial of the scheduled/predicate offence or vice versa?

 Section 43(1) of the Act provides for the constitution of Special Courts, by the Central Government, in consultation with the Chief Justice of the High Court. Sub-section (2) of Section 43 empowers a Special Court constituted Under Section 43(1), also to try an offence other than the offence punishable Under Section 4 of the PMLA, with which the Accused may be charged at the same trial under the Code of Criminal Procedure. In other words, a Special Court is constituted Under Section 43(1) primarily for the purpose of trying an offence punishable Under Section 4. But Sub-section (2) of Section 43 confers an additional jurisdiction upon such a Special Court to try any other offence with which the Accused may be charged at the same trial. Section 43 reads as follows:

43. Special Courts.--(1) The Central Government, in consultation with the Chief Justice of the High Court, shall, for trial of offence punishable Under Section 4, by notification, designate one or more Courts of Session as Special Court or Special Courts for such area or areas or for such case or class or group of cases as may be specified in the notification.

Explanation.--In this Sub-section, "High Court" means the High Court of the State in which a Sessions Court designated as Special Court was functioning immediately before such designation.

(2) While trying an offence under this Act, a Special Court shall also try an offence, other than an offence referred to in Sub-section (1), with which the Accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial. {Para 21}

22. Section 44 deals with the question of territorial jurisdiction of the Special Court, constituted Under Section 43(1). At the outset, Section 44(1) takes note of two different contingencies, namely, (i) cases where the scheduled offence as well as the offence of money-laundering are committed within the territorial jurisdiction of the same Special Court constituted Under Section 43(1); and (ii) cases where the Court which has taken cognizance of the scheduled offence, is other than the Special Court which has taken cognizance of the complaint of the offence of money-laundering. Section 44(1) reads as follows:

44. Offences triable by Special Courts.--(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--

(a) an offence punishable Under Section 4 and any scheduled offence connected to the offence under that Section shall be triable by the Special Court constituted for the area in which the offence has been committed:

Provided that the Special Court, trying a scheduled offence before the commencement of this Act, shall continue to try such scheduled offence; or;

(b) a Special Court may, upon a complaint made by an authority authorised in this behalf under this Act take cognizance of offence Under Section 3, without the Accused being committed to it for trial;

Provided that after conclusion of investigation, if no offence of money-laundering is made out requiring filing of such complaint, the said authority shall submit a closure report before the Special Court; or

(c) if the court which has taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money-laundering Under Sub-clause (b), it shall, on an application by the authority authorised to file a complaint under this Act, commit the case relating to the scheduled offence to the Special Court and the Special Court shall, on receipt of such case proceed to deal with it from the stage at which it is committed.

(d) a Special Court while trying the scheduled offence or the offence of money-laundering shall hold trial in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), as it applies to a trial before a Court of Session.

Explanation.--For the removal of doubts, it is clarified that,--

(i) the jurisdiction of the Special Court while dealing with the offence under this Act, during investigation, enquiry or trial 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 trial;

(ii) the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any Accused person involved in respect of the offence, for which complaint has already been filed, whether named in the original complaint or not.

23. What is dealt with by Section 44(1)(a) is a situation where there is no complication. Section 44(1)(a) lays down the most fundamental Rule relating to territorial jurisdiction, by providing that an offence punishable Under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence has been committed. It is relevant to note that Section 44(1)(a) uses the expression "offence" in three places in contradistinction to the expression "scheduled offence" used only once. This usage is not without significance. In all three places where the word "offence" alone is used, it connotes the offence of money-laundering. The place where the expression "scheduled offence" is used, it connotes the predicate offence. By prescribing that an offence punishable Under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which "the offence" has been committed, Section 44(1)(a) makes it crystal clear that it is the Special Court constituted Under Section 43(1), which will be empowered to try even the scheduled offence connected to the same.

24. After mapping out/laying down such a general but fundamental rule, the Act then proceeds to deal with a more complicated situation in Section 44(1)(c). The question as to what happens if the Court which has taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the offence of money-laundering, is what is sought to be answered by Clause (c) of Sub-section (1) of Section 44. If the Court which has taken cognizance of the scheduled offence is different from the Special Court which has taken cognizance of the offence of money-laundering, then the authority authorised to file a complaint under PMLA should make an application to the Court which has taken cognizance of the scheduled offence. On the application so filed, the Court which has taken cognizance of the scheduled offence, should commit the case relating to the scheduled offence to the Special Court which has taken cognizance of the complaint of money-laundering.

25. Therefore, it is clear that the trial of the scheduled offence should take place in the Special Court which has taken cognizance of the offence of money-laundering. In other words, the trial of the scheduled offence, insofar as the question of territorial jurisdiction is concerned, should follow the trial of the offence of money-laundering and not vice versa.

26. Since the Act contemplates the trial of the scheduled offence and the trial of the offence of money-laundering to take place only before the Special Court constituted Under Section 43(1), a doubt is prone to arise as to whether all the offences are to be tried together. This doubt is sought to be removed by Explanation (i) to Section 44(1). Explanation (i) clarifies that the trial of both sets of offences by the same Court shall not be construed as joint trial.

27. A careful dissection of Clauses (a) and (c) of Sub-section (1) of Section 44 shows that they confer primacy upon the Special Court constituted Under Section 43(1) of the PMLA. These two clauses contain two Rules, namely, (i) that the offence punishable under the PMLA as well as a scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence of money-laundering has been committed; and (ii) that if cognizance has been taken by one Court, in respect of the scheduled offence and cognizance has been taken in respect of the offence of money-laundering by the Special Court, the Court trying the scheduled offence shall commit it to the Special Court trying the offence of money-laundering.

 IN THE SUPREME COURT OF INDIA

Writ Petition (Criminal) No. 12 of 2023

Rana Ayyub  Vs. Directorate of Enforcement.

Hon'ble Judges/Coram:

V. Ramasubramanian and J.B. Pardiwala, JJ.

Author: V. Ramasubramanian, J.

Decided On: 07.02.2023.

Citation: MANU/SC/0096/2023.

Read full Judgment here: Click here

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To What extent provisions of CRPC are applicable to proceedings under The Prevention of Money Laundering Act?

 It is only because of the Special Court constituted Under Section 43(1) being conferred primacy that Section 44(1) begins with the words "notwithstanding anything contained in the Code of Criminal Procedure". Though the PMLA contains a non-obstante Clause in relation to the Code of Criminal Procedure, both in Section 44(1) and in Section 45(1), there are two other provisions where the Code of Criminal Procedure is specifically declared to apply to the proceedings before a Special Court. Section 46(1) specifically makes the provisions of the Code of Criminal Procedure applicable to proceedings before a Special Court. Similarly, Section 65 of the PMLA makes the provisions of Code of Criminal Procedure apply to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under the Act. {Para 28}

29. Therefore, it is clear that the provisions of the Code of Criminal Procedure are applicable to all proceedings under the Act including proceedings before the Special Court, except to the extent they are specifically excluded. Hence, Section 71 of the PMLA providing an overriding effect, has to be construed in tune with Section 46(1) and Section 65.

 IN THE SUPREME COURT OF INDIA

Writ Petition (Criminal) No. 12 of 2023

Rana Ayyub  Vs. Directorate of Enforcement.

Hon'ble Judges/Coram:

V. Ramasubramanian and J.B. Pardiwala, JJ.

Author: V. Ramasubramanian, J.

Decided On: 07.02.2023.

Citation: MANU/SC/0096/2023.

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Supreme Court :The court should not release Accused on bail in Money Laundering Case if the police have filed Chargesheet In Predicate Offence

6.3 From the impugned judgment(s) and order(s)

passed by the High Court, it appears that

what is weighed with the High Court is that

chargesheet has been filed against respective

respondent No. 1 – accused and therefore, the

investigation is completed. However, the High

Court has failed to notice and appreciate that

the investigation with respect to the

scheduled offences under the PML Act, 2002

by the Enforcement Directorate is still going

on. Merely because, for the predicated

offences the chargesheet might have been

filed it cannot be a ground to release the

accused on bail in connection with the

scheduled offences under the PML Act, 2002.

Investigation for the predicated offences and

the investigation by the Enforcement

Directorate for the scheduled offences under

the PML Act are different and distinct.

Therefore, the High Court has taken into

consideration the irrelevant consideration.

The investigation by the Enforcement

Directorate for the scheduled offences under

the PML Act, 2002 is till going on.

7. As observed hereinabove, the High Court has

neither considered the rigour of Section 45 of

the PML Act, 2002 nor has considered the

seriousness of the offences alleged against

accused for the scheduled offences under the

PML Act, 2002 and the High Court has not at

all considered the fact that the investigation

by the Enforcement Directorate for the

scheduled offences under the PML Act, 2002

is still going on and therefore, the impugned

orders passed by the High Court enlarging

respective respondent No. 1 on bail are

unsustainable and the matters are required

to be remitted back to the High Court for

afresh decision on the bail applications after

taking into consideration the observations

made hereinabove.

 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1401 OF 2023

Directorate of Enforcement  Vs  Aditya Tripathi 

CRIMINAL APPEAL NO. 1402 OF 2023

Author: M.R. SHAH, J.

MAY 12, 2023

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Whether receipt Of a Bribe Is An Act Of Money Laundering and whether ED can initiate prosecution based on FIR in a Corruption case?

 Question 1: Whether without identifying the proceeds of crime or a property representing the proceeds of crime and without identifying any process or activity connected to proceeds of crime as required by Section 3, which constitute the foundational/jurisdictional fact, ED can initiate an investigation and issue summons?

93. The common theme of the song of the learned counsel for the accused is that the mere registration of a FIR for a predicate offence, even if it is a scheduled offence, is not sufficient for the ED to register an Information Report and summon anyone. According to the learned counsel, the commission of the scheduled offence should have generated proceeds of crime and those proceeds of crime should have been laundered by someone, for the ED to step in. Going a step further, it was contended by the learned senior counsel that the ED should first identify some property as representing the proceeds of crime, before an Information Report is registered and a summon issued under Section 50(2).

94. These contentions, in our opinion, if accepted, would amount to putting the cart before the horse. Unfortunately for the accused, this is not the scheme of the Act.

95. Section 3 of the Act which defines the offence of money-laundering reads as follows:

“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 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 proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.”

96. If the main part of Section 3 is dissected with forensic precision, it will be clear that Section 3 addresses itself to three things (we may call them 3 ‘P’s) namely, (i) person; (ii) process or activity; and (iii) product. Insofar as persons covered by Section 3 are concerned, they are, (i) those who directly or indirectly attempt to indulge; or (ii) those who knowingly assists; or (iii) those who are knowingly a party; or (iv) those who are actually involved. Insofar as process is concerned, the Section identifies six different activities, namely (i) concealment; (ii) possession; (iii) acquisition; (iv) use; (v) projecting; or (vi) claiming as untainted property, any one of which is sufficient to constitute the offence. Insofar as product is concerned, Section 3 identifies “proceeds of crime” or the property representing the proceeds of crime as the product of the process or activity.

97. Out of the three things that Section 3 addresses, namely (i) person; (ii) process; and (iii) product, the first two do not require any interpretation or definition. The third aspect namely “product”, which Section 3 refers to as “proceeds of crime” requires a definition and hence it is defined in Section 2(1)(u) as follows:-

“2. Definitions. — (1) In this Act, unless the context otherwise requires, —

xxx xxx xxx

(u) “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;

Explanation.—For the removal of doubts, it is hereby clarified that "proceeds of crime" including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;”

98. Keeping in mind these essential elements that make up the molecular structure of Section 3, if we go back to the case on hand, we will find (i) that the offences under Sections 120B, 419, 420, 467 and 471 IPC are scheduled offences included in paragraph 1 of the Schedule; and (ii) that the offences under Sections 7 and 13 of the PC Act are included in paragraph 8 of the Schedule.

99. All the three FIRs allege that the accused 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 in Section 3.

100. 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 before putting it to use; and (iii) today projecting it as untainted money, is the process or activity in which the accused have indulged. The corruption money represents the proceeds of crime.

101. Therefore, all the arguments as though there are no foundational facts or jurisdictional facts, are simply aimed at hoodwinking the Court.

102. It is true that there are some offences, which, though scheduled offences, may or may not generate proceeds of crime. For instance, the offence of murder punishable under Section 302 is a scheduled offence. Unless it is a murder for gain or murder by a hired assassin, the same may or may not generate proceeds of crime. It is in respect of such types of offences that one may possibly argue that mere commission of the crime is not sufficient but the generation of proceeds of crime is necessary. In the case of an offence of corruption, the criminal activity and the generation of the proceeds of crime are like Siamese twins.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. OF 2023

Y. BALAJI VsKARTHIK DESARI & ANR. 

Author: V. Ramasubramanian, J.

Dated: MAY 16, 2023

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Whether provisions of money laundering Act will have overriding effect over CRPC in respect of grant of bail?

We have noted that Section 45 of the PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. As mentioned earlier, Section 45 of the PMLA imposes two conditions for grant of bail, specified under the said Act. We have not missed the proviso to Section 45 of the said Act which indicates that the legislature has carved out an exception for grant of bail by a Special Court when any person is under the age of 16 years or is a woman or is a sick or infirm. Therefore, there is no doubt that the conditions laid down under Section 45A of the PMLA, would bind the High Court as the provisions of special law having overriding effect on the provisions of Section 439 of the Code of Criminal Procedure for grant of bail to any person accused of committing offence punishable under Section 4 of the PMLA, even when the application for bail is considered under Section 439 of the Code of Criminal Procedure.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1706 OF 2015

(Arising out of SLP(Crl.) No.6701 of 2015)

GAUTAM KUNDU … APPELLANT(S)

:VERSUS:

MANOJ KUMAR, 

Citation;2016 CRLJ 666

Dated;December 16, 2015. 

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