Allahabad High Court
Subhash Arora And 2 Others vs Assistant Director Directorate on 29 August, 2024
HIGH COURT OF JUDICATURE AT ALLAHABAD Neutral Citation No. - 2024:AHC:140574 Reserved Case :- APPLICATION U/S 482 No. - 27657 of 2023 Applicant :- Subhash Arora And 2 Others Opposite Party :- Assistant Director Directorate Counsel for Applicant :- Nilesh Tripathi Counsel for Opposite Party :- Jitendra Prasad Mishra,Pawan Kumar Srivastava Hon'ble Vikram D. Chauhan,J.
1. Heard Sri Anurag Sharma alongwith Sri Nilesh Tripathi, learned counsel for the applicants and Sri Jitendra Prasad Mishra, learned counsel appearing for Directorate of Enforcement.
2. The present application is preferred by applicants under Section 482 of the Criminal Procedure Code, 1973 with the prayer to quash the entire criminal proceedings of complaint filed by Enforcement Directorate in respect of applicants arising out of Complaint Case No. 110 of 2018 ECIR No. 21/DLZO/2015 under Sections 3 and 4 of the Prevention of Money-Laundering Act, 2002, Police Station - Enforcement Directorate, Delhi Zonal Office, pending before the court of Learned Special Judge, Prevention of Corruption and CBI Court No 1, Ghaziabad along with all consequential proceedings.
3. On a complaint of Deputy Director, Directorate of Revenue Intelligence (DRI), Lucknow Zonal Office, a case vide FIR No. 0076 dated 18.1.2015 was registered at Police Station - Kavi Nagar, District - Ghaziabad (U.P.) under Sections 420, 467, 468, 471 and 469 IPC against Manish Jain and Rakesh Jain with the allegation that during search conducted by the DRI under Customs Act, it was found that Manish Jain was involved in making illegal foreign remittance to Hong Kong through banking channels by submitting fake import documents to bank authorities. As per prosecution case, Manish Jain and others operated through various fictitious firms/companies and remitted about more than Rs. 380 crores to Hong Kong from India during the period 2007-2011 showing the same as payment for import of computer parts and accessories. On further investigation, it was revealed that Manish Jain and others have been remitting foreign exchange to Hong Kong through bogus firms/companies, namely, M/s Suntek Computers and M/s Shyam Trading and had remitted an amount of Rs. 100 crores from 2012 till 2014.
4. The DRI searched the residential and business premises of Manish Jain and Associates on 7.8.2014 and recovered and seized certain incriminating articles in the form of huge numbers of blank postal wrappers of Hong Kong post, large number of bogus PAN cards and voter identity cards in the name of different fictitious identities.
5. On 10.8.2015 a case was registered at Lucknow Zonal Office of the Directorate of Enforcement, Lucknow, which was further transferred to Delhi Zonal Office, having the ECIR No.21/DLZO/2015 dated 1.12.2015 for further investigation against the accused person for commission of offence under Section 3 of Prevention of Money-Laundering Act, 2002 being punishable under Section 4 of the aforesaid Act.
6. As per prosecution case during investigation statement of various persons connected with the case were recorded including accused persons.
7. The Enforcement Directorate filed first complaint under Section 45 of the Prevention of Money-Laundering Act, 2002 for the commission of offence under Sections 3 and 4 of the Prevention of Money-Laundering Act, 2002 against Manish Kumar Jain and 13 Companies on 11.12.2015 and cognizance has been taken by the Special Judge, PMLA, Lucknow. The applicants were not made accused in the first complaint. Subsequently, the Enforcement Directorte proceeded with further investigation and filed a supplementary complaint on 11.05.2016 against Manish Kumar Jain, Rajeev Wadhwa and 12 companies. No role has been assigmed to applicants in the aforesaid supplementary complaint.
8. The Enforcement Directorate continued with further investigation and filed second supplementary complaint under Section 45 of the PMLA Act for offence under Sections 3 and 4 of the PMLA Act. The complaint was filed on 16.10.2018 wherein present applicants have been shown as accused.
9. After investigation of the predicate offence i.e. FIR No. 76 of 2015 dated 18.1.2015, Police Station Kavi Nagar, Ghaziabad under Sections 420, 467, 468, 469 and 471 read with 120-B I.P.C., chargesheet has been filed. The applicants were not named accused in the aforesaid chargesheet of the predicate offence.
10. The Prevention of Money-Laundering Act is enacted to prevent money-laundering and to provide confiscation of property derived from or involved in money-laundering and for matters connected therewith and incidental thereto. Section 2 (p) of the Prevention of Money-Laundering Act, 2002 defines money-laundering as having meaning assigned to it in Section 3 of the Act No. 15 of 2003. Section 3 of the Act No. 15 of 2003 defines the offence of money-laundering and the same is quoted hereinbelow :
"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 and projecting it as untainted property shall be guilty of offence of money-laundering".
11. As per Section 3 of the Act No. 15 of 2003 whoever directly or indirectly attempts to indulge or knowingly assist 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 used and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. The aforesaid section 3 of the Act No. 15 of 2003 declares activity or process connected with proceeds of crime by indulging or knowingly assisting by any person as an offence. The punishment for the offence under Section 3 of Act No. 15 of 2003 is provided under Section 4 of the aforesaid Act.
12. Section 2 (u) of the Act No. 15 of 2003 defines "proceeds of crime" to mean any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a schedule 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. The explanation appended to the aforesaid Section 2 (u) of the Act further clarifies that proceeds of crime include property not only derived or obtained from the schedule offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the schedule offence. The term schedule offence has been defined in Section 2 (y) of the Act No. 15 of 2003. Section 2 (y) of Act No. 15 of 2003 is quoted hereinbelow :-
"scheduled offence"means-
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if the total value involved in such offences is [one crore rupees] or more; or
(iii) the offences specified under Part C of the Schedule."
13. The term schedule offence under Section 2 (y) of the Act No.15 of 2003 means, the offences specified under Part A of the Schedule; offence specified under Part B of the Schedule, if the total value involved in such offences is one crore or more; the offences specified under Part C of the Schedule.
14. Initially, a FIR No. 76 dated 18.01.2015 was registered at Police Station - Kavi Nagar, District - Ghaziabad (U.P.) under Sections 420, 467, 468, 471 and 469 of IPC being predicate offence. The Sections 420, 467, 471 IPC included in Part A of the Schedule to the Prevention of Money-Laundering Act, 2002.
15. As per prosecution case, Manish Jain was found to be involved in illegal foreign remittance to Hong Kong through banking channels by submitting fake import documents to bank authorities. Manish Jain and others operated through various fictitious firms/companies and remitted about more than Rs. 382 crores to Hong Kong from India during the period from 2007 - 2011 showing the same as payment for import of computer parts and accessories. Further Manish Jain has remitted Rs. 100 crores from 2012 - 2014 through bogus companies. The DRI searched the residential and business premises of Manish Jain, Rakesh Jain and Associates on 7.8.2014 and recovered and seized certain incriminating materials in the form of huge number of blank postal wrappers of Hong Kong post, large number of bogus PAN card and voter identity cards in the name of various fictitious identities. During investigation, it has also revealed that some importers of India remitted foreign exchange through Manish Jain and Rakesh Jain by resorting to undervalue of imported goods. As per prosecution case, company P.R. Forex, of which Shri Subbash Arora was the Director collected cash from accused and sent foreign exchange outside India. The cash was received from Sanjeev Wadhwa, Rajeev Wadhva, Gurdeep Gujral, Subash Arora related to P.R. Forex. As per prosecution, applicants were involved in process or activity connected with the proceeds of crime as such is being prosecuted under the Prevention of Money-Laundering Act, 2002.
16. It is submitted by learned counsel for the applicants that the applicants were neither the accused in the F.I.R. lodged in the scheduled offence nor any charge sheet has been submitted. Although, charge sheet has been submitted against the principal accused being Manish Jain. Learned counsel for the applicants while referring to para 187(v)(d) judgment of the Supreme Court in Vijay Madanlal Choudhary and others Versus Union of India and others, 2022 LiveLaw (SC) 633, submits that once the applicants who have not been arrayed as accused in the scheduled offence then the provision of section 3 of Prevention of Money-laundering Act, 2002 Act would not come into play and as such the present criminal proceedings are bad in law. Learned counsel for the applicants has also relied upon the judgment of the Bombay High Court dated 23.02.2023 passed in Criminal Writ Petition No. 4037 of 2022 (Naresh Goyal Versus The Directorate of Enforcement and another. Learned counsel for the applicants has also relied upon the judgment of the Supreme Court in Special Leave Petition (Criminal) Diary No. (s). 42315 of 2022 dated 10.02.2023 to submit that similar question is already engaging the attention of the Supreme Court. Learned counsel for the applicants submits that once the applicants who are not the accused in the schedule offence the proceeding under section 3/4 of Prevention of Money-laundering Act, 2002, would not be permissible in law.
17. Learned counsel for the applicants further submits that the ECIR against the applicants was initiated on the basis of the case crime no. 76 of 2015 registered at Kavi Nagar, Ghaziabad and as such he submits that once the initiation and the foundation is based on the scheduled offence then the applicants cannot be proceeded with when the applicants have not been found to be the accused in the schedule offence.
18. Sri Jitendra Prasad Mishra, learned counsel for the opposite party, has opposed the 482 application and submits that the judgment of the Supreme Court in Vijay Madanlal Choudhary (supra) has been clarified in Pavana Dibbur Versus The Directorate of Enforcement (Criminal Appeal No. 2779 of 2023) and in this reference the counsel has referred to para 8, 15 and 16 of the aforesaid judgment to submit that the provisions of section 3 and 4 of the Prevention of Money-laundering Act can be independently proceeded with against the applicants. Once the applicants are beneficiary of the proceeds of crime as per the Act.
19. Learned counsel for the informant has also relied upon the judgment of this Court in Nandani Ramchandani and others Versus State of Uttar Pradesh and others, 2016 (95) AllCriC 91 to submit that once the applicants who are the beneficiary of the crime proceeds then the provisions of section 3 and 4 of Prevention of Money-laundering Act read with section 2(u) would be applicable and the applicants can be proceeded as the same is an independent offence in respect of a scheduled offence except the case where no persons is found to have committed any crime.
20. The principal thrust of the argument of learned counsel for the applicants is to the effect that applicants were neither the accused in the First Information Report dated 18.01.2015 lodged in the schedule offence nor any chargesheet has been submitted against applicants in the schedule offence. It is further submitted by learned counsel for the applicants that chargesheet has been submitted against the principal accused namely Manish Jain in the predicate offence. The submission of learned counsel for the applicants is that once the applicants are not being charged as an accused in the predicate offence or schedule offence then the provisions of Section 3 of the Prevention of Money-Laundering Act, 2002 would not be attracted and the present criminal proceedings under the Prevention of Money-Laundering Act, 2002 are bad in law.
21. The Supreme Court in Pavana Dibbur Vs The Directorate of Enforcement : 2023 SCConline SC 1586 has held 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 accused in the scheduled offence. What is held in paragraph 270 of the decision of this Court in the case of Vijay Madanlal Choudhary supports the above conclusion. The conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of sub-section (1) of Section 3 of the PMLA.
16. In a given case, if the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of the scheduled offence are quashed in its entirety, the scheduled offence will not exist, and therefore, no one can be prosecuted for the offence punishable under Section 3 of the PMLA as there will not be any proceeds of crime. Thus, in such a case, the accused against whom the complaint under Section 3 of the PMLA is filed will benefit from the scheduled offence ending by acquittal or discharge of all the accused. Similarly, he will get the benefit of quashing the proceedings of the scheduled offence. However, an accused in the PMLA case who comes into the picture after the scheduled offence is committed by assisting in the concealment or use of proceeds of crime need not be an accused in the scheduled offence. Such an accused can still be prosecuted under PMLA so long as the scheduled offence exists. Thus, the second contention raised by the learned senior counsel appearing for the appellant on the ground that the appellant was not shown as an accused in the chargesheets filed in the scheduled offences deserves to be rejected."
22. It is to be seen that for proceeding under Section 3 of the Prevention of Money-Laundering Act, 2002, schedule offence is required to exist and there must be proceeds of crime in relation to schedule offence. The provision of Section 3 of the PMLA comes into play when any person is directly or indirectly indulged or assist or involved in any process or activity connected with the proceeds of crime including concealment, possession, acquisition or use and projecting or claiming it is untainted property.
23. It is not in dispute between the parties that an F.I.R. under the schedule offence was registered against Manish Jain and Rakesh Jain. In pursuance to investigation, chargesheet has also been submitted against Manish Jain. The case set up by prosecution against applicants is that in P.R. Forex cash was collected from applicants and accused in schedule offence use to send foreign exchange outside India. As per prosecution, applicants further involved in the process or activity connected with the proceeds of crime and as such, applicants have been proceeded under Section 3 of the Prevention of Money-Laundering Act, 2002. The question whether the applicants were involved knowingly is a question of fact which is to be examined at the stage of trial.
24. The Section 3 of the Prevention of Money-Laundering Act, 2002 is an independent offence under the aforesaid Act which has the foundation in schedule offence. An accused under the Prevention of Money-Laundering Act, 2002 may not be an accused in the schedule offence, however, once such accused has 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 and projecting it as untainted property then the proceedings under the Prevention of Money-Laundering Act, 2002 can be initiated against an accused.
25. The accused proceeded under the Prevention of Money-Laundering Act, 2002 may arise out of an offence which may be committed by some other person being proceeded under the schedule offence, however, it may be that the person may not have committed the schedule offence, however, he has been participant in the proceeds of crime, such indulgence, assistance or involvement in any process of activity connected with the proceeds of crime would attract criminal liability under Section 3 of Prevention of Money-Laundering Act, 2002. The foundation for proceeding under Section 3 of Prevention of Money-Laundering Act, 2002 is existence of schedule offence. Therefore, it is not necessary that a person against whom an offence under Section 3 of Prevention of Money-Laundering Act, 2002 is alleged must have been shown as accused in schedule offence.
26. It is true that if the schedule offence itself is not shown by the prosecution then the offence under Section 3 of Prevention of Money-Laundering Act, 2002 would not be attracted as there would be no proceeds of crime as per the definition provided under Section 2 (u) of the PMLA. However, where the schedule offence is shown even though may have been committed by some other accused person then it is always open for the prosecution to proceed under Section 3 of the PMLA in respect of accused persons, who are participants in the proceeds of crime.
27. Learned counsel for the applicants has relied upon the judgement of Vijay Madanlal Choudhary and others Versus Union of India and others, 2022 LiveLaw (SC) 633, to submit that once the applicants who have not been an accused in the schedule offence and the provisions of Section 3 of the PMLA would not be attracted. The aforesaid judgement of the Supreme Court was considered in the subsequent judgement of the same court in Pavana Dibbur Vs Directorate of Enforcement (supra). The Supreme Court in para 42 of the Vijay Madanlal Choudhary (supra) has observed as under:-
"From the bare language of section 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form -- be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money-laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence -- except the proceeds of crime derived or obtained as a result of that crime."
28. In the present case condition precedent for initiating the proceedings under Section 3 of the Prevention of Money-Laundering Act, 2002 exists, as there is a scheduled offence although may having committed by other accused persons and after investigation, chargesheet has been submitted against other accused persons in schedule offence, however, applicants as per prosecution case have participated in the proceeds of crime and as such, provisions of Section 3 of the PML Act can be continued against the applicants even if chargesheet is not submitted against applicants in the schedule offence.
29. In view of the aforesaid, submission of learned counsel for the applicants that the applicants have not been chargesheeted under the schedule offence as such cannot be proceeded under Section 3 of the Prevention of Money-Laundering Act, 2002 is without merit and is hereby rejected.
30. Consequently, the present application under Section 482 Cr.P.C. is dismissed.
Order Date :- 29.08.2024 K.K. Maurya