IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 16th April, 2024
Pronounced on: 09th May, 2024
BAIL APPLN. 1268/2023
SANJAY KANSAL …..Applicant
Through: Mr. Siddharth Agarwal, Sr. Adv. with Mr. Malak Bhatt, Ms. Neeha Nagpal,
Ms. Arshia Ghose, Ms. Smridhi & Mr. Ayush Shrivastava, Advs.
versus
ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT ….. Respondent
Through:
Mr. Zoheb Hossain, Spl. Counsel for ED with Mr. Vivek Gurnani & Mr. Kartik Sabharwal, Advocates.
CORAM: HON’BLE MR. JUSTICE AMIT SHARMA JUDGMENT
AMIT SHARMA, J.
1.The present application under Section 439 of the Code of Criminal Procedure, 1973 (for short, ‗CrPC‘) read with Section 45 of the Prevention of Money Laundering Act, 2002 (for short, ‗PMLA‘) seeks regular bail in Complaint Case No. 25/2022 arising out of ECIR/DLZO-I/06/2020 under Sections 44 and 45 of the PMLA. The aforesaid ECIR was recorded on the basis of the scheduled/predicate offence which had arisen out of the FIR No. RC2202020E0005 (EO-II, CBI, New Delhi) dated 26.02.2020, registered under
Sections 120B read with Sections 420/468/471 of the Indian Penal Code (for short ‗IPC‘) and under Section 13 (2) read with Section 13 (1) (d) of Prevention of Corruption Act, 1988 (for short ‗PC Act‘).
2.The aforesaid FIR was registered by the CBI on a complaint of Shri Mukesh Dhingra, Deputy General Manager, Stressed Asset Management Branch II, State Bank of India, alleging that M/s Shree Bankey Bihari Exports Ltd. (hereinafter referred to ‗SBBEL‘) a public limited company promoted by Shri Amar Chand Gupta, was engaged in processing of agro commodities i.e., Gram Dal, Wheat Products, Besan etc. It was alleged that M/s SBBEL had availed credit facilities of Rs. 625 Crore from the consortium of 7 lenders with SBI as a lead lender and on account of irregular payment of the said loan, same was classified as Non-Performing Asset (‗NPA‘) on 27.02.2017. It is alleged that thereafter, on conduct of forensic audit, the said loan was declared as fraud on account of fudging of balance sheets, diversion of funds and related party transactions. It was further alleged that M/s SBBEL and its director have caused a wrongful loss to the tune of Rs. 604.81 Crore. It was further alleged that accused company and its directors were involved in bogus transactions relating to inventories and receivables, as the funds available with the company by way of proceeds from the sale of inventory and realization of receivables were diverted and not appropriated to reduce the outstanding loan. It was alleged that
the company misappropriated the legitimate fund obtained for working capital from the bank.
3.After investigation in the aforesaid ECIR, the respondent/ED filed a complaint before the learned Special Court against 47 persons including the present applicant, who has been arrayed as accused No. 42 at serial No. (A-42) for commission of offence of money laundering as defined under Section 3 and
punishable under Section 4 of the PMLA Act.
4.During the course of investigation, the applicant was arrested on 27.08.2022 and has been in judicial custody since then. The role of the present applicant as alleged in the complaint is that he was nephew of accused Amar Chand Gupta (A-2), who was promoter and director of M/s SBBEL and in connivance with the latter; he had played an instrumental role in opening of various firms on papers. It is alleged that in furtherance of the criminal conspiracy, the present applicant induced indigent people to open up paper firms at his behest. It is alleged that the said paper firms were dummy entities and were involved in bogus sales and purchases with M/s SBBEL. It is alleged that the present applicant was responsible for laundering of money at the behest and in furtherance of conspiracy with the co-accused persons to an amount of almost Rs. 50 Crore.
SUBMISSIONS ON BEHALF OF THE APPLICANT
5.Learned Senior Counsel appearing on behalf of the applicant submits that M/s SBBEL was heading a group of 8 companies. It was submitted that CBI had registered 8 RCs and accordingly, 8 ECIRs were registered by Enforcement Directorate. After completion of investigation one complaint was filed with
respect to 7 ECIRs and one separate complaint was filed in the present ECIR. It was submitted the applicant was not named in the FIR, on the basis of which ECIR in the present case was registered. It was submitted that the applicant has been made an approver with respect to the FIR registered at the instance of the CBI and has been cited as a witness in the chargesheet filed by the CBI in RC059/2021/A0001/2021 titled ‗CBI v. M/s Gagan Pulses Pvt. Ltd. &Ors.‘ It was submitted that the applicant was a mere employee acting in the capacity of field boy carrying out the instructions of director of M/s SBBEL namely, Mr. Amar Chand Gupta. It was argued that beneficiary of the alleged transactions were the directors of the said company and the present applicant was not a beneficiary. It
is further submitted that the applicant, even as per the case of the prosecution, was not a Key Managerial Person (KMP) in the said company. It was submitted that the complaint in the present complaint stands filed, charges have not been framed and the trial is likely to take considerable period of time, therefore, the applicant may be released on bail.
6.It was further submitted that the material on which the prosecution relies upon are the statements made by witnesses which are not reliable as the same suffer from practice of being identical to the extent that the cut, copy, paste technique has been used to array the applicant as an accused. It was argued that in the statement of the applicant wherein references have been made towards paper firms are identical to the extent of being cut, copy, paste; thus, casting aspersions over the veracity of the statements. It was further submitted that similarly situated accused persons have not been arrested by the Enforcement Directorate. It was submitted that brother of the present applicant, who was a Chief Accountant has been arrayed as a co-accused without arrest. Attention of this Court was drawn to the portion of the complaint to demonstrate that the other co-accused persons, who have admitted to opening of the paper firms and assisted the main accused relating to bogus sham transactions, have not been arrested.
7.Learned Senior Counsel has relied upon following judgments:
i. Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., 2022 SCC Online SC 929;
ii.Mohd. Muslim alias Hussain v. State (NCT of Delhi), 2023 SCC OnLine SC 352;
iii.Vernon v. State of Maharashtra, 2023 SCC OnLine SC 885;
iv.Vijay Agrawal Through Parokar v. Directorate of Enforcement, BAIL APPLN. 1762/2022 decided on 29.05.2023 by a Co-ordinate Bench of this Court;
v.Ashish Mittal v. SFIO, BAIL APPLN. 251/2023 decided on 03.05.2023 by a Co-ordinate Bench of this Court;
vi.Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586;
vii. Jai Narayan Sharma v. Asst. Director, Directorate of Enforcement, Order dated 05.09.2023 in Criminal Appeal No. 2726/2023 (Arising out of S.L.P. (Crl.) No. 11287/2023);
viii. Benoy Babu v. Directorate of Enforcement, Order dated 08.12.2023 in S.L.P. (Crl.) No. 11644-11645/2023;
ix.Sanjay Agarwal v. Directorate of Enforcement, 2022 SCC OnLine SC 1748;
x.Union of India v. K.A. Najeeb, (2021) 3 SCC 713;
xi.Raman Bhuraria v. Directorate of Enforcement, BAIL APPLN. 4330/2021 decided on 08.02.2023 by a Co-ordinate Bench of this Court;
xii.Ramesh Manglani v. Directorate of Enforcement, BAIL APPLN. 3611/2022 decided on 30.05.2023 by a Co-ordinate Bench of this Court;
xiii.Chandra Prakash Khandelwal v. Directorate of Enforcement, BAIL APPLN. 2470/2022 decided on 23.02.2023 by a Co-ordinate Bench of this Court;
xiv. Dr. Bindu Rana v. SFIO, BAIL APPLN. 3643/2022 decided on 20.01.2023 by a Co-ordinate Bench of this Court;
xv. State of Madhya Pradesh v. Sheetal Sahai & Ors. (2009) 8 SCC 617;
xvi. Soma Chakravarty v. State through CBI, (2007) 5 SCC 403;
xvii. Chanda Deepak Kochhar v. CBI, 2023 SCC OnLine Bom 72;
xviii.Santosh v. State of Maharashtra. (2017) 9 SCC 714;
xix.Shri Pradeep Koneru v. Directorate of Enforcement & Anr., Order dated 23.08.2019 passed by Division Bench of this Court in W.P. (Crl.) No. 2353/2019;
xx.Satish Babu Sana v. Directorate of Enforcement &Anr., Order dated 23.08.2019 passed by Division Bench of this Court in W.P. (Crl.) No. 2903/2019;
xxi. Gurdev Singh v. Directorate of Enforcement, Order dated 25.01.2024 in SLP (Crl.) No. 16688/2023;
xxii.Sanjay Jain v. Enforcement Directorate, BAIL APPLN. 3807/2022 decided on 07.03.2024 by Co-ordinate of Bench of this Court.
SUBMISSIONS ON BEHALF OF DIRECTORATE OF ENFORCEMENT/RESPONDENT
8.Learned Special Counsel for Directorate of Enforcement (for short ‗ED‘) has submitted that the applicant has not been able to satisfy the twin test as laid down in Section 45 of the PMLA. It is submitted that public money of more than Rs. 604.81 Crore have been siphoned off by the accused company M/s SBBEL. It was submitted that the present applicant who is the nephew of accused Amar
Chand Gupta (A-2) has played a vital role in the entire conspiracy. It was submitted that the present applicant was proprietor of entities, namely, Kansal Enterprises and Munshi Ram and Sons, who has been shown as supplier to M/s SBBEL, and has actively participated in the creating bogus transactions. It was alleged that the present applicant was assigned the work of predating indigent people as entry operators.
It was pointed out that, during the course of investigation, the proprietors of the dummy firms were examined, who had named the present applicant, as the person to whom they had handed over the cheque books after appending signatures on both sides. It was further submitted that proprietors of these firms had also named the present applicant as a person at whose behest the bank accounts were opened to accommodate the entries to various group companies of M/s SBBEL. Attention of this Court was drawn to various portion of the complaint wherein the gist of examination of these proprietors has been recorded. It was submitted that most of these operators were from indigent background and were lured to open bogus firms to provide entries to M/s SBBEL through the present applicant. It was further argued that the present applicant in his statement under Section 50 of the PMLA Act had also
admitted the fact that he had opened the firms and the accounts at the behest of accused Amar Chand Gupta (A-2). It was argued that modus operandi adopted by accused no.1 company M/s SBBEL was that the bogus business entities under its control was projecting circular movement of funds under the garb of bogus sale and bogus purchase with the intention to siphoning off the bank fund and simultaneously to enhance its bogus turn over as well.
9.Finally, it was submitted that the present applicant knowingly assisted in the commission of crime of money laundering by accommodating bogus sale and bogus purchase of M/s SBBEL through his firms. It was alleged that M/s Munshi Ram and Sons, of which the present applicant was a proprietor, had
accommodated bogus sale to the tune of Rs.9,40,67,750/-. Similarly, the other proprietorship firm of the present applicant namely, M/s Kansal Enterprises had accommodated bogus sale to the tune of Rs. 10,02,55,323/- and paper purchase to the tune of Rs. 3,25,63,820/-. It was argued that the present applicant was maintaining day-to-day transactions with the paper entities as mentioned hereinabove under the garb of fake sale and purchase. It is also argued that the applicant had used the cheques of these paper entities to purchase jewelleries in the name of his wife, son, brother-in-law and mother-in-law. It was further submitted that so far as the fact that the applicant has been made an approver in the other FIR filed by the CBI, the same would have no bearing in the present PMLA complaint.
10.Learned Special Counsel for the ED has been placed reliance on the following judgments: A.
i.Section 3 of the Prevention of Money Laundering Act, 2002: Definition of the „Money-Laundering‟
ii.Vijay Madanlal Choudhary & Ors. v. Union of India &Ors., 2022 SCC Online SC 929; (Paras 263-284)
iii.V. Balaji v. Karthik Desari & Anr., 2023 SCC Online SC 645 (Para 100)
Anoop Bartaria vs. Dy. Director of Enforcement Directorate & Anr. SLP (Crl.) No. 2397-98/2019 (Paras 27-28)
B. Twin Conditions for the Grant of Bail in PMLA Cases
i. Vijay Madanlal Choudhary &Ors. v. Union of India &Ors., 2022 SCC Online SC 929;(Paras 371-421);
ii. Satyendar Kumar Jain v. Directorate of Enforcement, in BAIL APPLN. 3590/2022 decided on 06.04.2023 by a Coordinate Bench of this Court: 2023:DHC:2380;
iii.The Asstt. Director Enforcement Directorate v. Dr. V.C. Mohan, Order dated 04.01.2022 passed by the Hon‘ble Supreme Court in Criminal Appeal No. 21 of 2022 (arising out of SLP (Crl.) No. 8441/2021);
iv.The Directorate of Enforcement v. M. Gopal Reddy & Anr., decided by Hon‘ble Supreme Court vide judgment dated 24.02.2022 in Criminal Appeal No. 534/2023 (arising out of SLP (Crl.) 8260/2021);
v.Union of India v. Varinder Singh, (2018) 15 SCC 248;
vi.Bimal Kumar Jain v. Directorate of Enforcement, BAIL APPLN 2438/2022 decided on13.09.2022 by a learned Single Judge of this Court;
vii.Bimal Kumar Jain &Anr. v. Directorate of Enforcement, 2021 SCC Online 3847;
viii.Christian Michael James v. Directorate of Enforcement, BAIL APPLN. 2566/2021 decided on 11.03.2022 by a Coordinate Bench of this Court;
ix.Raj Singh Gehlot v. Directorate of Enforcement, BAIL APPLN. 425/2021, decided on 02.03.2022 by a Coordinate Bench of this Court.
x.Sajjan Kumar v. Directorate of Enforcement, BAIL APPLN. 926/2022, decided on 13.06.2022 by a Coordinate Bench of this Court;
xi.Bimal Kumar Jain v. Directorate of Enforcement, Order dated 27.02.2023 in SLP (Crl.) 9656/2022;
xii.Bimal Kumar Jain v. Directorate of Enforcement, Order dated 04.01.2022 in SLP (Crl.) 7942/2021;
xiii.Raj Singh Gehlot v. Directorate of Enforcement, Order dated 31.05.2022 in SLP (Crl.) 4761/2022;
xiv. Gautam Thapar v. Directorate of Enforcement, BAIL APPLN. 4185/2021, decided on 02.03.2022 by a Coordinate Bench of this Court: 2022:DHC:799;
C.Witness in Predicate Offence can be made an accused in PMLA
i. State of Bombay v. Kathi Kalu Oghad, 1961 SCC Online SC 74;
ii. Ramanlal Bhogilal Shah v. D.K. Guha, (1973) 1 SCC 696;
iii. Laxmipat Choraria v. State of Maharashtra, 1967 SCC Online SC 30;
iv. Mohan Lal Rathi v. Union of India Through Directorate of Enforcement, Zonal Office, LKo, And Another., 2023: AHCLKO:59826;
v.Mohan Lal Rathi v. Union of India & Anr., Order dated 28.11.2023 in SLP (Crl.) No. 12870/2023.
vi. Tarun Kumar v. Assistant Director Directorate of Enforcement, 2023 INSC 1006.
REJOINDER ON BEHALF OF THE APPLICANT
11. Learned Senior Counsel by way of rejoinder submitted that the scheduled/predicate offences are directly related to offences under the PMLA and the fact that the present applicant has been granted status of approver in the chargesheet filed with respect to scheduled/predicate offence, the same would be relevant for the purpose of present bail application. It is pointed out that during the pendency of the present bail application, the applicant‘s application to become an approver has been allowed by the learned Special Judge in the predicate offence of the present ECIR. It is further submitted in the other predicate offences, the applicant has been granted anticipatory bail. It is submitted that jewellery as claimed by the prosecution in the complaint is worth about Rs. 1 Lakh. It is further submitted that the respondent in their complaint itself have made distinct category of accused and the present applicant has been cited as A-42. Attention of this Court was drawn to paras no. 10.20, 10.21 and 10.22 of the complaint filed by the ED, to reflect that Amit Kansal, brother of the present applicant, who was working as Chief Accountant in M/s SBBEL, has been chargesheeted without arrest. Similarly, Naresh Kumar Punia and Sanjiv Kumar, both working as accountants in M/s SBBEL, despite giving inculpatory
statements have been cited as witnesses. It is submitted that the present applicant is also similarly placed; therefore, the prosecution has adopted the policy of pick and choose without any justifiable reason. It is further submitted that the applicant has joined investigation at least 18 times and had cooperated with the same. The complaint stands filed and further investigation is continuing and
therefore, there is no necessity of the applicant being kept in judicial custody and his continued custody would tantamount to pre-trial conviction.
FURTHER SUBMISSIONS ON BEHALF OF THE RESPONDENT
12.Learned Special Counsel draws the attention of this Court to Section 44 of the PMLA: SECTION 44 (1) AND EXPLANATION TO SECTION 44(1)
“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;‖ It is pointed out that trial of the scheduled offence as well as the trial under
the PMLA will not be construed as a joint trial and he further relies upon para 19 of the judgment of the Hon‘ble Supreme Court in Kathi Kalu Oghad (supra).
13. Reliance was also placed on judgment of learned Single-Judge of Allahabad High Court in Mohan Lal Rathi v. Union of India Thru. Directorate Of Enforcement, 2023:AHC-LKO:59826, wherein it has been
recorded as under: ―
56. Grant of pardon under Section 306 Cr.P.C. would not fall within the purview of the words ‘finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the scheduled offence against him’ used by the Hon‘ble Supreme Court in Vijay Madanlal Chaudhary (Supra). The pardon granted under Section 306 Cr.P.C. to a person in a scheduled offence would not ipso facto result in his acquittal in the offence under the PMLA, unless, of course, the accused person seeks pardon in the case under PMLA also by making a full and true disclosure of the whole of the circumstances within his knowledge relative to the offence under PMLA also.‖
14. Learned Special Counsel also drew the attention of this Court to the judgment of the Hon‘ble Supreme Court in State (Delhi Administration) v. Jagjit Singh, 1989 Supp (2) SCC 770, to demonstrate that the person, who has been granted status of approver under Section 306 of the Cr.P.C. would be
legally bound to answer any question which is relevant to the case in which he has become an approver even if the answer to such a question is likely to incriminate him directly or indirectly. It was submitted that proviso to Section 132 of the Indian Evidence Act, 1872 (for short ‗IEA‘), expressly provides that such an answer given by a witness shall not subject him to any arrest or prosecution and nor the same can be proved against him in any criminal proceedings except for a prosecution for giving false evidence by such answer.
15.Heard learned counsel for the parties and perused the record.
16.This Court will first deal with the issue, whether the fact that the applicant has become an approver in the predicate offence in the present ECIR would have any bearing in the proceedings under the PMLA. The contention of the learned Senior Counsel for the applicant is that once a person becomes an approver then, he is given a pardon in the said case and becomes a witness to the prosecution subject to conditions mentioned in the order granting him pardon. It was further contented that once such a pardon is granted, the applicant in the predicate offence stands discharged and, therefore, the following observation of the Hon‘ble Supreme Court in Vijay Madanlal Choudhary (supra) gets attracted: ―253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The uthorities under the 2002 Act cannot resort to action against any person for money-laundering
on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression ―derived or
obtained‖ is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause ―proceeds of crime‖, as it obtains as of now.
17.The Hon‘ble Supreme in Pavana Dibbur (supra) was adjudicating upon an issue wherein the appellant had not been arrayed as accused in the chargesheet filed with respect to alleged scheduled offences, but was made an accused for offence punishable under Section 3 of the PMLA. The appellant therein relied upon the aforesaid paragraph of the Vijay Madanlal Choudhary (supra) and it was submitted that the case of the appellant therein was on a better footing as she was not shown as accused in the scheduled/predicate office. The Hon‘ble Supreme Court after examining the issue held and observed as under: “15. The condition precedent for the existence of proceeds of crime is the existence of a scheduled offence. On this aspect, it is necessary to refer to the decision of this Court in the case of Vijay Madanlal Choudhary1. In paragraph 253 of the said decision, this Court held thus:
“253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for moneylaundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression ―derived or obtained‖ is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for moneylaundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause ―proceeds of crime‖, as it
obtains as of now.‖ (underline supplied)
16. In paragraphs 269 and 270, this Court held thus: “269. 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.
270. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of moneylaundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence,
irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has
been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act — for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money-laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the
person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till
31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause (ii) in Explanation inserted in 2019 is of no
consequence as it does not alter or enlarge the scope of Section 3 at all.‖
(underline supplied)
17. 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 Choudhary1 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.
18. 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