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Prevention Of Money Laundering Act (PMLA): Digest Of High Court Cases-2022
LIVELAW NEWS NETWORK
23 Jan 2023 7:07 AM GMT
LiveLaw reported almost 7,000 orders and judgments in 2022 from various High Courts across the country. Here is a Digest on decisions relating to Prevention of Money Laundering Act, 2002:1. Prevention Of Money Laundering Act | "For Money-Launderers Jail Is The Rule And Bail Is An Exception": Allahabad High CourtCase title - Anirudh Kamal Shukla v. Union Of India Thru. Assistant Dir....
LiveLaw reported almost 7,000 orders and judgments in 2022 from various High Courts across the country. Here is a Digest on decisions relating to Prevention of Money Laundering Act, 2002:
Case title - Anirudh Kamal Shukla v. Union Of India Thru. Assistant Dir. Directorate Of Enforcement Lko
Case Citation: 2022 LiveLaw (AB) 136
While rejecting the anticipatory bail application of a person booked under the Prevention of Money Laundering Act, 2002, the Allahabad High Court observed that for money-launderers Jail is the rule and bail is an exception.
The bench of Justice Krishan Pahal observes thus as it stressed that money Laundering as an offence is an economic threat to national interest and is committed by the white-collar offenders who are deeply rooted in society and cannot be traced out easily.
Case title - Sidhique Kappan vs. Directorate Of Enforcement Thru. Assistant Director Lucknow [CRIMINAL MISC. BAIL APPLICATION No. - 13642 of 2022]
Case Citation: 2022 LiveLaw (AB) 537
The Allahabad High Court granted bail to Kerala journalist Siddique Kappan in connection with a Prevention of Money Laundering Act (PMLA) case initiated against him by the Enforcement Directorate (ED).
Significantly, the Bench of Justice Dinesh Kumar Singh noted in its order that except for the allegations that ₹5K was transferred in the bank account of the co-accused (Atikur Rahman), there is no other transaction, either in the bank account of Kappan or in the Co-accused bank account.
"Even if it is believed that part of the proceeds of the crime was transferred to the bank account of the co-accused, Atikur Rahman that itself may not be sufficient to prove that the accused-applicant has dealt with the proceeds of crime amounting to Rs. 1,36,14,291/-which had been allegedly received by K.A. Rauf Sherif," the bench added (emphasis supplied).
Case Title: Ajay Kumar v Directorate of Enforcement
Citation: 2022 LiveLaw (Bom) 27
A two-judge bench of the Bombay High Court noted that the twin conditions for bail in section 45(1) of the Prevention of Money Laundering Act, 2002 which were declared unconstitutional by the judgment of the Apex Court in Nikesh T.Shah Vs. Union of India (2018) 11 SCC 1, stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018.
In doing so, the division bench has departed from the view earlier expressed by a single bench of the Bombay High Court in Sameer M. Bhujbal Vs. Assistant Director, Directorate of Enforcement.
Case Title: Mohammad Nawab Mohammad Islam Malik @ Nawab Malik vs The Directorate of Enforcement and Ors.
Citation: 2022 LiveLaw (Bom) 82
Case No: WP 648/ 2022
In its order refusing interim release of Maharashtra Cabinet Minister Nawab Malik, the Bombay High Court observed that prima facie claiming that a property is untainted would amount to an offence under section 3 of the PMLA 2002.
The court denied Malik interim release in his habeas corpus plea challenging PMLA proceedings. The crux of Nawab Malik's counsel's arguments was on the retrospective applicability of PMLA since ED had used the amended provision of section 3 of PMLA from 2013 and an explanation is inserted in the year 2019, for the transaction of the year 2003 and 2005.
However, the bench observed that a perusal of the unamended provisions of Section 3 mention "process or activity connected with proceeds of crime" as one of the ingredients. It's a wider term and its constitutional validity is not challenged. "What we prima facie feel that projection/claiming a property as untainted property is the objectionable act forming part of an offence under Section 3 of the Act of 2002."
Case title: Anil Vasantrao Deshmukh v. State of Maharashtra
Citation: 2022 LiveLaw (Bom) 373
The Bombay High Court on Tuesday granted bail to former Maharashtra home minister Anil Deshmukh, in a money laundering case being investigated by the Enforcement Directorate stating that Deshmukh, in all probability, "may not be ultimately convicted".
The bench of Justice N. J. Jamadar refused to rely solely on Sachin Waze's statements considering his contradictory stand before the Justice Chandiwal Commission wherein he denied all the allegations against Deshmukh. The court also cited Waze's chequered past to prima facie discredit him as a witness.
Case Title: SanjeevPalande v. Union of India
Citation: 2022 LiveLaw (Bom) 508
The Bombay High Court observed the stringent conditions for bail under section 45 of PMLA have to be considered reasonably. A finding that the accused is not guilty of the offence and that he is not likely to commit an offence if released on bail, are required only to assess the entitlement of bail, the court said.
Justice NJ Jamadar granted bail to Sanjeev Palande, personal secretary and co-accused of former state home minister & NCP leader Anil Deshmukh in the money laundering case being investigated by ED.
Case Title : Hiren Panchal & Anr.v. Union of India
Case Citation: 2022 LiveLaw (Cal) 265
The Calcutta High Court has held that the Supreme Court's suo moto orders extending the period of limitation during the Covid-19 pandemic do not apply and will not extend the 180 days period prescribed for provisional attachment of property under Section 5 of the Prevention of Money-Laundering Act, 2002. A single judge bench of Justice Moushumi Bhattacharya was hearing the plea moved by directors of K.P. Garments Private Limited, whose properties were provisionally attached by the ED on 30th September, 2021 and ideally should have been released after 180 days, ending on 31st March, 2022. However, the ED had retained the attachment citing SC's suo moto orders.
Case Title - M/s. Rashmi Metaliks Limited & Anr. v. Enforcement Directorate & Ors.
Case Citation: 2022 LiveLaw (Cal) 289
In a significant order, the Calcutta High Court has explained and deliberated upon the procedure of Search, Seizure of Property & Impounding of Records as provided under Section 17 (1) of the Prevention of Money Laundering Act. The bench of Justice Moushumi Bhattacharya stressed that the power of the Directorate of Enforcement under the PML Act rests upon the quartet-test of 'Search', 'Seize', 'Proceeds Of Crime' & 'Money-Laundering'. In other words, the Court has held that the power of search and seizure as provided under Section 17(1) of the PML Act must satisfy the defining characteristic of "money-laundering" [Section 3 of the PML Act] and "proceeds of crime" [Sections 2(1)(u)] as well as their respective procedural requirements as separately stipulated in Act.
Case Title: M/s Nik Nish Retail Ltd. & Anr. v. Assistant Director, Enforcement Directorate, Govt. of India & Ors
Case Citation: 2022 LiveLaw (Cal) 348
The Calcutta High Court held that once a regular case of "scheduled offence" is quashed, any subsequent case registered under Prevention of Money Laundering Act will also automatically stand quashed. The Single Judge Bench of Justice Subhendu Samanta, in deciding the question of whether any subsequently registered PMLA case can survive independently consequent to the quashment of a prior regular case involving a "scheduled offence", held: "This court is a view that the pendency of PMLA case cannot be sustained at this juncture. Moreover, Hon'ble Appellate Tribunal PMLA is of specific finding that no proceeds of crime of the PMLA case has arisen from the regular case No. RCBSK2009E0008. The said regular case has already been quashed by this court. Thus, at the situation there is no proceeds of crime by virtue of order of quashing of the regular case. The quashing of FIR of regular case automatically created a situation that the offences, stated and alleged in the FIR has no existence; thus the "Scheduled Offence" has also no existence after quashing of the FIR. When there is no "Scheduled Offence", the proceeding initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone. Thus, the question answered in affirmative."
Case Title: Enforcement Directorate v. Shri Debabrata Halder
Case Citation: 2022 LiveLaw (Cal) 376
The Calcutta High Court ruled that an order of bail issued by Special PMLA Court in respect of accused, who appeared before it pursuant to the summons, is not open to interference until and unless supervening circumstances are brought on record. Justice Tirthankar Ghosh said there is a difference with regard to releasing a person on bail after his arrest by the investigating agency under PMLA and after his appearance in response to summons from the court. The Court was dealing with a writ petition filed in respect of a commercial contract for supply of goods and services entered into in the year 2016 between a private service provider and the respondent Kolkata Municipal Corporation ("KMC"), an entity within the purview of "State" under Article 12 of the Constitution.
Case Title: DIRECTORATE OF ENFORECEMENT v. GAGANDEEP SINGH & ORS
Citation: 2022 LiveLaw (Del) 124
The Delhi High Court has held that the offence of money laundering under the Prevention of Money Laundering Act, 2002 is layered and multi-fold which includes the stages preceding and succeeding the offence.
Justice Chandra Dhari Singh added that the PMLA is a special enactment to combat the menace of money laundering, keeping in view the illegal practices that have been surfacing with respect to transfer and use of tainted money and subsequent acquisition of properties by using the same.
Case Title: Indiabulls Housing and Finance Limited v. Enforcement Directorate
Citation: 2022 LiveLaw (Del) 911
The Delhi High Court has set aside the proceedings under the Prevention of Money Laundering Act, 2002 against Indiabulls Housing and Finance Limited (IHFL) and its employees.
The division bench of Justice Anish Dayal and Justice Mukta Gupta relied on the decision of the Supreme Court in the case of Vijay Madanlal Choudhary & Ors v. Union of India & Ors.
Title: Satyendra Kumar Jain v. ED
Citation: 2022 LiveLaw (Del) 926
The Delhi High Court has dismissed the plea moved by Aam Aadmi Party leader Satyendar Jain challenging the transfer of proceedings against him in a money laundering case from a Special Court to another judge recently.
Justice Yogesh Khanna said that the apprehension of Enforcement Directorate (ED) was not flimsy or unreasonable.
"The apprehension raised were not at a belated stage, as the request for an independent evaluation were consistently made and rather the respondent rushed to this Court in Crl.MC. No.3401/2022 (supra), hence, all these facts were duly considered by the learned Principal District and Session's Judge, hence in view of above, it cannot be said the impugned order suffers from any illegality or need any interference," court said
14. Sick Or Infirm Persons Need Not Satisfy Twin Conditions For Bail Under PMLA: Delhi High Court
Title: DEVKI NANDAN GARG v. DIRECTORATE OF ENFORCEMENT
Citation: 2022 LiveLaw (Del) 952
The Delhi High Court has said that sick or infirm persons need not satisfy the twin conditions for the grant of bail under Section 45(1) of the Prevention of Money Laundering Act.
The twin conditions are that when an accused applies for bail under PMLA, the public prosecutor has to be given an opportunity to oppose the same and if the court is considering grant of bail, there must be reasonable grounds for it to believe that the person is not guilty and is unlikely to commit any offence while on bail. However, a proviso to the provision states that a person who is sick or infirm may be released on bail.
After perusing the Statement of Objects and Reasons of the PMLA, Justice Jasmeet Singh in an order on a bail application said the inclusion of the proviso for grant of bail shows the legislative intent to incorporate relaxations for persons below 16 years of age; a woman or those who are sick and infirm.
Case Title: Syed Akeel Shah Vs Directorate of Enforcement & Ors.
Citation : 2022 LiveLaw (JKL) 186
The Jammu and Kashmir and Ladakh High Court observed that Section 8(4) of the PMLA Act clearly provides that the authorized officer can forthwith take over possession of the attached property once the order of provisional attachment is confirmed by the Adjudicating Authority.
It clarified that the expression "forthwith" used in Section 8(4) of the Act denotes clear intention of the legislature not to wait for the period of limitation prescribed for filing of appeal under Section 26 of the Act.
Case Title : Syed Akeel Shah vs Directorate Of Enforcement.
Citation : 2022 LiveLaw (JKL) 192
The Jammu and Kashmir and Ladakh High Court observed that the question whether a particular case is of exceptional nature or not to warrant action under Section 8(4) of Prevention of Money Laundering Act can be determined only by the appellate authority at the time of considering the merits of the appeal and not by a Court in exercise of its writ jurisdiction.
Case Title: Bindreshwar Ganju v. Union of India
Citation: 2022 LiveLaw (Jha) 42
The Jharkhand High Court observed that twin conditions for bail under Section 45 of the Prevention of Money Laundering Act, 2002 that were declared unconstitutional by the Supreme Court in the case of Nikesh Tarachand Shah v. Union of India, stand revived on account of the defects purportedly being cured by the Parliament by way of 2018 Amendment Act.
On the basis of the above, Justice Subhash Chand denied a bail application of an accused under the Act.
18. Jharkhand High Court Denies Bail To Suspended IAS Officer Pooja Singhal In Money Laundering Case
Case title - Pooja Singhal v. Directorate of Enforcement
Case Citation: 2022 LiveLaw (Jha) 91
The Jharkhand High Court denied bail to Indian Administrative Services (IAS) officer Pooja Singhal in connection with a money laundering case registered against her pertaining to the alleged embezzlement of MGNREGA funds in Khunti district during 2009-2010 and some other suspicious financial transactions.
While denying her bail, the bench of Justice Sanjay Kumar Dwivedi noted that the apprehension of the Enforcement Directorate with regard to tempering with the evidence cannot be ruled out.
19. Enforcement DirectorateMay Probe PMLA Cases Throughout India, Including J&K: Karnataka High Court
Case Title: AnishMohammed Rawther v. The Deputy Director, Enforcement Directorate
Citation: 2022 LiveLaw(Kar) 4
The Karnataka High Court has said that the EnforcementDirectorate can probe a case under the provisions of Prevention of MoneyLaundering Act, throughout India, including the Union Territory of Jammu andKashmir. Justice Krishna S Dixit said, "Sub-section (2) of section 1 ofthe (PML) Act reads "It extends to the whole of India. Thus, keeping theRPC (Ranbir Penal Code) offences away from the Act would offend the veryparliamentary intent of extending this Act "to the whole of India."
Case Title: HARSHA D v. STATE BY HIGH GROUND POLICE STATION
Case No: WRIT PETITION No.19042 OF 2022
Citation: 2022 LiveLaw (Kar) 419
The Karnataka High Court has said that in light of the statutory framework of Prevention of Money Laundering Act, applications for recording statements of an accused/ suspect can only be made before the Special Court designated to try cases under the Act.
A single judge bench of Justice M Nagaprasanna said, "PMLA mandates that anything emanating from the PMLA shall be considered only by the Special Court."The bench made the observation while allowing the petition filed by one Harsha D, an accused in the PSI recruitment scam, challenging the order of the Magistrate which allowed the application filed by Directorate of Enforcement (ED) under Section 50(3) of the Act seeking permission to record written statement of five accused including the petitioner who were in its custody.
Case Title: Abdul Gafoor @ Kunhumon v. Asst. Director, Directorate of Enforcement & Ors.
Citation: 2022 LiveLaw (Ker) 258
The Kerala High Court has recently ruled that while considering a bail application under the Prevention of Money Laundering Act, the twin conditions specified in Section 45(1) of PMLA and the general principles governing the grant of bail under Section 439 of CrPC should be considered. After examining Sections 65 and 71 of the PMLA, Justice Kauser Edappagath found that PMLA has an overriding effect and the provisions of the CrPC would apply only if they are not inconsistent with the provisions of the said Act.
Case Title: Shri. Ahmed A.R.Buhari, S/o.Shri.Abdul Rahman Buhary Seyed v. The Assistant Director, Directorate of Enforcement
Citation: 2022 LiveLaw (Mad) 125
Madras High Court has refused to grant bail to Ahmed A.R Buhari, director and promoter of M/s Coastal Energen Private Limited (CEPL), accused of the offence under Section 3 of the Prevention of Money Laundering Act, 2002.
Justice G. Jayachandran noted that the principle of 'bail being the rule and jail being the exception' is not entirely applicable in special legislations like PMLA, NDPS Act etc. where 'Jail becomes the rule and bail becomes the exception' based on the gravity of offences committed.
"...Whether such classification is reasonable or not is the question primarily now subject matter pending before of the Apex Court. Till verdict is pronounced, as the Division Bench of this Court has observed in N.Umashankar & others -vs- The Assistant Director, Directorate ofEnforcement, Government of India, Chennai(2022)...., the constitutional validity of Section 45(1) of PMLA, 2002 found in the statute has to be held valid", the court clarified.
Case Title: P Rajendran v. The Assistant Director, Directorate of Enforcement
Citation: 2022 LiveLaw (Mad) 435
The Madras High Court has made it clear that Supreme Court's decision in Vijay Madanlal Choudhary and others v. Union of India and others does not preclude the Enforcement Directorate from prosecuting a person for offence of money laundering under PMLA, merely because such person was not prosecuted for the predicate offence.
The bench of Justices PN Prakash and Teeka Raman found force in the submission that while a person may not be involved in the original criminal activity that had resulted in the generation of "proceeds of crime", such person may later help the main accused in laundering the proceeds of crime.
24. Madras High Court Quashes ED's Money Laundering Proceedings Against DMK MP Jagathrakshakan
Case Title: S Jagathrakshakan v The Deputy Director, Directorate of Enforcement
Citation: 2022 LiveLaw (Mad) 468
The Madras High Court recently quashed Enforcement Directorate proceedings against DMK MP S Jagathrakshakan. A bench of Justice PN Prakash and Justice RMT Teeka Raman allowed the petition filed by the Minister after observing that the FIRs in the predicate offense were already quashed by a single judge.
While seeking to quash the proceedings under the Money Laundering Act, the petitioners relied on the decision of the Supreme Court in Vijay Madanlal Choudhary and others v. Union of India and others. In this case, the Supreme Court observed that If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.
In light of the above judgment, the court allowed the petition filed by the Minister and set aside the proceedings under the Money Laundering Act.
Case Title: Murali Krishna Chakrala Versus Deputy Director,
Citation: 2022 LiveLaw (Mad) 495
The Madras High Court has held that the chartered accountant (CA) is not required to go into the genuineness or otherwise of the documents submitted by his clients.
"A Panel Advocate, who has no means to go into the genuinity of title deeds and who gives an opinion based on such title deeds, cannot be prosecuted along with the principal offender. Applying the same anomaly, we find that the prosecution of Murali Krishna Chakrala, in the facts and circumstances of the case at hand, cannot be sustained," the division bench of Justice P. N. Prakash and Justice G. Chandrasekharan observed.
Case Title: Narendra Kumar Gupta v State rep by Assistant Director, Directorate of Enforcement
Citation: 2022 LiveLaw (Mad) 506
While allowing the bail plea of a man charged under the Prevention of Money Laundering Act, the Madras High Court reiterated that personal liberty could not be arbitrarily taken away unless in accordance with law.
The bench of Justice AD Jagadish Chandira, after observing that the petitioner was also suffering from a medical condition remarked that the man needed medical intervention.
Since there was no concrete ground for denial of personal liberty and being satisfied that the petitioner had complied with the twin conditions for granting bail, the court allowed the petition on the condition that the petitioner shall deposit the title deeds of immovable property worth 5 crores and executing a bond for a sum of rupees ten thousand.
Case Title: Southern Agrifurane Industries Private Ltd., v. The Assistant Director, Directorate of Enforcement
Citation: 2022 LiveLaw (Mad) 517
While dismissing a plea by a company challenging the proceedings initiated by Enforcement Directorate under the Prevention of Money Laundering Act, the Madras High Court observed that the two requirements to start an investigation by the ED are (i) commission of a predicate offence (which was a schedule offence) and (ii) prima facie material to show that such schedule offence has generated proceeds of crime.
Justice PN Prakash and Justice Anand Venkatesh observed that once these conditions are satisfied and the court is convinced that the investigation is conducted by the Directorate within their power, then the court could not act as a "stumbling block" in the progress of the investigation.
Case Title: Mohammad Arif v. Enforcement Directorate
Citation: 2022 LiveLaw (Ori) 96
The Orissa High Court denied bail to an accused under the Prevention of Money Laundering Act (PMLA) citing 'flight risk'. However, it ordered the Trial Court to expedite and conclude the trial preferably within a period of six months. While dismissing the bail application, a Single Judge of Justice Sanjeeb Kumar Panigrahi observed, "Since the petitioner is a resident of Delhi and there is likelihood of flight risk and misuse of the liberty of bail and the trial is likely to suffer, the present case does not inspire the confidence of this Court to use the judicial discretion to grant bail in favour of the petitioner."
Case title - Sukhpal Singh Khaira v. Assistant Director, Directorate of Enforcement
Case Citation: 2022 LiveLaw (PH) 12
The Punjab and Haryana High Court on Thursday granted bail to former Punjab MLA and Congress leader, Sukhpal Singh Khaira in connection with a money laundering case, registered against him in January 2021 on account of his alleged involvement in the smuggling of heroin, gold, and, illegal weapons. The Bench of Justice Sureshwar Thakur was of the opinion that at this stage, it can't be concluded that the Khaira has committed the offence under the PML Act.
Case title - Bhupinder Singh @ Honey v. Enforcement of Directorate
Citation:2022 LiveLaw (PH) 166
The Punjab and Haryana High Court has allowed the bail plea moved by Punjab Chief Minister Charanjit Singh Channi's nephew Bhupinder Singh in connection with an alleged illegal sand mining case under Sections 3/4 Prevention of Money Laundering Act.
Case title - Pranjil Batra v. Directorate of Enforcement [CRM-M-23705-2022 (O&M)]
Case Citation: 2022 LiveLaw (PH) 288
The Punjab and Haryana High Court has granted bail to a Money Laundering accused noting that he is an 'obese' person who weighs 153 kg and hence, considering his co-morbidities, his case would fall within the exception of being "sick" as carved out in the first proviso to Section 45 (1) of the Prevention of Money Laundering Act, 2002.
Case Title: C. Parthasarthy v. Director of Enforcement
Citation: 2022 LiveLaw (Tel) 46
the Telangana High Court ruled that accused under the Prevention of Money Laundering Act, 2002 is entitled to statutory bail under Section 167(2) of CrPC if the charge sheet is not submitted in terms of Section 173(2) of the Cr.P.C without completion of investigation. Justice K. Lakshman held that:
"At the cost of repetition, this Court holds that the complaint dated 19.03.2022 was not a final complaint based on which cognizance could have been taken. A complaint/report cannot be treated as final report unless the investigation is completed, In the present case, the investigation is admittedly not completed and the statutory period of sixty days expired on 21.03.2022. Therefore, in the absence of complete investigation and absence of filing a final complaint, the Petitioner is entitled for statutory bail under Section 167(2) of the Cr.P.C."
