Summary
A property developer and his company, who had received large sums from entities controlled by the main accused in a Syndicate Bank fraud, sought quashing of the Enforcement Directorate's ECIR and prosecution complaint under the Prevention of Money Laundering Act, contending that they were mere buyers and sellers without knowledge that the money was proceeds of crime and that PMLA offences are non-cognizable. The Supreme Court dismissed the petitions, holding that all PMLA offences are cognizable and non-bailable, that knowledge is not a condition precedent for lodging a complaint since Section 3 also covers one who directly or indirectly attempts to indulge in or is actually involved in any process connected with proceeds of crime, and that the complaint disclosed prima facie involvement warranting trial.
Issues
- Whether offences under the Prevention of Money Laundering Act, 2002 are cognizable, and whether the prosecution complaint was lodged by an officer authorised under Section 45.
- Whether knowledge that one is dealing with proceeds of crime is a sine qua non for the offence of money laundering under Section 3, such that a complaint cannot be lodged without material showing such knowledge.
- Whether the ECIR and prosecution complaint against persons not named in the predicate FIR or the ECIR should be quashed under Section 482 CrPC as an abuse of process.
- Whether a special leave petition that omits the very document it seeks to have quashed is liable to be rejected on that ground.
Provisions considered
- Section 45 and its Explanation (inserted by the Finance (No. 2) Act, 2019), Prevention of Money Laundering Act, 2002The 2005 substitution of sub-section (1), the unchanged heading and the 2019 Explanation leave no doubt that all PMLA offences always were and are cognizable and non-bailable notwithstanding the CrPC, and authorised officers may arrest without warrant subject to Sections 19 and 45; the complaint here was filed by an officer authorised by the Government order of 11.11.2014. (¶¶ 20, 21, 22, 23, 24)
- Section 3 with its Explanation, and Sections 2(1)(u) and 2(1)(y), Prevention of Money Laundering Act, 2002The definition covers whosoever directly or indirectly attempts to indulge, knowingly assists, knowingly is a party, or is actually involved in any process or activity connected with proceeds of crime; knowledge is therefore not a condition precedent, and direct involvement with proceeds of scheduled offences was alleged with particulars. (¶¶ 25, 26, 27)
- Section 482, Code of Criminal Procedure, 1973The power to quash is exercised sparingly and only in the rarest of rare cases within the Bhajan Lal categories; the petitioners' case fell within none of them and no abuse of process was shown. (¶¶ 28, 29)
- Sections 120B, 420, 467, 468, 471, 472 and 474 IPC; Section 13(2) read with 13(1)(d) of the 1988 Act, Indian Penal Code, 1860 and Prevention of Corruption Act, 1988The predicate offences in the CBI FIR and chargesheet against the bank fraud accused, all of which are scheduled offences under Section 2(1)(y) of the PMLA. (¶¶ 7, 8, 26)
Held
- All offences under the PMLA are cognizable and non-bailable notwithstanding anything in the CrPC, as the 2019 Explanation to Section 45 clarifies for the removal of doubts; the objection that the investigation and complaint were without authority of law has no substance. (¶ 24)
- It would be a folly to treat knowledge that one is dealing with proceeds of crime as a condition precedent for lodging a complaint under the PMLA; apart from one who knowingly assists or is knowingly a party, a person who directly or indirectly attempts to indulge in or is actually involved in any process or activity connected with proceeds of crime is guilty of money laundering. (¶¶ 25, 27)
- Where the prosecution complaint narrates sufficient material particulars prima facie showing the petitioners' direct involvement in activities connected with proceeds of crime, the court will not examine the merits at the quashing stage; the allegations require a trial, and given the threat money laundering poses to financial systems and sovereignty, a lenient view would be a travesty of justice. (¶¶ 26, 27, 29)
- Non-production along with a special leave petition of the relevant documents, especially the document in respect of which relief is sought, is strongly deprecated and may by itself be a ground for rejecting the petition at the outset; the Registry is directed to verify this at registration. (¶¶ 30, 31, 35)
Result
Special leave petitions dismissed; interim protection vacated; the Enforcement Directorate at liberty to proceed with the prosecution complaint, no custodial interrogation being required as investigation is complete; observations are prima facie only and the trial court to decide on merits.