Savita Srivastava And Another vs Directorate Of Enforcement ...
2022 Latest Caselaw 21575 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

Reserved on 15.11.2022
 
 Delivered on 19.12.2022
 
Court No.10
 
Case :- APPLICATION U/S 482 No. - 5185 of 2022
 
Applicant :- Savita Srivastava And Another
 
Opposite Party :- Directorate Of Enforcement Thru.Assistant Director Zonal Officer
 
Counsel for Applicant :- Ratnesh Chandra,Sharad Kumar Shukla
 
Counsel for Opposite Party :- Kuldeep Srivastava
 

 
ALONG WITH 
 

 
Case :- APPLICATION U/S 482 No. - 7352 of 2022
 
Applicant :- Satish Kumar Kashyap
 
Opposite Party :- Directorate Of Enforcement Lko Thru. Its Ass. Director
 
Counsel for Applicant :- Ratnesh Chandra,Abhishek Pratap,Mohit Pandey
 
Counsel for Opposite Party :- Kuldeep Srivastava
 

 
Hon'ble Dinesh Kumar Singh,J.

1. Heard Mr. Ratnesh Chandra, learned counsel for the applicants, as well as Mr. Kuldeep Srivastava, learned counsel for the respondent Enforcement Directorate (hereinafter referred to as the "ED").

2. In the instant applications, under Section 482 of The Code of Criminal Procedure, 1973 (hereinafter referred to as the "CrPC"), common question of law and facts are involved and, therefore, both the applications are being taken up together and decided by this common judgment & order.

3. Case relates to misuse of funds allocated under the National Rural Health Mission (hereinafter referred to as the "NRHM") launched by the Government of India on 12.04.2005 with a view to provide accessible, adequate and affordable health service to all persons, particularly, to vulnerable section of the society, residing in remote areas. The separate Memorandum of Understandings were entered into between the Central Government and the State Governments for decentralizing the implementation of the scheme and mobilizing the resources for implementing the said scheme. Such a Memorandum of Understanding with the Government of Uttar Pradesh was entered into on 12.11.2006. As per the said Memorandum, 85% funds were to be provided by the Central Government whereas the State Government was to contribute 15% of the total funds for the Mission.

4. The State Health Society (hereinafter referred to as the "SHS") was established under the Chairmanship of Chief Secretary, Government of Uttar Pradesh and the existing State Agencies involved in implementation of tuberculous, blindness and leprosy eradication as well as other State Empowered Committee for RCH etc. were merged with he SHS.

5. On the allegation of large scale bungling, misappropriation and cheating of public funds, while implementing the NRHM by the government officials, in active connivance and conspiracy with private persons, three Public Interest Litigation Petition Nos. 3611 (M/B) of 2011, 3301 (M/B) of 2011 and 2647 (M/B) of 2011 came to be filed. This Court vide order 15th November, 2011 directed as under:-

".....................We are prima facie convinced that gross irregularities financial and administrative appear to have been committed in the execution and implementation of NRHM including the matter of award of contracts, procurement of goods, article and etc. at various levels.

.................The facts and circumstances, aforesaid make out a case for reference to CBI for making a preliminary enquiry in the affairs of NRHM in the entire State of U.P. right from the very inception of the NRHM.

We, therefore, direct the Director, CBI to conduct a preliminary enquiry in the matter of execution and implementation of the NRHM and utilization of funds at various levels during such implementation in the entire State of U.P. and register regular case in respect of persons against whom prima facie cognizable offence is made out and proceed in accordance with law. The preliminary enquiry shall be conducted from the period commencing year 2005-06 till date....."

6. In compliance of the directions issued by this Court, the CBI, after making preliminary inquiries, registered several FIRs, including FIR No. RC/DST/2012/A/0001 dated 23.02.2012, under Sections 120-B read with Sections 420, 467 and 471 of the Indian Penal Code, 1860 (hereinafter referred to as the "IPC") and Section 13(2) read with Sections 13(1)(d) of the Prevention of Corruption Act, 1988 (hereinafter referred to as the "PC Act").

7. The CBI had registered another FIR No. RC/DST/2012/A/0003 under Sections 420, 467, 468, 471 and 477A read with Section 120-B IPC and Sections 13(2) read with Sections 13(1)(d) of the PC Act.

8. The FIR was in respect of matter of irregularities in supply of medicines, equipment and other items at exorbitant price by Mr. Sanjay Agarwal, Proprietor, M/s Charisma Healthcare, Lucknow, Mr. Jugal Kishore, Director, M/s Jackson Laboratories Private Limited, Amritsar and Mr. Raees Alam Siddiqui, Proprietor M/s Seva Enterprises, Lucknow in the year 2009-2010 under NRHM.

9. The FIR No. RC/DST/2012/A/0003 was in respect of matter relating to irregularities in utilization of funds allocated to Chief Medical Office of District Bahraich, Shravasti, Balrampur and Gonda for purchase of medicines, equipment and surgical equipment under the NRHM against various government suppliers, private firms and companies.

10. In FIR No. RC/DST/2012/A/0001 several charge-sheets came to be filed, while in FIR No. RC/DST/2012/A/0003 the CBI filed five charge-sheet bearing charge sheet nos. 02 of 2014 to 06 of 2014 dated 28.02.2014.

11. Accused-applicant, Satish Kumar Kashyap, who was working on the post of Chief Pharmacist in the office of Chief Medical Officer, Gorakhpur, stood retired from the said post on 28.02.2019.

12. Accused-applicant, Savita Srivastava is the Proprietor of M/s B. L. Enterprises and manages the affairs of the firm, M/s Medicine Times on the basis of the power of attorney, whereas accused-applicant, Pooja Srivastava is the Proprietor of M/s Sristhi Enterprises. These firms had supplied certain items to the office of Chief Medical Officer, Shravasti allegedly at exhorbitant price under the NRHM for the year 2008-2009 and 2009-2010.

13. Allegation against the accused-applicant, Satish Kumar Kashyap is that while he was posted as Pharmacist in Gorakhpur, he entered the surgical items/medical equipment in stock books in his hand-writing. He, in criminal conspiracy with Dr. R.N. Singh, who was the District Project Officer/Chief Medical Officer, Family Welfare, Gorakhpur, recorded receipts of the materials on the bills and made false entries that the materials were received in the store. It is alleged that accused-applicant, Satish Kumar Kashyap abused his official position as public servant and entered into criminal conspiracy with suppliers in furtherance of which he forged quotations which were used as genuine for cheating the government exchequer by making/showing supplies in the district at exorbitant price.

14. The ED registered ECIR/10/PMLA/LKZO/2012 against 14 accused, including accused-applicant, Satish Kumar Kashyap, who was posted as Pharmacist in the office of Chief Medical Officer, Gorakhpur, accused, Sanjay Agarwal, Proprietor, M/s Charisma Healthcare, Lucknow, Raees Alam Siddiqui, Proprietor, M/s Seva Enterprises, Lucknow, Jugal Kishore, Director, M/s Jackson Laboratories Private Limited, 13, Joshi Colony, Mall Road, Amritsar and ten others officials of Health Department, who were responsible for implementing the NRHM in their respective places.

15. In respect of accused-applicants, Savita Srivastava and Pooja Srivastava, ED registered ECIR/12/LKZO/2012 and after completing the investigation, separate complaints had been filed under Section 45 PMLA.

16. Application No.7352 of 2022 has been filed for quashing of the proceedings of Complaint Case No.535 of 2021 under Section 3 read with Section 4 of the PMLA, pending in the Court of Special Judge, PMLA Court, Lucknow. Further prayer has been made for quashing of the summoning order dated 12.01.2022, so far as it relates to the accused-applicant, and also for quashing of the order dated 07.05.2022 by which bailable warrants of arrest were issued.

17. Application No. 5185 of 2022 has been filed for quashing of the Complaint dated 31.03.2021, for quashing of the orders dated 27.01.2022 and 27.06.2022 by means of which cognizance was taken and its consequential proceedings against the accused-applicants in Criminal Case No.295/2021, under Section 3/4 PMLA, arising out of ECIR/12/LKZO/2012 lodged at Police Station ED, Lucknow, pending in the Court of learned Sessions Judge/Special Judge, PMLA, Lucknow.

18. The only ground, which has been urged on behalf of the accused-applicants, is that since the proceeds of crime, which have been attached by the ED in both the cases is less than Rs. 1 Crore, the complaints filed by the ED against the accused-applicants are not cognizable and no cognizance could have been taken by the learned Sessions/Special Judge and further proceedings are nullity.

19. On the other hand, Mr. Kuldeep Srivastava, learned counsel for the respondent - ED Directorate, has submitted that based on FIR No. RC/DST/2012/A/0001 dated 23.02.2012 registered by the CBI, STF, New-Delhi, ECIR/10/PMLA/LKZO/2012 was registered on 14.04.2012 in the Zonal Office of ED, Lucknow against the accused persons for commission of offence under Section 3 of the PMLA punishable under Section 4 of the PMLA and accordingly the case was taken up for further investigation by the ED. The learned counsel has further submitted that the proceeds of crime was identified to the tune of Rs. 01,02,41,900/- in terms of Section 2(1)(u) of the PMLA and proceeds of crime, amounting to Rs. 56,37,860/- could be attached by by PAO No.9 of 2019 dated 31.12.2019 under Section 5 of the PMLA and the same has been confirmed by the Adjudicating Authority of the PMLA, New Delhi vide order dated 07.06.2021. It has been further submitted that the complaint dated 13.08.2021 had been filed against the 14 accused persons before the Special Judge, PMLA, Lucknow. It has been further submitted that what is relevant is not the attached proceeds of crime, but the total amount of proceeds of crime and in this case though attached proceeds of crime is Rs. 56,37,860/-, but the total proceeds of crime involved is Rs. 01,02,41,900/-, as mentioned above. The learned counsel has, therefore, submitted that these applications have no merit and substance and the same are liable to be dismissed.

20. Offence of money laundering is clearly a distinct and distinguishable from predicate offence. The FIR could be triggering point for initiation of proceedings under the PMLA. If it is found that the accused have also committed an offence which is punishable under the PMLA, the prosecution under the PMLA will be initiated by filing complaint under Section 45 of the PMLA. The scheduled offence and offence of money laundering are mutually exclusive and independent of each other. The Supreme Court in recent judgment reported in 2022 SCC OnLine SC 929 (Vijay Madanlal Choudhary and others Vs. Union of India and others in paragraph-269 has held as under:-

"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."

21. The offence under Section 3 of the PMLA does not prescribe any limit of proceeds of crime for initiating the proceedings under the PMLA. Section 4 of the PMLA also does not provide that the offence under Section 3 of the PMLA would be punishable when the proceeds of crime is Rs. 1 Crore or more. The offence of money laundering is made punishable for activities related to money laundering but not the quantum of money. The attachment proceedings are associated with civil proceedings mentioned in the PMLA. Even for the civil action i.e. attachment of proceeds of crime and property under the PMLA, it is not a condition precedent that against such a person, there should existing proceedings under scheduled offences. The definition of proceeds of crime and property under the PMLA would allow for confiscation of property derived or obtained directly or indirectly from proceeds of crime relating to a scheduled (predicate) offence, including income, profit and other benefits from the proceeds of crime. These definitions also allow for confiscation regardless of whether the property is held or owned by a criminal or a third party. In paragraph-65 of the Vijay Madanlal Choudhary and others Vs. Union of India and other's case (supra) it has been held is as under:-

"65. Mr. Siddharth Aggarwal, learned senior counsel, also appeared for the private parties. His main opposition is to the retrospective application of the PMLA. Certain questions are raised with respect to whether prosecution for money-laundering is permissible if the commission of scheduled offence and proceeds of crime takes place prior to the PMLA coming into force; and, similarly, in a situation when it is committed prior to the offence being made part of the Schedule of the PMLA. It is submitted that the prohibition against retrospective operation of substantial criminal statutes is a constitutional imperative which needs to be given its fullest interpretation in a purposive manner. He highlights the three situations where interpretation is warranted. One, where transactions were concluded prior to the enforcement of PMLA; two, prior to the offences being added to the Schedule of the PMLA; and three, whether amendment is applied with retrospective effect couched in the guise of an Explanation introduced by the 2019 amendment."

22. Offence of money laundering is a contining offence and relevance of the date of commission of the scheduled offence is irrelevant for the reason that as long as one is in possession of the proceeds of crime, he would be liable to be prosecuted for the offence under Section 3/4 of the PMLA. In paragraph-43 of Vijay Madanlal Choudhary and others Vs. Union of India and other's case (supra) it has been held as under:-

"43. It is then urged by the learned counsel that Section 45(1) of the PMLA, reverses the presumption of innocence at the stage of bail as an accused. According to him, the accused at this stage can never show that he is not guilty. It is also maintained that these are disproportionate and excessive conditions for a bail. Reference is also made to Nikesh Tarachand Shah to the limited extent that the 2018 amendment has not removed invalidity, pointed out in the aforesaid judgment of this Court. It is also stated that regardless of the amendment, the twin condition is in violation of Article 21 of the Constitution by virtue of the nature of the offence under PMLA. It is stated that presumption of innocence is a cardinal principle of Indian criminal jurisprudence. Reference is also made to Kiran Prakash Kulkarni v. The Enforcement Directorate Arguments have also been raised against an amendment through a Money Bill being violative of Article 110 of the Constitution. The need for interpretation by Rojer Mathew v. South Indian Bank Limited has also been asserted. The 2018 amendment is also challenged by referring to the notes on Clauses of the Finance Bill, 2018. It is also pointed out that similar amendments were proposed for the 1962 Act in the year 2012 and, yet, the same were dropped at the insistence of members of the Parliament."

23. Division Bench of this Court vide order dated 10.04.2018 passed in Application No.79 (Shafaat Ejaz Siddiqui and others Vs. State of U.P. and others) along with Application No.3458 (Azmat Ejaz Siddiqui and another Vs. The State of U.P. and others) filed under Section 482 CrPC, in respect of Amending Act of 2009 and its effect has held in paragraphs-22 and 23 as under:-

"22. By the amending Act of 2009, the provisions of PML Act were amended and Scheduled offences under Sections 419, 420, 467, 468, 471 and 120B IPC which were in Part B of the Schedule were brought in Part A of the Schedule. Further, Part B of the Schedule was omitted.

23. Thus the offence alleged to have been committed by the petitioners in acquiring or processing etc., of proceeds of crime were always part of the Schedule appended to the PML Act. The arguments of the counsel for the petitioners that these offences were not part of the Schedule at the time when the offence is alleged to have been committed by them, does not hold good in view of expressed provisions of the Act and the Schedule."

24. The Division Bench of this Court, while dismissing Application No.24521 of 2018 (under Section 482 CrPC) (Rajendra Singh Vs. State of U.P.) in paragraph-12, in respect of amendment brought in the PMLA in 2009, has held as under:-

"12. Thereafter an amendment was brought in PMLA, 2002 by the Prevention of Money Laundering (Amendment Act; 2009) (in short no. 21 of 2009, 6th March, 2009) whereby, in Part B Section 120B (criminal conspiracy) was added and the same was made punishable under the PMLA, 2002 under Section 3/4 of PMLA. Apart from that Section 471 - using as genuine or forged record, was also placed in Paragraph 1 under Part B of the said Act hence this offence also became punishable under the PMLA, 2002 with effect from 06.03.2009. Further in Paragraph 5 under Part B the Section 13 of P.C. Act - criminal misconduct by public servant was added, and was made punishable under the PMLA, 2002. Thereafter, by Prevention of Money Laundering Act, 2012 (in short 2 of 2013) which came into effect from 3rd July, 2013 the above offences of I.P.C. included in Part - B, were made part of Part - A in Paragraph 1."

25. The Supreme Court in Vijay Madanlal Choudhary and others Vs. Union of India and other's case (supra) has elaborated the meaning and scope of amendment brought by amending Act 2 of 2013 and vide Finance Act 2 of 2019 in the PMLA in paragraph 467(v)(b) which reads as under:-

"467(v)(b) Independent of the above, we are clearly of the view that the expression "and" occurring in Section 3 has to be construed as "or", to give full play to the said provision so as to include "every" process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity."

26. In view thereof, I do not find much substance in the submission advanced by the learned counsel for the applicants and, therefore, both the applications, being devoid of merit and force, are hereby dismissed.

[D.K. SINGH, J.]

Order Date: 19.12.2022

MVS/-