Allahabad High Court
Rajeev Ranjan Srivastava vs Assistant Director Directorate ... on 4 July, 2023
Bench: Subhash Vidyarthi
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
Neutral Citation No. - 2023:AHC-LKO:43200
Judgment Reserved on - 18.05.2023
Judgment Delivered on - 04.07.2023
A.F.R.
Court No. - 16
Case :- CRIMINAL REVISION No. - 534 of 2023
Revisionist :- Rajeev Ranjan Srivastava
Opposite Party :- Assistant Director Directorate Of Enforcement, Zonal Office, Lucknow
Counsel for Revisionist :- Santosh Kumar Bhatt
Counsel for Opposite Party :- Kuldeep Srivastava
Case :- CRIMINAL REVISION No. - 536 of 2023
Revisionist :- Jai Hind Maurya
Opposite Party :- Assistant Director, Directorate Of Enforcement, Zonal Office, Lucknow
Counsel for Revisionist :- Santosh Kumar Bhatt
Counsel for Opposite Party :- Kuldeep Srivastava
Case :- CRIMINAL REVISION No. - 538 of 2023
Revisionist :- Prem Shankar Singh
Opposite Party :- Assistant Director, Directorate Of Enforcement Zonal Office Lucknow
Counsel for Revisionist :- Santosh Kumar Bhatt
Counsel for Opposite Party :- Kuldeep Srivastava
Case :- CRIMINAL REVISION No. - 543 of 2023
Revisionist :- Satendra Kumar Rai
Opposite Party :- Assistant Director, Directorate Of Enforcement Zonal Office, Lucknow
Counsel for Revisionist :- Santosh Kumar Bhatt
Counsel for Opposite Party :- Kuldeep Srivastava
Case :- CRIMINAL REVISION No. - 545 of 2023
Revisionist :- Santosh Kumar Rastogi
Opposite Party :- Assistant Director - Directorate Of Enforcement, Zonal Office, Lucknow
Counsel for Revisionist :- Santosh Kumar Bhatt
Counsel for Opposite Party :- Kuldeep Srivastava
Case :- CRIMINAL REVISION No. - 546 of 2023
Revisionist :- Shri Prakash Mishra
Opposite Party :- Assistant Director, Directorate Of Enforcement Zonal Office, Lucknow
Counsel for Revisionist :- Santosh Kumar Bhatt
Counsel for Opposite Party :- Kuldeep Srivastava
Hon'ble Subhash Vidyarthi J.
1. The petitioners in the abovementioned 6 revisions are co-accused in a single case, bearing Case No. 357 of 2022 in the Court of Special Judge (Prevention of Corruption Act) / C.B.I. Court No. 3, Lucknow, arising out of ECIR/05/LKZO/2017 (New Case No.) and ECIR/PMLA/VSZO/2011 (Old case No.) under Section 3/4 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as 'PMLA') and all the revisions have been filed against separate similar orders dated 25.04.2023 passed by the trial Court rejecting separate applications for discharge under Section 227 of the Criminal Procedure Code (Cr.P.C.) filed by the petitioners. All the revisions involve common questions and, therefore, the same are being decided by a common judgment.
2. Heard Sri Santosh Kumar Bhatt, the learned for the revisionist and Sri Kuldeep Srivastava, learned counsel for the respondent - Directorate of Enforcement.
3. It has been stated in the revisions that the same arise out of a case registered under an order passed by this Court in Writ Petition Number 10503 (M/B) of 2009. Initially the case was investigated by S.I.T. of U. P. Police, but later it was transferred to C.B.I. under directions of this Court. The F.I.R. number RC0062010A0026/2010 lodged in Police Station CBI, ACB, Lucknow under Sections 120 B/420/467/468/471 I.P.C. and Section 13 (2) read with 13 (1) (c) and (d) of the Prevention of Corruption Act states that during the period 2004 to 2006, several persons, in conspiracy with each other, misappropriated and diverted the food grains meant for persons below poverty line, mid-day meal and Antyoday scheme in Varanasi district. After investigation, the C.B.I. submitted a charge-sheet.
4. The charge-sheet states that Satendra Kumar Rai - the revisionist in Revision No. 543 of 2023, was the then Supply Inspector and he was the godown-in-charge of Harahua block during the period 01.04.2005 to 31.03. 2006. He misappropriated food-grains entrusted to him and thereby caused loss of subsidy to the government Exchequer to the tune of ₹ 8,27,711/-.
5. On the basis of the aforesaid F.I.R. and the charge-sheet, the Directorate of Enforcement (hereinafter referred to as 'E.D.') registered ECIR/06/PMLA/VSZO/2011, which was later renumbered as ECIR/05/LKZO/2017 and after carrying out investigation, it filed a complaint under Sections 44 and 45 of the Prevention of Money-Laundering Act (PMLA) against six persons, who are the petitioners in the six revisions.
6. The complaint states that Sri. Prakash Mishra, the petitioner in Revision No. 546 of 2023 was the godown in-charge of Harahua Block for the period 01.04.2004 to 16.07.2004. Jai Hind Maurya, the petitioner in Revision No. 536 of 2023 was the godown in-charge of Harahua Block for the period 17.07.2004 to 31.03.2005. Satendra Kumar Rai - the petitioner in Revision No. 543 of 2023, was working as Supply Inspector and he was the godown in-charge of Harahua block for the period 01.04.2005 to 31.03.2006.
7. The aforesaid Sri. Prakash Mishra, Jai Hind Maurya and Satendra Kumar Rai had made certain entries in the issue register, which were denied by the Kotedars (fair-price shop license holders).
8. The complaint states that subsidy loss caused by the accused persons by misappropriating huge quantities of food-grains by forging the signatures of Kotedars in the issue register during the tenure of Sri Prakash Mishra is ₹19,10,448/-, the subsidy loss caused by the accused persons during the tenure of Jai Hind Maurya is ₹3,33,464/- and the subsidy loss caused by the accused persons during the tenure of Satendra Kumar Rai is ₹ 9,71,108/- and the aforesaid accused persons made corresponding financial gains.
9. The other co-accused persons, namely Rajeev Ranjan Srivastava - the petitioner in Revision No. 534 of 2023, Prem Shankar Singh - the petitioner in revision No. 538 of 2023 and Santosh Kumar Rastogi - the petitioner in Revision No. 545 of 2023 were the financers, who had conspired with the aforesaid accused persons, who were in-charge of the godown and they had financed the pay orders for lifting the food-grains which were illegally diverted.
10. During investigation, three fixed deposit accounts of the accused Satendra Kumar Rai came to light and the cumulative amount of ₹ 8,27,711/- deposited in those three accounts was attached by the E.D.
11. All the petitioners had filed separate applications for discharge before the trial court, which have been rejected by means of similarly worded separate orders dated 25.04.2023.
12. The orders rejecting the discharge applications have been assailed by filing separate revisions inter alia on the grounds that the petitioners are innocent; that the complaint has been filed belatedly, the predicate offence alleged against the petitioners was not a scheduled offence at the time of its alleged commission and that the E.D. could not find any money trail or any suspicious transactions. Ground XII taken in the memo of Revisions claims that as per Rule 3, the minimum threshold for all cash transactions is ₹ 10 lakhs whereas the subsidy loss allegedly caused by the petitioners is less than the aforesaid threshold amount, but the Ground does not disclose as to Rule 3 of which set of Rules has been referred to by the petitioners.
13. The learned Counsel for the petitioner has submitted that the loss allegedly caused by the individual petitioners is less than ₹30,00,000/- and, therefore, it would not fall within the purview of the term 'Scheduled Offence'.
14. The term Scheduled Offence is defined in Section 2 (y) of the PMLA. Section 2 (y), as it was enacted originally, read as follows: -
"(y) "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 thirty lakh rupees or more;"
15. Initially the offence under Section 467 I.P.C. found place in Part B of the Schedule. Section 2 of PMLA was amended by Act 21 of 2009, so as to make it read as follows: -
"(y) "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 thirty lakh rupees or more; or
(iii) the offences specified under Part C of the Schedule."
16. The Schedule was also amended by Act 21 of 2009, whereby offences under Sections 120 B, 467 and 471 I.P.C. and the offence under Section 13 of the Prevention of Corruption Act were placed in Part B of the Schedule.
17. Part B of the Schedule was omitted by Act 2 of 2013 and offences under Sections 120 B, 420, 467, 471 I.P.C. and Section 13 of the Prevention of Corruption Act were mentioned in Part A of the Schedule.
18. Section 2 (y) was again amended by Section 145 (ii) of Act No. 20 of 2015 with effect from 14.05.2015 by replacing the words "thirty lakh rupees" occurring in sub-section (ii) with the words "one crore rupees" and presently Section 2 (y) of PMLA reads as follows: -
"Section 2. Definitions
"(y) "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."
19. The Schedule was also amended by Section 145 (ii) of Act No. 20 of 2015 with effect from 14.05.2015 whereby all the aforesaid offences remained in Part A. Part B was inserted in the Schedule and it mentions the offence under Section 132 of the Customs Act, 1962. It is clarified that Part A of the Schedule mentions several other offences also but only those offences have been mentioned in this judgment, which have been allegedly committed by the petitioner and which are relevant for the present case.
20. From a bare reading of Section 2 (y) of PMLA as it exists today, it is clear that the condition of the total value involved in the offence applied to the offences specified under Part B of the Schedule alone, and not to any other Scheduled offence. Part B of the Schedule mentions offence under Section 132 of the Customs Act only and the petitioner has not been charged with commission of the aforesaid offence.
21. The learned Counsel for the petitioner placed reliance on a judgment rendered by a co-ordinate Bench of this Court in the case of Mohammad Iqbal Vs. Respondent: State of U.P. and Ors., Criminal Revision No. 1004 of 2019 decided On: 28.02.2020. In that case, a complaint case under Section 37 of the Air (Prevention and Control of Pollution) Act, 1981 was filed by U.P. Pollution Control Board, Lucknow with the allegation that there was no proper arrangement for controlling air pollution and the factory was operational from 12.09.1984 to 17.07.2007 without obtaining consent of the Board, in contravention of Section 21 of the Act. The Board had made a complaint to the E.D. upon which E.D. registered an ECIR for investigation of offence of money laundering to make inquiries regarding suspected 'Proceed of Crime' amounting to ₹52,42,525/- generated by the revisionist and his firm out of the commission of Scheduled Offence. After investigation, E.D. filed a Complaint under Section 45 of the Act with the allegation that the pollution control equipment worth ₹2,00,000/- was not installed, thus, the revisionist had generated 'Proceed of Crime' to the tune of ₹2,00,000/- and had retained the same. An application for discharge was rejected by the trial court. In Revision filed against the aforesaid order, it was submitted that the application for discharge moved before the court below was wrongly rejected without considering the provisions of Section 2 (y) (ii) of the PMLA. Allowing the revision, the Co-ordinate Bench held that: -
"15. As by way of Act No. 23 of 2019, Explanation clause has been added in Section 2(u) of the PML Act, which clearly provides that the 'Proceed of Crime' include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. Indisputably, in the present case, the cost of the unit, viz. ₹2 lac, which was not installed at the factory, is treated as 'Proceed of Crime'. Learned counsel for the respondent failed to dispute the fact that initially the allegation levelled was that total value involved in the offence was more than ₹30 lac, which is categorically mentioned in the ECIR, but later on, in the complaint case, only the cost of equipment which was not installed, is treated as a 'Proceed of Crime'. Admittedly, the court below failed to consider this aspect of the matter."
22. It is significant to note that the offence under Section 37 of the Air (Prevention and Control of Pollution) Act, 1981 was not mentioned in the Schedule of Offences appended to PMLA originally. It was inserted in paragraph 24 of Part B of the schedule by Act 21 of 2009. Thus the offence under Section 37 of the Air (Prevention and Control of Pollution) Act, 1981 was not a Scheduled Offence under PMLA during the period 12.09.1984 to 17.07.2007, which it was committed, yet the accused was charged with commission of offence under Section 3 of the PMLA. The co-ordinate Bench rightly did not interfere with the proceedings on the Ground that on the date of commission of the predicate offence, it was not a Scheduled Offence.
23. Before proceeding any further, it would be appropriate to have a look at Section 3 of PMLA, which reads as follows: -
"3. Offence of money-laundering.--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 including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering.
Explanation.--For the removal of doubts, it is hereby clarified that,--
(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely--
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property,
in any manner whatsoever;
(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever."
24. Sri. Kuldeep Srivastava, the learned Counsel for the E.D. has placed reliance upon the judgment of the Hon'ble Supreme court in the case of Vijay Madanlal Choudhary versus Union of India, 2022 SCC OnLine SC 929, wherein the Hon'ble Supreme Court held that: -
"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 money-laundering 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."
25. In view of the aforesaid discussion, it is clear that the offence of money laundering is an offence separate and distinct from the Scheduled offence. The complaint alleges that the petitioners have derived proceeds of crime and they have siphoned off the same. The petitioners have been involved in possession, acquisition and use of the proceeds of crime and they have enjoyed the proceeds of crime by it's possession, acquisition and use.
26. So far as the ground XII in the Memo of revision, that the trial Court has ignored that the minimum threshold for all cash transaction or any transaction is given as per Rule 3 is ₹10 Lakh is concerned, although the ground does not specify as to which set of Rules is being referred by the petitioners, it appears that the petitioner is referring to Rule 3 of Prevention of Money-laundering (Maintenance of Records) Rules, 2005, which have been framed for regulating "maintenance of records of the nature and value of transactions, the procedure and manner of maintaining and time for furnishing of information and verification of records of the identity of the clients of the banking companies, financial institutions and intermediaries". The relevant part of Rule 3 of the aforesaid Rules is being reproduced follows: -
3. Maintenance of records of transactions (nature and value). - Every reporting entity shall maintain the record of all transactions including, the record of--
(A) all cash transactions of the value of more than ten lakh rupees or its equivalent in foreign currency;
* * *
27. The aforesaid Rule 3 has no relevance for deciding as to whether a person needs to be tried for commission of an offence under section 3 of PMLA.
28. In view of the aforesaid discussion, I am of the considered view that the trial Court has rightly rejected the application for discharges of the petitioners and there appears to be no illegality in the orders. In any case, the orders do not suffer from any such illegality as calls for interference of this Court in exercise of its revisional jurisdiction.
29. The revisions lack merit and the same are dismissed.
(Hon'ble Subhash Vidyarthi J.)
Order Date - 04.07.2023
Pradeep/-
