Kerala High Court

A Dharmaraj Rasalam vs Assistant Director, Directorate Of ... on 24 March, 2025

Author: V.G.Arun

Bench: V.G.Arun

Crl.M.C.No.1932/25
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                                                           'CR'

             IN THE HIGH COURT OF KERALA AT ERNAKULAM

                              PRESENT

                 THE HONOURABLE MR.JUSTICE V.G.ARUN

   MONDAY, THE 24TH DAY OF MARCH 2025 / 3RD CHAITHRA, 1947

                      CRL.MC NO. 1932 OF 2025

      AGAINST THE ORDER/JUDGMENT DATED IN SC CASES (PMLA)
NO.3 OF 2024 OF SPECIAL C SPE/CBI- II & 4 ADDITIONAL
DISTRICT COURT, ERNAKULAM.
PETITIONER:

             A DHARMARAJ RASALAM,
             AGED 64 YEARS
             S/O ALBERT, BISHOP'S HOUSE, LMS COMPOUND,
             THIRUVANATHAPURAM, KERALA, PIN - 695033


             BY ADVS.
             MARIYA RAJAN
             SHINU J.PILLAI
             S.SUJA
             ANN MARIYA JOHN
             FELIX SAMSON VARGHESE



RESPONDENTS:

             ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT,
             COCHIN ZONAL, KALOOR CASTLE, A K,
             HESHADRI ROAD, COCHIN, PIN - 682011
 Crl.M.C.No.1932/25
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OTHER PRESENT:

             SC FOR ED JAISHANKER V. NAIR


       THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON
13.03.2025, THE COURT ON 24.03.2025 PASSED THE FOLLOWING:
 Crl.M.C.No.1932/25
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                                                                      "CR"

                                 V.G.ARUN, J
                       = = = = = = = = = = = = = = = = =
                            Crl.M.C.No.1932 of 2025
                      = = = = = = = = = = = = = = = = = =
                     Dated this the 24th day of March, 2025


                                   ORDER

The petitioner is the Bishop and Moderator of the Church

of South India (CSI). He is also the Chairman of all educational

institutions under the South Kerala Diocese, including the Dr.

Somervell Memorial CSI Medical College. In 2019, parents of

aspiring medical students filed criminal complaints, alleging

that large sums of money was collected from them, by

promising admissions to MBBS and PG courses in the Medical

College. After collecting the amounts, neither was the

promised admissions provided nor the amounts refunded. The

Admission Supervisory Committee for Medical Education in

Kerala enquired into the allegations and recommended the

Government to take appropriate steps to ensure refund of the

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amounts collected from the complainants. Acting on the

recommendation, the Government ordered Crime Branch

investigation into the FIRs registered at the Vellarada Police

Station based on the complaints submitted by the deceived

parents. Thereupon, the Crime Branch registered multiple

cases under various penal provisions, including Sections 120-B

and 420 of the IPC, against the petitioner and others. While

the Crime Branch investigation was in progress, the

Enforcement Directorate/1st respondent recorded

ECIR/KCZO/11/2020 dated 12.03.2020 and started

investigation under the provisions of the Prevention of Money

Laundering Act, 2002 (PMLA) against the following persons; (i)

Dr. Bennet Abraham, Director of Dr. SMCSI Medical College

and Hospital (ii) Rev. A. Dharmaraj Rasalam, Chairman of Dr.

SMCSI Medical College and Hospital (iii) Sri. P. Thankaraj,

Former Comptroller of Dr SMCSI Medical College and Hospital

and (iv) Dr. P. Madhusoodanan, Former Principal of Dr SMCSI

Medical College and Hospital and other administrative officials.

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Thereafter, on 08.05.2024, the 1st respondent filed Annexure

A1 Complaint against the petitioner and five others, alleging

commission of the offence under Section 3 read with Section

70, punishable under Section 4 of the PMLA. This Crl.M.C. is

filed seeking to quash all proceedings against the petitioner in

PMLA S.C.No.3 of 2024 pending before the Special Judge

(SPE/CBI)- II, Ernakulam.

2. Adv. Shinu J. Pillai, learned Counsel appearing for the

petitioner, put forth the following contentions;

Being the Bishop of CSI and de facto Chairman of multiple

educational institutions, the petitioner is not directly involved

in their day-to-day administration. As far as medical admissions

are concerned, the petitioner had only advised the parents,

who had approached him to meet the concerned officials. Upon

investigation, the Crime Branch was convinced that the

petitioner had not deceived the complainants and therefore his

name was omitted from the final reports filed before the

Magistrate Court. It is stated in the final report that allegations

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were raised against the petitioner on the belief that naming a

person of the petitioner's stature would expedite the refund

process. According to the Counsel, non-inclusion of the

petitioner's name in the final reports is equivalent to his

exoneration in the scheduled offence and he cannot therefore

be prosecuted for money laundering. Legal support for the

argument is sought to be drawn from the decision of the Apex

Court in Vijay Madanlal Choudhary and Others v. Union of

India and Others [(2023) 12 SCC 1], with specific emphasis on

paragraph 467(d) wherein it is held that, once a person is fully

discharged/acquitted of the scheduled offence, or if the

criminal case against him is quashed by the competent court,

there can be no offence of money laundering against that

person. Reliance is also placed on the decisions of the High

Court of Telangana in M/s.Smartcoin Financials Pvt.Ltd. v.

The Deputy Director and Another [2024 (3) ALT (Crl) 480]

and that of this Court in Vinod Mathew Wilson v. Union of

India represented by its Secretary and Others [2024 SCC

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OnLine Ker 2348]. It is submitted that in M/s.Smartcoin

Financials Pvt.Ltd.(supra), the Telangana High Court had

quashed the proceedings for money laundering initiated against

the petitioner therein, as no predicate offence was in existence.

It is the submission of the learned counsel that similar view is

expressed by the Division Bench of this Court in Vinod

Mathew Wilson (supra). It is contended that, continuance of

proceedings under the PMLA against the petitioner, without he

being accused of having committed the predicate offence, is

nothing but an abuse of process of court.

3. Adv. Jaishankar V. Nair appearing for the Enforcement

Directorate submitted that the challenge is premature since, as

of date, all final reports filed by the Crime Branch have not

been accepted by the jurisdictional Magistrate. Moreover, non-

inclusion of the petitioner's name in the final reports filed with

respect to the scheduled offences, will not absolve him from

being prosecuted for the offence of money laundering. To

buttress the contention, reliance is placed on the decision of

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the Apex Court in Pavana Dibbur v. Directorate of

Enforcement [(2023) 15 SCC 91] and that of the Madras High

Court in P. Rajendran v Assistant Director, Directorate of

Enforcement [2022 SCC OnLine Mad. 9007]. It is submitted

that, from the investigation conducted by the Enforcement

Directorate it had come out that an amount of Rs.7,22,50,000/-

was collected from 28 parents by promising admission to their

children in the Dr. Somervell Memorial CSI Medical College,

Karakonam. The investigation also revealed that the petitioner

used to send parents of prospective students to Sri. Thankaraj,

the then Comptroller of the Medical College and at his

direction, the parents used to handover money to Smt.Shiji, the

Accounts Department Clerk in the Medical College. Part of that

cash was used for developing the infrastructure of the Medical

College and the remaining Rs.3 crores was handed over to the

parent organization, the South Kerala Diocese and utilised for

making payment towards contract works. The petitioner's role

in the trail of the tainted money is well-established and he is

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therefore liable to be prosecuted for the offence of money

laundering.

4. The arguments give rise to the question whether, non-

inclusion of the petitioner's name in the final reports will, by

itself, lead to his exoneration in the offence of money

laundering under Section 3, punishable under Section 4 of the

PMLA. Hence, it will be apposite to read Section 3, extracted

hereunder for easy reference;

Section 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

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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."

Going by the provision, any person, who directly or

indirectly attempts to indulge or knowingly assists or gets

actually involved in any process or activity connected with the

proceeds of crime is guilty of the offence of money laundering.

The process and activities connected with the proceeds of

crime are concealment or possession or acquisition or use of

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proceeds of crime as well as projection or claiming of proceeds

of crime as untainted property in any manner whatsoever.

Going by the expansive meaning of the expression in Section

2(u), 'proceeds of crime' takes in any property obtained directly

or indirectly as a result of criminal activity. As per Section 2(v)

'property' means property or assets of any description, whether

corporeal or incorporeal, movable or immovable, tangible or

intangible, including deeds and instruments. A conjoint reading

of the above provisions leaves no room for doubt that any

person indulging, involving or attempting, or even assisting in

doing any of the processes or activities enumerated in the

explanation to Section 3 is guilty of the offence of money

laundering.

5. The question whether Section 3 of PMLA is a stand-

alone offence needs no further deliberation in view of the

following exposition in Vijay Madanlal Choudhary (supra);

"134. From the bare language of Section 3 of the 2002 Act, it is amply clear th at the offence of money laundering is an independent offence regarding the process or activity connected with the

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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."

(underline supplied)

6. The legal position is further clarified in Pavana Dibbur

as under ;

"17. Coming back to Section 3 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 PMLA. To give a concrete example, the offences under Sections 384 to 389 IPC relating to "extortion" are scheduled offences included in Para 1 of the Schedule to PMLA. An accused may commit a crime of extortion covered by Sections 384 to 389 IPC and extort money. Subsequently, a person unconnected with

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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 PMLA is alleged must have been shown as the accused in the scheduled offence. What is held in para 135 of the decision of this Court in Vijay Madanlal Choudhary [Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1] supports the above conclusion. The conditions precedent for attracting the offence under Section 3 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 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 PMLA as there will not be any proceeds of crime. Thus, in such a case, the accused against whom the complaint under Section 3 PMLA is filed will benefit from the scheduled offence ending by acquittal or discharge of all the accused. Similarly, he will get the benefit of quashing the proceedings of the scheduled offence. However, an accused in PMLA case who comes into the picture after the scheduled offence is committed by

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assisting in the concealment or use of proceeds of crime need not be an accused in the scheduled offence. Such an accused can still be prosecuted under PMLA so long as the scheduled offence exists. Thus, the second contention raised by the learned Senior Counsel appearing for the appellant on the ground that the appellant was not shown as an accused in the charge-sheets filed in the scheduled offences deserves to be rejected."

(underline supplied)

7. In P.Rajendran (supra), the High Court of Madras

correctly held that the benefit of discharge/acquittal or

quashing of the predicate offence cannot be extended to a

person who has not been arrayed as an accused in the

predicate offence, since the offence under the PMLA is a stand-

alone offence and is different and distinct from the predicate

offence.

8. True, in paragraph 467(d) of Vijay Madanlal

Choudhary the Apex Court has held that if a 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

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against him or anyone, claiming such property to be the

property linked to the scheduled offence through him. In the

petitioner's case, apart from the allegation of having cheated

the parents of prospective students, regarding which the final

reports are filed, there is a separate allegation that the

proceeds of crime generated by cheating the parents were used

for construction works of the South Kerala Diocese and is thus

involved in the use and concealment of the proceeds of crime.

For the sake of clarity the specific allegation in Annexure A1

complaint filed by the Enforcement Directorate is extracted

below;

"That wherever the parents brought the money as per their discussions with Dr. Bennet Abraham or Bishop. Shri Thankaraj and Smt. Shiji used to collect it and they used to enter it in the register maintained with them. The said register maintained by Shri. Thankaraj was like parallel book of account maintained and it was in the custody of Shri. Thankaraj or Smt. Shiji and the said money collected by them as per the instructions of Dr. Bennet Abraham was never brought in to the book of accounts of Dr. SM CSI Medical College, Karakonam.

(vii) Further investigation revealed that around Rs. 7 Crores was

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collected in cash from the parents of the aspiring students in the pretext of giving admission to Dr.SM CSI Medical College, Karakonam and part of the said cash was used for developing infrastructure of Dr. SM CSI Medical College, Karakonam and remaining around Rs. 3 crores was handed over to the parent organization i.e. South Kerala Diocese which was further used by SKD for making payments towards contract works entrusted to M/s.Micheal Builders and Develpors of Shri.Praveen T.T and all the payments done to Shri.Praveen T.T. were made in cash."

In the light of the above specific allegation, the findings in

Vijay Madanlal Choudhary will not be of any help to the

petitioner, since the discussion therein is not concerning a

situation like the present where money laundering is alleged as

a distinct offence. In Pavana Dibbur the Apex Court held

that a person not involved in the original criminal activity that

had resulted in the generation of proceeds of crime can be

prosecuted under the PMLA if he is found to have been

involved in the concealment, possession, acquisition, user etc.

in relation to the proceeds of crime. If so, a person, whose

name was included in the FIR registered for the scheduled

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