PMLA| Whole Of Property Linked To Scheduled Offence Need Not Be Regarded As 'Proceeds Of Crime': SC
|The Supreme observed that whole of property linked to a scheduled offense is need not be considered as "Proceeds of Crime" under Prevention of Money Laundering Act.
But any property meeting the definition of "Proceeds of Crime" under Section 2(1)(u) will indeed be considered crime properties, the court said.
In that regard, the Bench of Justice Bela M Trivedi and Justice Pankaj Mithal observed that, "Not even in case of existence of undisclosed income and irrespective of its volume, the definition of “Proceeds of Crime” under Section 2(1)(u) will get attracted, unless the property has been derived or obtained as a result of criminal activity relating to a scheduled offence. The property must qualify the definition of “Proceeds of Crime” under Section 2(1)(u) of the Act. As observed, in all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of proceeds of crime, but all properties qualifying the definition of “Proceeds of Crime” under Section 2(1)(u) will necessarily be the crime properties."
Senior Counsel Abhishek Manu Singhvi appeared for the applicant, while ASG SV Raju appeared for the Enforcement Directorate.
Satyendar Jain, accused of money laundering through four companies, was arrested on May 30 last year by the ED, based on a CBI FIR from 2017. In 2022, the trial court acknowledged the prosecution complaint filed by the ED against Jain, his wife, and eight others. The Delhi High Court, in its impugned order, cited Jain's influence and potential evidence tampering, upholding the trial court's decision to deny bail under the PMLA. However, on May 26, 2023, the Supreme Court granted Jain interim bail on medical grounds, allowing treatment at a private hospital. Despite initial reluctance, the Court extended the interim relief due to Jain's medical condition and adjourned the matter. ASG Raju highlighted a pattern of untoward incidents before Court hearings and noted the CJI's directive for Jain to surrender.
During the proceedings, Satyendar Jain argued that there was a significant disparity between the amount of proceeds of crime calculated by the ED and the amount of disproportionate assets mentioned by the CBI. While the CBI cited Rs. 1,47,60,497/- in disproportionate assets, the ED claimed Rs. 4,81,16,435/- as proceeds of crime. Even considering accommodation entries amounting to about Rs. 4.6 crores, attributed to Jain through his wife’s shareholdings, it totalled only Rs. 59,32,122/-. Additionally, Jain had resigned from directorship two years prior to the alleged offence, with influence over the companies primarily held by Vaibhav Jain and Ankush Jain, along with their family members.
Perusing Sections 2 and 3 of the PMLA, the Apex Court observed that "The offence as defined captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and is not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act of money laundering. Of course, the authority of the Authorised Officer under the Act to prosecute any person for the offence of money laundering gets triggered only if there exists proceeds of crime within the meaning of Section 2(1)(u) of the Act and further it is involved in any process or activity. Not even in case of existence of undisclosed income and irrespective of its volume, the definition of “Proceeds of Crime” under Section 2(1)(u) will get attracted, unless the property has been derived or obtained as a result of criminal activity relating to a scheduled offence."
Based on the facts and circumstances of the case, the Apex Court held that the appellants had failed miserably to satisfy the Court that there existed reasonable grounds to believe their innocence, and that the ED had collected sufficient material to reflect their prima facie guilt.
Resultantly, the appeals were dismissed.
Appearances:
Applicant: Senior Counsel Abhishek Manu Singhvi
Respondent: ASG SV Raju
Cause Title: Satyendar Kumar Jain vs Directorate of Enforcement
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