FPA-PMLA-2708/MUM/2018
1. The appeal under consideration in this order was filed by the Appellant Directorate (‘ED’) on 26/11/2018 against the order of the learned Adjudicating Authority dated 27/09/2018 dismissing the Original Complaint (O.C. No. 972/2018) filed by them seeking confirmation of the Provisional Attachment Order dated 04/04/2018. The learned Adjudicating Authority, however, dismissed the O.C. filed by the Appellant Directorate and held that the properties provisionally attached them were not involved in money laundering. In the appeal, the Appellant Directorate has prayed that the order of the Ld. Adjudicating Authority be set aside and the Provisional Attachment Order be confirmed.
2. During the course of the proceedings before this Appellate Tribunal, the learned Counsel for the Respondent submitted that the case against the respondent has no legs to stand as there is no predicate offence in this case.
The FIR, on the basis of which action was initiated under the Prevention of Money Laundering Act, 2002 (‘PMLA 2002’) in this case, i.e., FIR/MECR No. 01/2014 filed by the Mumbai Police, was subsequently transferred from the local Police Station (Bandra) to the Economic Offences Wing (EOW), Mumbai Police. After investigation, the EOW, Mumbai Police did not find any substance in the allegations and submitted a comprehensive ‘B’ summary report before the designated court, i.e., the Court of the Additional Chief Metropolitan Magistrate, Mumbai (ACMM, Mumbai). A certified copy of the order of the learned ACMM, Mumbai has also been furnished by the appellant vide their written submissions filed on 07.08.2023. The contents of the order of the learned ACMM, Mumbai are reproduced below in full as they go to the very root of the present case:
“IN THE COURT OF THE ADDL. CHIEF METROPOLITAN MAGISTRATE, 47TH COURT, ESPLANADE, MUMBAI.
C. C. No. 309/MISC/2021
State of Maharashtra (Through EOW, Mumbai) … Prosecution
Vs.
Rafique Qureshi and others ... Accused
And
Abdul Salam Haji Daud ... Complainant
ORDER BELOW EXH-1
1. The informant initially had filed one complaint before Metropolitan Magistrate Court, Bandra. In that complaint, order under section 156 (3) of the Code of Criminal Procedure has been passed. Accordingly, MECR No. 01/14 came to be registered with Bandra Police Station and thereafter investigation has been transferred to EOW. Accordingly MECR No. 02/2020 came to be registered. After the sufficient investigation, Investigation officer has submitted report of “B” Summary. As per the report, entire report found to be false. Therefore, the “B” summary report has been filed. Accordingly, the notice to the informant has been issued.
Informant appeared and filed and application on record contending that he has accepted “B” summary report and he is satisfied with the investigation. He does not wish to protest the same. Even the advocate for the informant Shri Kishor Gaikwad also appears and submits that he does not want to proceed further and he has accepted “B” summary report. Considering all these submissions, in my opinion and Investigating officer has filed 'B' summary report and informant does not have any objection on the said report. He does not want to proceed further. Therefore, I have no objection to accept the 'B' summary report. Therefore, 'B' summary report is accepted.
Date: 15.01.2022
(M.S. Bade)
Addl. Chief Metropolitan Magistrate
47th Court, Esplanade, Mumbai.”
3. The learned counsel for the respondent forcefully contended that the offence of money laundering under PMLA, 2002 is possible only if there exists and sustains a Scheduled Offence specified in the Schedule to the PMLA, 2002. In the absence of the same, the offence of money laundering under the Act ceases to exist. In support of its contentions, the appellant has cited the landmark judgment of the Hon’ble Supreme Court in Vijay Madan Lal Chaudhari v. Union of India (order dated 27/07/2022) and also the decisions in Parvathi Kollur v. Directorate of Enforcement (order dated 16.08.2022) and Writ Petition (Civil) No. 368 of 2021 Indrani Patnaik versus enforcement directorate (order dated 03.12 2022).
4. In the hearing held on 01.11.2023, the learned Counsel for the Appellant Directorate sought a short at adjournment to verify the factual position and file an appropriate response. Time was granted to him for this purpose. However, no response was filed by the Appellant Directorate by the next date of hearing, i.e., 14.12.2023. On that date, the learned counsel for the Appellant Directorate sought some more time to do the needful. Considering the request, the appellants were directed to do the needful within one week, failing which it would be presumed that there are no further developments contrary to the facts already brought on record. The final order in the case was reserved subject to the above directions. No contrary factual developments have been placed on record by the Directorate within the time allowed, or even up to the time of passing this order. Accordingly, it is presumed that there are no further developments after the order of the Ld. ACMM accepting the closure report in the predicate offence in the instant case.
5. The legal position with regard to the underlying issue is by now well-settled. The decision of the Hon’ble Apex Court in the matter of Vijay Madanlal Chaudhary, which the appellant has cited holds the field. In that judgment, in para 187 which provides the summary of decisions, the Hon’ble Supreme Court has held as below:
“(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the 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 against him or any one claiming such property being the property linked to stated scheduled offence through him.”
6. In the present case it is not in doubt that a court of competent jurisdiction, i.e., the Court of the Additional Chief Metropolitan Magistrate, 47th Court, Mumbai has passed an order accepting the ‘B’ summary report filed by the EOW, Mumbai Police which had investigated the case. As such, the predicate offence based on which the PMLA case was booked does not survive. No facts contrary to the factual position brought on record by the Appellant Directorate could be brought to the notice of this Appellate Tribunal despite being allowed adequate opportunity to do so. Allowing the matter to remain pending indefinitely would amount to ignoring the categorical pronouncement of the Apex Court that there cannot be a money laundering offence without there being a predicate offence in the first instance.
7. In the light of the aforesaid position on facts and in law, we hereby dismiss the appeal filed by the Directorate challenging the order of the learned Adjudicating Authority refusing to confirm the Provisional Attachment Order and dismissing the O.C. filed by the Appellant Directorate. However, in the facts of the instant case, we find it appropriate to grant liberty to the Appellant Directorate to file a suitable review application in case the order passed by the Ld. ACMM, Mumbai is overturned by any court of law.
8. With the above order, the instant appeal filed by the Directorate of Enforcement stands disposed of with the liberty as allowed in the preceding paragraph.
