India: Provisions Of PMLA Can Be Invoked Against The Abettor Of A Scheduled

Last Updated: 10 October 2019
Article by Vijay Pal Dalmia, Partner

Article by Vijay Pal Dalmia, Advocate, Supreme Court of India and Delhi High Court, Partner & Head of Intellectual Property Laws Division, Vaish Associates Advocates, India

The petitioner in this case titled Anand Chauhan vs. Directorate of Enforcement / MANU/DE/0928/2017, before the High Court of Delhi (Court), had preferred the bail application  during the pendency of writ petition of Habeas Corpus before this court and sought regular bail under section 439 of the Code of Criminal Procedure (CrPC) read with Section 45 of The Prevention of Money Laundering Act, 2002 (PMLA).

CBI had registered FIR under Sections 13(2) r/w 13(1) (e) [Scheduled offence under PMLA] of the Prevention of Corruption Act, 1988 (PC Act) and Section 109 IPC against Virbhadra Singh, the petitioner, and other persons. The FIR/RC alleged that Virbhadra Singh, the principal accused, while serving as Union Minister had invested huge amounts of money in purchasing LIC policies in his own name and in the name of his family members through the petitioner, who was then an LIC agent. As per prosecution this was done by principal accused by claiming to enter into a Memorandum of Understanding (MoU) with the petitioner for management of his apple orchard. In the terms of the said MoU, the petitioner claimed to have sold the apple produce to one of the co-accused and on that pretext he deposited huge amounts in cash in his bank accounts, which were used for purchasing LIC policies. It was further alleged that the petitioner brought the unaccounted money of principal accused back into regular books. On the basis these facts the CBI had claimed that the sale of apples was a sham.

On the basis of FIR, respondent had registered the case vide ECIR against principal accused, the petitioner herein and others under Sections 3 and 4 of the PMLA.

The counsel for petitioner had contended that the arrest of the petitioner is premature, as the commissions of the scheduled offence u/s 13(1) (e) r/w 13(2) of PC Act, 1988 was yet to be, prima facie, established and charge sheet in the regular case had not been filed by the CBI, and the principal accused in aforesaid regular case has also not been arrested.

It was further argued on behalf of petitioner that custody of applicant is in violation of Article 21 of the Constitution of India, since no trial under section 3 and 4 of PMLA Act can be proceeded without the charge sheet being filed.

The invocation of section 45 of PMLA was also challenged on the grounds that it applies only if a person is accused of an offence punishable for a term of imprisonment of more than 3 years under part A of the schedule. Sections 13(2) and 13(1) (e) of PC Act are only applicable to public servants and not to others, and the abettor of the said offence can only be prosecuted under section 109 IPC, which is punishable only in the context of other offences.

On behalf of the respondent it was submitted that section 109 of IPC could not be read in isolation as it is not a standalone offence. In the present matter Section 109 was invoked along with section 13(1) (e), 13(2) of PC Act. Therefore, it was argued that there cannot be any conviction of an accused under section 109 of IPC for abatement alone. Reliance was placed upon the judgments of the Supreme Court in Gautam Kundu v. Directorate of Enforcement ((2015) 16 SCC 1)   [] and Union of India v. Hassan Ali ((2011) 10 SCC 235) [].

The Court had rejected the submission of the petitioner that since he had been charged with abatement of the scheduled offence, the PMLA cannot be invoked against him, or that the rigours of Section 45(1) (ii) would not apply to him.

The Court held that the offence of "criminal misconduct" is defined in Section 13 of the PC Act to mean, inter alia, the possession of the public servant "or any person on his behalf at any time during the period of his office of pecuniary resources or property disproportionate" to the known sources of income of the public servant, which the public servant cannot specifically account for. Therefore, it was concluded that even a person who was not a public servant had been noticed in the said definition of "criminal misconduct" as defined in Section 13(1) (e) of the PC Act. Additionally, it was held that an offence under Section 13(1) (e) of the PC Act can rope-in as an abettor any person who is in possession of such unexplained pecuniary resources and property disproportionate to the known sources of income of the public servant, i.e. who holds the said pecuniary resources or property on behalf of the public servant.

The Court had also observed that while dealing with the bail application under Section 439 CrPC it cannot take into consideration aspects which fall within the realm of writ jurisdiction, and in respect of which the petitioner's writ petition is pending.

Petition was dismissed.

© 2019, Vaish Associates Advocates,
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Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

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