Prevention of Money Laundering Act, 2002 – s. 45 – Offence of money laundering – Conditions to be satified for grant of bail – Appellant-Minister in the Govt. of NCT of Delhi was the conceptualizer, initiator, fund provider and supervisor for the entire operation of the accommodation entries against cash totalling to around Rs. 4.81 crores received through entry operators in the bank accounts of the four companies, by paying cash and the said companies controlled and owned by him and his family – Other two appellants assisted the Minister by making false declarations under the IDS each of them declaring alleged undisclosed income of Rs.8.26 crores in order to protect the Minister – Prosecution complaint filed by the Enforcement Directorate against the appellants for the commission of the offence of Money laundering – Prosecution complaint fixed for framing of charge against the appellants – Bail applications – Denial of, by the High Court – Correctness: Held: Though a company is a separate legal entity from its shareholders and directors, the lifting of corporate veil is permissible when such corporate structures have been used for committing fraud or economic offences or have been used as a facade or a sham for carrying out illegal activities – Declarations made by the other two appellants under the IDS though were held to be void, the observations and proceedings recorded in the said orders passed by the Authorities and by the High Court cannot be brushed aside merely because of the said declarations – Said proceedings clearly substantiates the case of the ED as alleged in the prosecution complaint – Appellants could not be permitted to take advantage of their own wrongdoing of filing the false declarations to mislead the Income Tax authorities, and now to submit that the said declarations under the IDS were void – Having regard to the totality of the facts and circumstances of the case, the appellants miserably failed to satisfy that there are reasonable grounds for believing that they are not guilty of the alleged offences – On the contrary, there is sufficient material collected by the ED to show that they are prima facie guilty of the alleged offences – Thus, it is not possible to hold that appellants complied with the twin mandatory conditions laid down in s. 45 – High Court also prima facie found the appellants guilty of the alleged offences under the PMLA, and the judgment does not suffer from any illegality or infirmity – Appellants were released on bail for temporary period after their arrest and the appellant-Minister was released on bail on medical ground which continued till date – Appellant to surrender forthwith before the Special Court. [Paras 28-33]
Prevention of Money Laundering Act, 2002 – ss. 3 and 2(1)
(u) – Offence of money laundering u/s. 3 – Words “proceeds of Crime” in s. 2(1)(u) – Definition:
Held: Offence of money laundering 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 – 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 s. 2(1)(u) and further it is involved in any process or activity – Property must qualify the definition of “proceeds of crime” u/s. 2(1)(u) – 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” u/s. 2(1)(u) will necessarily be the crime properties. [Para 21]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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