1 June 2020


High Court of Delhi

Anand Chauhan v.  Directorate of Enforcement




PMLA has an over-riding effect and provisions of Cr. PC would apply only if they are not inconsistent with provisions of PMLA

Petitioner has preferred present bail application seeking regular bail under Section 439 of Code of Criminal Procedure,1973 (Cr. PC) read with Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA). Learned Special Judge held that, case is at stage of investigation, and there is enough material on record which shows how Petitioner invested cash monies in LIC policies on behalf of Virbhadra Singh and his family, and was actively involved in laundering of money. Special Judge opined, on basis of investigation, till that it cannot be said that, Petitioner is just at periphery of offence and, accordingly, bail application of Petitioner was dismissed. . Case of prosecution is that, on basis of preliminary enquiry registered on 17.06.2015, CBI registered FIR under Sections 13(2) read with Section 13(1) (e) of Prevention of Corruption Act, 1988 (P.C. Act) and Section 109 of Indian Penal Code, 1860

Offence of "criminal misconduct" is defined in Section 13 of P.C. Act to mean, possession of public servant "or any person on his behalf at any time during period of his office of pecuniary resources or property disproportionate" to known sources of income of public servant, which public servant cannot specifically account for. Thus, even a person who is not a public servant has been noticed in said definition of "criminal misconduct" as defined in Section 13(1) (e) of P.C. Act. Offence of criminal misconduct is committed by public servant, but offence under Section 13(1) (e) of P.C. Act may also rope in-as an abettor, any person who is in possession of such un-explained pecuniary resources and property disproportionate to known sources of income of public servant, i.e. who holds said pecuniary resources or property on behalf of public servant.

Section 3 of PMLA defines offence of money laundering as, "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 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".

Expression "proceeds of crime" is defined in Section 2(u) of PMLA to mean "any property derived or obtained, directly or indirectly, by any person as result of criminal activity relating to a scheduled offence ". Offence alleged against Sh. Vir Bhadra Singh in FIR/ RC registered by CBI under Section 13(2) read with Section 13(1) (e) of the P.C. Act is a scheduled offence and thus, allegation against Petitioner is that, proceeds of crime of Sh. Vir Bhadra Singh have been laundered by him.

A reading of Section 3 of PMLA shows that, person who commits offence of money laundering need not necessarily be a one who may have been involved in acquisition of proceeds of crime. Thus, even if Petitioner herein is assumed to be not guilty of offence under Section 13(2) read with Section 13(1) (e) of the P.C. Act, nevertheless, he is a person charged with abetting said offence and with laundering of proceeds of crime of Sh. Vir Bhadra Singh.

In Gautam Kundu, Supreme Court has categorically held that, conditions specified in Section 45 of PMLA are mandatory and needs to be complied with. In this regard, Supreme Court placed reliance on Sections 65 and 71 of PMLA. Section 65 of PMLA provides that, provisions of Code shall apply insofar as they are not inconsistent with provisions of PMLA and Section 71 of PMLA provides that, provisions of PMLA shall have over-riding effect, notwithstanding anything inconsistent therewith contained in other law for time being in force. Thus, PMLA has an over-riding effect and provisions of Code would apply only if they are not inconsistent with provisions of PMLA. Supreme Court has held that, compliance of provisions of Section 45 of PMLA should be insisted upon by High Court as well, while considering an application under Section 439 of Cr.P.C. In present case, prima facie finding returned by trial Court with regard to Petitioner's involvement in scheduled offence is unexceptionable. This Court is bound by decision of Supreme Court in Gautam Kundu. Supreme Court dismissed the Petition.


Gautam Kundu vs. Manoj Kumar, Assistant Director, Eastern Region, Directorate of Enforcement (Prevention of Money Laundering Act) Govt. of IndiaMANU/SC/1453/2015

Tags : Application Bail Grant

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