SHRI ANAND KUMAR KAPUR vs UNION OF INDIA & ORS.
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 14.05.2024
Pronounced on: 01.07.2024
+ CRL.M.C. 906/2020
SHRI ANAND KUMAR KAPUR ….. Petitioner
Through: Mr. Madhav Khurana, Mr. Shashank Dewan, Mr. Shaurya Singh, Ms. Harshita Gupta, Advocates alongwith petitioner in person
versus
UNION OF INDIA & ORS. ….. Respondents
Through: Mr. Zoheb Hossain, Special Counsel for ED with Mr. Vivek Gurnani and Mr. Kartik Sabharwal, Advocates (appeared through VC)
+ W.P.(CRL) 723/2019
MAJ GEN ANAND KUMAR KAPUR ….. Petitioner
Through: Mr. Madhav Khurana, Mr. Shashank Dewan, Mr. Shaurya Singh, Ms. Harshita Gupta, Advocates alongwith petitioner in person
versus
THE DEPUTY DIRECTOR DIRECTORATE
OF ENFORCEMENT NEW DELHI ….. Respondent
Through: Mr. Zoheb Hossain, Special Counsel for ED with Mr. Vivek Gurnani and Mr. Kartik Sabharwal, Advocates (appeared through VC)
CORAM:
HON’BLE MS. JUSTICE SWARANA KANTA SHARMA
JUDGMENT
SWARANA KANTA SHARMA, J.
CRL.M.A. 3708/2020 in CRL.M.C. 906/2020
CRL.M.A. 5241/2019 in W.P.(CRL) 723/2019
1. The present applications under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) have been filed on behalf of the petitioner, seeking issuance of necessary directions including ad-interim ex-parte order restraining the respondent from contemplating any proceedings including criminal proceedings against the petitioner in case arising out of Enforcement Case Information Report (ECIR) No. ECIR/320/DZ-1/2009, and CT No. 18/2018 filed by the Directorate of Enforcement under Section 44 and 45 of Prevention of Money Laundering Act, 2002 (PMLA), till the above-captioned petitions are adjudicated by this Court.
2. Factual background of the case is that the Central Bureau of Investigation (CBI) had registered an FIR No. RC-AC2-2007-A0003 on 08.10.2007, for offences under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988(PC Act) and Section 109 of the Indian Penal Code, 1860 (IPC). It was alleged that Major General Anand Kumar Kapur, the petitioner herein, while serving in various capacities in the Indian Army from 14.11.1971 to 31.05.2006, had amassed substantial assets through corrupt and illegal means, either in his name or in the names of his family members, which were disproportionate to his known sources of income. Smt. Mridula Kapur was accused of abetting her husband in acquiring these assets. Based on this FIR, an ECIR No. ECIR/320/DZ-1/2009 was also recorded on 22.12.2009.
3. After completing the investigation, the CBI had filed a charge sheet on 26.10.2009 in the Court of the learned Special Judge, Patiala House Court, New Delhi. The petitioner herein was charged under Section 13(2) read with Section 13(1)(e) of the PC Act, and his wife was charged under Section 109 of IPC read with Sections 13(2) and 13(1)(e) of the PC Act. After conclusion of trial, the learned Trial Court had convicted the petitioner on 27.09.2016, finding that he could not satisfactorily account for pecuniary resources and property worth Rs. 2,22,04,290/-, which were disproportionate to his income. However, his wife was acquitted, given the benefit of the doubt. Thereafter, on 29.09.2016, the learned Trial Court had ordered the confiscation of properties worth Rs. 2,12,36,205/-.
4. Further investigations in the present case revealed that the petitioner herein had amassed disproportionate assets amounting to Rs. 3,37,02,592/-, which were then provisionally attached by the Directorate of Enforcement on 04.11.2016. This attachment was confirmed by the Adjudicating Authority on 17.03.2017 after hearing both parties. The petitioner had appealed against this order, which is pending before the Appellate Tribunal, PMLA. The Appellate Tribunal had ordered the release of properties belonging to Smt. Mridula Kapur on 13.04.2018. The Directorate of Enforcement has appealed this order.
5. On 07.07.2018, the Directorate of Enforcement had filed a prosecution complaint under Section 44 read with Section 45(1) of PMLA alleging that the petitioner had committed offences under Section 3 and 4 of PMLA. The cognizance of the complaint was taken on 25.01.2019 by the learned Special Court. On 21.01.2020, the learned Special Court had ordered framing of charges against the petitioner under Sections 3 and 4 of PMLA, whereas his wife was discharged. The charges were framed thereafter by the learned Special Court, against the petitioner, vide order dated 01.02.2020.
6. The case set out by the petitioner is that on 06.03.2019, he had filed the above-captioned criminal writ petition against the order of cognizance passed by the learned Special Judge. Thereafter, when the order on charge was passed on 21.01.2020, it is stated that the learned Special Court had held that the amendment in the PMLA dated 01.08.2019 is applicable to the present case, and on 01.02.2020, charges were framed by the learned Special Judge against the petitioner. Thus, the petitioner had thereafter filed the above-captioned criminal miscellaneous petition seeking quashing of the ECIR and the orders dated 21.01.2020 and 01.02.2020, along with all related proceedings.
7. Learned counsel appearing on behalf of the petitioner argues that the petitioner’s appeal i.e. CRL.A. 1099/2016 against the judgment of conviction dated 27.09.2016 and order on sentence dated 29.09.2016, has been pending adjudication before this Court for the past six years. It is stated that during this period, the trial in the impugned complaint filed by the Directorate of Enforcement has progressed significantly, with the prosecution evidence closing on 29.08.2023. It is stated that the matter is now scheduled for the recording of statement of accused under Section 313 Cr.P.C. It is argued on behalf of the petitioner that allowing the trial to conclude in the PMLA case, without adjudicating the pending appeal could cause irreparable damage to the accused, as the establishment of the predicate offence is a mandatory prerequisite for proceedings under Section 3 of the PMLA.
8. It is argued by the learned counsel that there are no identified proceeds of crime as defined under Section 2(1)(u) of the PMLA, and without such proceeds, prosecution under Sections 3 and 4 of the PMLA is not maintainable. It is further submitted that the ‘property’ in question must be derived from criminal activity related to a scheduled offence. In this case, the judgment dated 27.09.2016 did not attribute any property to the purported disproportionate income, and only mentioned an amount. Therefore, there is no finding that any properties were derived from criminal activity related to the scheduled offence.
9. It is also argued that the provisions of PMLA, being punitive in nature, cannot be applied retrospectively. In this regard, it is submitted that Section 13 of PC Act was included in the list of predicate offences under the PMLA by an amendment on 01.06.2009. However, the check period for the predicate offence in this case is from 14.11.1971 to 10.10.2007. Thus, it is contended that the retrospective application of the PMLA is not permissible in this case. It is also pointed out that this issue of retrospective applicability is pending adjudication before both the Honble Supreme Court and the Honble Division Bench of this Court, and it is stated that the outcome of these cases will have a direct bearing on the present petitions.
10. It is then argued that Section 13(1)(e) of PC Act is ultra vires Section 3 of PMLA, as the ingredients of both sections are identical and therefore, prosecuting the petitioner under both statutes would amount to double jeopardy. It is contended that the offence under Section 13 of PC Act involves the inability to explain pre-existing assets, which does not result in the generation of proceeds of crime. Consequently, invoking the PMLA in such cases is inappropriate, and the inclusion of the offence under Section 13 of PC Act in the schedule of the PMLA is violative of Article 20(2) of the Constitution of India and Section 300 of the Cr.P.C.
11. It is also argued that the PC Act already addresses the aspect of layering ill-gotten wealth, and provisions of PMLA cannot be invoked for further laundering activities once the offence under the PC Act is established. It is submitted that the properties of the accused were attached and confiscated by the learned Special Judge in the predicate offence on 30.09.2016. Therefore, there cannot be any further laundering of these proceeds, which makes the invocation of PMLA unnecessary.
12. It is argued on behalf of the petitioner that the entire case of the respondent relies on the conviction order dated 27.09.2016, with no additional evidence presented beyond the possession of properties. Thus, it is submitted that the continuation of the trial in the impugned complaint during the pendency of the legal issues before the Honble Supreme Court and the Honble Division Bench of this Court and during pendency of appeal filed by the petitioner herein against his conviction in respect of predicate offence, will cause irreparable injury to the petitioner, and thus, the proceedings should be stayed in the interest of justice.
13. Learned special counsel appearing on behalf of the respondent, on the other hand, argues that the offence of money laundering is independent of the date on which the scheduled offence was committed. The key date is when the individual engages in activities connected with the proceeds of crime. It is submitted that this position aligns with the Honble Supreme Court’s decision in case of Vijay Madanlal Choudhary v. Union of India 2022 SCC OnLine SC 929, which clarified that money laundering can be a continuing offence, irrespective of the timing of the predicate offence, and that the criminal activity might have been committed before it was notified as a scheduled offence, but if a person continues to deal with the proceeds of crime derived from that activity after its notification, he can be prosecuted under the PMLA. It is further argued that the Honble Supreme Court in case of Tarun Kumar v. Directorate of Enforcement 2023 SCC OnLine SC 1486 has reiterated that money laundering under Section 3 of PMLA is an independent offence related to the handling of proceeds of crime, irrespective of the date of the predicate offence, and the involvement of an individual in activities such as concealment, possession, or use of proceeds of crime, or projecting it as untainted property, constitutes the offence of money laundering. Thus, it is submitted that the argument of the petitioner that PMLA proceedings are invalid due to the predicate offence occurring before certain provisions were included in the schedule is untenable.
14. It is also contended that prosecution under the PMLA does not violate Article 20(1) of the Constitution, even if the petitioner has been convicted of the predicate offence. The proceeds of crime, once held to be disproportionate assets under Section 13(1)(e) of PC Act, can fall within the ambit of money laundering. It is stated that the expression ‘proceeds of crime’ under Section 2(1)(u) of PMLA includes any property derived from criminal activity related to a scheduled offence. Further, the Honble Supreme Court in Vijay Madanlal Choudhary (supra) has clarified that various activities related to proceeds of crime, such as possession, use, or projecting it as untainted, independently constitute money laundering offences. It is also stated that in case of Y. Balaji v. Karthik Desari 2023 SCC OnLine SC 645, the Honble Supreme Court has emphasized that bribe money constitutes proceeds of crime. Thus, the argument that mere generation of proceeds of crime does not constitute money laundering is baseless, as the act of acquiring, using, or possessing proceeds of crime fulfills the criteria for the offence under Section 3 of PMLA.
15. It is therefore argued that possession, use, or concealment of proceeds of crime, or projecting or claiming it as untainted property, constitutes an offence of money laundering. In the present case, the trial is at an advanced stage of recording of statement of accused under Section 313 of Cr.P.C. Thus, it is prayed that the present applications seeking stay on trial court proceedings be dismissed.
16. This Court has heard arguments addressed by learned counsels appearing on behalf of both the parties, and the material placed on record by the either side has also been perused.
17. In short, the relief which is being sought by the petitioner at this stage is the stay of proceedings in the complaint case filed by the respondent under PMLA, which is pending before the learned Special Judge-05, CBI (PC Act), Rouse Avenue Court, and where the trial has reached the stage of recording of statement of accused under Section 313 of Cr.P.C.
18. As taken note of in the preceding discussion, the petitioner herein was convicted for offence under Section 13(1)(e) read with Section 13(2) of PC Act vide judgment dated 27.09.2016 since he was unable to satisfactorily account of the pecuniary resources of the property disproportionate to the tune of Rs 2,22,04,290/-. he had preferred the appeal against his conviction, which is pending before this Court. In the year 2018, the respondent i.e. Directorate of Enforcement had filed the prosecution complaint against the petitioner for commission of offence of money laundering, in case arising out of the ECIR which had been recorded in the year 2009. Cognizance of offence was taken by the learned Special Court vide order dated 25.01.2019, and charges were framed against the petitioner vide orders dated 21.01.2020 and 01.02.2020.
19. The above-captioned petitions were filed by the petitioner challenging the orders of cognizance and orders framing charge, in the year 2019 and 2020 respectively, in which notice were issued by this Court, however, the trial court proceedings in the present case have not been stayed till date.
20. The first argument raised on behalf petitioner is that since the appeal filed by him against his conviction in predicate offence is pending before this Court, the trial in respect of offences under PMLA must not proceed since establishment of the predicate offence is a mandatory prerequisite for proceedings under PMLA. In this Courts opinion, there is no merit in this argument since the petitioner, as on date, stands convicted by the learned Trial Court for the predicate offence vide judgment of conviction dated 27.09.2016. Though his appeal against conviction is pending before this Court, his conviction has not been stayed and thus, the commission of predicate offence stands established as the petitioner has been already convicted after a full-fledged trial by the learned Trial Court. Therefore, on this ground, the proceedings before the learned Special Court in the complaint case filed by the respondent under PMLA, cannot be stayed.
21. Another argument raised on behalf of petitioner is that since there is no ‘proceed of crime’ in the instant case as defined under Section 2(1)(u) of PMLA, which can be said to be derived from the criminal activity, no prosecution under Section 3 and 4 of PMLA is maintainable. As far as this argument is concerned, this Court is of the view that whether there are any proceeds of crime or not and whether offence under PMLA is made out or not is a matter of trial, which shall be decided by the learned Special Court after conclusion of trial. The cognizance of the offence under PMLA has been taken and charges against the petitioner have been framed by the learned Special Court already. Though these orders were challenged by the petitioner in the year 2019 and 2020 by way of above-captioned petitions, no stay of was granted in the present case by this Court. With respect to another argument of the petitioner that the ‘property’ under Section 2(1)(v) of PMLA must emanate as a result of a criminal activity relating to a scheduled offence and there is no finding in the judgment of conviction dated 27.09.2016that any of the properties have been derived or obtained as criminal activity relation to the scheduled offence, this Court, at this stage, is of the view that the learned Special Court while taking cognizance of the offence and while framing charges, has categorically noted that the independent investigation under PMLA had revealed that the petitioner had purchased properties and assets worth Rs. 3,37,02,592/- in his and his wife’s names, projecting them as bought with untainted money, and these were the proceeds of crime under Section 2(1)(u) of PMLA, and further that the properties belonging to the petitioner were provisionally attached under Section 5(1) via a Provisional Attachment Order dated 4.11.2006. Therefore, this Court is not inclined to stay the trial court proceedings in the present case on these grounds also.
22. Next contention raised on behalf of petitioner is that the provisions of PMLA, being punitive in nature, cannot be applied retrospectively and the issue of retrospective applicability is pending adjudication before the Honble Apex Court and Honble Division Bench of this Court. It has been argued so since the grievance of petitioner is that check period for the predicate offence under Section 13(1)(e) read with Section 13(2) of PC Act is from 14.11.1971 to 10.10.2007 in the present case, whereas the said provision was included in Schedule A of PMLA as predicate offence only in the year 2009. In this regard, this Court has gone through the findings of the learned Special Court in the order dated 21.01.2020 wherein the Court has examined various judgments of different High Courts as well as the Honble Apex Court. The relevant portion of the findings of learned Special Court are as under:
22. Therefore, from a reading of various cases relied on by Ld. Counsel for the parties it appears that there are judgments holding that the provisions of PML Act would be applicable even in cases where the scheduled offence was committed prior to amendment in the schedule of PML Act to include offences under Prevention of Corruption Act. There are judgments holding otherwise but in appeal either their operation has been stayed or it has been clarified that they would not be construed as conclusive and binding precedent.
23. Another factor which distinguishes the present case from all other cases relied on by Ld. Counsel for accused No.l is that Section 3 of PML Act has been amended w.e.f. 1st August 2019 adding Explanation to the Section clarifying that the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.
23. Be that as it may, the Honble Apex Court in case of Vijay Madanlal Choudhary (supra)has held that offence of money laundering can be a continuing offence, irrespective of the date and time of commission of scheduled offence. It has also been held that the criminal activity may have been committed before the same had been notified as scheduled offence under PMLA, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, such person may be liable to be prosecuted for offence of money laundering under PMLA. The relevant observations of the Honble Apex Court are as under:
270. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of money -laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money laundering under the 2002 Act – for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed.The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till 31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all.
(emphasis supplied)
24. In response to the aforesaid ratio laid down by the Honble Apex Court, the argument of the petitioner is that a review petition titled Karti P. Chidambaram v. Directorate of Enforcement has been filed before the Honble Apex Court for review of the judgment in Vijay Madanlal Choudhary (supra). However, this argument can be of no help to the petitioner as far as instant applications seeking stay of proceedings are concerned since as on date, the question of law stands answered by the three-judge Bench of the Honble Apex Court and even though review of the said judgment is pending, no direction has been passed by the Honble Apex Court, nor has the judgment been stayed. Thus, the proposition of law laid down by the Honble Apex Court shall be binding upon this Court.
25. The last argument advanced on behalf of the petitioner is that Section 13(1)(e) of PC Act is ultra vires Section 3 of PMLA, as the ingredients of both sections are identical and therefore, prosecuting the petitioner under both statutes would amount to double jeopardy, and thus, the inclusion of Section 13 of PC Act in the Schedule of the PMLA is violative of Article 20(2) of the Constitution of India and Section 300 of Cr.P.C. However, in this regard, learned Special counsel for the respondent has drawn this Courts attention towards the observations of the Honble Apex Court in case of Vijay Madanlal Choudhary (supra)wherein it was held that offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence and it has otherwise nothing to do with the criminal activity relating to a scheduled offence. The relevant observations of the Honble Apex Court are extracted hereunder:
269. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money-laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence – except the proceeds of crime derived or obtained as a result of that crime.
(emphasis supplied)
26. The respondent has also relied upon the decision of Honble Apex Court in case of Y. Balaji (supra)wherein following observations were made in respect of essentials of Section 3 of PMLA, Section 13 of PC Act being a scheduled offence, and bribe money being proceeds of crime under Section 2(1)(u) of PMLA:
97. If the main part of Section 3 is dissected with forensic precision, it will be clear that Section 3 addresses itself to three things (we may call them 3 P’s) namely, (i) person; (ii) process or activity; and (iii) product. Insofar as persons covered by Section 3 are concerned, they are, (i) those who directly or indirectly attempt to indulge; or (ii) those who knowingly assists; or (iii) those who are knowingly a party; or (iv) those who are actually involved. Insofar as process is concerned, the Section identifies six different activities, namely (i) concealment; (ii) possession; (iii) acquisition; (iv) use; (v) projecting; or (vi) claiming as untainted property, any one of which is sufficient to constitute the offence. Insofar as product is concerned, Section 3 identifies proceeds of crime or the property representing the proceeds of crime as the product of the process or activity.
***
99. Keeping in mind these essential elements that make up the molecular structure of Section 3, if we go back to the case on hand, we will find (i) that the offences under Sections 120B, 419, 420, 467 and 471 IPC are scheduled offences included in paragraph 1 of the Schedule; and (ii) that the offences under Sections 7 and 13 of the PC Act are included in paragraph 8 of the Schedule.
100. All the three FIRs allege that the accused herein had committed offences included in the Schedule by taking illegal gratification for providing appointment to several persons in the Public Transport Corporation. In one case it is alleged that a sum of more than Rs. 2 crores had been collected and in another case a sum of Rs. 95 lakhs had been collected. It is this bribe money that constitutes the ‘proceeds of crime’ within the meaning of Section 2(1)(u). It is no rocket science to know that a public servant receiving illegal gratification is in possession of proceeds of crime.The argument that the mere generation of proceeds of crime is not sufficient to constitute the offence of money-laundering, is actually preposterous. As we could see from Section 3, there are six processes or activities identified therein. They are, i) concealment; i) possession; (iii) acquisition; (iv) use; (v) projecting as untainted property; and (vi) claiming as untainted property. If a person takes a bribe, he acquires proceeds of crime. So, the activity of “acquisition” takes place. Even if he does not retain it but “uses” it, he will be guilty of the offence of money-laundering, since “use” is one of the six activities mentioned in Section 3.
(emphasis supplied)
27. Therefore, considering the aforesaid observations of the Honble Apex Court, and the fact that Section 13 of PC Act is a scheduled offence under PMLA, which has not been declared as unconstitutional or violative of any fundamental right by any court of law, this Court is of the opinion that the contention raised on behalf of petitioner that trial court proceedings in this case should be stayed since continuation of the same would amount to double jeopardy is also devoid of any merit.
28. Thus, in view of the foregoing discussion, this Court finds no reason to allow the present applications seeking stay of trial court proceedings.
29. Needless to say, the petitioner shall be at liberty to raise and address arguments on all these issues before the learned Trial Court at appropriate stage.
30. Accordingly, the present applications stand dismissed.
31. Nothing expressed hereinabove shall tantamount to an expression of opinion on the merits of the case.
32. The judgment be uploaded on the website forthwith.
SWARANA KANTA SHARMA, J
JULY 01, 2024/at
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