Grant of Pardon in Scheduled Offence has no Effect on Proceedings Under PMLA: Allahabad HC Upholds Proceedings [Read Order]

In a significant case, the Allahabad High Court held that the grant of pardon in a scheduled offence has no effect on proceedings under the Prevention of Money Laundering Act,2002 and upheld the proceeding.

Sri Dhruv Gupta appeared for the applicant Mohan Lal Rathi, Sri Kuldeep Srivastava appeared for the Enforcement Directorate and Sri Dharmendra Pratap Singh, held the brief of Sri Anurag Kumar Singh appeared for the respondent.

Through the application filed under Section 482Criminal Procedure Code ( Cr.P.C.), the applicant has sought to assail the validity of the cognizance/ summoning order dated 08.08.2019 passed in Complaint Case No.121/2019 titled “Directorate of Enforcement Vs. Yadav Singh & Others” in the Court of Session Judge / Special Judge PMLA, Lucknow, summoning the applicant for the trial of offences under Sections 3/4 of Prevention of Money Laundering Act, 2002, and all proceedings of the aforesaid complaint case whereby a non-bailable warrant has been issued against the applicant.

The C.B.I., after investigation, submitted a charge sheet dated 26.09.2017 against 11 persons, including the applicant. It was stated in the charge sheet that Yadav Singh was found in possession of disproportionate assets worth  231,541,514 - 512.66% to his known₹ 231,541,514 - 512.66% to his known sources of income, either in his name or in the name of his family members. The applicant was the Chartered Accountant of Yadav Singh.

The family members of Yadav Singh had incorporated numerous companies and firms and most of the business transactions found in those entities were fake and were used to convert the ill-gotten money of Yadav Singh into white money with the help of a battery of Chartered Accountants. The Chartered Accountants helped in layering the ill-gotten money by putting the same in various other companies and by making accommodation entries in accounts.

On an application filed by the applicant, the Special Judge, Prevention of Corruption Act, C.B.I., Ghaziabad has passed an order in Special Case No. 08/2017 whereby the applicant has been made an approver and he has been granted pardon regarding offences under Sections 109 read with 120- B IPC, read with Section 13(2), read with Section 13(1)(e) of Prevention of Corruption Act, 1988.

The order granting pardon to the applicant was challenged by the co-accused Yadav Singh by filing an Application under Section 482 No. 31498 of 2018, which was dismissed by a Division Bench of this Court through an order dated 11.09.2018. S.L.P. (Crl.) No. 9692 of 2018 filed by Yadav Singh against the aforesaid order was dismissed by the Supreme Court using an order dated 07.12.2018.

The Enforcement Directorate (E.D.) filed a supplementary complaint against five persons, including the applicant. It was stated in the complaint that the applicant was the Chartered Accountant of Yadav Singh and he had arranged various persons, through whom the illegal money was routed to the companies owned by Yadav Singh and Kusumlata, by making accommodation entries in the form of business income, referral commission and unsecured loans, which was subsequently used for construction and purchase of properties.

The E.D. issued a summon under Sub-sections (2) and (3) of Section 50 of the Prevention of Money Laundering Act (PMLA) to the applicant, directing him to appear on 13.05.2019 and another summon was issued on 27.05.2019 directing him to appear on 11.06.2019. Thereafter a non-bailable warrant was issued against the applicant.

The applicant has sought quashing of the proceedings under the Prevention of Money Laundering Act on the ground that he has been made an approver and has been granted pardon in the scheduled offence. Now, he is no longer an accused in the scheduled offence. The proceedings under the Prevention of Money Laundering Act cannot continue only against a person who is an accused in a scheduled offence and having been granted a pardon in the scheduled offence, he cannot be tried for the offence under PMLA also.

Section 46 of the Prevention of Money Laundering Act, 2002 provides that the persons conducting the prosecution before the Special Court shall be deemed to be a Public Prosecutor. However, the public prosecutor conducting the trial of the offence under PMLA before the Special Court cannot file objections regarding the concealment of facts relating to the processes or activities connected with proceeds of the offence, namely - (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property before the Court trying the scheduled offence.

It was observed that an order for discharge of the accused is passed or the criminal proceedings against him are quashed when on the face of the allegations, no triable offence is made out against the accused person and an order of acquittal is passed when the accused could not be proved guilty even after facing the trial. On the other hand, a pardon is granted to a person who is ‘supposed to have been directly or indirectly concerned in or privy to an offence’. Pardon is granted only to a person who was involved in the commission of the offence and not to a person against whom no case is made out or no case could be established.

The power under Section 482 Cr.P.C. can be exercised to secure the ends of justice, as held in State of Haryana v. Bhajan Lal, 1992 wherein the Supreme Court gave a word of caution by stating that “the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases”.

A single judge bench comprising Justice Subhash Vidyarthi held that “there is no illegality in the cognizance/ summoning order dated 08.08.2019 passed in Complaint Case No.121/2019 in the Court of Session Judge / Special Judge PMLA, Lucknow, and there is no ground to quash the proceedings of the complaint filed against the applicant under the PMLA. The application under Section 482 Cr.P.C. lacks merit and the same is, accordingly, dismissed.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates