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IN THE HIGH COURT OF DELHI AT NEW DELHI
Prathiba M. Singh, J.
Sachin Joshi – Appellant
Versus
Adjudicating Authority, Prevention of Money Laundering Through Its Registrar & Ors. – Respondents
W.P.(C) 11472 of 2022 and CM APPL. 33898 of 2022, 7732 of 2023 with W.P.(C) 11474 of 2022 and CM APPL. 33902 of 2022
Decided On : 16-02-2023
Money Laundering - Attachment of Properties - Prevention of Money Laundering Act - Section 5 - Summary of Acts and Sections: PMLA, Section 5 - The court discussed the legal provisions of the Prevention of Money Laundering Act, particularly Section 5, and its interpretation in light of the discharge of the accused in the predicate offence. The court highlighted the requirement of a scheduled offence for money laundering and the consequences of discharge or acquittal in the scheduled offence on the money laundering proceedings.
Fact of the Case:
The petitions challenged the Provisional Attachment Order (PAO) issued by the Directorate of Enforcement under Section 5 of the Prevention of Money Laundering Act, attaching properties of the petitioners. The accused, Mr. Sachin Joshi, was discharged in the PMLA case, and the petitioners sought release of the attached properties.
Finding of the Court:
The court found that Mr. Sachin Joshi and his companies were discharged in the PMLA case, and there was no evidence to show any criminality resulting in the generation of proceeds of crime by Mr. Sachin Joshi. The court also noted that the impugned PAO was based on the connection with Mr. Sachin Joshi, and in light of his discharge, the PAO was liable to be quashed/set aside.
Issues: The issues involved the challenge to the maintainability of the petition, the discharge of the accused in the PMLA case, and the validity of the impugned PAO in light of the discharge of the accused.
Ratio Decidendi: The court held that the discharge of the accused in the predicate offence had consequences on the money laundering proceedings, and in the absence of a scheduled offence, there could be no offence of money laundering. The court relied on the legal principle that the authorities under the PMLA cannot prosecute any person on the assumption of a scheduled offence unless it is registered or pending inquiry/trial before the competent forum.
Final Decision: The court quashed/set aside the impugned PAO concerning Mr. Sachin Joshi and M/s. Muktanand Agro Farming Pvt. Ltd. and ordered the release of the attached properties. The ED was granted liberty to seek revival of the PAO in accordance with law, if there is any change in the circumstances.
Key Points: - The discharge or acquittal of an accused in a scheduled offence has consequences on money laundering proceedings under the Prevention of Money Laundering Act (PMLA) [judgement_subject]. - The petitions challenged a Provisional Attachment Order (PAO) issued under Section 5 of the PMLA, seeking the release of attached properties after the accused, Mr. Sachin Joshi, was discharged in the PMLA case [judgement_subject]. - The court found that Mr. Sachin Joshi and his companies were discharged in the PMLA case, and there was no evidence of criminality leading to the generation of proceeds of crime by Mr. Sachin Joshi [judgement_subject]. - The impugned PAO was based on the connection with Mr. Sachin Joshi, and in light of his discharge, the PAO was liable to be quashed/set aside [judgement_subject]. - The court held that the discharge of the accused in the predicate offence had consequences on the money laundering proceedings, and in the absence of a scheduled offence, there could be no offence of money laundering [judgement_subject]. - The authorities under the PMLA cannot prosecute any person on the assumption of a scheduled offence unless it is registered or pending inquiry/trial [judgement_subject]. - The court quashed/set aside the impugned PAO concerning Mr. Sachin Joshi and M/s. Muktanand Agro Farming Pvt. Ltd. and ordered the release of the attached properties [judgement_subject]. - The basis of the PAO was an FIR invoking Sections 420, 406, and 34 of the Indian Penal Code, 1860 [11000754610001]. - The Special Court found no evidence to show any criminality resulting in the generation of proceeds of crime by Mr. Sachin Joshi [11000754610005]. - The Supreme Court in Vijay Madanlal Choudhary & Ors. v. UOI & Ors. held that if a person is finally discharged/acquitted of the scheduled offence, there can be no offence of money-laundering against them (!) (!) . - The court granted liberty to the ED to seek revival of the PAO if there is any change in circumstances [11000754610017].
JUDGMENT
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. The present two petitions are connected to each other. Mr. Sachin Joshi, the Petitioner in W.P. (C) 11472/2022 titled 'Sachin Joshi v. Adjudicating Authority, Prevention of Money Laundering through its Registrar and Ors.' is the shareholder/Director of M/s. Muktanand Agro Farming Pvt. Ltd., which is the Petitioner Company in W.P. (C) 11474/2022 titled 'Muktanand Agro Farming Pvt. Ltd. v. Adjudicating Authority, Prevention of Money Laundering through its Registrar and Ors.'. In both of these petitions, the impugned Provisional Attachment Order (PAO) No. 1/2022 dated 14th January, 2022 issued by the Directorate of Enforcement (ED) under Section 5 of the Prevention of Money Laundering Act (hereinafter 'PMLA') is under challenge. In addition, the Petitioners are also seeking a direction for release of the attached properties. The basis of the PAO is FIR No. 109/2020 dated 7th March, 2020 registered with City Chowk Police Station Aurangabad invoking Sections 420, 406 and 34 of the Indian Penal Code, 1860.
3. The allegations against Mr. Sachin Joshi who is accused no. 5 in the ECIR No. ECIR/03/MBZO-II/20/2020 are as under:
"6.5 Further, "Proceeds of Crime" to the extent of Rs. 80 crores (approx.) as mentioned above in Table No. 6 and 8 gets exhausted in the hands of Sachin Joshi and his Viiking Group of Companies. Mr. Sachin Joshi had utilized the entire Proceeds of Crime of Rs. 80 crores (approx.) for various purposes, as discussed above. The Proceed of Crime of Rs. 80 crores (approx.) will be attached under the provisions of Section 2(1)(u) of PMLA, whereby the value equivalent thereof concept is applied. It is gathered during investigation that M/s Muktanand Agro Farming Pvt. Ltd. has properties as mentioned in below table and Shri Sachin Joshi is the majority shareholder and ultimate beneficiary. The details of properties proposed to be attached for "Proceeds of Crime" to the extent of Rs. 80 crores (approx.) is as under :
| S.No | Name of Holder | Value of Property (in Rs.) | Description of property | Remarks | |
| 1. | M/s Muktanand Agro Farming Private Limited. (Through its Directors, Vidya Jagdish Joshi & Sachin Joshi) | 80,78,80,982 | Open Land situated at Gut No. 380- 386,423-424 & 427-454, Village Viram, Tal. Khed, Rajgurunagar, Pune | The said property was acquired under 5 different sale deeds: 1. Document No. 745/2008 dated 22.01.2008 2. Document No. 485/2008 dated 12.01.2008. 3. Document No. 1344/2009 dated 20.03.2009 4. | Document No. 744/2008 dated 22.01.2008. 5. Document No. 3579/2008 dated 12.05.2008. |
4. The present petitions were first listed before this Court on 2nd August, 2022, where Mr. Ahluwalia, Ld. Counsel for the Respondents made a preliminary objection with regards to the maintainability of the petition on the ground of lack of territorial jurisdiction. The said preliminary objection was dismissed, placing reliance on order dated 2nd June, 2022 passed in W.P. (C) 6354/2022 titled 'M/S Incred Financial Services Ltd. vs. Deputy Director, Directorate of Enforcement'. In addition, on the said date, status quo was directed. The relevant extract of the order directing status quo is extracted as under:
"6. Till the next date of listing, the respondent shall stand restrained from taking further steps as contemplated under Section 8 of Prevention of Money Laundering Act, 2002. The petitioner shall also stand restrained from disposing of or creating any third party rights or encumbering the property which forms subject matter of the provisional order of attachment."
5. It is the submission of ld. Counsel for the Petitioners that by order dated 18th October, 2022 which has been passed by the Special Court, Greater Bombay under the PMLA, the Petitioners - Mr. Sachin Joshi, who was accused No. 5, as also all his companies have been discharged, in the ECIR i.e., ECIR No. ECIR/03/MBZO-II/20/2020.
6. The findings of the Special Court are that there is no evidence
AI
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