Dismissed

R.Subramanian v. the Deputy Director

Madras HC13 Nov 2024CRL OP/7733/2019

Case brief

AI extract

What is this about?

The High Court dismissed a criminal original petition challenging a Provisional Attachment Order under the PMLA, holding that the order had lost relevance as the statutory period lapsed and adjudication was pending before the Competent Forum. The Court relied on the Supreme Court's interpretation of 'proceeds of crime' to clarify the scope of attachment powers.

What the court decided

AI extract

R.Subramanian Vs the Deputy Director — Money Laundering | Madras HC (2024)

¶1

2024:MHC:3917

¶2

Crl.O.P.No.7733 of 2019

¶3

IN THE HIGH COURT OF JUDICATURE AT MADRAS

¶4

DATED :13.11.2024

¶5

CORAM :

¶6

THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM AND THE HONOURABLE MR. JUSTICE M.JOTHIRAMAN

¶7

Crl.O.P.No.7733 of 2019

R.Subramanian

.....Petitioner

Vs.

1.The Deputy Director Directorate of Enforcement Chennai Zonal Office 3rd Floor C Block Murugesa Naicker Complex 84 Greams Road Chennai 600 006.

¶12

2.The Assistant Director Office of the Directorate of Enforcement Chennai Zonal Office 3rd Floor C Block Murugesa Naicker Complex 84 Greams Road Chennai 600 006. ... Respondents

¶13

Prayer: Criminal Original Petition filed under Section 482 of Cr.P.C., praying to call for the records and quash the PAO No.11/2018 dated 31.12.2018 passed by the 1st respondent in ECIR/CEZO/8/2014 on the file of 2nd respondent.

¶14

https://www.mhc.tn.gov.in/judis

¶15

Page 1 of 9

¶16

Crl.O.P.No.7733 of 2019

¶17

For Petitioner	: Mr.R.Subramanian (Party in person)
For Respondents	: Mr.AR.L.Sunderesan
	Additional Solicitor General of India
	Assisted by Mr.N.Ramesh for R1 and R2
	Special Public Prosecutor for ED

¶18

ORDER

¶19

(Order of the Court was made by S.M.SUBRAMANIAM, J. )

¶20

Under assail in the present Criminal Original Petition is the Provisional

¶21

Attachment Order dated 13.12.2018 issued by the Competent Authority of Directorate of Enforcement.

¶22

The petitioner, appearing in person, is an accused in a money laundering case. Admittedly, ECIR/CEZO/8/2014 was registered by the Directorate of Enforcement and launched an investigation under the provisions of Prevention of Money Laundering Act, 2002 (hereinafter referred as 'PMLA' for brevity). The scheduled offence was registered by the Central Bureau of Investigation (CBI) (BS&FC), Bangalore, in FIR No.18 of 2013 dated 26.07.2013, alleging an offence under Section 420 of Indian Penal Code (IPC). On completion of investigation, a complaint under Section 45 of PMLA, read with Sections 3 and 4 has been filed before the Court concerned.

¶23

https://www.mhc.tn.gov.in/judis

¶24

Page 2 of 9

¶25

Crl.O.P.No.7733 of 2019

¶26

The petitioner challenged the Provisional Attachment Order No.11 of 2018 dated 31.12.2018 issued by the Deputy Director, Directorate of Enforcement, under Section 5(1) of the PMLA. The petitioner states that the authority issued the impugned provisional attachment order has no jurisdiction and the properties provisionally attached cannot be construed as proceeds of crime within the meaning of Section 2(1)(u) of PMLA. The subject properties under provisional attachment were either purchased by the petitioner or were ancestral properties of the petitioner, which were in his possession even prior to the registration of a criminal case by the Central Bureau of Investigation (CBI) at Bangalore. Thus, recording of Enforcement Case Information Report (ECIR) under the provisions of the PMLA itself is untenable.

¶27

In support of the above grounds, the petitioner in person relied on the judgment of the Hon'ble Supreme Court of India in the case of Vijay Madanlal Choudhary and Others Vs. Union of India and Others¹ . The petitioner further relied on the case of Pavana Dibbur vs. Directorate of Enforcement² .

¶28

The petitioner states that the properties purchased prior to investigation of PMLA proceedings cannot be subjected to provisional attachment under

¶29

2022 SCC Online SC 929

¶30

2023 SCC Online SC 1586

¶31

https://www.mhc.tn.gov.in/judis

¶32

Page 3 of 9

¶33

Crl.O.P.No.7733 of 2019

¶34

Section 5(1) of PMLA. Thus, the provisional attachment order is infirm.

¶35

Mr.AR.L.Sunderesan, learned Additional Solicitor General of India appearing on behalf of the respondents would oppose by stating that provisional attachment order was passed by the Deputy Director, Directorate of Enforcement in proceedings dated 31.12.2018. Subsequently, a complaint was filed before the Adjudicating Authority under Section 8 of PMLA. Thus, the impugned provisional attachment order lost its relevance and would not provide cause at present to the petitioner to maintain the present criminal original petition. The period of 180 days contemplated for provisional attachment order had been lapsed. However, the provisional attachment order was passed in consonance with the provisions of Section 2(1)(u) and Section 5(1) of PMLA and there is no infirmity as such.

¶36

We have considered the rival submissions made between the parties to the lis on hand.

¶37

Section 2(1)(u) of the Prevention of Money Laundering Act, 2002

¶38

defines “proceeds of crime” as “any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled https://www.mhc.tn.gov.in/judis Page 4 of 9

¶39

Crl.O.P.No.7733 of 2019

¶40

offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad” .

¶41

The definition of “Proceeds of Crime” is wide enough to cover various facts and circumstances relating to offence of money laundering. The value of the properties is considered as proceeds of crime and further it says that property equal in value held within the country or abroad also constitute proceeds of crime.

¶42

With reference to Section 2(1)(u) of PMLA, “Proceeds of Crime”, the

¶43

Hon'ble Supreme Court in Vijay Madanlal Choudhary's case cited supra held as follows;

¶44

“ 298. It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of “proceeds of crime” is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in

¶45

https://www.mhc.tn.gov.in/judis

¶46

Page 5 of 9

¶47

Crl.O.P.No.7733 of 2019

¶48

value held within the country or abroad can be proceeded with. The definition of “property” as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering.”

¶49

The Hon'ble Apex Court ruled that the definition of proceeds of crime

¶50

is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a schedule offence, but also of the value of any such property.

¶51

The definition of “property” under Section 2(1)(v) is equally wide encompass the value of the property of proceeds of crime. The wider implications as interpreted by the Hon'ble Supreme Court in Vijay Madanlal Choudhary's case cited supra would be sufficient to form an opinion that the properties purchased prior to the commencement of alleged offence and value of the proceeds of crime can be subjected to attachment as it constitute proceeds of crime within the definition of Section 2(1)(u) of PMLA.

¶52

In the present case, the impugned provisional attachment order has

¶53

https://www.mhc.tn.gov.in/judis Page 6 of 9

¶54

Crl.O.P.No.7733 of 2019

¶55

been stayed by this Court and therefore, the period of 180 days as contemplated does not apply to the present case. However, the fact remains that a complaint has already been filed under the provisions of PMLA. Therefore, the provisional attachment order impugned lost its relevance and thus, no further adjudication needs to be undertaken. The petitioner is at liberty to approach the Competent Forum constituted under PMLA in the manner known to law.

¶56

The petitioner, appearing in person, would submit that he is in the process of contesting the complaint filed before the Adjudicating Authority. Accordingly, the Adjudicating Authority shall proceed with the case in accordance with law by following the procedures as contemplated under PMLA and uninfluenced by the observations made in this order regarding the facts of the case.

¶57

Considering the facts and circumstances, we hold that the petitioner has not established any grounds for the purpose of considering the relief as such sought for in the present criminal original petition.

¶58

Accordingly, the Criminal Original Petition in Crl.O.P.No.7733 of 2019 stands dismissed.

¶59

https://www.mhc.tn.gov.in/judis

¶60

Page 7 of 9

¶61

Crl.O.P.No.7733 of 2019

¶62

[S.M.S., J.] [M.J.R., J.] 13.11.2024

¶63

Index: Yes Speaking msv/Jeni

¶64

To 1.The Deputy Director Directorate of Enforcement Chennai Zonal Office 3rd Floor C Block Murugesa Naicker Complex 84 Greams Road Chennai 600 006.

¶65

2.The Assistant Director Office of the Directorate of Enforcement Chennai Zonal Office 3rd Floor C Block Murugesa Naicker Complex 84 Greams Road Chennai 600 006.

¶66

https://www.mhc.tn.gov.in/judis

¶67

Page 8 of 9

¶68

Crl.O.P.No.7733 of 2019

¶69

S.M.SUBRAMANIAM, J. AND M.JOTHIRAMAN, J.

¶70

msv/Jeni

¶71

Crl.O.P.No.7733 of 2019