# Gayatri Prasad Prajapati v. Directorate Of Enforcement Thru. Representative Asstt. Director Lko

- **Citation:** (2023) 7 ILRA 558
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-07-03
- **Case number:** Application U/S 482. No.1981 of 2023
- **Bench:** Subhash Vidyarthi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/gayatri-prasad-prajapati-v-directorate-of-enforcement-thru-representative-asstt-50379
- **Pages:** 14

## Headnote

Criminal Law - Criminal Procedure Code,
1973 - Sections 227, 228, 173, 300 & 482
- Prevention of Corruption Act, 1988 -
Sections 13(1)(b) & 13(2) - Prevention of
Money Laundering act, 2002 - Sections 3,
4 & 50: - Application - against rejection of
Discharge Application as well as against the
proceedings initiated under PMLA Act, - The
applicant has committed the offence of money
laundering
by
amassing
unexplained
and
unaccounted properties in the name of his
family members and related companies - plea of
double jeopardy - court finds that, there
appears to be no illegality in the order passed
by the trial court rejecting the application for
discharge and framing charges against him -
held, there is no averment regarding earlier
complaints had been closed after a full-fledged
enquiry and summery closure of complaint or
7 All. Gayatri Prasad Prajapati Vs. Directorate Of Enforcement Thru. Representative Asstt.
 Director Lko.
559
withdrawal thereof without any finding of
innocence would be of no consequence - it
would also not amount to double jeopardy and
Principle of res-judicate does not apply to the
proceedings before the Hon'ble Lokayukta -
whereas the Hon'ble Lokayukta is not a 'court'
within the meaning of the expression used in
Section 300 of Cr.P.C. - for attracting the
principle of double jeopardy, the person must
have been tried by a 'court of competent
jurisdiction' and convicted or acquitted of such
offence - hence, there appears to be no
illegality in the order passed by the trial court
rejecting the discharge application and framing
charges against the applicant - application lacks
merit - accordingly, rejected. (Para -28, 29, 30,
31)

Application u/s 482 dismissed. (E-11)

List of Cases cited:

## Text

_Characters 0–39,875 of 46,212. This is a partial read: ask again with offset=39875 for what follows._

558 INDIAN LAW REPORTS ALLAHABAD SERIES
(i)
Monthly Income (of
the deceased) =
 5000
(ii)
Annual Income (of the
deceased) = 5000x12
=
 60000
(iii)
Annual
Income+Future
Prospects
(annual
income x 50%) =
60000+30000 =
 90000
(iv)
Annual Dependency =
Annual Income - 50%
deduction
towards
personal expenses of
the deceased = 9000045000 =
 45000
(v)
Total Dependency =
Annual Dependency x
Applied Multiplier =
45000 x 18 =
 810000
(vi)
Claimant's entitlement
towards conventional
heads = Loss of Estate
+ Funeral Expenses +
dependents'
Consortium
=15000+15000+4000
0x2 =
110000
The
total
compensation
would therefore, work out to
a
figure
of
Rs.810000+
Rs.110000 =
920000

33. In the result, this appeal is
allowed in part. The impugned award
passed by the Tribunal is modified and the
compensation
awarded
enhanced
to
Rs.9,20,000/-. The aforesaid sum of money
shall carry simple interest at the rate of 7%
per annum from the date of institution of
the claim petition, until realization. Any
sum of money already deposited with the
Tribunal by the Insurers, pursuant to the
impugned award or the interim orders
passed by this Court, shall be adjusted. The
other directions of the Tribunal carried in
the impugned award shall remain intact.
Costs easy.
----------
(2023) 7 ILRA 558
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 03.07.2023

BEFORE

THE HON'BLE SUBHASH VIDYARTHI, J.

Application U/S 482. No.1981 of 2023

Gayatri Prasad Prajapati ...Applicant
Versus
Directorate
Of
Enforcement
Thru.
Representative Asstt. Director Lko.
 ...Opposite Party

Counsel for the Applicant:
Sri Indu Prakash Singh, Sri Salil Shekhar
Singh

Counsel for the Opposite Party:
Sri Kuldeep Srivastava

Criminal Law - Criminal Procedure Code,
1973 - Sections 227, 228, 173, 300 & 482
- Prevention of Corruption Act, 1988 -
Sections 13(1)(b) & 13(2) - Prevention of
Money Laundering act, 2002 - Sections 3,
4 & 50: - Application - against rejection of
Discharge Application as well as against the
proceedings initiated under PMLA Act, - The
applicant has committed the offence of money
laundering
by
amassing
unexplained
and
unaccounted properties in the name of his
family members and related companies - plea of
double jeopardy - court finds that, there
appears to be no illegality in the order passed
by the trial court rejecting the application for
discharge and framing charges against him -
held, there is no averment regarding earlier
complaints had been closed after a full-fledged
enquiry and summery closure of complaint or
7 All. Gayatri Prasad Prajapati Vs. Directorate Of Enforcement Thru. Representative Asstt.
 Director Lko.
559
withdrawal thereof without any finding of
innocence would be of no consequence - it
would also not amount to double jeopardy and
Principle of res-judicate does not apply to the
proceedings before the Hon'ble Lokayukta -
whereas the Hon'ble Lokayukta is not a 'court'
within the meaning of the expression used in
Section 300 of Cr.P.C. - for attracting the
principle of double jeopardy, the person must
have been tried by a 'court of competent
jurisdiction' and convicted or acquitted of such
offence - hence, there appears to be no
illegality in the order passed by the trial court
rejecting the discharge application and framing
charges against the applicant - application lacks
merit - accordingly, rejected. (Para -28, 29, 30,
31)

Application u/s 482 dismissed. (E-11)

List of Cases cited:

1. Amit kappor Vs Ramesh Chander (2012 9 SCC
460),

2. Vijay Madanlal Chaudhary & ors.Vs U.O.I.
(2022 SCC online SC 929),

3. St. of Mah.Vs Som Nath Thapa (1996 4 SCC
659),

4. Nikesh Tarachand Shah Vs U.O.I. (2018 11
SCC 1).

(Delivered by Hon'ble Subhash Vidyarthi, J.)

1. Heard Sri Malay Prasad, Ms. Saloni
Mathur, Ms. Tanya Makkar, Sri Piyush
Kumar Shukla and Sri. Kaustubh Singh
Advocates for the applicant and Sri Kuldeep
Srivastava, the learned counsel representing
the respondent - Directorate of Enforcement
(hereinafter referred to as 'E.D.').

2. By means of the instant application
filed under Section 482 of the Criminal
Procedure Code, the applicant has challenged
validity of the order dated 22.12.2022 passed
by the Sessions Judge / Special Judge,
Prevention of Money Laundering Act,
Lucknow in Sessions Case No. 1220/2021,
rejecting the application for discharge filed
by the applicant. The applicant has also
assailed another order passed in the aforesaid
case on the same date framing charge of
commission of offence under Section 3 of the
Prevention of Money Laundering Act, 2002
(hereinafter referred to as 'PMLA') against
the applicant.

3. Briefly stated, facts of the case are
that on 26.11.2020, an Inspector in the U. P.
Vigilance
Establishment
filed
a
First
Information Report (F.I.R.) No. 0003 of 2020
under Sections 13 (2) and 13 (1) (b) of the
Prevention of Corruption Act 1988, Police
Station
Lucknow
Sector,
Vigilance
Establishment, against the applicant stating
that by means of a Government order dated
08.06.2018, U. P. Vigilance Establishment
was directed to conduct an open enquiry
against the applicant, who was the then
Minister for Mining in U. P. Government. It
was found in enquiry that while working as a
public servant, the applicant had earned
₹49,93,149/- from his known and valid
sources
of
income,
but
he
spent
₹3,48,21,760/- on acquisition of properties
and maintenance during the same period.
Thus the applicant spent ₹2,98,28,511/- in
excess of his known income, which is
disproportionate to his income from the
known and valid sources. The applicant could
not give any satisfactory reply regarding
disproportionate expenditure and acquisition
of properties. Besides this, there was prima
facie evidence that the applicant had acquired
benami properties also. The F.I.R. states that
the aforesaid acts of the applicant amount to
commission of offence under Section 13 (1)
(b) of the Prevention of Corruption Act,
1988.

4. On 14.01.2022, the Directorate of
Enforcement registered an Enforcement
560 INDIAN LAW REPORTS ALLAHABAD SERIES
Case Information Report (ECIR) bearing
number
ECIR/LKZO/04/2021
in
furtherance of the aforesaid F.I.R. No. 0003
of 2020. It is recorded in the ECIR that
from the averments made in the F.I.R., it
appears that it is expedient to make
inquiries against the applicant relating to
illegal earnings, which are "proceeds of
crime", i.e., tainted money, earned out of
criminal activities and on the basis of the
aforesaid information, a prima facie case of
commission
an
offence
of
moneylaundering under Section 3 of the PMLA
appears to have been made out.

5. The E.D. carried out investigation
and on 08.04.2021, it filed a Complaint No.
94 of 2021 in the Special Court for
Prevention of Money Laundering cases at
Lucknow stating that the applicant has
committed the offence of money-laundering
and he is liable to be prosecuted and punished
under Section 4 of the PMLA. It is inter-alia
stated in the complaint that the relevant
documents/evidences were collected from
various
authorities,
including
Banks,
Registrar of Companies, District Registration
Authorities etc. and those were examined.
There is another case bearing number
ECIR/LKZO/08/2019 in respect of illegal
mining in District Fatehpur, Uttar Pradesh,
which was lodged on the basis of C.B.I.
F.I.R. number RC 04 (A)/2019/SC-III/ND, in
which the applicant is one of the named
accused persons. The documents collected
during the course of investigation in the
aforesaid ECIR and the statements recorded
under Section 50 of PMLA and Section 17 of
PMLA
during
searches
conducted
on
30.01.2020 have also been taken into
consideration during investigation.

6. The complaint contains a list of 57
bank accounts, of which 7 are in the name
of the applicant's wife, 6 are in the name of
his son Anil Kumar Prajapati, 6 are in the
name of his other son Anurag Prajapati, 5
are in the name of the applicant's daughter
Ankita Prajapati, 5 are in the name of his
other daughter Sudha Prajapati, 14 are in
the name of the applicant and rest of the
accounts are in the name of some other
persons and companies and a total of ₹
3,50,17,045.48 is deposited in those bank
accounts. The complaint also contains a list
of 60 immovable properties worth ₹
33,44,52,827/-, out of which 4 properties
are in the name of the applicant's son
Anurag Prajapati, 9 properties are in the
name of his other son Anil Kumar
Prajapati, 2 properties stand in the name of
the applicant's wife, 2 are in the name of
his daughter Sudha Prajapati, 1 property
stands in the name of his other daughter
Ankita and 1 property stands in the name of
the applicant's daughter-in-law Shilpa and
rest of the properties are in the names of
some other persons and some companies, in
which the applicant's sons are directors.

7 . The complaint states that the
applicant was examined during custodial
remand and he was confronted with various
documents and with two of his benami
holders and his manager Hari Sharan
Shukla. The statements of several persons
were recorded under Section 50 of the
PMLA and voluminous records/documents
were scrutinised.

8. Both the applicant's daughters
stated that they were students having no
source of income and they had signed the
tax related documents under directions of
the applicant and after the applicant was
taken into custody, on the directions of the
applicant's son Anil Kumar Prajapati. The
applicant's daughter-in-law stated that she
is a housewife and she had signed the
income tax documents showing income of
7 All. Gayatri Prasad Prajapati Vs. Directorate Of Enforcement Thru. Representative Asstt.
 Director Lko.
561
rupees 2.20 Crores, on the directions of her
husband Anil Prajapati and she doesn't
know about the source of income.

9. The applicant expressed ignorance
about the source of money deposited in the
bank accounts of himself and of his family
members shown in the affidavit filed by
him during 2017 elections and about the
mode of payment of money for purchase of
properties in his name and in the names of
his family members.

10. The complaint states that the
applicant became a member of the
legislative assembly in the year 2012 and in
the year 2013, he was appointed as
Minister of State for Irrigation and later he
was appointed as the Minister of State for
Mining. The applicant remained a Minister
till 2017 and on 15.03.2017, he was
arrested in connection with a different
F.I.R. registered by U. P. Police. During the
period the applicant was a Minister, he
misused his official position and unlawfully
gained several Crores of Rupees in cash,
which was deposited in the bank accounts
of his family members, his employees
and companies, in which his sons were
directors. Investigation revealed that the
applicant rose exponentially in wealth
ever since he became a minister. The total
income of the applicant during the period
he was a Minister, was ₹ 72.38 lakhs
whereas the assets standing in the name
of the applicant, his family members and
benami holders and of some companies in
which the applicant's sons are directors,
is ₹ 35 crores approximately. The
applicant has committed the offence of
money-laundering
by
amassing
unexplained and unaccounted properties
in the name of his family members and
related companies.

11. The applicant filed an application
for discharge under Section 227 of the
Criminal Procedure Code, 1973 inter alia
on the grounds that no charge-sheet has
been filed in furtherance of the F.I.R.
lodged by the vigilance establishment; that
the allegations leveled in the complaint are
false and there is no allegation and material
which could associate the applicant with
the offence alleged and establish his guilt
even prima facie.

12. A supplementary affidavit was
filed in support of the application for
discharge wherein it was stated that as no
police report has been filed in furtherance
of the FI are No. 03/2020, trial of the case
under PMLA should be postponed.

13. The application for discharge has
been rejected by means of the order dated
22.12.2022 passed by the trial Court on the
ground that as per the law laid down by the
Hon'ble Supreme Court in Vijay Madanlal
Choudhary and others versus Union of
India, 2022 SCC OnLine SC 929, a person
can be prosecuted under PMLA, if a case is
registered with the jurisdictional police.
The trial court has framed a charge against
the applicant that while being a Minister
during the period Fabruary 2013 to March
2017, the applicant generated unaccounted
money to the tune of approximately ₹ 35
Crores, which was invested in bank
accounts in the name of his family
members and companies controlled by his
sons and in several shell companies and
was also used for purchasing properties in
the name of his family members and
benami holders, and the applicant has
directly been involved in possession,
acquisition and use of proceeds of crime
and projecting the same as untainted,
thereby committing offence under Section
562 INDIAN LAW REPORTS ALLAHABAD SERIES
3 of PMLA, Punishable under Section 4 of
the Act.

14. The applicant has challenged both
the aforesaid orders rejecting his discharge
application and framing charge against
him, by filing the application under Section
482, Cr.P.C. and in the affidavit filed in
support of the application, he has inter alia
stated that the alleged benami holders are
not even known to the applicant and they
are individuals operating on their own in
their businesses; that the failure of
Vigilance Establishment in filing a report
under Section 173 of Cr.P.C. prima facie
shows that the applicant has not committed
any offence; that the allegations leveled
against him are false and that the case has
been registered due to political animosity.
It has also been stated in the affidavit that
multiple complaints had been filed before
the
Hon'ble
Lokayukta
against
the
applicant but all those complaints were
either closed or were withdrawn by the
complainants. Multiple fresh complaints
were filed on the same set of facts and the
Hon'ble Lokayukta passed an ex-parte
order referring the matter to the Hon'ble
Chief Minister of the State for carrying out
vigilance enquiry against the applicant,
which forms the basis for initiation of the
present proceedings.

15. The respondent - Directorate of
enforcement has filed a counter affidavit
inter alia stating that the complaint was
filed on the basis of investigation in respect
of laundering of proceeds of crime acquired
by the applicant during his tenure as a
Minister. The properties identified as
proceeds of crime in the hands of the
applicant and other related persons have
been provisionally attached by means of an
order
dated
07.04.2021
and
further
investigation in respect of further proceeds
of crime and culpability of other persons in
the offence of money laundering is still in
progress. It has further been stated in the
counter
affidavit
that
the
condition
precedent for filing a complaint alleging
commission
of
offence
of
money
laundering is that either there should be an
F.I.R. or there should be a police report
under Section 173 Cr.P.C. As there is a
F.I.R. in the present case, the applicant can
be tried for the commission of the offence
of money laundering. No rejoinder affidavit
has been filed on behalf of the applicant.

16. Assailing the aforesaid orders
dated 22.12.2022, Shri Malay Prasad, the
learned counsel for the applicant, has
submitted that a person can be charged with
commission of offence under the PMLA if
he is involved, either directly or indirectly,
in any process or activity connected with
proceeds of crime and he projects or claims
such proceeds of crime as untainted
property. Although a F.I.R. No. 003/2020
was registered on 26.11.2020, no report
under Section 173 of
the
Criminal
Procedure Code has been submitted till
date. He has submitted that a complaint
under PMLA can be filed only after a
charge-sheet
has
been
submitted
in
furtherance of the F.I.R. in respect of the
Scheduled offence because existence of
'proceeds of crime' can be established only
after submission of charge-sheet in the case
in respect of the Scheduled offence.

17. The second submission of Sri
Malay Prasad is that projection of claim of
the proceeds of crime is essential for
making out an offence under Section 3 of
the PMLA and there is no such allegation
against the applicant in the present case. In
support of the submission, the learned
counsel for the applicant has placed
reliance on the following passage from the
7 All. Gayatri Prasad Prajapati Vs. Directorate Of Enforcement Thru. Representative Asstt.
 Director Lko.
563
judgment of the Hon'ble Supreme Court in
the case of Nikesh Tarachand Shah
versus Union of India, (2018) 11 SCC 1: -

"11.Having heard the learned
counsel for both sides, it is important to
first understand what constitutes the
offence of money laundering. Under
Section 3 of the Act, the kind of persons
responsible for money laundering is
extremely
wide.
Words
such
as
"whosoever", "directly or indirectly" and
"attempts to indulge" would show that all
persons who are even remotely involved in
this offence are sought to be roped in. An
important ingredient of the offence is that
these persons must be knowingly or
actually involved in any process or activity
connected with proceeds of crime and
"proceeds of crime" is defined under the
Act, by Section 2(1)(u) thereof, to mean any
property derived or obtained directly or
indirectly, by any person as a result of
criminal activity relating to a scheduled
offence (which is referred to in our
judgment as the predicate offence). Thus,
whosever is involved as aforesaid, in a
process
or
activity
connected
with
"proceeds of crime" as defined, which
would include concealing, possessing,
acquiring or using such property, would be
guilty of the offence, provided such persons
also project or claim such property as
untainted property. Section 3, therefore,
contains all the aforesaid ingredients, and
before somebody can be adjudged as guilty
under the said provision, the said person
must not only be involved in any process or
activity connected with proceeds of crime,
but must also project or claim it as being
untainted property."

18. The learned counsel for the
applicant has submitted in his written
submissions that E.D. did not supply a copy
of the ECIR to the applicant before recording
his statement under Section 50 of the Act.

19. Per contra, Sri. Kuldeep Srivastava,
the learned Counsel for the E.D. has
submitted that F.I.R. No. 003/2020 was
registered against the applicant alleging
commission of offence under Section 13 (2)
read with Section 13 (1) (b) of the Prevention
of Corruption Act, 1988, which are scheduled
offences under the PMLA. The E.D. has
conducted an investigation and has filed a
complaint number 1220/2021 and the trial
court has taken cognizance of the case on
06.09.2021 and has framed charge against the
applicant on 22.12.2022. The learned counsel
for the E.D. has submitted that there is no
requirement under the PMLA to wait for
submission of charge-sheet in respect of the
scheduled offence before filing a complaint
under the Act as offence under the PMLA is
a separate and independent offence, distinct
from the scheduled offence. He has further
submitted that The trial is proceeding and 3
witnesses have already been examined. Shri
Srivastava has also relied upon the judgment
of the Hon'ble Supreme Court in the case of
Vijay Madanlal Choudhary (Supra).

20. In Vijay Madanlal Choudhary
and others versus Union of India, 2022
SCC OnLine SC 929, the Hon'ble
Supreme Court has discussed all the
earlier judgments, including the judgment
in the case of Nikesh Tarachand Shah,
and has summarised its conclusions in
paragraph 467 of the judgment, which is
being reproduced here: -

"CONCLUSION

467.In light of the above analysis,
we now proceed to summarise our
conclusion on seminal points in issue in the
following terms:-
564 INDIAN LAW REPORTS ALLAHABAD SERIES

(i) The question as to whether
some of the amendments to the Prevention
of Money laundering Act, 2002 could not
have been enacted by the Parliament by
way of a Finance Act has not been
examined in this judgment. The same is left
open for being examined along with or
after the decision of the Larger Bench
(seven Judges) of this Court in the case
ofRojer Mathew.

(ii)
The
expression
"proceedings" occurring in Clause (na) of
Section 2(1) of the 2002 Act is contextual
and is required to be given expansive
meaning to include inquiry procedure
followed by the Authorities of ED, the
Adjudicating Authority, and the Special
Court.

(iii)
The
expression
"investigation" in Clause (na) of Section
2(1) of the 2002 Act does not limit itself to
the matter of investigation concerning the
offence
under
the
Act
and
is
interchangeable with the function of
"inquiry"
to be undertaken
by
the
Authorities under the Act.

(iv) The Explanation inserted to
Clause (u) of Section 2(1) of the 2002 Act
does not travel beyond the main provision
predicating tracking and reaching upto the
property derived or obtained directly or
indirectly as a result of criminal activity
relating to a scheduled offence.

(v) (a)Section 3 of the 2002 Act
has a wider reach and captures every
process and activity, direct or indirect, in
dealing with the proceeds of crime and is
not limited to the happening of the final act
of integration of tainted property in the
formal economy. The Explanation inserted
to Section 3 by way of amendment of 2019
does not expand the purport of Section 3
but is only clarificatory in nature. It
clarifies the word "and" preceding the
expression projecting or claiming as "or";
and being a clarificatory amendment, it
would make no difference even if it is
introduced by way of Finance Act or
otherwise.

(b)Independent of the above, we
are clearly of the view that the expression
"and" occurring in Section 3 has to be
construed as "or", to give full play to the
said provision so as to include "every"
process or activity indulged into by anyone.
Projecting or claiming the property as
untainted property would constitute an
offence of money laundering on its own,
being an independent process or activity.

(c)The interpretation suggested
by
the
petitioners,
that
only
upon
projecting or claiming the property in
question as untainted property that the
offence of Section 3 would be complete,
stands rejected.

(d)The offence under Section 3
of the 2002 Act is dependent on illegal
gain of property as a result of criminal
activity relating to a scheduled offence. It
is concerning the process or activity
connected with such property, which
constitutes
the
offence
of
money
laundering. The Authorities under the
2002 Act cannot prosecute any person on
notional basis or on the assumption that a
scheduled offence has been committed,
unless it is so registered with the
jurisdictional
police
and/or
pending
enquiry/trial including by way of criminal
complaint before the competent forum. If
the person is finally discharged/acquitted
of the scheduled offence or the criminal
case against him is quashed by the Court of
7 All. Gayatri Prasad Prajapati Vs. Directorate Of Enforcement Thru. Representative Asstt.
 Director Lko.
565
competent jurisdiction, there can be no
offence of money laundering against him or
any one claiming such property being the
property linked to stated scheduled offence
through him.

(vi) Section 5 of the 2002 Act is
constitutionally valid. It provides for a
balancing arrangement to secure the
interests of the person as also ensures that
the proceeds of crime remain available to
be dealt with in the manner provided by the
2002 Act. The procedural safeguards as
delineated by us hereinabove are effective
measures to protect the interests of person
concerned.

(vii) The challenge to the validity of
sub-Section (4) of Section 8 of the 2002 Act is
also rejected subject to Section 8 being
invoked and operated in accordance with the
meaning assigned to it hereinabove.

(viii) The challenge to deletion of
proviso to sub-Section (1) of Section 17 of the
2002 Act stands rejected. There are stringent
safeguards provided in Section 17 and Rules
framed thereunder. Moreover, the precondition in the proviso to Rule 3(2) of the
2005 Rules cannot be read into Section 17
after
its
amendment.
The
Central
Government may take necessary corrective
steps to obviate confusion caused in that
regard.

(ix) The challenge to deletion of
proviso to sub-Section (1) of Section 18 of the
2002 Act also stands rejected. There are
similar safeguards provided in Section 18.
We hold that the amended provision does not
suffer from the vice of arbitrariness.

(x)
The
challenge
to
the
constitutional validity of Section 19 of the
2002 Act is also rejected. There are
stringent safeguards provided in Section
19. The provision does not suffer from the
vice of arbitrariness.

(xi) Section 24 of the 2002 Act
has reasonable nexus with the purposes
and objects sought to be achieved by the
2002 Act and cannot be regarded as
manifestly arbitrary or unconstitutional.

(xii) (a)The proviso in Clause (a)
of sub-Section (1) of Section 44 of the 2002
Act is to be regarded as directory in nature
and this provision is also read down to
mean that the Special Court may exercise
judicial discretion on case-to-case basis.

(b)We do not find merit in the
challenge to Section 44 being arbitrary or
unconstitutional.
However,
the
eventualities referred to in this Section
shall be dealt with by the Court concerned
and by
the Authority
concerned
in
accordance with the interpretation given in
this judgment.

(xiii)
(a)The
reasons
which
weighed
with
this
Court
inNikesh
Tarachand Shah for declaring the twin
conditions in Section 45(1) of the 2002 Act,
as it stood at the relevant time, as
unconstitutional in no way obliterated the
provision from the statute book; and it was
open to the Parliament to cure the defect
noted by this Court so as to revive the same
provision in the existing form.

(b)We are unable to agree with
the
observations
inNikesh
Tarachand
Shahdistinguishing the enunciation of the
Constitution
Bench
decision
inKartar
Singh; and other observations suggestive of
doubting the perception of Parliament in
regard to the seriousness of the offence of
money laundering, including about it
566 INDIAN LAW REPORTS ALLAHABAD SERIES
posing serious threat to the sovereignty and
integrity of the country.

(c)The provision in the form of
Section 45 of the 2002 Act, as applicable
post amendment of 2018, is reasonable and
has direct nexus with the purposes and
objects sought to be achieved by the 2002
Act and does not suffer from the vice of
arbitrariness or unreasonableness.

(d)As regards the prayer for
grant of bail, irrespective of the nature of
proceedings, including those under Section
438 of the 1973 Code or even upon
invoking the jurisdiction of Constitutional
Courts, the underlying principles and
rigours of Section 45 may apply.

(xiv) The beneficial provision of
Section 436A of the 1973 Code could be
invoked by the accused arrested for offence
punishable under the 2002 Act.

(xv) (a)The process envisaged by
Section 50 of the 2002 Act is in the nature
of an inquiry against the proceeds of crime
and is not "investigation" in strict sense of
the term for initiating prosecution; and the
Authorities under the 2002 Act (referred to
in Section 48), are not police officers as
such.

(b)The statements recorded by the
Authorities under the 2002 Act are not hit
by Article 20(3) or Article 21 of the
Constitution of India.

(xvi) Section 63 of the 2002 Act
providing for punishment regarding false
information or failure to give information
does
not
suffer
from
any
vice
of
arbitrariness.

(xvii) The inclusion or exclusion of
any particular offence in the Schedule to the
2002 Act is a matter of legislative policy; and
the nature or class of any predicate offence
has no bearing on the validity of the Schedule
or any prescription thereunder.

(xviii) (a)In view of special
mechanism envisaged by the 2002 Act,
ECIR cannot be equated with an F.I.R.
under the 1973 Code. ECIR is an internal
document of the ED and the fact that F.I.R.
in respect of scheduled offence has not been
recorded does not come in the way of the
Authorities referred to in Section 48 to
commence inquiry/investigation for initiating
"civil action" of "provisional attachment" of
property being proceeds of crime.

(b)Supply of a copy of ECIR in
every case to the person concerned is not
mandatory, it is enough if ED at the time of
arrest, discloses the grounds of such arrest.

(c)However,
when
the
arrested
person is produced before the Special Court, it is
open to the Special Court to look into the
relevant records presented by the authorised
representative of ED for answering the issue of
need for his/her continued detention in
connection with the offence of money laundering.

(xix) Even when ED manual is
not to be published being an internal
departmental document issued for the
guidance of the Authorities (ED officials),
the department ought to explore the
desirability of placing information on its
website which may broadly outline the
scope of the authority of the functionaries
under the Act and measures to be adopted
by them as also the options/remedies
available to the person concerned before
the Authority and before the Special Court.

(xx) The petitioners are justified
in expressing serious concern bordering on
7 All. Gayatri Prasad Prajapati Vs. Directorate Of Enforcement Thru. Representative Asstt.
 Director Lko.
567
causing injustice owing to the vacancies in
the Appellate Tribunal. We deem it
necessary to impress upon the executive to
take corrective measures in this regard
expeditiously.

(xxi)
The
argument
about
proportionality
of
punishment
with
reference to the nature of scheduled offence
is wholly unfounded and stands rejected."

(Emphasis supplied)

21. The first submission of the
learned counsel for the applicant that a
person cannot be prosecuted for the offence
under Section 3 of the PMLA unless a
charge-sheet is filed in respect of the
Scheduled offence, is negatived by the
judgment of the Hon'ble Supreme Court in
Vijay Madanlal Choudhary (Supra),
wherein the Hon'ble Supreme Court has
held that the only condition for prosecution
of a person under PMLA is that a case
regarding scheduled offence is registered
with
the
jurisdictional
police
and/or
pending enquiry/trial including by way of
criminal complaint before the competent
forum. As F.I.R. No. 003/2020 under
Sections 13 (2) and 13 (1) (b) of the
Prevention of Corruption Act 1988 has
already
been
registered
with
the
jurisdictional police, the applicant can be
tried under PMLA and filing of a report
under Section 173 of
the
Criminal
Procedure Code in furtherance of the F.I.R.
alleging commission of scheduled offence
is not a prerequisite for initiation of
proceedings under PMLA.

22. The second submission of the
learned counsel for the applicant is that
there is no allegation or material that the
applicant has projected or claimed proceeds
of crime as untainted money whereas the
same is essential for constituting an offence
under Section 3 of the PMLA. Although in
Nikesh Tarachand Shah (Supra), the
Hon'ble Supreme Court had observed that
before somebody can be adjudged as guilty
under the said provision, the person must
not only be involved in any process or
activity connected with proceeds of crime,
but must also project or claim it as being
untainted property. Subsequent to the
decision in Nikesh Tarachand Shah,
Section 3 of the PMLA has been amended
by means of Section 193 of theFinance Act
(No. 2), 2019, with effect from 01.08.2019,
whereby an Explanation has been inserted
in it. Section 3 of the PMLA as it exists
presently, is as follows: -

"3.
Offence
of
money
laundering.-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 with theproceeds 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.

Explanation.-For the removal of
doubts, it is hereby clarified that,-

(i) a person shall be guilty of
offence of money laundering if such person
is found to have directly or indirectly
attempted to indulge or knowingly assisted
or knowingly is a party or is actually
involved in one or more of the following
processes or activities connected with
proceeds of crime, namely:-

(a) concealment; or

(b) possession; or
568 INDIAN LAW REPORTS ALLAHABAD SERIES

(c) acquisition; or

(d) use; or

(e)
projecting
as
untainted
property; or

(f)
claiming
as
untainted
property,

in any manner whatsoever;

(ii)
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. In Vijay Madanlal Choudhary,
the Hon'ble Supreme Court has held that in
Nikesh Tarachand Shah, the questions
raised were not in respect of the meaning of
money laundering and moreover, Section 3
has been amended by inserting the
Explanation post the judgment in Nikesh
Tarachand Shah. The Hon'ble Supreme
Court has held that Section 3 of the PMLA
captures every process and activity, direct
or indirect, in dealing with the proceeds of
crime and is not limited to the happening of
the final act of integration of tainted
property in the formal economy. The
expression "and" occurring in Section 3 has
to be construed as "or" so as to include
"every" process or activity indulged into by
anyone. Projecting or claiming the property
as untainted property would constitute an
offence of money laundering on its own,
being
an
independent
process
or
activity.The interpretation suggested by the
learned counsel for the applicant, that only
upon projecting or claiming the property in
question as untainted property that the
offence of Section 3 would be complete,
stands rejected.

24. The last submission of the
learned counsel for the applicant is that
ED did not supply a copy of the ECIR to
the
applicant
before
recording
his
statement under Section 50 of the Act.
This submission is also without force in
view of the law laid down in Vijay
Madanlal Choudhary (Supra) that in
view of special mechanism envisaged by
the 2002 Act, ECIR cannot be equated
with an F.I.R. under the 1973 Code.
ECIR is an internal document of the ED.
Supply of a copy of ECIR in every case
to
the
person
concerned
is
not
mandatory, it is enough if ED at the time
of arrest, discloses the grounds of such
arrest. Moreover, non-supply of ECIR
before
recording
the
applicant's
statement under Section 50 of PMLA
cannot vitiate the subsequent order
rejecting the application for discharge
and the order framing charges.

25. The statutory provisions regarding
discharge of an accused person and framing
charges against him, are contained in
Sections 227 and 228 of the Criminal
Procedure
Code,
which
are
being
reproduced below: -

"227. Discharge.- If, upon
consideration of the record of the case
and the documents submitted therewith,
and after hearing the submissions of the
accused and the prosecution in this
behalf, the Judge considers that there is
not sufficient ground for Page 9 of 17
proceeding against the accused, he shall
discharge the accused and record his
reasons for so doing.
7 All. Gayatri Prasad Prajapati Vs. Directorate Of Enforcement Thru. Representative Asstt.
 Director Lko.
569

228. Framing of charge.- (1) If,
after such consideration and hearing as
aforesaid, the Judge is of opinion that there
is ground for presuming that the accused
has committed an offence which - (a) is
not exclusively triable by the Court of
Session, he may, frame a charge against
the accused and, by order, transfer the case
for trial to the Chief Judicial Magistrate, or
any other Judicial Magistrate of the first
class and direct the accused to appear
before the Chief Judicial Magistrate, or, as
the case may be, the Judicial Magistrate of
the first class, on such date as he deems fit,
and thereupon such Magistrate shall try the
offence in accordance with the procedure
for the trial of warrant cases instituted on a
police report; (b) is exclusively triable by
the Court, he shall frame in writing a
charge against the accused. (2) Where the
Judge frames any charge under clause (b)
of sub Section (1), the charge shall be read
and explained to the accused, and the
accused shall be asked whether he pleads
guilty of the offence charged or claims to
be tried."

26. The difference between the
approach with which the Court should
examine the matter in the aforesaid
Sections has been explained by the Hon'ble
Supreme Court in Amit Kapoor v.
Ramesh Chander, (2012) 9 SCC 460, in
the following words: -

"17. Framing of a charge is an
exercise of jurisdiction by the trial court in
terms of Section 228 of the Code, unless the
accused is discharged under Section 227 of
the Code. Under both these provisions, the
court is required to consider the "record of
the
case"
and
documents
submitted
therewith and, after hearing the parties,
may either discharge the accused or where
it appears to the court and in its opinion
there is ground for presuming that the
accused has committed an offence, it shall
frame the charge. Once the facts and
ingredients of the Section exists, then the
court would be right in presuming that
there is ground to proceed against the
accused and frame the charge accordingly.
This presumption is not a presumption of
law as such. The satisfaction of the court in
relation to the existence of constituents of
an offence and the facts leading to that
offence is a sine qua non for exercise of
such jurisdiction. It may even be weaker
than a prima facie case. There is a fine
distinction
between
the
language
of
Sections 227 and 228 of the Code. Section
227 is the expression of a definite opinion
and judgment of the Court while Section
228 is tentative. Thus, to say that at the
stage of framing of charge, the Court
should form an opinion that the accused is
certainly guilty of committing an offence, is
an approach which is impermissible in
terms of Section 228 of the Code.

* * *

30. We have already noticed that
the legislature in its wisdom has used the
expression "there is ground for presuming
that the accused has committed an
offence". This has an inbuilt element of
presumption once the ingredients of an
offence with reference to the allegations
made are satisfied, the Court would not
doubt the case of the prosecution unduly
and extend its jurisdiction to quash the
charge in haste. A Bench of this Court in
State of Maharashtra v. Som Nath Thapa
(1996) 4 SCC 659 referred to the meaning
of the word "presume" while relying upon
Black's Law Dictionary. It was defined to
mean "to believe or accept upon probable
evidence"; "to take as proved until
evidence to the contrary is forthcoming".
570 INDIAN LAW REPORTS ALLAHABAD SERIES
In other words, the truth of the matter has
to come out when the prosecution evidence
is led, the witnesses are cross-examined by
the defence, the incriminating material and
evidence is put to the accused in terms of
Section 313 of the Code and then the
accused is provided an opportunity to lead
defence, if any. It is only upon completion
of such steps that the trial concludes with
the court forming its final opinion and
delivering its judgment.