# Rajeev Ranjan Srivastava Revisionist v. Asstt. Director Directorate of Enforcement, Zonal Office, Lucknow

- **Citation:** (2023) 7 ILRA 610
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-07-04
- **Case number:** Criminal Revision No. 534 of 2023
- **Bench:** Subhash Vidyarthi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/rajeev-ranjan-srivastava-revisionist-v-asstt-director-directorate-of-50394
- **Pages:** 7

## Headnote

(A) Criminal Law - Indian Penal Code,
1860 - Sections 120 B/420/467/468/471
-The Code of Criminal Procedure, 1973 -
Section 397/401 - Revision - Section 227 -
Discharge ,The Prevention of Money
Laundering Act, 2002 - Section 3/4,44,45,
Section 2 (y) - Scheduled Offence, The
Prevention of Corruption Act, 1988 -
Section 13 (2) r.w. 13 (1) (c) & (d), The
Customs Act, 1962 - Section 132, The Air
(Prevention and Control of Pollution) Act,
1981 - Section 37 - Offence of money
laundering is an offence separate and
distinct from the Scheduled offence.(Para
- 25)

(B)
Prevention
of
Money-laundering
(Maintenance of Records) Rules, 2005 -
Rule 3 - Maintenance of records of
transactions (nature and value) - Every
reporting entity shall maintain the record
of all transactions including, the record of
all cash transactions of the value of more
than ten lakh rupees or its equivalent in
foreign currency. (Para -26)

Case involved a conspiracy between several
individuals - to misappropriate and divert
food grains for persons below the poverty
line, mid-day meal, and Antyoday - case
initially
investigated
by
S.I.T.
-
later
transferred to C.B.I. under court directions -
C.B.I.
submitted
charge-sheet
after
investigation - revisionist (Supply Inspector)
was
godown-in-charge
-
misappropriated
food-grains entrusted to him - caused loss of
subsidy
to
government
Exchequer
-
Petitioners
filed
separate
discharge
applications - under Section 227 of Cr.P.C. -
wrongly rejected by trial Court - without
considering provisions of Section 2 (y) (ii) of
PMLA - non-scheduled predicate offense - lack
of suspicious transactions - memo of Revisions
claims that Rule 3 requires a minimum
threshold of ₹ 10 lakhs for all cash transactions
- instant revision.(Para - 3,4,12)

HELD:-Rule 3 has no relevance for deciding as
to whether a person needs to be tried for
commission of an offence under section 3 of
PMLA .Trial court rightly rejected petitioners'
application for discharges. No illegality in the
orders. (Para -27,28)

Revision dismissed. (E-7)

List of Cases cited:
7 All. Rajeev Ranjan Srivastava Vs. Asst. Director Directorate of Enforcement, Zonal Office,
 Lucknow
611

## Text

610 INDIAN LAW REPORTS ALLAHABAD SERIES

9. It is not so that once application
under section- 156(3) Cr.P.C. has been
filed, the Magistrate has no option but to
order for registration of F.I.R. just because
it discloses a cognizable offence on paper
irrespective of the broad probabilities of the
case. In my view the concerned court has
applied judicial discretion correctly; As far
as incomplete sentence in para no. 2 of the
order is concerned, prima facie it appears
that it is just a typing mistake which does
not effect the merits of the matter.

10. There does not appear sufficient
ground calling for intervention in the order
by this court in exercise of revisional
powers, therefore this criminal revision is
dismissed.
----------
(2023) 7 ILRA 610
REVISIONAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 04.07.2023

BEFORE

THE HON'BLE SUBHASH VIDYARTHI, J.

Criminal Revision No. 534 of 2023
And other Cases

Rajeev Ranjan Srivastava ...Revisionist
Versus
Asstt.
Director
Directorate
of
Enforcement, Zonal Office, Lucknow
 ...Respondent

Counsel for the Revisionist:
Sri Santosh Kumar Bhatt

Counsel for the Respondent:
Sri Kuldeep Srivastava

(A) Criminal Law - Indian Penal Code,
1860 - Sections 120 B/420/467/468/471
-The Code of Criminal Procedure, 1973 -
Section 397/401 - Revision - Section 227 -
Discharge ,The Prevention of Money
Laundering Act, 2002 - Section 3/4,44,45,
Section 2 (y) - Scheduled Offence, The
Prevention of Corruption Act, 1988 -
Section 13 (2) r.w. 13 (1) (c) & (d), The
Customs Act, 1962 - Section 132, The Air
(Prevention and Control of Pollution) Act,
1981 - Section 37 - Offence of money
laundering is an offence separate and
distinct from the Scheduled offence.(Para
- 25)

(B)
Prevention
of
Money-laundering
(Maintenance of Records) Rules, 2005 -
Rule 3 - Maintenance of records of
transactions (nature and value) - Every
reporting entity shall maintain the record
of all transactions including, the record of
all cash transactions of the value of more
than ten lakh rupees or its equivalent in
foreign currency. (Para -26)

Case involved a conspiracy between several
individuals - to misappropriate and divert
food grains for persons below the poverty
line, mid-day meal, and Antyoday - case
initially
investigated
by
S.I.T.
-
later
transferred to C.B.I. under court directions -
C.B.I.
submitted
charge-sheet
after
investigation - revisionist (Supply Inspector)
was
godown-in-charge
-
misappropriated
food-grains entrusted to him - caused loss of
subsidy
to
government
Exchequer
-
Petitioners
filed
separate
discharge
applications - under Section 227 of Cr.P.C. -
wrongly rejected by trial Court - without
considering provisions of Section 2 (y) (ii) of
PMLA - non-scheduled predicate offense - lack
of suspicious transactions - memo of Revisions
claims that Rule 3 requires a minimum
threshold of ₹ 10 lakhs for all cash transactions
- instant revision.(Para - 3,4,12)

HELD:-Rule 3 has no relevance for deciding as
to whether a person needs to be tried for
commission of an offence under section 3 of
PMLA .Trial court rightly rejected petitioners'
application for discharges. No illegality in the
orders. (Para -27,28)

Revision dismissed. (E-7)

List of Cases cited:
7 All. Rajeev Ranjan Srivastava Vs. Asst. Director Directorate of Enforcement, Zonal Office,
 Lucknow
611
1. Mohammad Iqbal Vs Respondent: St. of U.P.
& Ors., Criminal Revision No. 1004 of 2019

2. Vijay Madanlal Choudhary Vs U.O.I., 2022
SCC OnLine SC 929

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

1.

The
petitioners
in
the
abovementioned 6 revisions are co-accused
in a single case, bearing Case No. 357 of
2022 in the Court of Special Judge
(Prevention of Corruption Act) / C.B.I.
Court No. 3, Lucknow, arising out of
ECIR/05/LKZO/2017 (New Case No.) and
ECIR/PMLA/VSZO/2011 (Old case No.)
under Section 3/4 of the Prevention of
Money Laundering Act, 2002 (hereinafter
referred to as 'PMLA') and all the revisions
have been filed against separate similar
orders dated 25.04.2023 passed by the trial
Court rejecting separate applications for
discharge under Section 227 of the
Criminal Procedure Code (Cr.P.C.) filed by
the petitioners. All the revisions involve
common questions and, therefore, the same
are being decided by a common judgment.

2. Heard Sri Santosh Kumar Bhatt,
the learned for the revisionist and Sri
Kuldeep Srivastava, learned counsel for the
respondent - Directorate of Enforcement.

3. It has been stated in the revisions that
the same arise out of a case registered under
an order passed by this Court in Writ Petition
Number 10503 (M/B) of 2009. Initially the
case was investigated by S.I.T. of U. P.
Police, but later it was transferred to C.B.I.
under directions of this Court. The F.I.R.
number RC0062010A0026/2010 lodged in
Police Station CBI, ACB, Lucknow under
Sections 120 B/420/467/468/471 I.P.C. and
Section 13 (2) read with 13 (1) (c) and (d) of
the Prevention of Corruption Act states that
during the period 2004 to 2006, several
persons, in conspiracy with each other,
misappropriated and diverted the food grains
meant for persons below poverty line, midday meal and Antyoday scheme in Varanasi
district. After investigation, the C.B.I.
submitted a charge-sheet.

4. The charge-sheet states that Satendra
Kumar Rai - the revisionist in Revision No.
543 of 2023, was the then Supply Inspector
and he was the godown-in-charge of Harahua
block during the period 01.04.2005 to 31.03.
2006.
He
misappropriated
food-grains
entrusted to him and thereby caused loss of
subsidy to the government Exchequer to the
tune of ₹ 8,27,711/-.

5. On the basis of the aforesaid F.I.R.
and the charge-sheet, the Directorate of
Enforcement (hereinafter referred to as
'E.D.')
registered
ECIR/06/PMLA/VSZO/2011,
which
was
later renumbered as ECIR/05/LKZO/2017
and after carrying out investigation, it filed a
complaint under Sections 44 and 45 of the
Prevention
of
Money-Laundering
Act
(PMLA) against six persons, who are the
petitioners in the six revisions.

6. The complaint states that Sri.
Prakash Mishra, the petitioner in Revision
No. 546 of 2023 was the godown in-charge
of Harahua Block for the period 01.04.2004
to 16.07.2004. Jai Hind Maurya, the
petitioner in Revision No. 536 of 2023 was
the godown in-charge of Harahua Block for
the period 17.07.2004 to 31.03.2005.
Satendra Kumar Rai - the petitioner in
Revision No. 543 of 2023, was working as
Supply Inspector and he was the godown
in-charge of Harahua block for the period
01.04.2005 to 31.03.2006.

7. The aforesaid Sri. Prakash Mishra,
Jai Hind Maurya and Satendra Kumar Rai
612 INDIAN LAW REPORTS ALLAHABAD SERIES
had made certain entries in the issue
register, which were denied by the
Kotedars (fair-price shop license holders).

8. The complaint states that subsidy loss
caused
by
the
accused
persons
by
misappropriating huge quantities of foodgrains by forging the signatures of Kotedars
in the issue register during the tenure of Sri
Prakash Mishra is ₹19,10,448/-, the subsidy
loss caused by the accused persons during the
tenure of Jai Hind Maurya is ₹3,33,464/- and
the subsidy loss caused by the accused
persons during the tenure of Satendra Kumar
Rai is ₹ 9,71,108/- and the aforesaid accused
persons made corresponding financial gains.

9. The other co-accused persons,
namely Rajeev Ranjan Srivastava - the
petitioner in Revision No. 534 of 2023, Prem
Shankar Singh - the petitioner in revision No.
538 of 2023 and Santosh Kumar Rastogi -
the petitioner in Revision No. 545 of 2023
were the financers, who had conspired with
the aforesaid accused persons, who were incharge of the godown and they had financed
the pay orders for lifting the food-grains
which were illegally diverted.

10. During investigation, three fixed
deposit accounts of the accused Satendra
Kumar Rai came to light and the
cumulative
amount
of
₹
8,27,711/-
deposited in those three accounts was
attached by the E.D.

11. All the petitioners had filed
separate applications for discharge before
the trial court, which have been rejected by
means of similarly worded separate orders
dated 25.04.2023.

12. The orders rejecting the discharge
applications have been assailed by filing
separate revisions inter alia on the grounds
that the petitioners are innocent; that the
complaint has been filed belatedly, the
predicate offence alleged against the
petitioners was not a scheduled offence at
the time of its alleged commission and that
the E.D. could not find any money trail or
any suspicious transactions. Ground XII
taken in the memo of Revisions claims that
as per Rule 3, the minimum threshold for
all cash transactions is ₹ 10 lakhs whereas
the subsidy loss allegedly caused by the
petitioners is less than the aforesaid
threshold amount, but the Ground does not
disclose as to Rule 3 of which set of Rules
has been referred to by the petitioners.

13. The learned Counsel for the
petitioner has submitted that the loss
allegedly caused by the individual
petitioners is less than ₹30,00,000/- and,
therefore, it would not fall within the
purview
of
the
term
'Scheduled
Offence'.

14. The term Scheduled Offence is
defined in Section 2 (y) of the PMLA.
Section 2 (y), as it was enacted originally,
read as follows: -

"(y)
"scheduled
offence"
means-

(i) the offences specified under
Part A of the Schedule; or

(ii) the offences specified under
Part B of the Schedule if the total value
involved in such offences is thirty lakh
rupees or more;"

15. Initially the offence under Section
467 I.P.C. found place in Part B of the
Schedule. Section 2 of PMLA was
amended by Act 21 of 2009, so as to make
it read as follows: -
7 All. Rajeev Ranjan Srivastava Vs. Asst. Director Directorate of Enforcement, Zonal Office,
 Lucknow
613

"(y)
"scheduled
offence"
means-

(i) the offences specified under
Part A of the Schedule; or

(ii) the offences specified under
Part B of the Schedule if the total value
involved in such offences is thirty lakh
rupees or more; or

(iii) the offences specified under
Part C of the Schedule."

16. The Schedule was also amended by Act
21 of 2009, whereby offences under Sections 120
B, 467 and 471 I.P.C. and the offence under
Section 13 of the Prevention of Corruption Act
were placed in Part B of the Schedule.

17. Part B of the Schedule was omitted
by Act 2 of 2013 and offences under Sections
120 B, 420, 467, 471 I.P.C. and Section 13 of
the Prevention of Corruption Act were
mentioned in Part A of the Schedule.

18. Section 2 (y) was again amended by
Section 145 (ii) of Act No. 20 of 2015 with
effect from 14.05.2015 by replacing the
words "thirty lakh rupees" occurring in subsection (ii) with the words "one crore rupees"
and presently Section 2 (y) of PMLA reads as
follows: -

"Section 2. Definitions

"(y) "scheduled offence" means-

(i) the offences specified under
Part A of the Schedule; or

(ii) the offences specified under
Part B of the Schedule if the total value
involved in such offences is one crore
rupees or more; or

(iii) the offences specified under
Part C of the Schedule."

19. The Schedule was also amended
by Section 145 (ii) of Act No. 20 of 2015
with effect from 14.05.2015 whereby all
the aforesaid offences remained in Part A.
Part B was inserted in the Schedule and it
mentions the offence under Section 132 of
the Customs Act, 1962. It is clarified that
Part A of the Schedule mentions several
other offences also but only those offences
have been mentioned in this judgment,
which have been allegedly committed by
the petitioner and which are relevant for the
present case.

20. From a bare reading of Section 2
(y) of PMLA as it exists today, it is clear
that the condition of the total value
involved in the offence applied to the
offences specified under Part B of the
Schedule alone, and not to any other
Scheduled offence. Part B of the Schedule
mentions offence under Section 132 of the
Customs Act only and the petitioner has not
been charged with commission of the
aforesaid offence.

21. The learned Counsel for the
petitioner placed reliance on a judgment
rendered by a co-ordinate Bench of this
Court in the case of Mohammad Iqbal Vs.
Respondent: State of U.P. and Ors.,
Criminal Revision No. 1004 of 2019
decided On: 28.02.2020. In that case, a
complaint case under Section 37 of the Air
(Prevention and Control of Pollution) Act,
1981 was filed by U.P. Pollution Control
Board, Lucknow with the allegation that
there was no proper arrangement for
controlling air pollution and the factory
was
operational
from
12.09.1984
to
17.07.2007 without obtaining consent of
the Board, in contravention of Section 21
614 INDIAN LAW REPORTS ALLAHABAD SERIES
of the Act. The Board had made a
complaint to the E.D. upon which E.D.
registered an ECIR for investigation of
offence of money laundering to make
inquiries regarding suspected 'Proceed of
Crime'
amounting
to
₹52,42,525/-
generated by the revisionist and his firm
out of the commission of Scheduled
Offence. After investigation, E.D. filed a
Complaint under Section 45 of the Act with
the allegation that the pollution control
equipment worth ₹2,00,000/- was not
installed, thus, the revisionist had generated
'Proceed of Crime' to the tune of
₹2,00,000/- and had retained the same. An
application for discharge was rejected by
the trial court. In Revision filed against the
aforesaid order, it was submitted that the
application for discharge moved before the
court below was wrongly rejected without
considering the provisions of Section 2 (y)
(ii) of the PMLA. Allowing the revision,
the Co-ordinate Bench held that: -

"15. As by way of Act No. 23 of
2019, Explanation clause has been added
in Section 2(u) of the PML Act, which
clearly provides that the 'Proceed of Crime'
include property not only derived or
obtained from the scheduled offence but
also any property which may directly or
indirectly be derived or obtained as a result
of any criminal activity relatable to the
scheduled offence. Indisputably, in the
present case, the cost of the unit, viz. ₹2
lac, which was not installed at the factory,
is treated as 'Proceed of Crime'. Learned
counsel for the respondent failed to dispute
the fact that initially the allegation levelled
was that total value involved in the offence
was more than ₹30 lac, which is
categorically mentioned in the ECIR, but
later on, in the complaint case, only the
cost of equipment which was not installed,
is treated as a 'Proceed of Crime'.
Admittedly, the court below failed to
consider this aspect of the matter."

22. It is significant to note that the
offence under Section 37 of the Air
(Prevention and Control of Pollution) Act,
1981 was not mentioned in the Schedule of
Offences appended to PMLA originally. It
was inserted in paragraph 24 of Part B of
the schedule by Act 21 of 2009. Thus the
offence under Section 37 of the Air
(Prevention and Control of Pollution) Act,
1981 was not a Scheduled Offence under
PMLA during the period 12.09.1984 to
17.07.2007, which it was committed, yet
the accused was charged with commission
of offence under Section 3 of the PMLA.
The co-ordinate Bench rightly did not
interfere with the proceedings on the
Ground that on the date of commission of
the predicate offence, it was not a
Scheduled Offence.

23. Before proceeding any further, it
would be appropriate to have a look at
Section 3 of PMLA, which reads as
follows: -

"3.
Offence
of
moneylaundering.-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 the proceeds 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
7 All. Rajeev Ranjan Srivastava Vs. Asst. Director Directorate of Enforcement, Zonal Office,
 Lucknow
615
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

(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."

24. Sri. Kuldeep Srivastava, the
learned Counsel for the E.D. has placed
reliance upon the judgment of the Hon'ble
Supreme court in the case of Vijay
Madanlal Choudhary versus Union of
India, 2022 SCC OnLine SC 929, wherein
the Hon'ble Supreme Court held that: -

"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 moneylaundering. 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.

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
616 INDIAN LAW REPORTS ALLAHABAD SERIES
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."

25. In view of the aforesaid discussion,
it is clear that the offence of money
laundering is an offence separate and distinct
from the Scheduled offence. The complaint
alleges that the petitioners have derived
proceeds of crime and they have siphoned off
the same. The petitioners have been involved
in possession, acquisition and use of the
proceeds of crime and they have enjoyed the
proceeds of crime by it's possession,
acquisition and use.

26. So far as the ground XII in the
Memo of revision, that the trial Court has
ignored that the minimum threshold for all
cash transaction or any transaction is given as
per Rule 3 is ₹10 Lakh is concerned, although
the ground does not specify as to which set of
Rules is being referred by the petitioners, it
appears that the petitioner is referring to Rule
3
of
Prevention of
Money-laundering
(Maintenance of Records) Rules, 2005,
which have been framed for regulating
"maintenance of records of the nature and
value of transactions, the procedure and
manner of maintaining and time for
furnishing of information and verification of
records of the identity of the clients of the
banking companies, financial institutions and
intermediaries". The relevant part of Rule 3
of the aforesaid Rules is being reproduced
follows: -

3. Maintenance of records of
transactions (nature and value). - Every
reporting entity shall maintain the record of
all transactions including, the record of-

(A) all cash transactions of the
value of more than ten lakh rupees or its
equivalent in foreign currency;

* * *

27. The aforesaid Rule 3 has no
relevance for deciding as to whether a person
needs to be tried for commission of an
offence under section 3 of PMLA.

28. In view of the aforesaid discussion,
I am of the considered view that the trial
Court has rightly rejected the application for
discharges of the petitioners and there
appears to be no illegality in the orders. In
any case, the orders do not suffer from any
such illegality as calls for interference of this
Court in exercise of its revisional jurisdiction.

29. The revisions lack merit and the
same are dismissed.
----------
(2023) 7 ILRA 616
REVISIONAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 24.05.2023

BEFORE

THE HON'BLE MRS. JYOTSNA SHARMA, J.

Criminal Revision No. 2047 of 2023

Smt. Rani Gaur ...Revisionist
Versus
State of U.P. & Ors. ...Respondents