Concealment Of Proceeds Of Crime An Offence Under PMLA, ED Need Not Establish Where The Money Eventually Went: Madras High Court

A division bench of Justice GR Swaminathan and Justice R Poornima added that the accused, who would have engineered the disappearance of the money, could not be exonerated from the charges merely because the proceeds of the crime had not been identified. The court thus underscored that it was enough if the prosecution established the generation of the proceeds of crime and the involvement of the accused in the process.

“Since concealment of the proceeds of crime is an offence, the accused can be held guilty of the same. The Enforcement Directorate need not demonstrate where the money eventually went. The accused after engineering a disappearing act cannot be heard to contend that they must be exonerated because proceeds of crime has not been identified. If a rat has escaped into a hole, one can only point to the hole. The rat might even have exited through another end. The defence cannot argue that unless the rat is found, there cannot be a prosecution,” the court said.

The court was hearing a revision petition filed by KC Chandran, his wife and his company against the order of the Special Court refusing to discharge them from a money laundering case. The prosecution case against the petitioners was that after getting a lease to quarry minerals in Melur in the year 1989, they entered into a criminal conspiracy and illegally quarried granite stones from nearby lands and non-lease patta lands. The department of Geology and Mining had valued this illegal quarrying to the tune of Rs. 436.88 crore. Thus, a case was registered against them for offences under Sections 447(criminal trespass), 379(theft), 120(B)(criminal conspiracy), 114(Abettor present when offence is committed), 109(Punishment of abetment if the act abetted is committed in consequence and where no express provision is made for its punishment), 420(cheating), 434(mischief), 465(forgery), 467(Forgery of valuable security, will, etc), 468(Forgery for purpose of cheating), 471(Using as genuine a forged document or electronic record), 304(ii) (Punishment for culpable homicide not amounting to murder)IPC and Section 4 (Mischief causing damage to property)of TNPPDL Act, 1992 and Section 6 r/w. 3(a) and 4(a) of the Explosive Substances Act.

 Since offences under Sections 420, 467, and 471 of the IPC and Sections 3(a) and 4(a) of the Explosive Substances Act are scheduled offences under the Prevention of Money Laundering Act, the ED registered the ECIR. The property that was allegedly brought from the illegal profits was also attached by the ED.

The petitioners argued that though they were given the lease in 1989, they handed over the quarry to one Palanichamy in 1999 for rs. 60 Lakh and thereafter had no connection with the mining activity. Regarding the property, it was submitted that it was purchased from untainted money. Ot was further argued that identification of the proceeds of crime was sine qua non in PMLA proceedings and since the money alleged in the present case had not been identified, no complaint would lie. Thus, contenting that no offence had been made out, they sought to be discharged from the case.

The ED, on the other hand, argued that the petitioners as lease holders could not have entered into any transaction for handing over the quarry. It was also submitted that the sale deed of the property did not reflect the actual market value of the property. Contending that the petitioner's defences could not be gone into at the stage of discharge, the ED sought to dismiss the plea.

The court observed that since concealment of proceeds of crime itself would constitute the offence of money laundering, the petitioners could not take a defence that the complaint will not lie unless the proceeds of crime are identified. The court was also satisfied that prima facie, illicit mining had taken place and the prosecution in the scheduled offence was still pending.

The court also noted that the presumption under Section 24(b) of the Act would be applied in the present case and it was upon the petitioners to rebut the same. The court noted that the Special Court had approached the issue rightly and dismissed the discharge petition. Thus, noting that the order did not warrant any interference, the court dismissed the revisional appeal.

Counsel for the Petitioner: Mr. A. Robinson

Counsel for the Respondent: Mr. A. R. L. Sundaresan, Additional Solicitor General of India assisted by Mr. K. Govindarajan Deputy Solicitor General of India

Citation: 2024 LiveLaw (Mad) 481

Case Title: KC Chandran and Others v Directorate of Enforcement

Case No: Crl RC(MD)No.662 of 2024