S.8 PMLA | Accused Himself Can’t Be Regarded As A ‘Claimant’ Who ‘Acted In Good Faith & Suffered Quantifiable Loss’: MP High Court

Madhya Pradesh High Court has recently clarified that persons accused of money laundering themselves do not fall within the definition of a ‘claimant’ mentioned in Rule 2(b) of PMLA Rules, 2016 and Section 8(8) of PMLA, 2002.

Justice Prem Narayan Singh, while setting aside the order of Special Judge (PMLASection 8(8) of PMLA) releasing the properties belonging to the accused that are allegedly ‘proceeds of the crime’, noted that such an order was passed by blatantly violating the respective provisions in the statute.

“The learned Special Judge, in impugned order, has not mentioned anything with regard to the said manner specified in the Rules 3 and Rule 3A of PMLA Rule, 2016. Likewise, learned Special Judge has not clarified as to how the applicant coming into purview of definitions of 'claimants' mentioned in Rule 2(b) of PMLA Rule, 2016 and first proviso of Section 8(8) of the PMLA, 2002. Virtually, the impugned order is a sear violation of the respective provisions of PMLA, 2002 and PMLA Rule, 2016”, the bench sitting at Indore observed in the order.

The Enforcement Directorate had earlier preferred a revision against the Special Court’s order that allowed the release of properties allegedly obtained by the accused doctors through malpractices in PMT-2012 & Pre PG-Exam-2012. The adjudicating authority, PMLA New Delhi confirmed the provisional attachment order for the remaining duration of the proceedings relating to the offences. Thereafter, the accused doctors, who are husband and wife, procured a favourable order from the Special Court to release the attached properties worth Rs 8,93,50,085/- in lieu of a fixed deposit.

The two substantial questions raised by the Enforcement Directorate and framed by the High Court were: i) Whether the order lifting the attachment passed by the Special Court was interlocutory and hence a revision against the same would lie or not, and ii) Whether the said order is suffering from any illegality or infirmity or impropriety.

Answering the second question in affirmative, the single judge bench noted that though Section 8(8) of PMLA, 2002 talks about considering the claim of the ‘claimants’ for the restoration of properties ‘in such manner as may be prescribed’; it has not been mentioned anywhere that the accused himself can be considered as a claimant.

The court then quoted the first proviso to Section 8(8) which specifies that the ‘claimant’ should have acted in good faith and suffered the loss despite taking necessary precautions against the offence of money laundering.

To further elucidate upon the ambit of ‘claimant’ and ‘in such manner as may be prescribed’ given in Section 8 (8), the court further referred to Section 2(b) of PMLA Rules, 2016:

“It is nowhere mentioned that the applicants can be treated as claimants defined in the rules. One applicant is Dr. Vinod Bhandari, who is accused in the concerned criminal case and other applicants are his relatives. Then, at this stage, it cannot be presumed that they have acted in good faith and have suffered a quantifiable loss as a result of the offence of money laundering despite having taken all reasonable precautions. Since, Dr. Vinod Bhandari himself is an accused, he cannot be treated as 'claimant'. In view of the aforesaid definition enshrined under Rule 2(b) of PMLA Rule 2016. The respondents at this stage also cannot satisfy the first proviso of Section 8(8) of PMLA, 2002.”

The court also noted that the ‘manner of restoration of confiscated property’ and ‘manner of restoration of property during the trial’ as mentioned in Rules 3 and 3A of PMLA Rules, 2016 have not been mentioned at all in the impugned order of the Special Judge. Hence, the court concluded that the order suffers from gross illegality and infirmity.

On the first aspect, the court opined that when an order finally adjudicates the rights and liabilities of parties, even at an interim stage, it can be treated as a final order and revision against such an order is usually permissible. While arriving at the said conclusion, the court relied upon Mohanlal Maganlal Thakre v. State of Gujarat, AIR 1968 SC 733 and the commentary of Criminal Procedure Code, 1973 written by Acharya Dr. Durgadas Baso. The court noted that even if the order made under Section 451 CrPC may be for a temporary duration, it cannot be said to be ‘interlocutory’ and revision would lie against the same when the order itself has been made without jurisdiction:

“On going through the aforesaid analysis in entirety, it is explicitly evident that the order passed by the Courts regarding handing over the custody of property would be considered as final order since they are finally adjudging the possession of the property. However, when the order is challenged on the basis of violation of law, without applying proper procedure and passed without jurisdiction, the revision certainly lies. Accordingly, the contentions of respondents regarding the non-maintainability of this revision deserve to be and is dismissed.”

Case Title: Directorate Of Enforcement Through Assistant Director Bhopal Zonal Office v. Dr. Vinod Bhandari & Ors.

Case No: Criminal Revision No. 3394 of 2023

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