Directorate of Enforcement Vs Mahanivesh Oils & Foods Pvt Ltd (Delhi High Court)
Delhi High Court held that property acquired from proceeds of crime before Prevention of Money Laundering Act can be attached u/s. 5(1) since possession continued after Prevention of Money Laundering Act came into force.
Facts- This Letters Patent Appeal, against judgment dated 25 January 2016 of a learned Single Judge of this Court, involves the interpretation of Section 5(1) of the Prevention of Money Laundering Act, 20022. The neat question that arises for consideration is that if the scheduled offence is committed and, from the proceeds thereof, property is purchased before the coming into force of the PMLA, can it be attached under Section 5(1) thereof, if the offender continues to remain in possession of, and continues to use, the property even after the PMLA came into force?
Conclusion- Supreme Court in Vijay Madanlal Choudhary has held that money laundering is an independent offence which deals with the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to a scheduled offence. When this enunciation of the law is read in conjunction with the stipulation in Section 2(1)(u) of the PMLA, that the proceeds of crime could have been obtained “directly or indirectly”, there is no escape from the position that the subject property itself constitutes “proceeds of crime”, and not merely property obtained from proceeds of crime. Also held that continuing to possess proceeds of crime or retaining possession of proceeds of crime or using of proceeds of crime until they are fully exhausted, amounts to money laundering. It is also clarified, in the same paragraph that the relevant date for determining when the offence has been committed is the date when the person indulges in the process or activity connected with the proceeds of crime. Inasmuch as usage and possession of the proceeds of crime is also covered under the definition of “money laundering”, the fact that the subject property was in the possession of and continued to be used by, the respondent on and after the date when the PMLA came into force, ipso facto makes the PMLA applicable.
