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2013 SCC OnLine Ori 619 : (2014) 136 AIC 365 : 2014 Cri LJ
2556 : (2014) 3 RCR (Cri) 827 : (2014) 3 ALT (Cri) (NRC) 21

In the High Court of Orissa

(BEFORE M.M. DAS, J.)

Between
Smt. Janata Jha and another
Versus
Assistant Director, Directorate of Enforcement,
Govt. of India and another
Crl. M.C. No. 114 of 2011
Decided on December 16, 2013

Page: 366

The Judgment of the Court was delivered by

M.M. DAS, J.:— This Criminal Misc. Case has been filed under
section 482 of the Code of Criminal Procedure seeking quashing of the
proceeding under section 3 of the Prevention of Money Laundering Act,
2002 (for short, ‘the P.M.L.A.’) initiated against the petitioners by the
opp. party No. 1 vide Enforcement Case Information Report (ECIR) No.
14 of 2010 on the ground that the said proceeding is not only illegal
and arbitrary, but also without jurisdiction in view of section 5(1)
proviso (i) of the P.M.L.A. as well as for quashing of all consequential
proceedings.
2. On the basis of letter No. 503/SR dated 9.4.2010 of the
Superintendent of Police, Keonjhar forwarding a copy of an FIR filed
under sections 307/357/387, I.P.C. read with sections 25 and 27 of the
Arms Act, 1959 alongwith the copies of the seizure reports and
statements of prosecution witnesses recorded under section 161, Cr.
P.C. relating to the petitioners, addressed to the Assistant Director,
Directorate of Enforcement, Bhubaneswar, it being found that the
petitioner No. 2 was involved in large scale smuggling of iron ores and
acquired huge proper ties through illegal means and also through
extortion by the concerned Investigating Officer, the petitioner No. 2
was arrested by the Barbil police and was detained under N.S.A. being
lodged in Keonjhar Jail. Pursuant to an order passed by this Court, the
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opp. party No. 1 interrogated the accused - petitioner No. 2 in jail

custody of 22.5.2010 in presence of the Superintendent of Keonjhar
District Jail. Finding that the of fences under sections 307/387, I.P.C.
as well as under sections 25 and 27 of the Arms Act, 1959 are
scheduled offences under the P.M.L.A. (as amended), the Directorate of
Enforcement, Bhubaneswar registered the ECIR bearing No.
14/BBSR/2010 dated 8.5.2010 against the petitioner No. 2 for initiating
action under P.M.L.A.. Investigation was taken up under the said Act
and it was found out during the investigation that the accused
petitioner No. 2 had accounts in various Banks at. Barbil, where huge
amounts have been deposited. Account was also opened in the name of
the petitioner No. 1. Details of the bank accounts were collected from
the respective banks which reflected the multiple entries showing huge
transaction of money in the name of the petitioners. According to the
Investigating Agency, none of the petitioners apparently had any legal
source of income. The Banks were requested by the Assistant Director
not to allow any debit from those accounts for smooth conduct of the
investigation under the P.M.L.A. Summons in terms of section 50 of the
P.M.L.A. were issued pursuant to which witnesses were examined
regarding criminal activities of the petitioner No. 2. The retention of the
said amount in different bank accounts of the petitioners has been
confirmed by the adjudicating authority under the P.M.L.A., New Delhi
on 23.9.2010 in O.C. No. 54 of 2010 after hearing both the parties. The
Income Tax authorities have also seized the amount lying in the
accounts of petitioner No. 2 on 4.6.2010 for initiation of proceedings
under the provisions of the Income Tax Act for which the amounts
could not be seized under the P.M.L.A. at that point of time. Huge
amounts have been deposited also in the name of the sons of the
petitioners which have been found out during investigation and have
been

Page: 367

confirmed by the adjudicating authority under the Act in O.C. No. 96 of

2011 after hearing both the parties.

3. The present application, as stated earlier, has been filed to quash

ECIR No. 14 of 2010.
4. In Misc. Case No. 84 of 2011 by order dated 9.2.2011, this Court,
as an interim measure, directed that the investigation in ECIR No. 14 of
2010 pending before the Assistant Director of Enforcement,
Government of India, Bhubaneswar may continue, but the same shall
not be concluded without leave of this Court.
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5. In the prosecution report vide Annexure-1 in column (2) and

column (7), it has been mentioned as follows:
“2. Nature of Scheduled Offence.— Attempt to murder, putting
person in fear of injury in order to commit extortion-charged under
sections 307 and 387 of I.P.C., read with sections 25 and 27 of Arms
Act falling under the list of Scheduled offences of the Prevention of
Money Laundering Act, 2002 as amended.
Scheduled Act Sections of the Act Agency Investigating
Scheduled Offences
Penal Code, Sections 307/353/387 Superintendent of
1860/Arms Act. read with section 25 Police, Keonjhar
and 27 Arms Act District, Orissa.
6. Material relating to commission of offence and reason to believe
that an offence of money laundering has been committed and
assessment thereof.
7. On 5.3.2010 Shri Krishna Chandra Parida son of late Natabar
Parida Inspector in-charge of Barbil Police Station, District-Keonjhar
lodged an FIR that he received an information on 6.3.2010 at 4 a.m.
from his source to the effect that on 5.3.2010 at about 10 p.m. one
Jiten @ Jitendra Jha of Station Road, P.S. - Barbil was terrorizing the
business men at Barbil by a revolver on demand of Dada Buti. None of
the locality dared to lodge any complain against the said Jiten @
Jitendra Jha. However, Sri Krisna Chandra Parida, Inspector in-charge
of Barbil Police Station himself entered the above mentioned fact in
Barbil police station diary on 6.3.2010 and left for the spot, i.e., house
of Jiten @ Jitendra Jha of Barbil with S/Sri A.P. Kar, Sub-Inspector,
B.Gidhi and S. Purohit, A.S.Is, Ram Chandra Patra, N.Mohanta,
Habildars and other staff and conducted search in the house premises
of said Jiten @ Jitendra Jha. During the course of search Jiten @
Jitendra Jha suddenly brought out a revolver kept under the pillow on
his bed and fired aiming at police with a view to kill the police
personnel but fortunately it missed hitting the police personnel
conducting search there.”
8. Mr. Kanungo, learned Counsel for the petitioners submitted that
the petitioners have explained in the petition as to how they have
acquired the amounts in the bank accounts. In view of such assertions,
he submitted that it could not be said that the properties recovered
from the house of the petitioners are proceeds of crime which have
been projected as untainted within the meaning of section 3 of the
P.M.L.A. and hence, the proceeding is illegal and arbitrary being
contrary to law. He further submitted that both the petitioners have
filed their Income tax returns disclosing the sources of income and
profits for which tax has been paid.
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Page: 368

9. Section 3 of the P.M.L.A. defines the offence of money laundering,

which reads thus:
“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
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”.
10. Section 5 of the P.M.L.A. provides attachment of property
involved in money-laundering, which reads thus:
“5. Attachment of property involved in money-laundering.—(1)
When the Director or any other officer not below the rank of Deputy
Director authorized by the Director for the purposes of this section,
has reason to believe (the reason for such belief to be recorded in
writing), on the basis of material in his possession, that—
(a) any person is in possession of any proceeds of crime; and
(b) such proceeds of crime are likely to be concealed, transferred
or dealt with in any manner which may result in frustrating any
proceedings relating to confiscation of such proceeds of crime
under this Chapter, he may, by order in writing, provisionally
attach such property for a period not exceeding one hundred
and eighty days from the date of the order, in such manner as
may be prescribed:
Provided that no such order or attachment shall be made
unless, in relation to the scheduled offence, a report has been
forwarded to a Magistrate under section 173 of the Code of
Criminal Procedure, 1973 (2 of 1974), or a complaint has been
filed by a person authorized to investigate the offence mentioned
in that Schedule, before a Magistrate or Court for taking
cognizance of the scheduled offence, as the case may be, or a
similar report or complaint has been made or filed under the
corresponding law of any other country:
Provided further that, notwithstanding anything contained in
Clause (b), any property of any person may be attached under
this section if the Director or any other officer not below the rank
of Deputy Director authorized by him for the purpose of this
section has reason to believe (the reasons for such belief to be
recorded in writing), on the basis of material in his possession,
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that if such property involved in money laundering is not attached

immediately under this Chapter, the non-attachment of the
property is likely to frustrate any proceeding under this Act”
(2) The Director, or any other officer not below the rank of Deputy
Director, shall, immediately after attachment under sub-section (1),
forward a copy of the order, alongwith the material in his possession,
referred to in that sub-section, to the Adjudicating Authority, in a
sealed envelope, in the manner as may be prescribed and such
Adjudicating Authority shall keep such order and material for such
period as may be prescribed.
(3) Every order of attachment made under sub-section (1) shall
cease to have effect after the expiry of the period specified in that
sub-section or on the date of an order made under sub-section (2) of
section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person interested in
the enjoyment of the immovable property attached under sub-
section (1) from such enjoyment.

Page: 369

Explanation.—For the purpose of this sub-section, “person

interested”, in relation to any immovable property, includes all
persons claiming or entitled to claim any interest in the property.
5. The Director or any other officer who provisionally attaches any
property under sub-section (1) shall, within a period of thirty days
from such attachment, file a complaint stating the facts of such
attachment before the “Adjudicating Authority”.
Section 17(3) of the P.M.L.A. provides as follows:
“17. Search and Seizure.—(1) and (2) xx xx
(3) Where an authority, upon information obtained during
survey under section 16, is satisfied that any evidence shall be or
is likely to be concealed or tampered with, he may, for reasons to
be recorded in writing enter and search the building or place
where such evidence is located and seize that evidence:
Provided that no authorization referred to in sub-section (1)
shall be required for search under this sub-section”.
11. Mr. Kanungo further submitted that it would be clear from the
prosecution report that the opp. party No. 1 has conducted search and
seizure on the basis of FIR lodged under section 154, Cr.P.C. by the
police vide Annexure-2 even though the report under section 173, Cr.
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P.C. was not forwarded to the Magistrate and, therefore, the entire
prosecution report including the search and seizure and attachment to
the properties are illegal, being contrary to law. The evidences of the
witnesses recorded by the opp. party No. 1 are, therefore, also without
authorization of law being contrary to the proviso to section 17(3) of
the P.M.L.A. He also submitted that a parallel proceeding under section
131 of the Income Tax Act and Wealth Tax Act is pending for disposal
in respect of the self-same property. Therefore, the present proceeding
should be stayed till final disposal of the proceeding under the Income
Tax Act.
12. It appears from the record that in the case initiated by the police
which was ultimately tried by the learned Assistant Sessions Judge,
Keonjhar in S.T. Case No. 23/70 of 2011 and the learned Assistant
Sessions Judge by his judgment dated 7.11.2011 has acquitted the
petitioner No. 2 (sole accused) from the offences for which he was
charged and with regard to the property seized, returned a finding that
the seized fire arm shall be submitted to the State armoury for its
disposal and the seized cash, gold ornaments and foreign currency shall
be at the disposal of the State Government and the claim of the
accused for its return is to be decided by the Income Tax Department.
The order of disposal of the seized revolver shall take effect after four
months from expiry of the appeal period and shall be subject to the
order in appeal, if any.
13. On the basis of such order of acquittal, Mr. Kanungo submitted
that if the proceeding under the P.M.L.A. is allowed to proceed, it would
amount to double jeopardy in respect of the petitioner No. 2.
14. Mr. S.D. Das, learned Assistant Solicitor General appearing for
the opp. parties 1 and 2, on the contrary, submitted that the ambit and
scope of trial under the P.M.L.A. is totally different from that of the
Penal Code, 1860. In a case for offences under the Penal Code, 1860
under the criminal jurisprudence, it is for the prosecution to prove the
guilt of the accused beyond reasonable doubt. But in a proceeding
under the P.M.L.A., the onus is on the accused to prove that the
properties seized are untainted and not the proceedings of any crime.
The offences, for which the petitioner No. 2 was tried, come under the
schedule of the Act.

Page: 370

15. Considering the facts of the present case and the provisions of
the P.M.L.A. (as amended), this Court is of the view that the P.M.L.A.,
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being a Special Statute, it has overriding effect on the Income Tax Act
and further considering the huge amounts of money, which are lying in
the bank in the accounts of the petitioners as well as the nature of
proceeding under the P.M.L.A., more specifically, section 24 thereof,
which provides with regard to burden of proof that when a person is
accused of having committed offence under section 3, the burden of
proving that the proceeds of crime are untainted property shall be on
the accused, this Court is of the view that even if the petitioner No. 2
has been acquitted of the charges framed against him in the sessions
trial, a proceeding under the P.M.L.A. 2002 cannot amount to double
jeopardy, where the procedure and nature of proof are totally different
from a criminal proceeding under the Penal Code, 1860. The Hon'ble
Supreme Court in the case of Union of India v. Hassan Ali Khan, while
dealing with an order, by which the accused persons were granted bail
by the High Court, in Criminal Appeal No. 1883 of 2011 (arising out of
SLP (Crl.) No. 6114 of 2011) observed as follows:
“… There is no denying the fact that allegations have been made
that the said monies were the proceeds of crime and by depositing
the same in his bank accounts, the respondent No. 1 had at tempted
to project the same as untainted money. The said allegations may
not ultimately be established, but having been made, the burden of
proof that the said monies were not the proceeds of crime and were
not, therefore, tainted shifted to the respondent No. 1 under section
24 of the PML Act…”
16. In view of the above, this Court finds no reason to exercise its
inherent power under section 482, Cr. P.C. to quash the proceeding
initiated under the P.M.L.A. against the petitioners. It may be made
clear that the question as to whether the inherent power available
under section 482, Cr. P.C. can be exercised for quashing a proceeding
initiated under the IMLA or not, is left open.
17. In the result, the Crl. M.C., being devoid of merit, stands
dismissed.
18. Petition Dismissed.
———
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