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 PMLA') 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 PMLA 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 IPC read with sections 25 and 27 of the Arms Act, 1959 along with 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 properties 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 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 offences under sections 307 / 387 IPC as well as under sections 25 and 27 of the Arms Act 1959 are scheduled offences under the PMLA (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 PMLA. 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 3 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 PMLA. Summons in terms of section 50 of the PMLA were issued pursuant to which witnesses were examined regarding criminal activities of the petitioner no.2.

3. The retention of the said amount in different bank accounts of the petitioners has been confirmed by the adjudicating authority under the PMLA, 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 PMLA 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 confirmed by the adjudicating authority under the Act in O.C. No. 96 of 2011 after hearing both the parties.

4. The present application, as stated earlier, has been filed to quash ECIR No. 14 of 2010.

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 4 continue, but the same shall not be concluded without leave of this Court.

5. In the prosecution report vides Annexure-1 in column (2) and column (7), it has been mentioned as follows:-

6. Mr. Kanungo, learned counsel for the petitioners submitted that the petitioners have explained in the petition as to how 5 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 PMLA 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.

7. Section 3 of the PMLA defines the offence of money laundering, which reads thus:

Section 5 of the PMLA provides attachment of property involved in money-laundering, which reads thus:

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.

immovable property attached under sub-section (1) from such enjoyment.

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 PMLA provides as follows:-

Provided that no authorization referred to in sub-section (1) shall be required for search under this sub-section".

8. 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.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 PMLA. 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 .

9. It appears from the record that in the case initiated by the police which was ultimately tried by the learned Assistant 8 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.

10. On the basis of such order of acquittal, Mr. Kanungo submitted that if the proceeding under the PMLA is allowed to proceed, it would amount to double jeopardy in respect of the petitioner no.2.

11. 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 PMLA is totally different from that of the Indian Penal Code . In a case for offences under the Indian Penal Code 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 PMLA, 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.

12. Considering the facts of the present case and the provisions of the PMLA (as amended), this Court is of the view that the 9 PMLA, 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 PMLA, 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 PMLA 2002 cannot amount to double jeopardy, where the procedure and nature of proof are totally different from a criminal proceeding under the Indian Penal Code .

13. The Hon'ble Supreme Court in the case of Union of India v. Hassan Ali Khan and another ,, 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:-

14. In view of the above, this Court finds no reason to exercise its inherent power under section 482 Cr.P.C. to quash the 10 proceeding initiated under the PMLA 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.

15. In the result, the CRLMC, being devoid of merit, stands dismissed.

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M.M. Das, J.

Orissa High Court, Cuttack.

December 16th , 2013/Biswal.