SHRI N J YASASWY 2ND NATIONAL MOOT COURT COMPETITION, 2023

TEAM CODE: TC-03

SHRI N J YASASWY 2ND NATIONAL MOOT COURT

COMPETITION, 2023

-----BEFORE THE HON’BLE SUPREME COURT OF

SENAPITA-----

SPECIAL VERSUS MR. SUGAM KUMAR AND ORS.

ENFORCEMENT

AGENCY

MEMORIALON BEHALF OF THE APPELLANT

SHRI N J YASASWY 2ND NATIONAL MOOT COURT COMPETITION, 2023

TABLE OF CONTENTS

Content

INDEX OF AUTHORITIES....................................................................................................III

STATEMENT OF JURISDICTION.....................................................................................VIII

STATEMENT OF FACTS......................................................................................................IX

ISSUES RAISED...................................................................................................................XII

SUMMARY OF ARGUMENTS..........................................................................................XIII

ARGUMENTS ADVANCED..............................................................................................XVI

PRAYER FOR RELIEF.....................................................................................................XXXI

SHRI N J YASASWY 2ND NATIONAL MOOT COURT COMPETITION, 2023

LIST OF ABBREVIATIONS

% PERCENTAGE

& AND

¶ PARAGRAPH

AIR ALL INDIA REPORTER

ANR ANOTHER

F.I.R FIRST INFORMATION REPORT

GOVT. GOVERNMENT

HON'BLE HONOURABLE

I.E THAT IS

SC SUPREME COURT

SCC SUPREME COURT CASES

V. VERSUS

ART ARTICLE

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ED. EDITION

IPC Indian Penal Code, 1860

SEA Special Enforcement Agency

SEC. Section

SLP Special Leave Petition

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INDEX OF AUTHORITIES

INDIAN CASES

1. M.P. Sharma And Others v. Satish Chandra, 1954 AIR 300

2. Vijay Mandal Choudhary v. Union of India, 2022 OnLine SC 929
3. Pankaj Bansal v. Union of India, Special Leave Petition (Crl.) Nos. 9220-21 of
2023
4. Nalini Chidambaram v. Directorate of Enforcement, (2018) 04 MAD CK 0227
5. State of Punjab v. Barkat Ram, 1962 AIR 276
6. Tofan Singh v. State of Tamil Nadu, Criminal Appeal No.152 Of 2013
7. Raja Ram Jaiswal v. State of Bihar, 1964 AIR 828
8. Balkishan A. Devidayal Etc v. State Of Maharashtra Etc, 1981 AIR 379
9. Nandini Satpathy and C. Sampath Kumar v.. Enforcement Officer,
10. Babulal Verma v. Enforcement Directorate, Criminal Application (Apl) No. 201
Of 2021
11. Radha Mohan Lakhotia v. Deputy Director, PMLA, 2010 (5) BomCR 625
12. Directorate of Enforcement and VGN Developers P Ltd v. The Deputy Director,
Directorate of Enforcement, Criminal Application No. 201 of 2021
13. Sukesh Gupta v. Government of India, WP 24539/2020
14. Binod Kumar and others v. State of Bihar and another, Criminal Miscellaneous
No.17600 of 2018
15. Rishipal Singh v. State of Uttar Pradesh and another, LL 2021 SC 667
16. State of Haryana and others v. Bhajan Lal and others, 1992 AIR 604
17. Naresh Prasad Agarwal and another v. Inspector of Police, ACB, CBI, Chennai.,
Appeal(Crl.)D.No.29911 of 2018
18. M Shobhana v. The Assistant Director,
19. Sukesh Gupta v. Government Of India, WP 24539/2020
20. State of Bihar v. Deokaran Nenshi, 1973 AIR 908
21. Radha Mohan Lakhotia v. Directorate of Enforcement, 2010 (5) BomCR 625
22. B. Rama Raju v. Union of India
23. Samsuddin v Union of India, 1991 (20) DRJ 3
24. M/Sb Prakash Industries v Union of India, 2023/DHC/000481

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25. K. Sowbhagya v. Union of India, Ministry of Finance, North Block, Department

of Revenue and others, Writ Petition No.19732 OF 2014
26. Bhanuben and Ors. v. State of Gujarat and Ors, 2017 (354)ELT193(Guj.)
27. Paresha G. Shah v. State of Gujarat and Ors, 2016 GLH (1) 329

STATUTES REFERRED

1. PREVENTION OF MONEY LAUNDERING ACT, 2002

2. PREVENTION OF CORRUPTION ACT, 1988

3. CODE OF CRIMINAL PROCEDURE, 1973

4. INDIAN PENAL CODE, 1860

5. ARTICLES OF THE CONSTITUTION OF INDIA

BOOKS

1. PREVENTION OF MONEY LAUNDERING ACT, 2002 BY LEXIS NEXUS

2. INDIAN CONSTITUTIONAL LAW BY MP JAIN
3. PREVENTION OF CORRUPTION ACT, 1988 BY EBC PUBLICATIONS
4. CODE OF CRIMINAL PROCEDURE BY RATAN LAL AND DHIRAJ LAL

WEBSITES
1. https://www.scconline.com/
2. https://www.barandbench.com/
3. https://www.livelaw.in/
4. https://www.aironline.in/
5. https://www.manupatrafast.com/
6. https://www.indiacode.nic.in/
7. https://home.heinonline.org/

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STATEMENT OF JURISDICTION

THE COUNSEL FOR THE RESPONDENTS, NATIONAL INSURANCE

CORPORATION, HEREBY HUMBLY SUBMIT TO THIS HON’BLE COURT’S
JURISDICTION UNDER ARTICLE 136 OF THE CONSTITUTION OF UNION OF
INDIA. THE RESPONDENT WOULD LIKE TO HUMBLY SUBMIT THAT THIS
SPECIAL LEAVE FOR APPEAL IS MAINTAINABLE.

Article 136 deals with the special leave to appeal by the Supreme court. It means that the
Supreme Court is authorised to grant in its discretion special leave to appeal from any
judgement in any matter passed by any court or tribunal in the territory of India (except
military tribunal and court-martial).

Special leave to appeal by the Supreme Court-

(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant
special leave to appeal from any judgment, decree, determination, sentence or order in any
cause or matter passed or made by any court or tribunal in the territory of India
(2) Nothing in clause ( 1 ) shall apply to any judgment, determination, sentence or order
passed or made by any court or tribunal constituted by or under any law relating to the Armed
Forces.

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STATEMENT OF FACTS

PARTIES TO THE
DISPUTE

Republic of Senapita is a densely populated country in South Asia, known

INTRODUCTION & for its diverse religious and linguistic landscape. The majority of its

BACKGROUND population is engaged in traditional agriculture, and its geography is unique,

being surrounded by the sea on three sides and bordered by high mountains
to the north.Senapita gained independence from Varselia 75 years ago and
operates as a sovereign, socialist, secular, democratic republic with a
Constitution inspired by various countries and international conventions. It
has a multi-party political system with a federal structure.

CAUSE OF ACTION The Rashtrawadi Janta Party (RJP) came into power in 2014, promising to
combat corruption and money laundering, leading to amendments in anti-
corruption and money laundering laws, particularly the Senapita Prevention
of Money Laundering Act, 2002 (SPMLA, 2002).In 2019, the RJP won a
significant majority in the elections and vowed to take stronger measures
against corruption, illegal foreign funding, and money laundering.The
Special Enforcement Agency (SEA) conducted numerous raids post-2019.
These raids stirred controversy, with the government claiming they targeted
criminals while the opposition alleged political vendetta.Research by the
'Society against Corruption' revealed that SEA secured only a few
convictions despite numerous raids, leading to accusations of targeting
opposition leaders.The SEA's conduct raised concerns that it was acting on
government instructions, and the lack of functioning of the Appellate
Tribunal under SPMLA, 2002 hindered remedies for unjustified asset
seizures.

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SUPREME COURT The Supreme Court upheld the constitutionality of SPMLA, 2002 and SEA's
UPHELD THE powers to arrest, attach, search, and seize under various sections. The court
CONSTITUTIONALIT argued that money laundering had serious implications, such as promoting
Y terrorism and drug trafficking.The RJP welcomed the court's decision, while
the opposition criticized it. The SEA defended its powers, arguing they were
appropriately balanced.

In another case, the Supreme Court declined a plea for a larger bench
reference, upholding principles of judicial discipline and stare decisis.

A dispute arose regarding the tenure extension of the SEA's chief, leading to
a stay order from the Supreme Court, although the extension was eventually
OTHER APPEALS
permitted.
REGARDING

CONSTITUTIONALIT An investigative report in January 2021 alleged a job scam involving Mr.
Y OF OROVISIONS Sugam Kumar, who was later raided by the SEA in 2023. He claimed the
OF SPMLA, 2002 seized money was meant for a land deal involving his son's company.An
acquitted accused filed a petition against the SEA's case, and the High Court
restricted SEA proceedings. SEA appealed to the Supreme Court.

The government issued a tender for a major highway project, and the special
officers involved were accused of taking bribes. The SEA registered a case
and seized bank accounts, leading to a recovery of cash, gold, and silver.
The trial court acquitted the accused but raised concerns about tendering
procedures. The accused challenged the freezing of their bank accounts
under SPMLA, 2002. The High Court upheld their petition, and SEA
appealed to the Supreme Court, arguing that money laundering and the
predicate offense were distinct.

In another case, a personal assistant received a notice under Section 50 of

SPMLA, 2002, and his statements were used against the Transport Minister
and himself. He challenged the constitutional validity of Section 50.

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The Supreme Court consolidated these cases and referred them to a five-
judge constitutional bench, focusing on issues related to constitutional
APPEAL TO
validity and the interpretation of provisions of SPMLA, 2002.
HON’BLE SUPREME

COURT

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ISSUES RAISED

ISSUE I: Whether the Section 50 of IPMLA, 2002 violates various constitutional provisions
recognizing rights relating to fair trial in a criminal prosecution or not?

ISSUE II: Whether SEA has powers to investigate and prosecute under SPMLA, 2002 when
the accused has secured an acquittal from the trial court in predicate offence under Section
320 of the Senapita Code of Criminal Procedure, 1973 or not?

ISSUE III: Whether SEA has powers to proceed with prosecution and investigation under
SPMLA, 2002 when a person is not made accused of the predicate offence but found to be
involved in the proceeds of crime flowing from the predicate offence and investigation by
SEA is still pending under the SPMLA, 2002 or not?

ISSUE IV: Whether the High Court, Lumbi was erred in issuing the writ petition against an
order of seizing of bank account under Section 17(1)(A) of SPMLA and discharge of the
accused or not?

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SUMMARY OF ARGUMENTS

ISSUE I: Whether the Section 50 of SPMLA, 2002 violates various constitutional

provisions recognizing rights relating to fair trial in a criminal prosecution or not?

It is submitted that Section 50 of the Prevention of Money Laundering Act, 2002 (PMLA) on
the grounds of violation of Article 20(3) of the Indian Constitution. . That Section 50, which
mandates the provision of information and documents, does not violate the constitutional
protection against self-incrimination. It is further submitted that the nature of the
Enforcement Directorate (ED) and the process of recording statements under Section 161 of
the Cr.P.C. distinguish them from "police officers," and, therefore, the Article 20(3)
safeguard doesn't apply. Additionally, it is submitted that Section 25 of the Evidence Act,
which bars admissions to the police, does not apply which infringes right of a person under
Article 20(3) and Article 14.

ISSUE II:Whether SEA has powers to investigate and prosecute under SPMLA, 2002
when the accused has secured an acquittal from the trial court in predicate offence
under Section 320 of the Senapita Code of Criminal Procedure, 1973 or not?

The counsel argues, based on legal precedents and the provisions of the Prevention of Money
Laundering Act (PMLA), that the investigation under PMLA is distinct and independent from
the predicate or scheduled offenses. The Bombay High Court in Babulal Verma vs.
Enforcement Directorate emphasized that the PMLA's primary purpose is to investigate and
punish individuals for money laundering, regardless of the status of the underlying offense.

Section 2(na) of the PMLA defines "investigation" to encompass all proceedings related to
evidence collection. Section 3 of the PMLA makes it an offense to be involved in any process
connected to the proceeds of crime, including concealment, possession, acquisition, use, or
projecting it as untainted property.

Section 4 prescribes punishments for money laundering, with more severe penalties for
certain specified offenses. The court reiterated that the predicate offense is necessary only for
registering a crime under PMLA, and once registered, the Enforcement Directorate must
conclude the investigation as per Section 44.

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In the case of Sukesh Gupta vs. Government Of India, the Supreme Court clarified that
money laundering is independent of the scheduled offenses, focusing solely on the process
related to proceeds of crime. Other cases, such as Binod Kumar, Rishipal Singh, State of
Haryana, and Naresh Prasad Agarwal, reaffirmed this principle.

In M Shobhana vs. The Assistant Director, the court confirmed that PMLA proceedings,
initiated to trace and attach proceeds of crime, are independent processes.

In summary, the investigation under PMLA aims to combat money laundering as a

standalone offense, separate from the underlying scheduled offenses, and it continues until
the Enforcement Directorate concludes its inquiry and files a complaint or closure report
before the appropriate court.

ISSUE III: Whether SEA has powers to proceed with prosecution and investigation
under SPMLA, 2002 when a person is not made accused of the predicate offence but
found to be involved in the proceeds of crime flowing from the predicate offence and
investigation by SEA is still pending under the SPMLA, 2002 or not?
It is submitted that the SEA possesses the authority to prosecute and investigate under the
Prevention of Money Laundering Act, 2002 (SPMLA) even if an individual is not accused of
the predicate offense but is found to be connected to the proceeds of crime resulting from the
predicate offense. Section 3 of the SPMLA, prior to amendments, allows for prosecution if an
individual is involved in any activity related to the 'proceeds of crime,' irrespective of their
direct involvement in the predicate offense or lack of conviction. This interpretation
highlights the PMLA's focus on money laundering as an independent and continuous offense.

ISSUE IV: Whether the High Court, Lumbi was erred in issuing the writ petition
against an order of seizing of bank account under Section 17(1)(A) of SPMLA and
discharge of the accused or not?
The counsel humbly submits to the Hon'ble Supreme Court regarding the High Court's
decision to issue a writ petition against the seizure of a bank account and the discharge of the
accused in a case involving the Senapati Prevention of Money Laundering Act (SPMLA) and
the Senapati Prevention of Corruption Act, 1988. The counsel argues that the accused parties,

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including special officers, company directors, and hawala operators, are liable under various
sections of these acts.
The counsel contends that the freezing of the bank account is necessary to prevent the
destruction of evidence related to the money circulation by the hawala operators and the
proceeds of crime. The counsel points out that both the predicate offense (bribery) and money
laundering are governed by different statutes, and the freezing of the bank account falls under
SPMLA, 2002.
The counsel draws parallels to previous court cases where freezing of bank accounts was
deemed necessary to protect the proceedings and prevent the frustration of the legal process.
The counsel argues that the freezing of accounts is essential to ensure a fair trial and to
preserve evidence, especially the bribe amount of Rs. 100 crores given to the special officers.
In summary, the counsel is urging the Supreme Court to reconsider the High Court's decision
and allow the freezing of the bank account, emphasizing the importance of preventing the
destruction of evidence and ensuring a fair legal process in this complex case involving
multiple acts and accused parties.

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ARGUMENTS ADVANCED

ISSUE I: Whether the Section 50 of SPMLA, 2002 violates various constitutional

provisions recognizing rights relating to fair trial in a criminal prosecution or not?

1. The counsel states and humbly submits Section 50 of the Prevention of Money
Laundering Act, 2002 (PMLA) does not violate Article 20(3) of the Indian
Constitution. The central contention is that Section 50, which compels the accused to
provide information and documents, does not infringe upon the constitutional
protection against self-incrimination guaranteed by Article 20(3).

2. The counsel humbly submits that Article 20(3) of the Indian Constitution: Article
20(3) safeguards individuals from self-incrimination, stating that "No person accused
of any offense shall be compelled to be a witness against himself." Article 20(3) is
clear in its language that it prohibits the compulsion of a person to become a witness
against themselves. This pertains to the core principle of testimonial compulsion.
Section 50 of the Prevention of Money Laundering Act, 2002, on the other hand, does
not require an accused to become a witness against themselves in the sense
contemplated by Article 20(3). It merely requires the accused to produce information
and documents related to their financial transactions and properties. The accused is
not compelled to provide testimonial evidence that may incriminate them; they are
asked to provide factual records.

3. That, the he legislative intent behind Section 50 of the Prevention of Money

Laundering Act, 2002 is to empower authorities in their efforts to curb money
laundering. The provision was introduced to ensure that those involved in financial
wrongdoing could not hide behind the veil of self-incrimination to obstruct
investigations. It is not meant to undermine the principle of non-self-incrimination but
to strike a balance between the rights of the accused and the broader societal interest
in preventing financial crimes.

4. The counsel humbly submits that in M.P. Sharma And Others v. Satish Chandra
Distt. Magistrate, Delhi And Others1 “the phrase used in article 20(3) is “to be a

1
M.P. Sharma And Others v. Satish Chandra Distt. Magistrate, Delhi And Others, 1954 AIR 300

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witness” and not to “appear as a witness”. It follows that the protection afforded to an
accused in so far as it is related to the phrase “to be a witness” is not merely in respect
of testimonial compulsion in the court room but may well extend to compelled
testimony previously obtained from him. It is available therefore to a person against
whom a formal accusation relating to the commission of an offence has been levelled
which in the normal course may result in prosecution.” It is important to keep in mind
that the summons is being issued by the Authority under Section 50 of the Act in
relation to the investigation into any potential criminal proceeds that may have been
attached and are pending decision-making by the Adjudicating Authority. The
authorised authorities have the authority to call anybody in relation to this action in
order to gather data and proof that will be submitted to the adjudicating authority. It's
not always to start a legal action against the notice specifically. If the circumstances
justify it, the designated officials under this Act have the authority to conduct
inquiries to gather pertinent information that would enable the start or pursuit of a
case involving the proceeds of crime and its presentation before the adjudicating
authority. It is a different matter that the information and evidence so collated during
the inquiry made, may disclose commission of offence of money-laundering and the
involvement of the person, who has been summoned for making disclosures pursuant
to the summons issued by the Authority. At this stage, there would be no formal
document indicative of likelihood of involvement of such person as an accused of
offence of money laundering.

5. The counsel humbly submits that, in Section 50 of the Prevention of Money

Laundering Act, 2002 (PMLA), self-incrimination does not apply when an individual
is being questioned during a summons. This is because the person being questioned
has not yet been formally accused, rendering Article 20(3) of the Constitution
ineffective. In the Vijay Mandal Choudhary v. Union of India2, the court upheld
this interpretation, stating that the judicial nature of the interrogation process means
that Section 25 of the Evidence Act, which prohibits the admission of confessions
made to the police, does not apply.

2
Vijay Mandal Choudhary v. Union of India, 2022 OnLine SC 929

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6. That, In Pankaj Bansal v. Union of India 3 it was held that incrimination will
admissions of guilt cannot be put during summon stage so this give clearity regarding
applicability of incrimination during summon stage, it will be applicable.

7. In Nalini Chidambaram v. Directorate of Enforcement 4, rendered by the Madras

High Court, it was held that Section 50(2) gives sufficient ammunition to an authority
to summon “any person” whose attendance is considered necessary. It is to be
interpreted to mean absolute power to seek attendance at the designated office of ED.
The Court further held that merely because trappings of police power are existing
with the officers of ED, they cannot be treated as “police officers” under all
circumstances or in their office. Further in State of Punjab vs. Barkat Ram5,
wherein it was held —a customs officer is not a police officer within the meaning of
Section 25 of the 1872 Act. It is also stated that police officers had to be construed not
in a narrow way but in a wide and popular sense. Reference is made to Sections 17
and 18 of the Police Act, 186 , where under an appointment of special police officers
can be made. Thus, it is stated that it is not necessary to be enrolled under the 1861
Act, but if one is invested with the same powers i.e., the powers for prevention and
detection of crime, one will be a police officer. Further, it has been stated that even in
Tofan Singh vs. State of Tamil Nadu 6, the case of Raja Ram Jaiswal7 has been
relied upon and it is concluded that when a person is vested with the powers of
investigation, he is said to be a police officer, as he prevents and detects crime.
Therefore, on a parity of reasoning, the ED officials are not police officers, as held in
Balkishan A. Devidayal8.

8. That, regarding Section 25 of the 1872 Act, it is contended that in order for the
restrictions imposed by Section 25 of the 1872 Act to be applicable, three conditions
must be satisfied: (i) the presence of a confession; (ii) that this confession is made to a
police officer; and (iii) that the individual making the confession is an accused party.
It is asserted that the officials responsible for recording statements pursuant to Section
50 of the Prevention of Money Laundering Act (PMLA) are not police officers.
3
Pankaj Bansal v. Union of India, Special Leave Petition (Crl.) Nos. 9220-21 of 2023
4
Nalini Chidambaram v. Directorate of Enforcement, (2018) 04 MAD CK 0227
5
State of Punjab vs. Barkat Ram, 1962 AIR 276
6
Tofan Singh vs. State of Tamil Nadu, Criminal Appeal No.152 Of 2013
7
Raja Ram Jaiswal v. State of Bihar, 1964 AIR 828
8
Balkishan A. Devidayal Etc vs State Of Maharashtra Etc, 1981 AIR 379

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Consequently, the limitations delineated in Section 25 of the 1872 Act will not be
relevant when the statement is provided to Enforcement Directorate (ED) officers. It
is emphasized that there exists a distinction between statements recorded by the police
under Section 161 of the Code of Criminal Procedure (Cr.P.C.) and statements
recorded by ED officers under Section 50(2) of the PMLA.

9. Therefore the counsel submits that , these contentions made by Hon’ble court clarify
that ED cannot be treated as “police officer” to attract Constitutional protection under
Article 20(3) and statements recorded under Section 161 of the Cr.P.C., typically by
the police during the course of a criminal investigation, do not have the same
evidentiary character. These statements serve as tools for gathering information
during the investigation and are generally not treated as evidence in themselves. .

10. The counsel further submits that, in Nandini Satpathy and C. Sampath Kumar vs.
Enforcement Officer, Enforcement Directorate 9, it is submitted that the legal
penalties imposed on a person on his refusal to answer truthfully, cannot be regarded
as a compulsion within the meaning of Article 20(3) of the Constitution. Therefore, it
is submitted that the contentions of the private parties that provisions contained in
Sections 50(3), 50(4) amount to legal compulsion violating the fundamental right
under Article 20(3) of the Constitution, is devoid of any merit. Therefore, Section 50
of the Prevention of Money Laundering Act, 2002 (PMLA) does not violate the
Article 20(3) of the Indian Constitution. Hence, it is constitutional.

9
Nandini Satpathy and C. Sampath Kumar vs. Enforcement Officer

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ISSUE II:Whether SEA has powers to investigate and prosecute under SPMLA, 2002
when the accused has secured an acquittal from the trial court in predicate offence
under Section 320 of the Senapita Code of Criminal Procedure, 1973 or not?

1. The counsel humbly wants to submit that the Bombay HC in Babulal Verma vs
Enforcement Directorate10 noted that the PMLA's object is to "investigate into the
offence of money-laundering and to punish the accused for commission of the said
offence".The court while relying on several judicial precedents, including Radha
Mohan Lakhotia v Deputy Director, PMLA, Directorate of Enforcement 11 and
VGN Developers P Ltd v The Deputy Director, Directorate of Enforcement 12 the
court held that:

"Even if the Predicate/Scheduled Offence is compromised, compounded, quashed or

the accused therein is/are acquitted, the investigation of ED under PMLA does not get
affected, wiped away or ceased to continue. It may continue till the ED concludes
investigation and either files a complaint or closure report before the Court of
competent jurisdiction."

2. According to Section 2(na) of PMLA,"investigation" includes all the proceedings

under this Act conducted by the Director or by an authority authorised by the Central
Government under this Act for the collection of evidence.

3. Whereas Section 3 of PMLA states that,"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.

4. [Explanation. -For the removal of doubts, it is hereby clarified that,-

(i) a person shall be guilty of offence of money-laundering if such person is found to

have directly or indirectly attempted to indulge or knowingly assisted or knowingly is
a party or is actually involved in one or more of the following processes or activities
connected with proceeds of crime, namely:-
10
Babulal Verma v. Enforcement Directorate, Criminal Application (Apl) No. 201 Of 2021
11
Radha Mohan Lakhotia v. Deputy Director, PMLA, 2010 (5) BomCR 625
12
Directorate of Enforcement and VGN Developers P Ltd v. The Deputy Director, Directorate of Enforcement,
Criminal Application No. 201 of 2021

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(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e) projecting as untainted property; or

(f) claiming as untainted property,in any manner whatsoever;

(ii) the process or activity connected with proceeds of crime is a continuing activity
and continues till such time a person is directly or indirectly enjoying the proceeds of
crime by its concealment or possession or acquisition or use or projecting it as
untainted property or claiming it as untainted property in any manner whatsoever.]"

5. Furthermore, referring to Section 4 of PMLA which reads as follows,"Whoever

commits the offence of money-laundering shall be punishable with rigorous
imprisonment for a term which shall not be less than three years but which may
extend to seven years and shall also be liable to fine. Provided that where the proceeds
of crime involved in money-laundering relates to any offence specified under
paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect
as if for the words "which may extend to seven years", the words "which may extend
to ten years" had been substituted."

6. Taking the above-mentioned sections in consideration counsel wants to highlight that

the investigation under PMLA is for the independent offence of money laundering
and the main objective of the act is to further stop the spread of money laundering,the
court in the case of Babulal Verma v Enforcement Directorate further held that
"predicate/ scheduled offence is necessary only for registration of crime/ launching
prosecution under PMLA and once a crime is registered under the PMLA, then the
ED has to take it to its logical end, as contemplated under Section 44 of the Act."

7. In the case of Sukesh Gupta vs Government of India 13,criminal Petition, under

Section 482 of the Code of Criminal Procedure, 1973, was filed by the petitioner,

13
Sukesh Gupta v. Government of India, WP 24539/2020

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seeking to quash the complaint and investigation. The petitioner further submitted that
the investigation done by ECIR should be quashed as the offence of money
laundering has to be connected to 'proceeds of crime', as defined under Section 2(u) of
PMLA and it has to be projected as 'untainted property',the SC further held that
"commission of scheduled offence is a fundamental pre-requisite for initiating
proceedings under the PMLA, the offence of money laundering is independent of the
scheduled offences. The scheme of the PMLA indicates that it deals only with
laundering of money acquired by committing the scheduled offence. In other words,
PMLA deals only with the process or activity of proceeds of crime, including its
concealment, possession, acquisition or use and it has nothing to do with the launch of
prosecution for scheduled offence and continuation thereof. Scheduled offence is only
a trigger point to initiate investigation under PMLA and once ECIR is recorded, case
registered under PMLA is independent, distinct and stand alone." Same was reiterated
in cases such as Binod Kumar and others Vs. State of Bihar and another 14,
Rishipal Singh Vs. State of Uttar Pradesh and another15, State of Haryana and
others Vs. Bhajan Lal and others16 & Naresh Prasad Agarwal and another Vs
Inspector of Police, ACB, CBI, Chennai.17

8. In the case of M Shobhana v/s The Assistant Director 18 it was held that,"the
proceedings initiated under the Prevention of Money- Laundering Act by the
Respondent through issuance of summons dated 10.04.2013 to the Petitioners is an
Independent Process and where the ultimate object of the Respondent is to
trace/ascertain the proceeds of crime and to attach the proceeds of crime if proved in a
given case."

14
Binod Kumar and others v. State of Bihar and another, Criminal Miscellaneous No.17600 of 2018
15
Rishipal Singh v. State of Uttar Pradesh and another, LL 2021 SC 667
16
State of Haryana and others v. Bhajan Lal and others, 1992 AIR 604
17
Naresh Prasad Agarwal and another v. Inspector of Police, ACB, CBI, Chennai., Appeal(Crl.)D.No.29911 of
2018
18
M Shobhana v. The Assistant Director, W.P.Nos.14083 to 14085 of 2013

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ISSUE III: Whether SEA has powers to proceed with prosecution and investigation
under SPMLA, 2002 when a person is not made accused of the predicate offence but
found to be involved in the proceeds of crime flowing from the predicate offence and
investigation by SEA is still pending under the SPMLA, 2002 or not?

1. The respondent states and submits that SEA has powers to proceed with prosecution
and investigation under SPMLA, 2002 when a person is not made accused of the
predicate offence but found to be involved in the proceeds of crime flowing from the
predicate offence and investigation by SEA is still pending under the SPMLA, 2002.

2. The respondent states and submits that under section 2 sub-clause 1 (na) of
Prevention of Money Laundering Act, 2002 - “investigation” includes all the
proceedings under this Act conducted by the Director or by an authority authorised
by the Central Government under this Act for the collection of evidence; and under
section 2 sub-clause 1 (u) of Prevention of Money Laundering Act, 2002 - “proceeds
of crime” means any property derived or obtained, directly or indirectly, by any
person as a result of criminal activity relating to a scheduled offence or the value of
any such property [or where such property is taken or held outside the country, then
the property equivalent in value held within the country or abroad]

3. The counsel humbly submits that the PMLA, 2002 explicitly encompasses both direct
and indirect involvement in the proceeds of crime, granting the competent authorities
the power to prosecute and conduct investigations. Section 3 of the PMLA forms the
cornerstone of the legislation, defining the offense of money laundering. It reads,
"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 and projecting it as untainted property shall be guilty of the
offense of money-laundering." A reading of section 3 of PML Act in unamended
form would clearly indicate that even without there being any conviction of the
accused in a predicate offence and even if the offender under section 3 of the PML
Act is not a party to the predicate offence, still the prosecution could be launched
against him if the offender is found involved in any process or activity connected with
the 'proceeds of crime'.

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4. The counsel further submits that in Sukesh Gupta v. Government Of India19, the
court contended that, the offence of money laundering contemplated under Section 3
of the PMLA is an independent offence. A reference to criminal activity relating to
offence under PMLA has a wider connotation, and it may extend to a person, who is
connected with criminal activity relating to scheduled offence, but may not be the
offender of scheduled offence. It is in this background that it has to be necessarily
held that offence under PMLA is a stand-alone offence. The offence under
Section 3 of the PMLA is an independent offence and it may extend
even to a person who may be unconnected or may not be the actual
offender of the scheduled offence but comes under the net of
“offence of money laundering” under Section 2(1)(u). A person
booked for a scheduled offence, but subsequently acquitted of such
a scheduled offence can still be proceeded under PMLA, if it is found
that he was dealing with the proceeds of crime. Prosecution can be
independently initiated under PMLA only for the offence of money
laundering, as it relates to any property which may directly or
indirectly be derived or obtained as a result of criminal activity
relatable to the scheduled offence. The process or activity
contemplated under Section 3 is relatable to “proceeds of crime”, as
a continuing activity.

5. That, It was decided in State of Bihar v. Deokaran Nenshi20 and Radha Mohan
Lakhotia v. Directorate of Enforcement21 that money laundering under the PMLA
is an ongoing offence that cannot be considered as having been committed.
"Continuing offences" and "committed offences" are the two types of offences. It is
impossible to consider the act of portraying "proceeds of crime" as pure and injecting
such contaminated funds into the nation's economy as a "committed offence"; rather,
it must be considered a "continuous ongoing offence." Thus "proceeds of crime" is
categorized as the same offense as the original crime. This categorization is crucial
because it implies that the act of benefiting from criminal activities is an integral part

19
Sukesh Gupta v. Government Of India, WP 24539/2020
20
State of Bihar v. Deokaran Nenshi, 1973 AIR 908
21
Radha Mohan Lakhotia v. Directorate of Enforcement, 2010 (5) BomCR 625

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of the crime itself. This categorization considers the "proceeds of crime" as a

continuation of the initial offense. So the individuals found to be involved in the
"proceeds of crime" stemming from a predicate offense of money laundering can be
both prosecuted and investigated same as the predicate offence.

6. Furthermore, Section 3 of the PMLA has been clarified by the amendments made to it
by the Finance Act, 2019. This section states that it would be incorrect to interpret
money laundering as a one-time, instantaneous offence that ends with the
concealment, possession, acquisition, use, or projection of the proceeds of crime as
untainted property or by claiming it to be untainted. A person shall be liable to be
prosecuted for the offence of money laundering for as long as the said person is
enjoying the “proceeds of crime” – thus, making the offence of money laundering a
continuous offence.

7. The counsel further submits that in B. Rama Raju v. Union of India22 court
contended that “On the afore-stated scheme the provisions of the Act, the prosecution
under the Act; and attachment and eventual confiscation proceedings are distinct
proceedings. These two sets of proceedings may be initiated against the same person
if he is accused of the offence of money-laundering. Even when a person is not so
accused, the property in his possession may be proceeded against for attachment and
confiscation, on a satisfaction by the appropriate and competent authority that such
property constitutes proceeds of crime.” Thus, it is possible to initiate such forfeiture
proceedings against an accused where the accused indulged in the money laundering
offence alone, without having participated in the predicate offence.

8. In Vijay Madanlal Choudhary vs Union Of India , it was stated that “Section 4 of

the 2002 Act makes no distinction between person directly involved in the process or
activity connected with the proceeds of crime and the other not so directly involved.
Further, the scheduled offence may have been committed by someone else and the
offence of money-laundering by third person owing to being involved in the process
or activity connected with the proceeds of crime.” Under Section 4 of the Prevention
of Money Laundering Act, 2002 (PMLA), both parties involved in a money

22
B. Rama Raju v. Union of India

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laundering transaction are considered equal, regardless of whether they have

committed the underlying predicate offense or not. Therefore, pursuant to PMLA, an
investigation and prosecution may be initiated against both parties involved in the
money laundering transaction, including those who have received or converted the
proceeds of the crime.

9. That, in the same judgement court stated that” the investigation under Section 2(1)
(na) of the 2002 Act is conducted by the Director or by an authority authorised by the
Central Government under the 2002 Act for the collection of evidence for the purpose
of proceeding under this Act. Obviously, this investigation is in the nature of inquiry
to initiate action against the proceeds of crime and prevent activity of money-
laundering. In the process of such investigation, the Director or the authority
authorised by the Central Government referred to in Section 48 of the 2002 Act is
empowered to resort to attachment of the proceeds of crime and for that purpose, also
to do search and seizure and to arrest the person involved in the offence of money-
laundering.” The plain reading of the act satisfy the contention that it is at the power
of the Authority to investigate and prosecute an accused of the predicate offence but
found to be involved in the proceeds of crime flowing from the predicate offence and
investigation by SEA is still pending under the PMLA, 2002.

10. That, In Samsuddin v Union of India23 & M/Sb Prakash Industries v Union of
India24 it was stated by the court that, the structure of the PMLA clearly indicates its
focus on the money laundering related to scheduled offenses. Put differently, the
PMLA is concerned exclusively with the processes or activities associated with the
ill-gotten gains of a scheduled crime, encompassing actions like concealing,
possessing, acquiring, or using those proceeds. It is important to note that the PMLA
is not concerned with initiating prosecutions for scheduled offenses or their
subsequent continuation. The scheduled offense serves merely as the trigger for
commencing an investigation under the PMLA, and once an Enforcement Case
Information Report (ECIR) is filed, the PMLA case is distinct, independent, and self-
sustaining. Even if the predicate or scheduled offenses are settled, resolved, annulled,
or if the accused is acquitted, it does not impact the proceedings under the PMLA.
23
Samsuddin v Union of India, 1991 (20) DRJ 3
24
M/Sb Prakash Industries v Union of India, 2023/DHC/000481

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11. That, the proceedings are pending in the said case before the Designated Court.
Therefore, acquittal in predicate offence has no bearing or effect in investigation or
trial under the PMLA as the said Act deals only with the offences of money
laundering. In K. Sowbhagya v. Union of India, Ministry of Finance, North Block,
Department of Revenue and others 25 the court contended that, Money laundering is
a stand alone offence. A person who has not committed a scheduled offence could be
prosecuted for an offence of money laundering. In such a situation, the prosecution
need not wait for the scheduled offence to be established. It can independently
prosecute and lay material to show that he had knowingly assisted or was responsible
for laundering of the illicit wealth.

12. Thus, it is concluded with respect to above case laws and arguments that, SEA has
powers to proceed with prosecution and investigation under SPMLA, 2002 when a
person is not made accused of the predicate offence but found to be involved in the
proceeds of crime flowing from the predicate offence and investigation by SEA is still
pending under the SPMLA, 2002.

25
K. Sowbhagya v. Union of India, Ministry of Finance, North Block, Department of Revenue and others, Writ
Petition No.19732 OF 2014

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ISSUE IV: Whether the High Court, Lumbi was erred in issuing the writ petition
against an order of seizing of bank account under Section 17(1)(A) of SPMLA and
discharge of the accused or not?

1. The counsel humbly wants to submit before this Hon'ble Supreme Court that High
Court, Lumbi has erred in issuing writ petition against an order of seizing of bank
account and discharging the accused.

2. The section 17(1)(A) of Senapati Prevention of Money Laundering Act (SPMLA)

empowers an authorized officer to freeze a property, where it would not practically be
possible for such authority to search or seize the record or property. In the present
facts of the case, all seven parties of the case- the two special officers Mr. Suban
Nirwan, Rosemary David, the directors of Ann Highway Pvt. Ltd. And Benn Road
Constructors, and three biggest Hawala Operators at that time period- Mr. Nageshwar
Bath, Jeetu Kalmadi and Mahindroo Das are liable under relevant provisions of the
Senapati Prevention of Corruption Act, 1988. The Special Enforcement Agency has
even registered an Enforcement Case Information Report (ECIR) against them.

3. The counsel humbly wants to submit that the seven parties stated above are liable
under section 7 of SPCA, 1988 which talks about offence relating to public servant
being bribed, and section 7A which talks about taking undue advantage to influence
public servant by corrupt or illegal means or by exercise of personal influence, and
section 8 which talks about offence relating to bribing of a public servant, and section
9 which states about offence relating to bribing a public servant by a commercial
organisation, and section 10 which states that Person in charge of commercial
organisation to be guilty of offence.—Where an offence under section 9 is committed
by a commercial organisation, and such offence is proved in the court to have been
committed with the consent or connivance of any director, manager, secretary or other
officer shall be of the commercial organisation, such director, manager, secretary or
other officer shall be guilty of the offence and shall be liable to be proceeded against
and shall be punishable with imprisonment for a term which shall not be less than
three years but which may extend to seven years and shall also be liable to fine- here

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directors of the companies to whom the tender project is alloted are guilty and several
other provisions of SPCA, 1988.

4. The counsel humbly wants to submit that High Court, Lumbi has erred in issuing the
writ petition against the order of seizing of bank account and discharging the accused.
Due to this, it leads to frustration of proceedings and justice cannot be served without
a layer of prejudice being involved. The counsel wants to submit that both are
different offences (predicate offence and offence of money laundering) under
different statutes wherein the bribery case falls under Senapita Prevention of
Corruption Act, 1988 and freezing of bank account is governed by SPMLA, 2002.
The counsel begs to submit that it is in the interest of justice that the case under
SPMLA, 2002 should be investigated further so that the property derived from the
criminal activities mentioned in the scheduled offences can be confiscated. The
counsel wants to bring the court's attention to the finding of the trial court where it
mentioned especially that acquittal of the parties does not make them entirely free
from all the charges. The trial court observed that there was some form of tampering
with the tender allotment procedure and left it open for SEA to investigate and
unearth any criminal act with regards to the tendering process and to trace proceeds of
crime.

5. The counsel humbly wants to submit that in the case of Bhanuben and Ors. Vs.
State of Gujarat and Ors.26, the Hon'ble Gujarat High Court in the case of Freezing
of account- where it involved relevant provisions of Prevention of Corruption Act,
1988 and Section 5(1) of Prevention of Money Laundering Act, 2002. A writ Petition
was filed for direction to Respondent No. 2 to permit Petitioner to operate their Bank
accounts and to set aside ban whereby it was directed to Petitioner that no debits be
allotted from accounts of Petitioners. It was held that it could seize or prohibit
operation of account if such assets have direct links with commission of offence for
which the police officer was investigating. The manner in which attachment
proceedings were structured indicated that when designated/authorised officer orders
provisional attachment, based on material available with him, it was a tentative view
that if provisional attachment was not ordered, it could lead to frustration of

26
Bhanuben and Ors. v. State of Gujarat and Ors, 2017 (354)ELT193(Guj.)

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proceedings under Act. It was open for Petitioner to prefer representation in that
regard addressed to the Competent Authority. The writ petition was rejected. In the
present facts of the case, if the bank account does not remain seized, it could lead to
frustration of proceeding and an unfair trial would happen. The bribe amount of Rs.
100 crores given to the special officers for acquiring the tender of the project remains
to be a vital proof for defining the proceeds of the crime.

6. The counsel humbly wants to submit that in the case of Paresha G. Shah Vs. State of
Gujarat and Ors.27, the Hon'ble Gujrat High Court decided a case of freezing of bank
account. The account of petitioner freezed/attached under provisions of Act, 2002. It
was held, Director shall have reasons to believe on basis of materials in his possession
- Person, against whom proceedings under Act, 2002 has been initiated, must be in
possession of any proceeds of crime - Such person must be charged of having
committed any scheduled offence – Such proceeds of the crime are likely to be
concealed, transferred or dealt with in any manner. And if provisional attachment is
not ordered immediately such concealment or transfer of such proceeds of crime may
result in frustrating proceedings relating to confiscation of such proceeds of crime.
Property requires to be protected from dissemination, depletion or destruction by any
mode. Under guise of being given information about said action, no Accused, not
even third party, can overreach law under umbrella of sublime provision meant to
protect innocent and preserve his property. Initial stage for believing the existence of
a certain thing or alleged fact is suspicion. The order of attachment/freezing of Bank
account should not continue or remain in operation for an indefinite period of time.
The Authority can record its reasons to believe that if account is not freezed, then non
freezing of property would frustrate proceeding under Act, 2002 - Respondent No. 2
was justified in invoking Section 102 of Code for purpose of freezing savings account
of Petitioner. Authorities could have proceeded to instruct Bank to freeze savings
account without there being any complaint lodged against Petitioner under Act, 2002.
The counsel humbly wants to submit that the present case has similar facts and if the
bank accounts are not frozen, it could lead to destruction of evidence owing to the
trail and chain of money circulation by the hawala operators.

27
Paresha G. Shah v. State of Gujarat and Ors, 2016 GLH (1) 329

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PRAYER FOR RELIEF

Wherefore, in the light of the issues raised, arguments advanced, reasons given and
authorities cited, it is most humbly prayed that the court may be pleased to:

A. Hold that the Section 50 of SPMLA 2002 is constitutional and recognises the right to
fair trial of the citizens.
B. Hold that the SEA has the power to investigate and prosecute under SPMLA 2002
even if the predicate offence has been compounded under Section 320 of Senapita
Criminal Procedure Code,1973.
C. Hold that the SEA has the power to investigate and prosecute under SPMLA 2002
when the accused is not held liable for the predicate offence but found to be involved
in proceeds of crime.
D. Hold that the High Court of Lumbi had erred in issuing the writ petition against the
order of seizing of bank account under Section 17(1)(A) of SPMLA and discharge of
accused.

AND/OR

Pass any other order/direction that the Hon’ble Court may be pleased to grant in the interest
of justice, equity and good conscience, all of which is respectfully submitted.

And for this act of kindness the Appellant duty bound shall ever

(S/d) PLACE:THEHON’BLE SUPREMECOURT OFSENAPITA

(Counsels for the Appellant)

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