2025 INSC 349
SUPREME COURT OF INDIA
(HON’BLE
VIKRAM NATH, J. AND HON’BLE PRASANNA B. VARALE, JJ.)
PRADEEP NIRANKARNATH
SHARMA
Petitioner
VERSUS
DIRECTORATE OF
ENFORCEMENT
Respondent
Criminal
Appeal No. OF 2025 (@ SLP (CRL.) No.6185 OF 2023)-Decided on 17-03-2025
Criminal, PMLA
Criminal
Procedure Code, 1973, Section 227 - Prevention of Money Laundering Act, 2002,
Sections 2(1)(u) , 3 and 4 – Discharge – Rejection of application – Challenge as to -
Submission that the allegations primarily pertain to acts committed before the
PMLA was in force or during periods when the relevant offences were not
scheduled under the Act hence the
accused cannot be prosecuted under the PMLA for alleged predicate offences that
occurred prior to its enactment or prior to the inclusion of those
offences in the PMLA schedule. Respondent argues that the appellant's arguments
regarding the retrospective application of PMLA are legally untenable, as the
offence of money laundering is a continuing offence as has been held by this
Court and has been correctly applied based on the facts of the case.
Held that offences under the PMLA are of a
continuing nature, and the act of money laundering does not conclude with a
single instance but extends so long as the proceeds of crime are concealed,
used, or projected as untainted property - The legislative intent behind the
PMLA is to combat the menace of money laundering, which by its very nature
involves transactions spanning over time – Material on record establishes that
the misuse of power and position by the appellant, coupled with the alleged
utilization and concealment of proceeds of crime, has had an enduring impact -
The act of laundering money is not a one-time occurrence but rather a process
that continues so long as the benefits derived from criminal activity remain in
circulation within the financial system or are being actively utilized by the
accused - The respondent has submitted that fresh instances of the
utilization of the proceeds of crime have surfaced even in recent times,
thereby extending the offence into the present and negating the appellant’s
contention that the act was confined to a particular point in the past -
Respondent has categorically established that the amount in question far
exceeds the threshold of Rs. 30 lakhs, even under the unamended provisions of
the PMLA - The material submitted by the respondent, coupled with the broad
legislative framework of the PMLA, indicates the necessity of allowing the
trial to proceed and not discharging the appellant at the nascent stage of
charge framing - Appellant has failed to establish any legally sustainable
ground warranting interference by this Court at a pre-trial stage.
(Para
21, 24, 28, 34 and 36)
JUDGMENT
Vikram Nath, J. :-Leave granted.
2.
The present appeal has been filed against an order dated 14.03.2023 passed by
the High Court of Gujarat dismissing the appellant’s criminal revision
application and refusing to the quash the order of the Trial Court rejecting
the appellant’s discharge application in a case for offences under the
Prevention of Money Laundering Act, 2002[PMLA].
3.
The appellant had approached the High Court through a Criminal Revision
Application No. 66 of 2018, challenging the order dated 08.01.2018 passed by
the Special Judge (PMLA), Ahmedabad, in PMLA Case No. 02 of 2016. The Special
Judge had rejected the discharge application filed by the appellant
under Section 227 of the Code of Criminal Procedure, 1973[CrPC] seeking discharge from the
case registered under the PMLA. The appellant had been implicated based on
allegations of money laundering arising out of scheduled offences under the
PMLA.
4.
The case against the appellant arose from an alleged economic offence wherein
the respondent no. 1 – Enforcement Directorate[ED] initiated proceedings against him under the PMLA. The
primary allegation was that the appellant was involved in financial
transactions related to proceeds of crime, generated through fraudulent
activities causing significant financial losses to the State of Gujarat. The
prosecution alleged that the appellant had actively facilitated the process of
money laundering by utilizing banking channels and other financial
instruments to conceal the illicit origins of funds.
5.
Appellant was arrested on 31.07.2016 in connection with inquiry in furtherance
of ECIR/01/AZO/2012 registered by respondent no.1. This Enforcement Case
Information Report[ECIR] dated
12.03.2012 came to be registered in furtherance of FIR No. 03/2010 dated
31.03.2010 and FIR No. 09/2010 dated 25.09.2010. Upon completion of the
investigation, respondent no.1 filed a complaint before the Special Judge on
27.09.2016 for offences under Section 3 and 4 of the PMLA.
In the present case there were two scheduled offences as per the two FIRs:
i. I-CR No. 03/2010
registered with Rajkot Zone, CID Crime for offences under Sections 7, 11,
13(1)(B), 13(2) of the Prevention of Corruption Act, 1988[PC Act] ; and
ii. I-CR No. 09/2010
registered with Rajkot Zone, CID Crime for offences under Sections 217, 409, 465, 467, 468, 471, 476, 120-B,
IPC.
6.
In both these cases, the charge sheet has been filed before the concerned
Court. Appellant is on anticipatory bail in the first scheduled offence,
in furtherance of High Court’s order dated 03.02.2012.
In
the second scheduled offence, the appellant has been on regular bail in
furtherance of this Court’s order dated 13.12.2011.
7.
Appellant approached the Special Judge under Section 227 of CrPC
seeking discharge in the PMLA case on the grounds that he has been falsely
implicated in the case and also no offence under the PMLA is made out. Further,
the appellant was arrested on 06.01.2010 and thereafter suspended on
08.01.2010, during which period he had attained the age of superannuation and
therefore now there is no question of him being in service. He further
contended that the offences are alleged to have been committed when the PMLA
was not in force and thus these provisions cannot be invoked retrospectively.
It was his case the transaction alleged against him were of the company in
which his wife is a partner and thus these cannot be attributed to him.
Further, the transactions made to the accounts held by him the bank in United
States of America cannot be deemed to be in furtherance of any offence, as he had
opened those accounts during his studies there and they were used for
transactions in that period.
8.
The Special Judge (PMLA) in its judgment dated 08.01.2018 observed that from
the material on record and on the basis of the investigation by respondent
no.1, it prima facie appears that the appellant is involved in Hawala, that is,
illegal transfer of money to foreign countries, he also appears to be in
possession of proceeds of crime, and prima facie appears to be involved in
offences likely to affect the economy of the country. It was further held that
it appears from the material on record that the appellant is prima facie
involved in Hawala transaction of crores of rupees as well. Further, in the
Trial Court’s opinion, the appellant had miserably failed to discharge the
burden of proof under Section 24 of the PMLA which had shifted upon
him to show that proceeds of crime are untainted property. Such prima facie
material sufficient to infer the appellant’s involvement in such a serious case
did not warrant interference in the opinion of the Special Judge (PMLA) and
therefore the Trial Court refused to discharge the appellant, thereby
rejecting his application under Section 227 of the CrPC.
9.
Aggrieved, the appellant approached the High Court seeking to quash and set
aside the above judgment of the Special Judge. The appellant contended before
the High Court that the allegations against him were baseless and did not
constitute an offence under the PMLA. He argued that the scheduled offences
alleged against him predated the introduction of money laundering provisions in
the PMLA, and therefore, the application of the PMLA sought in the present case
was retrospective and thus impermissible in law. There was no direct evidence
linking him to the generation, possession, concealment, or transfer of proceeds
of crime.
10.
It was further argued that the prosecution had failed to establish a prima
facie case against him, as the allegations were based purely on assumptions and
conjectures. The Special Judge erred in rejecting his discharge application
without properly considering the absence of cogent material against him. The
enforcement proceedings were initiated in a mala fide manner with the sole
intent of harassing him, despite the lack of substantive evidence.
11.
The State and the Enforcement Directorate vehemently opposed the petition and
argued that the appellant was a key player in the entire money laundering
scheme and had facilitated the layering and placement of funds through multiple
transactions to project them as untainted.
12.
It was also contended that the investigation had revealed substantial material
to suggest that the appellant had knowingly assisted in the money laundering
activities and had derived financial benefits from the proceeds of crime.
13.
It was further submitted that the appellant’s argument regarding the
retrospective application of the PMLA was misplaced since the offence of money
laundering is a continuing offence, and as long as the tainted money remains in
circulation, PMLA is applicable. The Special Court had examined the materials
on record and found sufficient grounds to proceed against the appellant,
thereby justifying the rejection of his discharge application. They
also argued that the High Court, in the exercise of its revisional
jurisdiction, ought not to interfere with well-reasoned orders passed by the
Trial Court unless there was a manifest error or miscarriage of justice, which
was not the case here.
14.
The High Court vide the impugned order dated 14.03.2024 dismissed the Criminal
Revision Application, thereby upholding the Special Judge’s order rejecting the
appellant’s discharge application. The High Court observed that the material
placed on record by the Enforcement Directorate indicated prima facie
involvement of the appellant in the alleged offence. The High Court held that,
in light of the charge sheet and the documents to be considered at the stage of
charge framing, without going into the evidence produced by the accused, the
order of the Trial Court does not suffer from any illegality, irregularity or
impropriety.
15.
The High Court found no procedural irregularity or legal infirmity in the
Special Judge’s order warranting interference under its revisional
jurisdiction. It also emphasized that economic offences of this
nature require a strict approach, and courts must be cautious while exercising
their discretionary powers to quash proceedings at an early stage. In light of
these findings, the High Court concluded that the rejection of the appellant’s
discharge application was justified and did not warrant interference. The
revision application was accordingly dismissed.
16.
The appellant, aggrieved by the High Court’s decision, has now approached this
Court in appeal, seeking to challenge the correctness of the judgment.
17.
We have heard Mr. Kapil Sibal, learned senior counsel for the appellant and Mr.
Tushar Mehta, learned Solicitor General appearing for the respondents at
length.
18.
Learned senior counsel for the appellant has made the following submissions:
18.1
The alleged predicate offences, which supposedly generated proceeds of crime,
took place before the PMLA came into force. Additionally, these offences
predate the PMLA (Amendment) Act, 2009. As a result, such actions could
not have generated proceeds of crime as defined in Section
2(1)(u) of the PMLA, which stipulates that a property can only be
categorized as proceeds of crime if it is derived from criminal activity
related to a scheduled offence. The substantiate this argument, the appellant
has submitted a detailed summary of the enforcement of the PMLA and the various
amendments. The PMLA came into effect on 1st July 2005, and various predicate
offences were incorporated into its schedule on different dates. Initially,
Section 420 of the Indian Penal Code (IPC) and the Prevention of Corruption
Act, 1988 were not included as scheduled offences under the PMLA. Section
467 IPC was originally part of the PMLA schedule (Part B), but only if the
total value involved in such offences was thirty lakh rupees or more. Later, Section
420 IPC was added to Part B of the PMLA schedule on 1st June 2009, with a
similar monetary threshold. Similarly, Section 13 of the Prevention
of Corruption Act was included in Part B of the PMLA schedule from 1st June 2009,
again applicable only when the offence involved more than thirty lakh rupees. Subsequently,
with the PMLA (Amendment) Act, 2012, effective from 4th January
2013, Sections 420 IPC, 467 IPC, and 13 of the Prevention
of Corruption Act were moved to Part A of the PMLA schedule, removing any
monetary threshold.
18.2
It has been further submitted that the Enforcement Directorate (ED) has relied
on the judgment in Vijay Madanlal Chaudhary and others v. Union of
India and others[(2023) 12 SCC 1],
to argue that the issue of PMLA’s retrospective application is settled.
However, it has been contended, the only paragraphs dealing with
retrospectivity in this judgment are Paragraphs 270 and 296, despite extensive
submissions made on this issue. The judgment merely holds that "in a given
fact situation," the offence of money laundering under Section
3 of the PMLA may be considered a continuing offence, irrespective of when
the scheduled offence was committed. The appellant argued that the conclusions
in Paragraph 467 of this judgment do not address the issue of
retrospectivity.
Currently,
a three-judge bench of this Court is deliberating on the retrospective
application of the PMLA and its amendments in ED v. M/s Obulapuram Mining
Company Pvt. Ltd. (Criminal Appeal No. 1269/2017) and related cases.
18.3
It is further the argument of the appellant that the allegations in the eight
predicate offence FIRs primarily concern actions allegedly taken by the accused
during his tenure as Collector at Bhuj and Rajkot. It is alleged that he
approved large-scale land allotments in 2004 and 2005 to private companies and
individuals, exceeding his authorized power, thereby committing offences
under Section 420 IPC. Further, it is claimed that he hastily
approved the conversion of land use from agricultural to industrial to unduly
benefit certain persons, thereby committing offences under Sections
420 and 467 IPC. Additionally, he allegedly facilitated land
allotments at below-market rates, causing notional losses to the government in 2004
and 2005, amounting to offences under Sections
420 and 467 IPC. Furthermore, between 2004 and 2009, certain
private companies allegedly paid his mobile phone bills totaling approximately ₹2.24 lakhs and ₹46,554/-, which has
been characterized as bribery under the Prevention of Corruption Act,
1988. It is submitted that these alleged actions all took place either before
the PMLA came into force or when the offences under Section
420 and 467, IPC were not predicate offences.
18.4
To underscore and highlight the non- application of the PMLA to these
allegations, a chronological analysis of the alleged acts and the application
of the PMLA at the relevant time was submitted by the appellant.
|
Period |
Allegations
in the predicate offence FIRs |
Applicable
Law |
|
Prior
to 01.07.2005 |
i.
That during his tenure as Collector at Bhuj which began from 02.05.2003,
while in discharge of his official duties, he was in charge of a land revenue
policy of 1997 [Circular dated 25.09.1997] that allowed
allotment of fallow lands to private persons. He allotted such lands
contrary to the policy and cheated the government, caused loss, committed
forgery by allowing false
documents to be used for these allotment requests and engaged in corruption. ii.
As per Gujarat Govt Order 03.02.2002 for allotment of land to those affected
by the earthquake at Bhuj, a certificate was required from the Collector to
verify that the victim was in fact impacted by the earthquake. The accused
provided a fake certificate to a trust to facilitate their fraudulent application
for compensatory land. iii.
As per Gujarat Govt's Revenue Dept Resolution No. Jaman/392003/454/A dated
06.06.2003, the Collector was authorized to allot land upto 2 hectares only
for industrial use. iv.
When the accused Pradip Sharma was Collector, Bhuj, he allowed allotment of
fallow land to M/s Saw Pipes Ltd. for setting up an industrial unit. These
applications were submitted on 23.01.2004 and sanctioned on 05.03.2004, after
which
accused Pradip issued an order
on 05.03.2004 for allotment above the cap of 2 hectares. v.
Accused Pradip received a mobile SIM card no. 9925133799 from Asim Niranjan
Chakravorty, Director of M/s Wellspun Company for which a bill of Rs. 2.24
lakhs were paid by the company for the period from
2004-2009 which was allegedly a bribe punishable under Section 7/11/13 of the
Prevention of Corruption Act, 1988, as this was in exchange for allotments of
land to M/s Wellspun in the year 2004 at an allegedly undervalued rate. vi.
These undervalued allotments to M/s Wellspun in 2004 at the rate of Rs. 15/-
and not Rs. 30/- per sq metre on 22.07.2004 caused a financial loss of Rs.
1,20,30,824/-to the government. An application dated 01.02.2005 was made by a
company M/s Value Packaging in which the wife of the accused Pradip is a
partner, for converting land from agricultural to non_agricultural use.
Accused Pradip allowed this within 40 days by passing an order on 10.03.2005 which
amounted to an offence punishable under Section 217/409/465/467/471/476 and
120-B IPC. vii.
Accused Pradip received mobile sim card no. 9824001729 from Ranjit Singh
Bhaktasingh Bhat, owner of M/s Ratan Enterprises Company and used it and the
bill of Rs. 46,554/- was paid by Mr. Bhat for the period from 2004-2009 which
was allegedly a bribe punishable under Section 7/11/13 of the Prevention of
Corruption Act, 1988. |
PMLA
not in force. |
|
Between 01.07.2005
and
01.06.2009 |
i.
That during his tenure as Collector at Bhuj between 02.05.2003 and 03.07.2006
and thereafter in Rajkot till 28.03.2008, while in discharge of his official
duties, he was in charge of a land revenue policy of 1997 [Circular dated
25.09.1997] that allowed allotment of fallow lands to private persons. He
allotted such lands contrary to the policy and cheated the government, caused
loss, committed forgery by allowing False documents to be used for these
allotment requests and engaged in corruption. ii.
While accused Pradip was Collector, Bhuj, he received an application dated
18.07.2005 from one Chandan Mandali requesting extension of a lease of land
from the government to him was initially rejected by the accused. Allotment of
30 units vide applications made in 2005 were awarded instead despite it
crossing the threshold of 2 hectares. iii.
While accused Pradip was Collector, Rajkot, he passed an order dated 23.05.2007
to reinstate allotment of agricultural land to applicants who were resident
abroad, despite their ineligibility. iv.
Accused Pradip received a mobile SIM card no. 9925133799 from Asim Niranjan
Chakravorty, Director of M/s Wellspun Company for which a bill of Rs. 2.24
lakhs was paid by the company for the period from 2004-2009 which was
allegedly a bribe punishable under Section 7/11/13 of the
Prevention of Corruption Act, 1988, as this was in exchange for allotments of
land to M/s Wellspun in the year 2004 at an allegedly undervalued rate. v.
Accused Pradip received mobile sim card no. 9824001729 from Ranjit Singh
Bhaktarsingh Bhat, owner of M/S Ratan Enterprises Company and used it and the
bill of Rs. 46,554/- was paid by Mr. Bhat for the period from 2004-2009 which
was allegedly a bribe punishable under Section 7/11/13 of the Prevention of
Corruption Act, 1988. vi.
On retirement from the partnership in April 2009, his wife received Rs 22
lakhs in her NRO Bank account maintained with Bank of India from M/s Value
Packaging. Subtracting her original investment of Rs. 1,50,000/-, this
amounted to profits of Rs. 20.5 lakhs which was allegedly a bribe punishable
under Section 7/11/13 of the Prevention of
Corruption Act,1988. vii.
Pradip Sharma's wife received Rs. 7.5 lakhs as goodwill payment from M/s
Value Packaging which was allegedly a bribe punishable under Section 7/11/13
of the Prevention of Corruption Act, 1988. |
PMLA
in force. S. 420 IPC and PC Act not scheduled offences. |
|
Between
01.06.2009 and
04.01.2013 |
i.
Accused Pradip received a mobile SIM
card no. 9925133799 from Asim Niranjan Chakravorty, Director of M/s Wellspun
Company for which a bill of Rs. 2.24 lakhs were paid by the
company for the period from 2004-2009. This was in exchange for allotments of
land to Wellspun in the year 2004 at an allegedly undervalued rate which was
allegedly a bribe punishable under Section 7/11/13 of the Prevention of
Corruption Act, 1988. ii.
Accused Pradip received mobile sim car no. 9824001729 from Ranjit Singh
Bhaktasingh Bhat, owner of M/s Ratan Enterprises Company and used it and the
bill of Rs. 46,554/- was paid by Mr. Bhat for the period from 2004-2009 which
was allegedly a bribe punishable under Section 7/11/13 of the Prevention of
Corruption Act, 1988. iii.
Accused Pradip got a SIM card while in custody at Palora Jail as an under trial
offence was made out only if the total value involved in such offences is
thirty lakh or more. |
PMLA
was amended by the PMLA (Amendment)
Act, 2009 which came into
force on 01.06.2009:
S. 420/467 IPC and S.
13 PC Act were in the PMLA Schedule
(Part B) Which stipulated that the offence was made out only if the total
value involved in such offences is R. 30 Lakhs or more. |
|
From
04.01.2013 |
No
allegations |
PMLA
in force.S.420/467 IPC and S.13 PC Act was in the PMLA schedule (Part A) with
no minimum monetary value specified. |
18.5
Thus, on the basis of the above allegations, the following submissions were
made with regards to the application of the PMLA:
A. Before 1st July 2005, the PMLA was not in
force. During his tenure as Collector at Bhuj, beginning on 2nd May 2003, the
accused was responsible for implementing a land revenue policy from 1997, which
permitted the allotment of fallow lands to private entities. It is alleged that
he misused this policy to approve land allotments contrary to regulations,
thereby committing offences of cheating, forgery, and corruption. Under a
Gujarat Government Order dated 3rd February 2002, land allotments to earthquake
victims required a certificate from the Collector verifying their eligibility.
The accused allegedly issued a fraudulent certificate to a trust, facilitating
a wrongful land allotment. Further, the Gujarat Government’s Revenue Department
Resolution dated 6th June 2003 authorized the Collector to allot up to two
hectares of land for industrial purposes. However, it is alleged that in 2004, he
exceeded this limit by allotting large tracts of land to M/s Saw Pipes Ltd. and
M/s Wellspun Company at significantly undervalued rates, causing a
financial loss of ₹1,20,30,824/- to the
government. Additionally, his wife was a partner in M/s Value Packaging, which
applied for land-use conversion in 2005, and he allegedly facilitated the
approval within 40 days, constituting offences under
multiple IPC sections, including 217, 409, 465, 467, 471, 476, and
120-B.
B. Between 1st July
2005 and 1st June 2009, while the PMLA was in force, Sections 420 IPC and the
Prevention of Corruption Act were not scheduled offences, though Section
467 IPC was included in Part B of the schedule, applicable only if the
offence involved a value exceeding thirty lakh rupees. During this period,
similar allegations continued against the accused, including improper land
allotments in Bhuj and Rajkot, approval of ineligible applications for
agricultural land, and further instances of alleged bribery. Notably, during
this period, his wife received ₹22
lakhs in her NRO bank account from M/s Value Packaging upon her retirement from
the partnership in April 2009. After deducting her original investment of ₹1.5 lakhs, the
remaining ₹20.5 lakhs was
allegedly an illicit benefit under the Prevention of Corruption Act.
Additionally, she received ₹7.5 lakhs as a
goodwill payment, which was also considered a bribe under the Act.
C. From 1st June 2009
to 4th January 2013, the PMLA (Amendment) Act, 2009 was in effect,
which added Sections 420 and 467 IPC and Section
13 of the Prevention of Corruption Act to the PMLA schedule (Part B),
again with a monetary threshold of thirty lakh rupees. During this time, the
accused allegedly continued to benefit from mobile phone bills paid by
companies in return for past land allotments. Moreover, it is alleged that
while in custody at Palora Jail as an undertrial, he obtained a SIM card,
though it is unclear whether this constitutes an offence under the PMLA.
D. Finally, from 4th
January 2013 onward, the PMLA was amended to include Sections
420 and 467 IPC and Section 13 of the Prevention of
Corruption Act in Part A of its schedule, thereby removing any minimum monetary
threshold. However, there are no allegations against the accused for actions
taken during this period.
18.6
The primary submission made in light of the above timeline is that the
allegations primarily pertain to acts committed before the PMLA was in force or
during periods when the relevant offences were not scheduled under the Act. It
is further the argument that given the legal framework and the pending
deliberations before this Court regarding the retrospective application of the
PMLA, it is evident that the accused cannot be prosecuted under the PMLA for
alleged predicate offences that occurred prior to its enactment or prior
to the inclusion of those offences in the PMLA schedule
19.
The learned Solicitor General has made the following submission on behalf of
the respondent authorities and the State:
19.1
The respondent argues that the appellant's arguments regarding the
retrospective application of PMLA are legally untenable, as the offence of
money laundering is a continuing offence as has been held by this Court and has
been correctly applied based on the facts of the case.
19.2
The respondent emphasizes that at the stage of framing of charges, the court
only needs to determine whether there is sufficient material to raise a
"grave suspicion" of the commission of an offence. The probative
value of evidence is not assessed at this stage, and the case must proceed to
trial if a prima facie offence is made out.
19.3
The respondent submits that the predicate offences forming the basis of the
money laundering case were scheduled offences under the PMLA at the relevant
time. Specifically, the predicate offences under the IPC and the
Prevention of Corruption Act, 1988 (PC Act), were already included in the
Schedule to PMLA when they were committed. Section 7 of the Prevention
of Corruption Act, 1988, was part of Part B, Para 5 of the PMLA Schedule as
originally enacted in 2005. Section 467 of the IPC was part of Part
B, Para 1 of the PMLA Schedule as enacted in 2005. The total value of the
alleged offence exceeded Rs. 30 lakhs, satisfying the monetary threshold
under Section 2(1)(y) of PMLA for a Part B offence. The amendments to
PMLA in 2009 and 2013 only expanded the scope of money laundering offences but
did not introduce retrospective liability in this case.
19.4
The respondent provided a detailed factual timeline to establish that the
offence was committed after PMLA came into force. FIR No. 3/2010 was
registered on 31.03.2010 under Section 7 of the PC Act, a scheduled
offence under PMLA since 01.07.2005. Similarly, FIR No. 9/2010 was registered
on 25.09.2010 under Section 467 IPC, a scheduled offence under PMLA
since 01.07.2005. Additionally, the sanction order for the illegal land
allotment was issued by the appellant on 09.06.2006, establishing the
continuation of criminal conduct after PMLA came into force. The charge sheet
under the Prevention of Corruption Act and IPC, filed in 2011,
confirmed that the total proceeds of crime exceeded Rs. 1.32 crores, justifying
the invocation of PMLA.
19.5
The respondent asserted that the amount allegedly laundered by the appellant is
far in excess of the Rs. 30 lakhs threshold required for a Part B scheduled
offence before the 2013 amendment. The charge sheet records that the total loss
to the government was Rs. 1.20 crores, which by itself exceeds the threshold
limit.
Furthermore,
the total proceeds of crime laundered amount to Rs. 1.32 crores,
as identified through investigation and attachment proceedings
under Section 5 of PMLA. The accused allegedly projected Rs. 22 lakhs
received by his wife as profits from a business entity, which was in reality an
attempt to disguise illegal gratification. Several hawala transactions linked
to the accused involved amounts exceeding Rs. 1 crore, reinforcing the
magnitude of the financial crime. These figures demonstrate that the case is
well within the purview of PMLA, even under the pre- amendment legal framework.
19.6
The respondent strongly contended that the offence of money laundering is
independent and continuing and is not confined to the date when the predicate
offence was committed. The ED relies on this Court’s judgment in Vijay
Madanlal Choudhary (supra), which held that the offence of money
laundering extends beyond the mere commission of the scheduled offence. Any
process or activity connected with the proceeds of crime, including possession,
use, concealment, or projection as untainted property, continues to
attract liability under PMLA. The relevant date for determining the offence of
money laundering is when the accused engages in activities connected to the
proceeds of crime, not the date of the scheduled offence. The amendment
to Section 3 of PMLA in 2019 was merely clarificatory and did not
introduce new liabilities.
19.7
The respondent refuted the appellant’s claim that PMLA has been applied retrospectively
in this case. It submits that the appellant continued to enjoy and utilize the
proceeds of crime well after 2005, making the offence of money laundering
applicable under PMLA. The sanction orders for land allotments were passed in
2006, after PMLA came into force, and were based on forged documents,
constituting an independent offence. The reverse burden of proof
under Section 24 of PMLA places the onus on the appellant to prove
that the attached properties were not proceeds of crime, which he has failed to
do.
19.8
The respondent submitted that the Special Court and High Court correctly
applied the law in framing charges against the appellant. The scheduled
offences were part of the PMLA Schedule at the time they were committed, and
the offence of money laundering continued well beyond the enactment of PMLA.
Additionally, the total amount involved far exceeds the Rs. 30 lakhs threshold
required under Part B of the Schedule before its amendment. Therefore, the
appellant’s argument regarding retrospective application is misconceived and
without merit.
20.
Having considered the rival submissions, the material on record, and the
statutory framework under the PMLA, this Court finds no merit in the appeal.
21.
A significant ground raised by the appellant pertains to the nature of the
alleged offence under the PMLA. The appellant has contended that the alleged
acts do not constitute an offence under the PMLA as the same was not in force
during the relevant period, or the predicate offences as alleged were not
included in the schedule to the PMLA at the relevant time and, therefore,
cannot be subject to proceedings under the PMLA. It has also been argued that
these instances do not constitute continuing offences. This contention,
however, is untenable. It is well established that offences under the PMLA are
of a continuing nature, and the act of money laundering does not conclude with
a single instance but extends so long as the proceeds of crime are concealed, used,
or projected as untainted property. The legislative intent behind the PMLA is
to combat the menace of money laundering, which by its very nature involves
transactions spanning over time.
22.
The concept of a continuing offence under PMLA has been well-settled by
judicial precedents. An offence is deemed continuing when the illicit act or
its consequences persist over time, thereby extending the liability of the
offender. Section 3 of the PMLA defines the offence of money
laundering to include direct or indirect attempts to indulge in, knowingly
assist, or knowingly be a party to, or actually be involved in any process or
activity connected with the proceeds of crime. Such involvement, if
prolonged, constitutes a continuing offence.
23.
Even though the issue of retrospective application of the PMLA is pending
adjudication before this Court, the reliance by the respondent on the
observation of this Court in Vijay Madanlal Chaudhary (Supra) cannot
be said to be misplaced. This Court, in its judgment in this case made the
following observations regarding the offence of money laundering and its nature
as a continuing offence:
“134. From the bare
language of Section 3 of the 2002 Act, it is amply clear that the
offence of money laundering is an independent offence regarding the process or
activity connected with the proceeds of crime which had been derived or
obtained as a result of criminal activity relating to or in relation to a
scheduled offence. The process or activity can be in any form — be it one of concealment,
possession, acquisition, use of proceeds of crime as much as projecting it as
untainted property or claiming it to be so. Thus, involvement in any one of
such process or activity connected with the proceeds of crime would constitute
offence of money laundering. This offence otherwise has nothing to do with
the criminal activity relating to a scheduled offence — except the
proceeds of crime derived or obtained as a result of that crime.
135. Needless to
mention that such process or activity can be indulged in only after the
property is derived or obtained as a result of criminal activity (a scheduled
offence). It would be an offence of money laundering to indulge in or to assist
or being party to the process or activity connected with the proceeds of crime;
and such process or activity in a given fact situation may be a continuing
offence, irrespective of the date and time of commission of the scheduled
offence. In other words, the criminal activity may have been committed before
the same had been notified as scheduled offence for the purpose of the 2002
Act, but if a person has indulged in or continues to indulge directly or
indirectly in dealing with proceeds of crime, derived or obtained from such
criminal activity even after it has been notified as scheduled offence, may be
liable to be prosecuted for offence of money laundering under the 2002 Act —
for continuing to possess or conceal the proceeds of crime (fully or in part)
or retaining possession thereof or uses it in trenches until fully exhausted.
The offence of money laundering is not dependent on or linked to the date
on which the scheduled offence, or if we may say so, the predicate offence has
been committed. The relevant date is the date on which the person indulges in
the process or activity connected with such proceeds of crime. These
ingredients are intrinsic in the original provision (Section 3, as amended
until 2013 and were in force till 31-7-2019);and the same has been merely
explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019.
Thus understood, inclusion of clause (ii) in the Explanation inserted in 2019
is of no consequence as it does not alter or enlarge the scope of Section
3 at all.” [Emphasis supplied]
24.
In the present case, the material on record establishes that the misuse of
power and position by the appellant, coupled with the alleged utilization and
concealment of proceeds of crime, has had an enduring impact. The act of
laundering money is not a one-time occurrence but rather a process that continues
so long as the benefits derived from criminal activity remain in circulation
within the financial system or are being actively utilized by the accused. The
respondent has submitted that fresh instances of the utilization of the
proceeds of crime have surfaced even in recent times, thereby extending the
offence into the present and negating the appellant’s contention that the act
was confined to a particular point in the past.
25.
The law recognizes that money laundering is not a static event but an ongoing
activity, as long as illicit gains are possessed, projected as legitimate, or
reintroduced into the economy. Thus, the argument that the offence is not
continuing does not hold good in law or on facts, and therefore, the judgment
of the High Court cannot be set aside on this ground. Even if examined in the
context of the present case, the appellant's contention does not hold water.
The material on record indicates the continued and repeated misuse of power and
position by the appellant, resulting in the generation and utilization of
proceeds of crime over an extended period. The respondent has successfully
demonstrated prima facie that the appellant remained involved in financial
transactions linked to proceeds of crime beyond the initial point of
commission. The utilization of such proceeds, the alleged layering
and integration, and the efforts to project such funds as untainted all
constitute elements of a continuing offence under the PMLA. Thus, the
proceedings initiated against the appellant are well within the legal framework
and cannot be assailed on this ground.
26.
Another ground urged by the appellant is that the amount involved does not meet
the statutory threshold for initiating proceedings under the PMLA as it stood
prior to the amendment. The appellant has relied upon the monetary threshold of
Rs. 30 lakhs to argue that at the relevant time, the offence did not attract
the provisions of the PMLA. This argument is equally devoid of merit.
27.
The respondent has placed substantial material on record to demonstrate that
the quantum of proceeds of crime significantly exceeds the statutory threshold.
The financial trail indicates that the aggregated value of assets derived from
the alleged criminal activity is well beyond the prescribed limit. It is
settled law that the determination of the threshold value must be based on the
entirety of the transaction and not an isolated instance or a narrow
interpretation of specific amounts at any given time.
28.
The respondent has categorically established that the amount in question far
exceeds the threshold of Rs. 30 lakhs, even under the unamended provisions of
the PMLA. The allegations against the appellant involve alleged land allotment
transactions facilitated through forgery, cheating, and fraud, resulting in an
alleged loss of over Rs. 1 crore to the government, along with hawala
transactions of crores of rupees, and illegal gratification through his wife of
around Rs. 22 Lakhs. The financial transactions in the alleged acts, as
evidenced from the record, reveal a considerably higher amount of proceeds of
crime, rendering the appellant's reliance on the threshold limit baseless.
29.
Furthermore, it is settled law that the determination of the amount involved in
a money laundering offence is not to be viewed in isolation but in the context
of the overall financial trail and associated transactions. The totality of the
evidence must be assessed, which is a matter of trial; but even on a
prima facie assessment, it is clear that the
proceeds of crime in the present case are significantly higher than the
statutory threshold. The appellant has failed to substantiate his claim with
any material that contradicts the respondent’s submissions in this regard.
Therefore, this ground also does not aid the appellant in any manner.
30.
The PMLA was enacted with the primary objective of preventing money laundering
and confiscating the proceeds of crime, thereby ensuring that such illicit
funds do not undermine the financial system. Money laundering has far-reaching
consequences, not only in terms of individual acts of corruption but also in
causing significant loss to the public exchequer. The laundering of proceeds of
crime results in a significant loss to the economy, disrupts lawful financial
transactions, and erodes public trust in the system. The alleged offences in
the present case have a direct bearing on the economy, as illicit financial
transactions deprive the state of legitimate revenue, distort market integrity,
and contribute to economic instability. Such acts, when committed by persons in
positions of power, erode public confidence in governance and lead to
systemic vulnerabilities within financial institutions.
31.
The illegal diversion and layering of funds have a cascading effect, leading to
revenue losses for the state and depriving legitimate sectors of investment and
financial resources. It is settled law that in cases involving serious economic
offences, judicial intervention at a preliminary stage must be exercised with
caution, and proceedings should not be quashed in the absence of compelling
legal grounds. The respondent has rightly argued that in cases involving
allegations of such magnitude, a trial is imperative to establish the full
extent of wrongdoing and to ensure accountability.
32.
The PMLA was enacted to combat the menace of money laundering and to curb the
use of proceeds of crime in the formal economy. Given the evolving complexity
of financial crimes, courts must adopt a strict approach in matters concerning
economic offences to ensure that perpetrators do not exploit procedural loopholes
to evade justice.
33.
The present case involves grave and serious allegations of financial
misconduct, misuse of position, and involvement in transactions constituting
money laundering. The appellant seeks an end to the proceedings at a
preliminary stage, effectively preventing the full adjudication of facts and
evidence before the competent forum. However, as established in multiple
judicial pronouncements, cases involving economic offences necessitate a
thorough trial to unearth the complete chain of events, financial transactions,
and culpability of the accused.
34.
The material submitted by the respondent, coupled with the broad legislative
framework of the PMLA, indicates the necessity of allowing the trial to proceed
and not discharging the appellant at the nascent stage of charge framing. The
argument that the proceedings are unwarranted is devoid of substance in light
of the statutory objectives, the continuing nature of the offence, and the
significant financial implications arising from the alleged acts. Discharging
the appellant at this stage would be
premature and contrary to the principles
governing the prosecution in money laundering cases.
35.
Given the severe and grave nature of the allegations against the appellant, it
is imperative that he must undergo thorough judicial scrutiny during trial. A
proper trial is necessary to unearth the full extent of the offence, to
evaluate the evidence produced by the appellant, to analyze the complete chain
of final transactions, and find out the veracity of the severe allegations and
the amount of proceeds of crime. The legal framework under the PMLA serves as a
crucial mechanism to ensure that individuals involved in laundering proceeds of
crime are brought to justice and that economic offences do not go unpunished.
36.
In light of the above discussion, it is evident that the appellant has failed
to establish any legally sustainable ground warranting interference by this
Court at a pre-trial stage. The submissions made in support of the appeal are neither
legally untenable nor in the best interest of justice. The offence alleged
against the appellant is clearly a continuing offence under the PMLA, and the
quantum of proceeds of crime involved far exceeds the statutory threshold
and requires proper investigation and judicial scrutiny. The findings of the
Courts below are well- reasoned and do not call for interference.
37.
Consequently, the appeal is dismissed.
38.
Pending applications, if any, also stand disposed of.
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