Summary
A retired IAS officer prosecuted under the Prevention of Money Laundering Act, 2002 for laundering proceeds of alleged land-allotment frauds and bribes committed while he was Collector sought discharge under Section 227 CrPC, contending that the predicate offences predated the PMLA or their inclusion in its Schedule and that the amounts fell below the Rs.30 lakh threshold for Part B offences. The Supreme Court dismissed the appeal: money laundering under Section 3 PMLA is a continuing offence subsisting as long as proceeds of crime are possessed, used, concealed or projected as untainted (Vijay Madanlal Choudhary), the material prima facie showed dealings in proceeds of crime well after the Act came into force, the threshold is judged on the entire financial trail and was far exceeded, and such economic offences call for a trial rather than discharge.
Issues
- Whether an accused can be prosecuted under the PMLA where the scheduled (predicate) offences were allegedly committed before the Act came into force on 01.07.2005, or before those offences were added to the Schedule by the 2009 and 2013 amendments.
- Whether the offence of money laundering under Section 3 of the PMLA is a continuing offence, so that dealing with proceeds of crime after the Act and the Schedule came to cover them attracts liability.
- Whether the Rs.30 lakh monetary threshold for Part B scheduled offences under the unamended PMLA was satisfied, and how the threshold value is to be determined.
- Whether the Special Judge and the High Court erred in refusing discharge under Section 227 CrPC at the stage of framing charge in a money laundering case.
Provisions considered
- Section 3, Prevention of Money Laundering Act, 2002The offence of money laundering covers any process or activity connected with proceeds of crime, including concealment, possession, acquisition, use or projection as untainted property, and is independent of the scheduled offence; where such involvement is prolonged it is a continuing offence, and the relevant date is the date on which the person deals with the proceeds, not the date of the predicate offence. The Court applied paragraphs 134-135 of Vijay Madanlal Choudhary, noting that the 2019 Explanation merely clarified ingredients already in the section, and held that the appellant's alleged continued use, layering and projection of proceeds after 2005 brought the case within Section 3. (¶¶ 21, 22, 23, 24, 25, 36)
- Section 2(1)(y) read with Part B of the Schedule (pre-2013 threshold of Rs.30 lakh), Prevention of Money Laundering Act, 2002The appellant argued that the predicate offences, as scheduled before the 2013 amendment, attracted the PMLA only if the value involved was Rs.30 lakh or more. The Court held that the threshold is to be assessed on the entirety of the transaction and the overall financial trail, not on isolated amounts, and that the alleged loss of over Rs.1 crore to the government, hawala transactions of crores and illegal gratification of about Rs.22 lakh through the appellant's wife far exceeded the threshold even under the unamended Act. (¶¶ 18.1, 19.3, 19.5, 26, 27, 28, 29)
- Section 24, Prevention of Money Laundering Act, 2002The Special Judge had held that the burden under Section 24 to show that the proceeds of crime were untainted property had shifted to the appellant and had not been discharged; the Enforcement Directorate relied on this reverse burden, and the Court found the courts below well-reasoned in refusing discharge. (¶¶ 8, 19.7, 36)
- Section 227, Code of Criminal Procedure, 1973At the stage of considering discharge the court examines only whether the material raises grave suspicion of the offence, without assessing its probative value; in cases of serious economic offences judicial intervention at this preliminary stage must be exercised with caution, and the prima facie material of the appellant's involvement in dealings with proceeds of crime justified refusal of discharge. (¶¶ 3, 7, 8, 19.2, 31, 33, 34, 35)
Held
- Offences under the PMLA are of a continuing nature: 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, since the Act is aimed at transactions spanning over time. Prolonged involvement in any process or activity connected with proceeds of crime within Section 3 constitutes a continuing offence. (¶¶ 21, 22, 25)
- Although the question of retrospective application of the PMLA is pending before a larger Bench, reliance on Vijay Madanlal Choudhary is not misplaced: money laundering is an independent offence not dependent on the date of the scheduled offence, and a person who continues to possess, conceal or use proceeds derived from criminal activity after it was notified as a scheduled offence may be prosecuted; the 2019 Explanation to Section 3 did not enlarge the section. (¶ 23)
- On the material on record the appellant's alleged misuse of position and continued utilisation and concealment of proceeds of crime, including fresh instances surfacing in recent times, prima facie extended the offence beyond the initial point of commission; the contention that the acts were confined to a point in the past before the PMLA applied was rejected on law and on facts. (¶¶ 24, 25)
- The monetary threshold for a Part B scheduled offence under the unamended PMLA is determined on the entirety of the transaction and the overall financial trail rather than isolated amounts; the totality of evidence is a matter for trial, but even prima facie the proceeds of crime here far exceeded Rs.30 lakh. (¶¶ 26, 27, 28, 29)
- In serious economic offences, which cause loss to the exchequer and erode public trust, courts must adopt a strict approach and should not quash proceedings or discharge the accused at a preliminary stage absent compelling legal grounds; a full trial is necessary to unearth the chain of transactions and the quantum of proceeds of crime, and discharging the appellant at the stage of framing charge would be premature. (¶¶ 30, 31, 32, 33, 34, 35)
Result
Appeal dismissed; orders of the Special Judge (PMLA) refusing discharge under Section 227 CrPC and of the High Court dismissing the criminal revision upheld; pending applications disposed of.