Continuing Nature of Money Laundering Upheld; Trial Ordered to Proceed

A bench of Justices Vikram Nath and Prasanna B. Varale heard the criminal appeal filed by the appellant against the Gujarat High Court’s order dated 14.03.2023 which had dismissed his criminal revision and declined to quash the Special Judge (PMLA), Ahmedabad’s order of 08.01.2018 rejecting his discharge application under Section 227 CrPC in a case registered under the Prevention of Money Laundering Act, 2002 (PMLA). The appeal arose from Enforcement Directorate proceedings that alleged large-scale money laundering arising out of two scheduled predicate FIRs.

The Court dismissed the appeal and upheld the concurrent findings of the Special Judge and the High Court that there was prima facie material to proceed against the appellant. The judges held that money laundering under Section 3 PMLA was a continuing and independent offence and that the trial court had rightly refused discharge on the material placed on record. The Court endorsed the view that at the charge-framing stage the court need only be satisfied that a “grave suspicion” or prima facie case existed and that assessment of probative value belonged to trial. The Court, in its reasoning, observed: "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. ... 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. ... The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. ... 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."

Background

The appellant was arrested on 31.07.2016 following an ECIR dated 12.03.2012 and complaints filed by the Enforcement Directorate under Sections 3 and 4 of PMLA. Two scheduled predicate offences were identified: FIR No. 03/2010 (Rajkot Zone, CID Crime) alleging corruption offences under the Prevention of Corruption Act, and FIR No. 09/2010 alleging offences under various IPC provisions including Section 467. The Special Judge found prima facie material that the appellant was involved in hawala transfers, possession and concealment of proceeds of crime, and that he had failed to discharge the reverse burden under Section 24 PMLA to show that attached properties were not proceeds of crime.

The appellant contended before the Trial Court, High Court and this Court that the alleged predicate acts predated the PMLA or the inclusion of those offences in its Schedule, and that retrospective application was impermissible. He also argued that certain transactions related to a company in which his wife was a partner and that the bank accounts abroad predated the alleged offences. The Enforcement Directorate and State maintained that the offences were continuing in nature, that the total proceeds exceeded statutory thresholds (including loss exceeding Rs. 1 crore and proceeds of crime circa Rs. 1.32 crores), and that the act of laundering continued after PMLA came into force. The ED relied upon this Court’s decision in Vijay Madanlal Chaudhary to support the continuing-offence doctrine. The High Court found no illegality in the Trial Court’s refusal to discharge and dismissed the revision. This Court, after hearing senior counsel for both sides, found no merit in the appellant’s challenge and held that the material supported continuation of proceedings; the appeal was therefore dismissed and pending applications were disposed of. No interim relief was granted.

Case No.: SLP(Crl.) No. 6185 of 2023 (Criminal Appeal No. ___ of 2025) Case Title: Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr. Appearances: For the Petitioner(s): Mr. Kapil Sibal, Senior Counsel For the Respondent(s): Mr. Tushar Mehta, Solicitor General of India