..........
31. It is in the above context that the grounds taken by the
Petitioner will be dealt with. As stated above, one of the
contentions of the Petitioner was that he was not named as an
accused in the predicate offence, therefore, the offence of money
laundering qua him is not maintainable. According to this Court,
the said contention cannot be accepted. The offence of money
laundering deals with the money/property derived after the
commission of the scheduled offence. A person may not be
involved in the commission of the scheduled offence, but he/she
may be involved in the offence of money laundering by
aiding/assisting the accused in the scheduled offence. In Pavana
Dibbur (supra), the Supreme Court explained that an accused in
the PMLA proceedings need not be an accused in the scheduled
offence.
32. The relevant paragraphs are extracted below:
17. Coming back to Section 3 of the PMLA,
on its plain reading, an offence under
Section 3 can be committed after a
scheduled offence is committed. For
example, let us take the case of a person who
is unconnected with the scheduled offence,
knowingly assists the concealment of the
proceeds of crime or knowingly assists the
use of proceeds of crime. In that case, he can
be held guilty of committing an offence
under Section 3 of the PMLA. To give a
concrete example, the offences under
Sections 384 to 389 of the IPC relating to
"extortion" are scheduled offences included
in Paragraph 1 of the Schedule to the
PMLA. An accused may commit a crime of
extortion covered by
Sections 384 to 389 of IPC and extort
money. Subsequently, a person unconnected
with the offence of extortion may assist the
said accused in the concealment of the
proceeds of extortion. In such a case, the
person who assists the accused in the
scheduled offence for concealing the
proceeds of the crime of extortion can be
guilty of the offence of money laundering.
Therefore, it is not necessary that a person
against whom the offence under Section 3 of
the PMLA is alleged must have been shown
as the accused in the scheduled offence.
What is held in paragraph 270 of the decision
of this Court in the case of Vijay Madanlal
Choudhary1 supports the above conclusion.
The conditions precedent for attracting the
offence under Section 3 of the PMLA are that
there must be a scheduled offence and that
there must be proceeds of crime in relation to
the scheduled offence as defined in clause (u)
of sub-section (1) of Section 3 of the PMLA.
18. In a given case, if the prosecution for the
scheduled offence ends in the acquittal of all
the accused or discharge of all the accused or
the proceedings of the scheduled offence are
quashed in its entirety, the scheduled offence
will not exist, and therefore, no one can be
prosecuted for the offence punishable under
Section 3 of the PMLA as there will not be any
proceeds of crime. Thus, in such a case, the
accused against whom the complaint under
Section 3 of the PMLA is filed will benefit
from the scheduled offence ending by acquittal
or discharge of all the accused. Similarly, he
will get the benefit of quashing the proceedings
of the scheduled offence. However, an
accused in the PMLA case who comes into
the picture after the scheduled offence is
committed by assisting in the concealment
or use of proceeds of crime need not be an
accused in the scheduled offence. Such an
accused can still be prosecuted under PMLA
so long as the scheduled offence exists. Thus,
the second contention raised by the learned
senior counsel appearing for the appellant
on the ground that the appellant was not
shown as an accused in the chargesheets
filed in the scheduled offences deserves to be
rejected.
(emphasis original)
22. Therefore, the offence of money laundering is an
independent offence which prosecutes a person who has dealt with or
continues to deal with proceeds of crime.
23. Unless the predicate offence / scheduled offence is quashed
in its entirety qua all the accused, the PMLA proceedings will not
terminate. In other words, as long as there is a predicate offence /
scheduled offence in which the issue of generation of proceeds of
crime is pending adjudication, the proceedings under the PMLA shall
continue qua all the accused.
24. In the present case, merely because the predicate offence /
scheduled offence was quashed qua Petitioner No. 1, the same will not
result in automatic termination of PMLA proceedings against both
Petitioner No. 1 and Petitioner No. 2. The Petitioners cannot rely on
the judgment dated 03.10.2024 passed by the Supreme Court to
contend that they were fully absolved of any wrong doing. It was
based on the chargesheet in the predicate offence that the Supreme
Court held that there was lack of requisite material against Petitioner
No. 1. Likewise, the Court noted that none of the companies which
were allegedly involved in transferring the bribe were arraigned as
accused. However, in the present case, a perusal of the prosecution
complaint in S.C. No. 3/2021 clearly indicates the role played by the
Petitioners. Likewise, all the companies which were allegedly
involved in the alleged transfer of bribes are also named as accused.
Further, the Supreme Court noted that the pending proceedings shall
continue. Therefore, the quash of predicate offence / scheduled
offence against Petitioner No. 1 will not automatically terminate the
proceedings against the Petitioners herein.
25. There may be various factors at play which may influence
the outcome in the scheduled offence. For instance, there may be
defective investigation in the scheduled offence or procedural
irregularities and based on such defective investigation and procedural
irregularities, the proceedings may result in a quash. In such cases, the
Court will have to see whether such quash was on merits indicating
that no proceeds of crime were generated or could have been
generated. If the answer is yes, then the proceedings under the PMLA
cannot continue. However, for such an inquiry to be conducted, the
scheduled offence has to be in existence.
26. To clarify, if the predicate offence involves only one
accused and the proceedings against that accused in the predicate
offence are quashed, then the PMLA proceedings automatically
terminate as there is no scheduled offence in existence. On the other
hand, if there are multiple accused and the proceedings under the
scheduled offence are quashed qua any one of the accused and the
proceedings against the other accused are still pending, the PMLA
proceedings do not automatically terminate as the scheduled offence
still exists. In such cases, if the accused against whom the scheduled
offence is quashed relying on such quashment files another quash
petition against the continuation of the PMLA proceedings, the Court
can refuse to entertain such a petition taking note of the fact that the
issue of generation of proceeds of crime is still pending adjudication
and if it finds that the accused was prima facie involved in dealing
with proceeds of crime.
27. As can be seen from the allegations against the Petitioners
as extracted above, the Petitioner No. 1 used Petitioner No. 2 as a
conduit to pay the bribe amount. Even a person assisting a person in
dealing with proceeds of crime is enough to attract Section 3 of the
PMLA. It is also pertinent to note that the Petitioners have not
provided any explanation concerning the transfer of the alleged bribes
through them. In this regard, it is apposite to refer to the Supreme
Court's decision in Pradeep Nirankarnath Sharma (supra), wherein
this Court held that the economic offences like PMLA cannot be
nipped in the bud. The accused, in such cases, shall face trial.
28. The relevant paragraphs are extracted below:
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.
29. Therefore, this Court holds that the Petitioners have failed
to make out a case to quash the proceedings in S.C. No. 3/2021 and
they shall face the trial.
30. In light of the aforesaid discussion, the present criminal
petition is dismissed. Interim orders, if any, stand vacated.
Consequently, miscellaneous Petitions, if any, pending, shall also
stand closed.
_________________________
JUSTICE K. LAKSHMAN
Date:21.04.2025
Vvr
