PMLA - High Court - Case Laws

❯

❯❯

0 / 200

Expand Note

Add to Folder

No Folders have been created

Are you sure you want to delete "My most important" ?

NOTE:

Open Link

Case Laws

All › PMLA › PMLA - HC

Showing Results for :

Reset Filters

Results Found:

Page of 89

Press 'Enter' after typing page number.

181 to 200 of 1773 Results

Show AI Text Quick Glance by AI Headnote

2025 (12) TMI 1897 - KERALA HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) Whether writ jurisdiction should be exercised against attachment-confirmation orders under the Prevention of Money Laundering Act, 2002 despite the statutory appellate remedies, where the appellants had initiated an appellate challenge; (ii) Whether legitimately acquired or pre-offence property may be provisionally attached as property equivalent in value to untraceable proceeds of crime under the Prevention of Money Laundering Act, 2002.

Issue (i): Whether writ jurisdiction should be exercised against attachment-confirmation orders under the Prevention of Money Laundering Act, 2002 despite the statutory appellate remedies, where the appellants had initiated an appellate challenge.

Analysis: Sections 26 and 42 provide a tiered appellate mechanism against orders of the Adjudicating Authority, followed by a further appeal to the High Court. The rule requiring exhaustion of an efficacious statutory remedy ordinarily governs the exercise of jurisdiction under Article 226, except in compelling exceptional circumstances. The appellants had filed appeals before the Appellate Tribunal and remitted the prescribed fee; no material disclosed either the defect in those appeals or any impediment to curing it. The statutory remedy was therefore neither shown to be illusory nor inadequate.

Conclusion: Writ intervention was unwarranted, and the appellants must pursue the statutory appellate remedy. The issue is decided against the appellants.

Issue (ii): Whether legitimately acquired or pre-offence property may be provisionally attached as property equivalent in value to untraceable proceeds of crime under the Prevention of Money Laundering Act, 2002.

Analysis: The definitions of proceeds of crime, property and value, read with the attachment power, encompass not only property directly or indirectly derived from criminal activity but also its value. The statutory scheme permits attachment of other property of near or equivalent value where tainted property is untraceable, unreachable or insufficient to account for the pecuniary advantage from the scheduled offence; this power is not confined to cases where tainted property is located outside India. Such attachment requires a tentative and periodically reviewable assessment of the wrongful gain, must remain proportionate to that value, and eventual confiscation must be confined to illicit gains. The competent authority had made the requisite tentative valuation.

Conclusion: Property acquired through legitimate means, including property acquired before the alleged offence, may be attached as equivalent-value property where the statutory requirements are met. The issue is decided against the appellants.

Final Conclusion: The statutory appellate process remains the appropriate forum for scrutiny of the attachment, and equivalent-value attachment is permissible within the assessed value of the proceeds of crime.

Ratio Decidendi: The definition of proceeds of crime under the Prevention of Money Laundering Act, 2002 includes the value of tainted property and permits proportionate attachment of other equivalent-value property when the tainted property cannot be effectively reached.

Equivalent-value attachment under PMLA can reach legitimate pre-offence property, while statutory appeals ordinarily preclude writ intervention.
Under the Prevention of Money Laundering Act, statutory appeals against attachment-confirmation orders must ordinarily be pursued before invoking writ jurisdiction, unless compelling exceptional circumstances establish that the remedy is ineffective or inadequate. The statutory definition of proceeds of crime includes the value of tainted property, permitting proportionate attachment of other property of near or equivalent value when tainted assets are untraceable, unreachable or insufficient. Legitimately acquired and pre-offence property may therefore be attached as equivalent-value property, subject to tentative valuation, periodic review, proportionality, and ultimate confiscation limited to illicit gains.

Alternative statutory remedy under the PMLA - Attachment of property equivalent in value to proceeds of crime Maintainability of a writ challenge to confirmation of provisional attachment under the PMLA despite the statutory appellate remedy - HELD THAT: - The PMLA provides an efficacious tiered appellate mechanism against an order of the Adjudicating Authority, followed by a further appeal to the High Court. Extraordinary writ jurisdiction cannot ordinarily be invoked to bypass that mechanism absent exceptional circumstances showing that the statutory remedy is inadequate. The appellants had in fact elected to file appeals before the Appellate Tribunal and, having failed to disclose the defect noted or the impediment to its cure, could not contend that the remedy was illusory. [Paras 13, 15] The challenge was not entertainable in writ jurisdiction, and the appellants were left to pursue their statutory appeals in accordance with law. Attachment of property equivalent in value to proceeds of crime - Proportionality of provisional attachment - Validity of attachment of properties not directly derived from the scheduled offence, including properties acquired before the alleged offence, as assets equivalent in value to the proceeds of crime - HELD THAT: - The definition of proceeds of crime encompasses not only property derived or obtained from criminal activity but also the value of such property. Where tainted property is untraceable, unreachable, or insufficient to account for the pecuniary advantage from the criminal activity, other property of the accused may be attached as property of near or equivalent value; this power is not confined to cases where the tainted property is held outside India. Fairness requires a tentative and periodic assessment of the proceeds of crime, limitation of attachment to equivalent-value assets, and eventual confiscation only to the extent of illicit gains. The competent authority had undertaken the requisite tentative valuation exercise. [Paras 26, 27, 28, 29, 30] The attachment was held to accord with the statutory scheme, and no interference with the confirmation order was warranted. Final Conclusion: The appeals were dismissed. The appellants may pursue their statutory appeals before the Appellate Tribunal in accordance with law.

2025 (12) TMI 1798 - ALLAHABAD HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) whether the ECIR could be quashed or its operation restrained in relation to the consolidated Grand Venice FIRs and the independent Mist Avenue FIRs; (ii) whether the search and seizure challenge was maintainable in writ jurisdiction; (iii) whether the Non-Bailable Warrants dated 11.04.2025 were liable to be set aside.

Issue (i): whether the ECIR could be quashed or its operation restrained in relation to the consolidated Grand Venice FIRs and the independent Mist Avenue FIRs.

Analysis: Proceedings under the Prevention of Money Laundering Act, 2002 depend upon the existence of proceeds of crime arising from a scheduled offence. An ECIR is only an internal document and is ordinarily not quashable in writ jurisdiction. The consolidation order relating to the Grand Venice FIRs did not extinguish the underlying scheduled offences, but the stay of the consolidated predicate proceedings meant that coercive investigation could not continue qua those stayed FIRs. The independent Mist Avenue FIRs, not covered by the consolidation stay, continued to supply separate predicate material sustaining the ECIR to that extent.

Conclusion: The ECIR was not quashed in entirety, but the Enforcement Directorate was restrained from proceeding coercively qua the consolidated Grand Venice FIRs until the earlier of final adjudication of the pending quashing matter, framing of charges, or any final order in the predicate case.

Issue (ii): whether the search and seizure challenge was maintainable in writ jurisdiction.

Analysis: The challenge to the search action under Section 17 of the Prevention of Money Laundering Act, 2002 raised disputed factual questions and the statute provided an efficacious alternate remedy before the Adjudicating Authority. Such matters were not fit for writ adjudication at this stage.

Conclusion: The writ challenge to the search and seizure action was rejected.

Issue (iii): whether the Non-Bailable Warrants dated 11.04.2025 were liable to be set aside.

Analysis: The record showed repeated engagement by the petitioner with the investigation, including appearance and furnishing of documents. The Enforcement Directorate did not place adequate material showing evasion of process or necessity for coercive warrant at that stage. In the circumstances, issuance of open-ended Non-Bailable Warrants was disproportionate and inconsistent with the governing safeguards.

Conclusion: The Non-Bailable Warrants dated 11.04.2025 were set aside.

Final Conclusion: The petition succeeded only to a limited extent: coercive steps were interdicted qua the stayed consolidated predicate FIRs and the Non-Bailable Warrants were annulled, while the ECIR itself was allowed to survive with respect to the independent predicate material and the search challenge was not entertained.

Ratio Decidendi: Money-laundering proceedings can continue only so long as there is a subsisting scheduled-offence foundation, but an ECIR, being an internal investigative document, is not ordinarily quashable; however, coercive steps must still conform to statutory safeguards and cannot be sustained where the predicate proceedings are stayed and the record does not show evasion justifying a warrant.

PMLA investigation limits: ECIR survives on independent predicate offences, but coercive steps and warrants must meet statutory safeguards.
PMLA proceedings require a subsisting proceeds-of-crime basis from a scheduled offence, but an ECIR is only an internal investigative document and is not ordinarily quashable in writ jurisdiction. Where the predicate consolidated FIRs were stayed, coercive investigation could not continue against those FIRs, though independent FIRs could still sustain the ECIR to that extent. A writ challenge to search and seizure under PMLA was not entertained because it involved disputed facts and an alternate remedy before the Adjudicating Authority existed. Open-ended non-bailable warrants were set aside because the record did not show evasion or sufficient need for coercive process.

Quashability of an ECIR - dependence of PMLA jurisdiction on existence of a scheduled offence - effect of stay of predicate criminal proceedings on PMLA investigation - ECIR as an internal/administrative document - permissibility of addendums to ECIR and clubbing of predicate FIRs - lawful exercise of search and seizure under Section 17 PMLA - issuance and cancellation of non-bailable warrants during PMLA investigationQuashability of an ECIR - ECIR as an internal/administrative document - Whether the ECIR registered by the ED can be quashed in writ jurisdiction - HELD THAT: - The Court held that an ECIR is an internal administrative record of the ED and is not equivalent to an FIR; consequently quashment in writ jurisdiction is limited and to be exercised only where clear jurisdictional defects appear. Because the ECIR here rested not only on the consolidated Grand Venice FIRs (which are stayed) but also on independent Mist Avenue FIRs that prima facie involve scheduled offences, the petition for total quashment of the ECIR was declined. The Court emphasised that limited relief (staying investigative measures qua the stayed consolidated FIRs) is the appropriate remedy rather than wholesale quashment at the preliminary investigation stage. [Paras 108, 109, 170, 199]The prayer to quash the ECIR is declined; ECIR is not quashed in its entirety.Dependence of PMLA jurisdiction on existence of a scheduled offence - effect of stay of predicate criminal proceedings on PMLA investigation - Whether stay of proceedings in the predicate consolidated FIR extinguishes or suspends ED's jurisdiction to investigate under the PMLA - HELD THAT: - The Court reiterated the governing principle that PMLA jurisdiction is contingent on the existence of proceeds of crime linked to a scheduled offence. While a stay does not technically quash or erase an FIR, a judicial stay operates to eclipse the predicate proceedings and temporally suspend their operative effect. Accordingly, investigative or coercive measures by the ED that are referable to the consolidated Grand Venice FIRs (which are the subject of a stay by this Court) must be restrained until final adjudication of the Criminal Misc. Application or framing of charges in the relevant case. At the same time, the Court acknowledged that independent FIRs (Mist Avenue FIRs) containing scheduled offences remain valid predicates and may sustain investigation unaffected by the stay limited to the consolidated Grand Venice FIRs. [Paras 140, 144, 149, 169]ED shall refrain from pursuing investigation, summons, searches, seizures, attachment or other coercive measures qua the consolidated Grand Venice FIRs while the stay in Criminal Misc. Application No. 25724/2022 subsists or until framing of charges, but may continue investigation insofar as it relates to independent FIRs containing scheduled offences.Permissibility of addendums to ECIR and clubbing of predicate FIRs - ECIR as an internal/administrative document - Whether the ED could validly add further FIRs (addendums) to the ECIR and investigate multiple predicate FIRs including those not consolidated by the Supreme Court - HELD THAT: - The Court observed that an ECIR is not governed by the procedural strictures applicable to an FIR under CrPC and that, as an internal investigative record, it may be supplemented by addendums when new material emerges. Consolidation of FIRs for police convenience does not extinguish the statutory character of other FIRs or bar ED from investigating distinct scheduled offences registered separately (such as the Mist Avenue FIRs). On the material before it, the Court found no legal bar to the ED issuing addendums and incorporating additional FIRs into its investigative record where those FIRs prima facie disclose scheduled offences. [Paras 125, 126, 129, 139]The ED was entitled to issue addendums to the ECIR and investigate additional FIRs that prima facie involve scheduled offences; clubbing under CrPC does not prohibit ED from investigating distinct predicate offences.Lawful exercise of search and seizure under Section 17 PMLA - availability of statutory remedy before the Adjudicating Authority - Whether the search and seizure conducted under Section 17 PMLA could be declared illegal in writ jurisdiction - HELD THAT: - The Court declined to grant relief in writ jurisdiction with respect to the legality of the search and seizure because the petitioner has an efficacious alternate statutory remedy before the Adjudicating Authority to challenge the sufficiency of the 'reason to believe' and other statutory prerequisites. Allegations of misconduct during search were treated as disputed factual questions not amenable to interference in the writ petition. [Paras 115, 116, 117]Prayer to declare search and seizure illegal is rejected; petitioner to avail statutory remedy before the Adjudicating Authority.Issuance and cancellation of non-bailable warrants during PMLA investigation - principles governing NBWs and requirement of demonstrable evasion - Whether the open-ended non-bailable warrants issued on 11.04.2025 were justified and whether they should be cancelled - HELD THAT: - Applying established principles that NBWs are coercive instruments to secure presence where there is demonstrated evasion and must not be issued mechanically, the Court examined the chronology of summons, appearances, and document production by the petitioner. The ED failed to place sufficient material proving evasion; the petitioner had appeared earlier, furnished documents and his nonappearance at a particular time was explained by alleged illegal detention. Given the prolonged pendency of the investigation and absence of material establishing deliberate evasion, the Court held that issuance of the NBWs was unjustified and ordered their cancellation, while directing the petitioner to cooperate with the investigation upon prior written intimation by the ED. [Paras 172, 176, 188, 193]The NBWs dated 11.04.2025 are set aside/cancelled; petitioner to join and cooperate with investigation upon prior written intimation.Final Conclusion: The writ petition is partly allowed. The ECIR is not quashed in its entirety because independent FIRs alleging scheduled offences remain as valid predicates; however, all investigative and coercive measures by the ED relating to the consolidated Grand Venice FIRs (principal FIR No.353/2015) are stayed until final adjudication of Criminal Misc. Application No.25724/2022 or framing of charges, whichever is earlier. The challenge to the search is to be pursued before the Adjudicating Authority. The open-ended NBWs dated 11.04.2025 are set aside and the petitioner is directed to cooperate with the investigation upon prior notice; other observations are without prejudice to merits and courts below.

2025 (12) TMI 1315 - PATNA HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) Whether the petitioner could be permitted to amend the writ petition to add a prayer challenging the vires of Sections 50 and 63 of the Prevention of Money Laundering Act, 2002. (ii) Whether the remaining amendments, including the additional consequential prayers and correction of the reference to Article 32 in the synopsis, could be allowed.

Issue (i): Whether the petitioner could be permitted to amend the writ petition to add a prayer challenging the vires of Sections 50 and 63 of the Prevention of Money Laundering Act, 2002.

Analysis: The challenge to the constitutional validity of Sections 50 and 63 of the Prevention of Money Laundering Act, 2002 had already been upheld by the Supreme Court and was also stated to be pending consideration in other proceedings before that Court. In writ jurisdiction under Article 226, the Court held that it was not bound to apply the amendment liberalities of Order 6 Rule 17 of the Code of Civil Procedure, 1908 in the same manner as in civil suits, and that Section 141 of the Code expressly excludes proceedings under Article 226. The liberty granted by the Supreme Court to raise contentions before the appropriate forum did not extend to re-agitating an issue already settled or presently seized by the Supreme Court.

Conclusion: The proposed amendment seeking to add the vires challenge was rejected and is against the petitioner.

Issue (ii): Whether the remaining amendments, including the additional consequential prayers and correction of the reference to Article 32 in the synopsis, could be allowed.

Analysis: The additional prayers were found to be incidental to the reliefs already sought in the writ petition and the correction in the synopsis was treated as a typographical error. These amendments did not introduce a fresh independent controversy requiring the Court to enter upon a barred constitutional validity question.

Conclusion: The remaining amendments were allowed and are in favour of the petitioner.

Final Conclusion: The interlocutory application was allowed only to a limited extent, with the amendment introducing the constitutional challenge declined and the consequential and clerical amendments permitted.

Ratio Decidendi: A High Court, in writ proceedings under Article 226, need not permit an amendment that would require adjudication of a constitutional question already upheld by the Supreme Court or presently pending before that Court, and the procedural framework of the Code of Civil Procedure does not control such writ proceedings by virtue of Section 141 of the Code.

Writ amendment limits in Article 226 proceedings bar fresh vires challenge, but allow incidental and clerical corrections.
In Article 226 writ proceedings, a High Court need not permit an amendment that introduces a fresh challenge to the constitutional validity of Sections 50 and 63 of the Prevention of Money Laundering Act, 2002 where that issue has already been upheld by the Supreme Court or is pending before it. The Court held that the liberal amendment approach under Order 6 Rule 17 CPC does not apply in the same manner to writ proceedings, and Section 141 CPC excludes such proceedings. However, consequential prayers linked to the existing reliefs, and correction of a typographical reference to Article 32 in the synopsis, were allowed because they did not raise a barred independent controversy.

Money Laundering - Seeking for amending the prayer in the main writ application along with amendment in synopsis - seeking a declaration that Section 50 and Section 63 of Prevention of Money Laundering Act (PMLA), 2002 are ultra vires to the Constitution of India or not - HELD THAT:- The vires of Sections 50 and 63 of PMLA, 2002 has already been upheld by the Hon’ble Supreme Court in the case of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)]. The petitioner has admitted the position of law in paragraph-5 of his synopsis wherein it has been stated that the petitioner is conscious of the recent judgment of Hon’ble Supreme Court whereby a challenge to vires of Sections 50 and 63 of PMLA has been turned down in the case of Vijay Madanlal Choudhary. Though, it has also been mentioned the judgment of Vijay Madanlal Choudhary deserves to be held as per incuriam. Section 141 of the Code makes it clear that proceeding does not include any proceeding under Article 226 of the Constitution of India. This fact was emphasized by the Hon’ble Supreme Court in the case of Puran Singh & Ors vs State Of Punjab & Ors, [1996 (1) TMI 436 - SUPREME COURT], considering an appl -cation under Order XXII of the Code in the writ proceeding and held that 'It need not be impressed that different provisions and procedures under the Code are based on well-recognised principles for exercise of discretionary power, and they are reasonable and rational. But at the same time, it cannot be disputed that many procedures prescribed in the said Code are responsible for delaying the delivery of justice and causing delay in securing the remedy available to a person who pursues such remedies. The High Court should be left to adopt its own procedure for granting relief to the persons concerned. The High Court is expected to adopt a procedure which can be held to be not only reasonable but also expeditious.' Therefore, this Court is not bound by the provisions of the Code and considering the amendment sought as relief (IV) could not be considered by this Court and hence, this amendment could not be allowed. The amendment sought to be added as relief is rejected whereas all other amendments are allowed.

2025 (12) TMI 946 - JHARKHAND HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) Whether the orders refusing discharge and framing charge under the Prevention of Money Laundering Act, 2002 suffered from legal error; (ii) Whether the materials collected in investigation disclosed a prima facie case of money-laundering against the petitioner.

Issue (i): Whether the orders refusing discharge and framing charge under the Prevention of Money Laundering Act, 2002 suffered from legal error?

Analysis: The governing test at the stage of discharge and framing of charge is whether the record and documents produced by the prosecution disclose sufficient ground for proceeding and a prima facie case, not whether the prosecution will ultimately secure conviction. The Court applied the settled principles that the accused's defence cannot be weighed at this stage, that the Court may only sift the prosecution material to see whether grave suspicion exists, and that revisional interference with an order framing charge or refusing discharge is warranted only in cases of patent illegality or jurisdictional error.

Conclusion: The orders refusing discharge and framing charge did not suffer from any legal infirmity warranting interference.

Issue (ii): Whether the materials collected in investigation disclosed a prima facie case of money-laundering against the petitioner?

Analysis: The investigation material showed that the petitioner was linked to large-scale illegal stone mining, possession of unaccounted cash, suspicious bank deposits, and assistance to a co-accused in routing and layering illicit funds. The Court treated the existence of scheduled offences as established from the multiple predicate FIRs and held that the material disclosed proceeds of crime, the petitioner's active involvement in possession, concealment, and projection of such proceeds, and the applicability of the statutory presumption at the appropriate stage. The contention that the petitioner was not named in the original predicate offence or that mining activity under the mining law alone could not attract the money-laundering statute was rejected.

Conclusion: A prima facie case of money-laundering was made out against the petitioner.

Final Conclusion: The revisional challenge failed because the prosecution material disclosed sufficient grounds to proceed, and the criminal proceedings under the money-laundering law were allowed to continue.

Ratio Decidendi: At the stage of discharge or framing of charge, the Court must confine itself to whether the prosecution material discloses sufficient ground for proceeding and a prima facie case of money-laundering, without conducting a mini trial or evaluating the defence on merits.

Prima facie money-laundering case survives charge stage where prosecution material shows proceeds of crime and grave suspicion.
At the discharge and charge-framing stage under the Prevention of Money Laundering Act, the Court must only see whether the prosecution material discloses sufficient ground to proceed and a prima facie case; it cannot weigh the defence or conduct a mini trial, and revisional interference is limited to patent illegality or jurisdictional error. Applying that standard, the Court found no legal infirmity in the orders refusing discharge and framing charge. The investigation material was held to disclose proceeds of crime, linked to illegal stone mining, unaccounted cash, suspicious bank deposits, and routing of illicit funds, so a prima facie case of money-laundering was made out and the proceedings were allowed to continue.

Money Laundering - illegal mining - scheduled offence - failure to appreciate that the prosecution has not produced material which would show that the petitioner has, in any manner, dealt with “proceeds of crime” - prima facie case against the petitioner is made out or not, on the basis of the evidence which has been collected in course of investigation - HELD THAT:- It is evident from Section 2(1)(u) of PMLA Act, 2002 that “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 - it is evident that the reason for giving explanation under Section 2(1)(u) is by way of clarification to the effect that whether as per the substantive provision of Section 2(1)(u), the 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 but by way of explanation the proceeds of crime has been given broader implication by including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. The issue of discharge was the subject matter before the Hon'ble Supreme Court in the case of State of Tamilnadu, by Inspector of Police in Vigilance and Anti-Corruption v. N. Suresh Rajan, [2014 (1) TMI 553 - SUPREME COURT], wherein the Hon'ble Apex Court has been observed that 'what needs to be considered is whether there is a ground for presuming that the offence has been committed and not whether a ground for convicting the accused has been made out. To put it differently, if the court thinks that the accused might have committed the offence on the basis of the materials on record on its probative value, it can frame the charge; though for conviction, the court has to come to the conclusion that the accused has committed the offence. The law does not permit a mini trial at this stage.' Thus, it is evident that the law regarding the approach to be adopted by the Court while considering an application for discharge of the accused person the Court has to form a definite opinion, upon consideration of the record of the case and the documents submitted therewith, that there is not sufficient ground for proceeding against the accused. Thus, it can be safely inferred that if, upon consideration of the record of the case and the documents submitted therewith, and after hearing the submissions of the accused and the prosecution in this behalf, the Judge considers that there is no sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for doing so and if, after such consideration and hearing as aforesaid, the Judge is of the opinion that there is ground for presuming that the accused has committed an offence, the trial Court shall frame the charge. However, the defence of the accused cannot be looked into at the stage of discharge. The accused has no right to produce any document at that stage. The application for discharge has to be considered on the premise that the materials brought on record by the prosecution are true - It is settled position of law that the accused is entitled in law to know with precision what is the law on which they are put to trial. Charges are framed against the accused only when the Court finds that the accused is not entitled to discharge under the relevant provision of CrPC/BNSS. If, upon consideration of the record of the case and the documents submitted therewith, and after hearing the submissions of the accused and the prosecution in this behalf, the Judge considers that there is no sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for doing so and if, after such consideration and hearing as aforesaid, the Judge is of the opinion that there is ground for presuming that the accused has committed an offence, the trial Court shall frame the charge - Therefore, the stage of discharge is a stage prior to framing of the charge and once the Court rejects the discharge application, it would proceed for framing of charge. At the stage of discharge, the Judge has merely to sift and weigh the evidence in order to find out whether or not there is sufficient ground for proceeding against the accused and in other words, the sufficiency of grounds would take within its fold the nature of the evidence recorded by the prosecution or the documents produced before the court which ex facie disclose that there are suspicious circumstances against the accused so as to frame the charge against him and after that if the Judge comes to a conclusion that there is sufficient ground to proceed, he will frame a charge and, if not, he will discharge the accused. Prima facie the petitioner's role in illegal mining and laundering of its proceeds stood firmly established through seized cash, banking trails, and statements recorded under Section 50 of the PMLA, therefore arraignment of the petitioner as an accused is thus not arbitrary, but based on material that surfaced during investigation - from perusal of case record, statements of witnesses, materials available on record, this Court is of the considered view that prima-facie sufficient materials are available on record for framing of charge against the present petitioner. This Court do not find any justifiable reason to interfere with the impugned orders - both the criminal revision petitions are hereby dismissed.

2025 (12) TMI 645 - BOMBAY HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the materials on record disclose a prima facie commission of offences of cheating and forgery under Sections 318(4), 336, 338 and 340(2) of the Bharatiya Nyaya Sanhita, 2023.

1.2 Whether, notwithstanding that gambling/online betting is not a scheduled offence under the Prevention of Money Laundering Act, 2002, the funds routed through the shell entities constitute "proceeds of crime" under Section 2(1)(u) PMLA.

1.3 Whether, on the basis of the above, a prima facie case of the offence of money-laundering under Section 3 PMLA is made out against the applicant.

1.4 Whether, having regard to the nature of accusations and material available, the applicant is entitled to bail under Section 483 BNSS read with Section 45 PMLA.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Prima facie commission of offences under Sections 318(4), 336, 338 and 340(2) BNS

Legal framework

2.1 The Court considered the statutory definitions in Sections 2(7) "dishonestly", 2(9) "fraudulently", 2(14) "injury", 2(15) "illegal", 2(31) "valuable security", 2(36) "wrongful gain", 2(37) "wrongful loss", 2(38) "gaining wrongfully and losing wrongfully" of BNS, and the text of Sections 318 (cheating and its aggravated form under sub-section (4)), 335 (making a false document), 336 (forgery), 338 (forgery of valuable security, etc.) and 340(2) (using a forged document as genuine).

Interpretation and reasoning

2.2 On perusal of the FIR, statements and material, the Court found that the applicant and co-accused induced innocent individuals to part with their identity/KYC documents and to open bank accounts or shell entities on the false promise of employment in APMC. These documents and accounts were then used, without disclosure of the true purpose, to establish and operate shell entities (including M/s Hardik Enterprises and M/s Haresh Trading Co.).

2.3 The Court held that if such deception had not been practised, the concerned individuals would not have opened accounts nor handed over signed cheque-books and debit cards. Thus, there was clear "deception" and "dishonest" inducement within the meaning of Section 318 BNS.

2.4 Bank accounts were treated as "property" and the right to operate them as an asset, the wrongful transfer of control over which constituted "wrongful loss" to the account-holders and "wrongful gain" to the accused, within Sections 2(36)-(38) BNS. Reference was made to the Supreme Court's view that bank accounts are "property" in the context of seizure (State of Maharashtra v. Tapas D. Neogy).

2.5 The Court inferred that, for effecting withdrawals, the accused must have filled in their own names or beneficiaries' names as payees in blank, pre-signed cheques. Writing the payee's name without authority on such cheques amounted to making a "false document" and thereby "forgery" of a "valuable security" (cheques being bills of exchange and "valuable security"), attracting Sections 335, 336 and 338 BNS.

2.6 Use of those cheques and related documents for encashment and transfers, with knowledge that they were so created/altered, constituted "using as genuine" forged documents under Section 340(2) BNS. The deception extended to the banks, which were induced to honour such instruments as genuine.

2.7 The Court rejected the contention that the documents were "genuine" merely because they belonged to real persons. It held that the critical factor was the deceptive manner in which the documents and accounts were obtained and used, and the unauthorised completion and use of signed cheque-leaves, which satisfied the elements of cheating and forgery.

Conclusions

2.8 The Court concluded that there is a strong prima facie case that the applicant and co-accused cheated the individual account-holders and the banks, made false documents/forged valuable securities (cheques) and used them as genuine, thereby attracting Sections 318(4), 338 and 340(2) BNS (with the elements of forgery as per Section 336 being satisfied).

Issue 2: Whether the funds constitute "proceeds of crime" under Section 2(1)(u) PMLA, despite gambling not being a scheduled offence

Legal framework

2.9 The Court referred to Section 2(1)(u) PMLA, including its Explanation, defining "proceeds of crime" as any property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, including property indirectly derived or obtained as a result of criminal activity "relatable" to such scheduled offence.

2.10 The Court noted the exposition of "proceeds of crime" in the Supreme Court decision in Vijay Madanlal Choudhary, emphasising: (i) strict construction; (ii) the requirement that property be derived/obtained "as a result of" criminal activity relating to a scheduled offence; and (iii) the clarificatory nature of the 2019 Explanation.

Interpretation and reasoning

2.11 The Court accepted that gambling or online betting per se is not a scheduled offence, and that mere proceeds of gambling would not, by themselves, constitute "proceeds of crime" under PMLA.

2.12 However, on facts, the Court found that the criminal scheme did not merely involve gambling proceeds, but a layered process whereby: (a) individuals were cheated and their identities and accounts were misused; (b) shell-company bank accounts were opened and operated through deception and forgery; and (c) large sums, allegedly generated from illegal business/online gambling, were routed through these forged/cheated channels and withdrawn in cash.

2.13 The Court held that associating funds (allegedly from gambling/illegal business) with shell accounts opened through cheating and forgery, and projecting them as legitimate APMC/business transactions, created a direct nexus between the funds and the scheduled offences (cheating/forgery). The "criminal overlay" of cheating/forgery turned the funds into property derived/obtained "as a result of" criminal activity relating to scheduled offences.

2.14 The Court reasoned that the Explanation to Section 2(1)(u) PMLA covers property indirectly derived or obtained as a result of criminal activity relatable to a scheduled offence. Here, the scheduled offences (Sections 318(4), 338 and 340(2) BNS) were integral to routing, disguising and withdrawing the funds; thus, the funds withdrawn became "tainted" as proceeds of those offences, even if they originally arose from non-scheduled gambling operations.

2.15 The Court distinguished the Supreme Court's illustration (in Vijay Madanlal Choudhary) concerning unaccounted property acquired by legal means, noting that the present case involves property associated with criminal activity of cheating and forgery (scheduled offences), not merely untaxed legal income. It observed that excluding such laundered funds from PMLA would defeat the Act's object and allow illegally accumulated money to be easily "legalised".

Conclusions

2.16 The Court concluded that the money credited into and ultimately withdrawn from the shell-company bank accounts, operated through deception and forged instruments, constituted "proceeds of crime" within Section 2(1)(u) PMLA, notwithstanding that gambling itself is not a scheduled offence.

Issue 3: Prima facie existence of the offence of money-laundering under Section 3 PMLA

Interpretation and reasoning

2.17 Having held that the funds routed through the shell accounts were "proceeds of crime" arising from or relatable to scheduled offences of cheating and forgery, the Court examined the applicant's role in dealing with such proceeds.

2.18 The material, including statements under Section 50 PMLA and witnesses' accounts, indicated that: (a) the applicant worked in close concert with co-accused; (b) he participated in establishing shell entities and opening/operating their bank accounts; (c) he, along with others, effected cash withdrawals and other transactions from those accounts; and (d) he received commission for facilitating these withdrawals.

2.19 The Court inferred that the applicant knowingly assisted in the processes and activities connected with the projection, layering and withdrawal of the crime proceeds, thereby facilitating laundering and the appearance of legitimate business income, consistent with the mischief targeted by Section 3 PMLA.

2.20 The Court noted the applicant's arguments that his statement under Section 50 PMLA lacked corroboration and that custodial statements are of limited evidentiary value, but, at the bail stage, found there was sufficient additional material (including bank records, witness statements and the modus operandi) to show prima facie involvement.

Conclusions

2.21 The Court held that a strong prima facie case exists that the applicant was actively involved in the process or activity connected with the proceeds of crime, thereby attracting Section 3 PMLA.

Issue 4: Entitlement of the applicant to bail under Section 483 BNSS read with Section 45 PMLA

Interpretation and reasoning

2.22 In light of the above findings, the Court assessed whether the twin conditions and the stringent standard under PMLA for grant of bail were satisfied.

2.23 The Court observed that the allegations involve a well-designed and sophisticated scheme of cheating and forgery, large-scale laundering of funds running into hundreds of crores, and exploitation of the vulnerabilities of APMC-related accounts and shell entities to disguise criminal proceeds.

2.24 Given the applicant's alleged central role in opening and operating the accounts, executing withdrawals, and receiving commission, the Court found there to be a "strong case" of his involvement in the scheduled offences and in money-laundering.

2.25 The Court further held that, considering the nature and scale of the offence and the applicant's position in the operation, there existed: (i) a strong possibility of the applicant causing disappearance of evidence if released; and (ii) no assurance that he would not commit further offences while on bail.

Conclusions

2.26 The Court concluded that the applicant failed to satisfy the requirements for bail under Section 45 PMLA and that the gravity of the offence, the strength of the material, and the likelihood of tampering and re-offending justified continued custody. The bail application was therefore rejected.

Bail Denied u/s 483 BNSS and Section 45 PMLA in Alleged Money Laundering Shell Account Scam
The HC dismissed the applicant's bail plea under Section 483 BNSS r/w Section 45 PMLA, holding that stringent twin conditions under PMLA were not satisfied. The Court found a strong prima facie case of money laundering and scheduled offences under the Bharatiya Nyaya Sanhita, noting that bank accounts, including those of shell entities and APMC-linked accounts, constituted "property" used for laundering illicit funds. The applicant and co-accused wrongfully controlled victims' bank accounts, filled in blank cheques as unauthorized payees, and derived wrongful gain. Given the gravity of the offence, risk of tampering with evidence, and likelihood of reoffending, the applicant was denied bail.

Rejection of the application for bail filed by the Applicant before the trial Court invoking Section 483 of Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) r/w Section 45 of the Prevention of Money Laundering Act, 2002 - proceeds of crime - prima facie case of the offences of Sections 318, 336 and 338 (2) BNS or not - existence of material to attract and establish against the applicant the ingredients of the alleged scheduled offences under Sections 318 (4), 338 and 340 (2) of the BNS, 2023 or not. HELD THAT:- Section 2 (v) of the PMLA defines the word ‘property’ which means any property or asset and includes intangible property. Bank accounts are intangible property because they represent a right to receive money rather than a physical object. To support this conclusion it is apt to refer the decision in State of Maharashtra vs. Tapas D. Neogy [1999 (9) TMI 960 - SUPREME COURT], it is held by the Apex Court that the bank account of the accused or any of his relations is “property” within the meaning of Section 102 of Cr.P.C. and police officer in course of investigation can seize or prohibit the operation of the said account if such assets have direct links with the commission of the offence. In the case on hand, first, the accused persons deceived the individual victims of the crime, then made them to open their bank accounts and lastly, caused them to allow the accused to take complete control and operations of the bank accounts in their hands. This was a clear wrongful loss of documents and right to operate the bank account by the individuals and wrongful gain of property by the accused persons. The money accumulated/credited in the bank accounts of the shell companies including M/s Hardik and M/s Haresh, were not withdrawn by the actual account holders but by Ritesh Shah, Sharifmiya, the applicant and others. However, without showing any of these three accused and their co-accused as ‘payee’ in the said cheques, the withdrawal by cheque was not possible. Therefore, the conclusion is inevitable that when the accused concerned wrote his name as ‘payee’ in the blank signed cheques to encash it, he did it falsely and without any authority, to derive or obtain the money from the bank account concerned. Considering the facts and circumstances of the case, it appears that, APMC accounts, integral to agricultural trade, are routinely involved in large-scale cash transactions. APMCs often handle high-value transactions due to the nature of their operations, including the trading of agricultural commodities. However, such accounts are vulnerable to misuse due to absence of strict oversight and regulatory mechanisms - Looking at the design of the offence, it appears that, the mastermind behind the money laundering operation and his co-accused were keenly aware of the inherent difficulty in tracing the purpose and end-use of the funds. At the cost of repetition, since the originally credited money was generated illegally, it was difficult for the accused persons to show it as a money legally earned. There is a strong case against the applicant of having committed the alleged offences. Secondly, looking at the nature of the offence, there is strong possibility of the applicant causing disappearance of the evidence of this offence. In addition, it cannot be said that the applicant is not likely to commit any offence while on bail. Bail application dismissed.

2025 (12) TMI 1786 - CALCUTTA HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Money Laundering bail condition: request to live outside trial jurisdiction and attend virtually denied; bail condition retained.
Petitioner sought modification of an interim bail condition requiring residence within the trial courts jurisdiction and furnishing a local address, requesting return to a different city and virtual participation. Court analysed the asserted grounds, including adequacy of medical treatment at the current place of custody, and found no cogent basis to relax the jurisdictional residence requirement. Consequently the request for waiver or modification of the bail condition was refused and the application to permit relocation and virtual attendance was dismissed, maintaining the existing interim bail conditions.

2025 (12) TMI 1839 - UTTARAKHAND HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Changed Circumstance for Bail Not Shown in Second Bail Application, with delay and prior knowledge of evidence proving insufficient.
A second bail application was rejected because no changed circumstance was shown. Allegations about the investigating officer, seized bitcoin, screenshots and the proffer statement were found not to amount to a fresh ground for the applicant; the concerns mainly related to a co-accused, and the email concerning the proffer statement was already within the applicant's knowledge when the earlier bail request was decided. The Court also noted that delay in trial is relevant only in assessing the gravity of the offence, and observed that the applicant's own conduct had contributed to the delay. On that basis, the application was not fit to be allowed.

Successive bail - Change in circumstances - Gravity of Offence - Admissibility of Proffer Statement - Whether the second bail application discloses any changed circumstance warranting release on bail. - HELD THAT: - This Court is of the view that the allegations that have been levelled by the co-accused Parvinder Singh against the IO and the response that has been submitted by the ED on this aspect relates to co-accused Parvinder Singh alone. There are allegations against the IO, which has been refuted by learned counsel for the ED. This, per se, is not a change of circumstances to consider the second bail application. The Court held that the allegations made against the investigating officer regarding seizure and handling of Bitcoins arose from proceedings initiated by the co-accused and, being matters disputed by the Directorate of Enforcement, did not by themselves constitute a fresh circumstance in favour of the applicant. The communication from the U.S. authorities regarding the applicant's proffer statement and the scope of the money-laundering charge was also not treated as a new basis for bail, since that material was already available when the first bail application was rejected and, in any event, the earlier rejection had not rested solely on that aspect. On the plea of prolonged custody and likely delay in trial, the Court observed that delay is a relevant consideration but must be weighed with the gravity of the offence, and it also noted the trial court's observation that the applicant had been creating hindrance and delaying the proceedings. On that reasoning, no changed circumstance was found after rejection of the first bail application. [Paras 19, 21, 23, 26, 28] No fresh ground having arisen after rejection of the earlier bail plea, the second bail application was dismissed. Final Conclusion: The Court found that the grounds pressed in the second bail application did not amount to any fresh or material change in circumstances after rejection of the earlier bail plea. The application for bail was therefore dismissed.

2025 (12) TMI 821 - MADRAS HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether an appeal under Section 42 of the Prevention of Money-laundering Act, 2002 can be entertained and delay condoned beyond the outer limit of 120 days prescribed therein.

1.2 Whether Section 5 of the Limitation Act, 1963 is applicable to condone delay in filing an appeal under Section 42 of the Prevention of Money-laundering Act, 2002 beyond the period specified in that provision.

1.3 Consequential relief regarding return of the original order-in-original to enable the appellant to pursue other remedies, if any.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Condonation of delay and applicability of Section 5 of the Limitation Act to Section 42 PMLA

Legal framework

2.1 Section 42 of the Prevention of Money-laundering Act, 2002 provides that an appeal to the High Court must be filed within sixty days from the date of communication of the decision or order of the Appellate Tribunal, and the proviso authorises the High Court, on being satisfied of "sufficient cause", to allow it to be filed "within a further period not exceeding sixty days".

2.2 Section 29(2) of the Limitation Act, 1963 stipulates that where a special or local law prescribes a period of limitation different from that in the Schedule, Sections 4 to 24 of the Limitation Act apply only insofar as, and to the extent to which, they are not expressly excluded by such special or local law.

2.3 The Court considered Supreme Court precedents interpreting similarly worded limitation provisions containing expressions such as "not exceeding" or "but not thereafter", including decisions under the Foreign Exchange Management Act, 1999, the Electricity Act, 2003, and the Arbitration and Conciliation Act, 1996, which hold that Section 5 of the Limitation Act cannot be invoked beyond the maximum condonable period prescribed.

Interpretation and reasoning

2.4 From the text of Section 42 PMLA, the Court held that the scheme of limitation is two-fold: (i) an initial period of sixty days for filing the appeal, and (ii) an additional, condonable period "not exceeding sixty days" upon showing sufficient cause.

2.5 The expression "not exceeding sixty days" in the proviso to Section 42 was construed as prescribing an outer limit of 120 days (60 + 60) for institution of an appeal, beyond which the High Court is statutorily precluded from entertaining an appeal.

2.6 Reading Section 42 of PMLA with Section 29(2) of the Limitation Act, the Court held that the specific language of the proviso to Section 42-especially the phrase "not exceeding sixty days"-constitutes an express exclusion of the application of Section 5 of the Limitation Act beyond the said outer limit.

2.7 Reliance was placed on the decision under Section 35 of the Foreign Exchange Management Act, 1999, which uses similar wording and in which it was held that the High Court cannot entertain an appeal beyond 120 days; and on the decision under Section 125 of the Electricity Act, 2003, where the Supreme Court held that the outer limit for filing an appeal is 120 days and that Section 5 of the Limitation Act cannot be invoked beyond that period.

2.8 The Court further noted that in relation to Section 34(3) of the Arbitration and Conciliation Act, 1996, the Supreme Court has held that the words "but not thereafter" exclude the application of Section 5 of the Limitation Act, reinforcing the principle that where the statute uses restrictive expressions, the power to condone delay is confined to the period expressly specified and no further.

2.9 On this settled legal position, the Court held that it had no jurisdiction to condone delay beyond the maximum condonable period of sixty days in addition to the initial sixty days, and that any delay beyond 120 days under Section 42 PMLA is statutorily non-condonable, irrespective of the cause shown.

Conclusions

2.10 The Court concluded that an appeal under Section 42 of the Prevention of Money-laundering Act, 2002 must be filed within an absolute outer limit of 120 days from the date of communication of the order of the Appellate Tribunal.

2.11 Section 5 of the Limitation Act, 1963 cannot be invoked to condone delay beyond this outer limit, as the expression "not exceeding sixty days" in the proviso to Section 42 PMLA expressly excludes such extension.

2.12 As the delay in filing the appeal was 116 days (i.e., beyond the initial 60 days and exceeding the maximum condonable period of a further 60 days), the Court held that the delay was not condonable in law and dismissed the application for condonation of delay, resulting in rejection of the appeal at the stage of scrutiny.

Issue 3: Return of original order-in-original

Interpretation and reasoning

3.1 After dismissal of the application for condonation of delay, a request was made for return of the original order-in-original to enable the appellant to pursue any other remedies available under law.

Conclusions

3.2 The Court permitted the prayer and directed that the original order-in-original be returned to the counsel for the appellant, after retaining a photocopy on record.

Section 5 inapplicable: no condonation beyond 120 days for PMLA appeals u/s 42, Section 29(2)
The HC, interpreting Section 42 of PMLA read with Section 29(2) of the Limitation Act, held that Section 5 of the Limitation Act is inapplicable to appeals under PMLA beyond the statutorily prescribed outer limit of 120 days. The proviso to Section 42, by allowing filing only "within a further period not exceeding sixty days," was construed as expressly excluding any further enlargement of time. Relying on analogous statutory schemes with similar "but not thereafter" formulations, the HC ruled that it lacked jurisdiction to condone a 116-day delay beyond the prescribed period and dismissed the condonation application.

Seeking condonation of delay of 116 days in filing the appeal u/s 42 of PMLA - sufficient cause for delay or not - Applicability of Section 5 of the Limitation Act, 1963 - HELD THAT:- On a bare reading of the aforesaid provision, it is clear that where any special or local law prescribes for a period of limitation different from the period prescribed by the Schedule to the Limitation Act, 1963, the provisions of Sections 4 to 24 of the Limitation Act, 1963 shall apply only in so far as and to the extent which they are not expressly excluded by such special or local law. From a conjoint reading of Section 42 of the PMLA and Section 29(2) of the Limitation Act, 1963, the inevitable conclusion that could be drawn is that Section 5 of the Limitation Act, 1963 cannot be invoked to condone the delay beyond 120 days prescribed under Section 42 of the PMLA and the proviso thereto. The proviso to Section 42 of the PMLA by mandating that “allow it to be filed within a further period not exceeding sixty days” adjures exclusion of the applicability of Section 5 of the Limitation Act, 1963. In Chhatisgarh State Electricity Board vs. Central Electricity Regulatory Commission and Others [2010 (4) TMI 1031 - SUPREME COURT], the Supreme Court held that outer limit for filing of an appeal is 120 days and there is no provision in the Electricity Act, 2003 empowering the Court to entertain an appeal after more than 120 days delay. It needs to be emphasised that while interpreting the period of limitation as contemplated under Section 34(3) of the Arbitration and Conciliation Act, 1996 and the proviso thereto which stipulates that “Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter”, the Supreme Court in Union of India v. Popular Construction Co. [2001 (10) TMI 1044 - SUPREME COURT], has held that applicability of Section 5 of the Limitation Act to a petition filed under Section 34(3) of the Arbitration and Conciliation Act, 1996 is excluded. The application for condonation of delay is dismissed.

2026 (5) TMI 758 - BOMBAY HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Bail condition relaxation withdrawn after Supreme Court noted stringent conditions and upheld discretionary grant of bail.
Relaxation of bail conditions was sought on the ground of efflux of time, but the applicant withdrew the application after the Supreme Court had dismissed the Enforcement Directorate's challenge to the bail order while noting that stringent conditions had been imposed and no interference was warranted with the Single Judge's discretion. Leave to withdraw was granted, and the interim application was disposed of as withdrawn.

2025 (11) TMI 1862 - DELHI HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) whether investigation by the Serious Fraud Investigation Office under the Companies Act, 2013 barred parallel proceedings under the Prevention of Money Laundering Act, 2002; (ii) whether a provisional attachment order under Section 5(1) of the Prevention of Money Laundering Act, 2002 required prior filing of a report under Section 173 of the Code of Criminal Procedure, 1973; (iii) whether the provisional attachment order was vitiated for want of reason to believe or for absence of a pre-attachment hearing; and (iv) whether the writ petitions should be entertained in view of the statutory remedy before the Appellate Tribunal.

Issue (i): whether investigation by the Serious Fraud Investigation Office under the Companies Act, 2013 barred parallel proceedings under the Prevention of Money Laundering Act, 2002

Analysis: Section 212(2) of the Companies Act, 2013 operates only in respect of offences under that Act. The statutory scheme does not create a bar against investigation under other enactments, and Section 212(17)(b) contemplates sharing of information with other investigating agencies under other laws. The two enactments address distinct wrongs and operate in separate fields.

Conclusion: The bar on parallel proceedings was not accepted and the contention failed.

Issue (ii): whether a provisional attachment order under Section 5(1) of the Prevention of Money Laundering Act, 2002 required prior filing of a report under Section 173 of the Code of Criminal Procedure, 1973

Analysis: The attachment power under Section 5(1) is conditioned by recorded reasons and material showing possession of proceeds of crime and likelihood of concealment or transfer. The first proviso is not to be read as making a charge-sheet under Section 173 of the Code of Criminal Procedure, 1973 an absolute precondition in every case. The statutory scheme permits provisional attachment on the basis of the material available to the authorised officer.

Conclusion: Prior filing of a report under Section 173 of the Code of Criminal Procedure, 1973 was not held to be a mandatory precondition in the manner urged by the petitioners.

Issue (iii): whether the provisional attachment order was vitiated for want of reason to believe or for absence of a pre-attachment hearing

Analysis: The expression reason to believe requires an objective, evidence-based satisfaction founded on tangible material. The record referred to the underlying FIR, the ECIR, seized documents, electronic material, and recorded statements, which furnished a rational basis for the belief that the properties were involved in money-laundering and that immediate attachment was warranted. The statute does not require a separate pre-attachment hearing before issuance of the provisional attachment order.

Conclusion: The provisional attachment order was not found to be invalid on the grounds of absence of reason to believe or want of pre-attachment hearing.

Issue (iv): whether the writ petitions should be entertained in view of the statutory remedy before the Appellate Tribunal

Analysis: The provisional attachment order had already been confirmed by the Adjudicating Authority, and the petitioners had availed the appellate remedy under the special statute. In such circumstances, judicial interference in writ jurisdiction was considered unwarranted, leaving the merits to be examined by the statutory appellate forum.

Conclusion: The writ petitions were not entertained on merits in view of the available statutory appellate remedy.

Final Conclusion: The challenge to the enforcement proceedings did not succeed, and the petitioners were left to pursue the remedy provided under the special statutory appellate mechanism.

Parallel PMLA attachment and SFIO investigation can proceed on recorded material without a mandatory pre-attachment hearing.
Parallel investigation under the Companies Act and PMLA was not treated as barred because Section 212 of the Companies Act applies only to offences under that Act and permits sharing of information with other agencies. A provisional attachment under Section 5(1) of PMLA was not read as requiring prior filing of a Section 173 CrPC report in every case; recorded reasons and available material were sufficient. Reason to believe must rest on objective material, and no separate pre-attachment hearing was required. Writ interference was declined where the statutory appellate remedy had been invoked.

Money Laundering - serious irregularities pertaining to foreign exchange transactions - validity of the issuance of the Provisional Attachment Order (PAO) passed under Section 5(1) of the Prevention of Money Laundering Act, 2002 - right of the CBI and the Directorate to investigate the present case stood interdicted by virtue of Section 212(2) of the Act of 2013 - HELD THAT:- This Court, having considered the submissions advanced by the learned counsel for the parties, is of the view that the contention of the Petitioner, that the transfer of investigation to the SFIO would bar parallel proceedings under the PMLA, is legally untenable. This Court is afraid that the said argument holds no ground since the express language, “in respect of any offence under this Act”, used in Section 212(2) the Act of 2013, reveals that the said provision applies only to offences covered under that Act. Moreover, a purposive and harmonious construction of the statutory regime confirms that the Act of 2013 is merely applicable to the offences relating to companies and does not extend to offences under other laws, including the PMLA. While Section 212 is a self-contained code governing SFIO investigations into company affairs, its scheme does not preclude other agencies, in their own domain, from probing offences under separate laws. Importantly, if the practical application of the entire dispute is taken into account, it would become crystal clear that the Act of 2013 only deals with violations of corporate governance, norms, fraudulent conduct by the officers of the company and irregularities in the administration of the said company. However, the PMLA, penalises the process or activity connected with the proceeds of crime derived from scheduled offences, and under which, such tainted property would be classified as proceeds of crime. The offences defined under both the aforementioned statues are distinct and involve separate elements of proof while serving distinct legislative purposes. This Court is satisfied that the D/AO had ample and cogent material to justify and form a ‘reason to believe’ under Section 5(1) of the PMLA for the purpose of attachment - the formation of belief was not perfunctory or based on mere suspicion, but was founded on a rational nexus between the material collected and the inference drawn regarding the involvement of the Petitioner in the process of money-laundering - The PMLA is a self-contained statutory regime, with its own adjudicatory and appellate structure, and the existence of a viable statutory remedy would militate against premature interference through writ jurisdiction. This Court, in analogous cases, has held that when a complete appeal mechanism is built into a special statute, Constitutional Courts should ordinarily restrain from exercising their powers under Article 226 of the Constitution of India, 1950, unless there is some extraordinary or exceptional circumstance. Therefore, this Court being conscious about its restricted jurisdiction, deems it appropriate to not delve deeply into the validity of the PAO and its consequential proceedings, leaving those matters to be ventilated before the Appellate Tribunal. This Court finds no merit in the present Petitions - Petition dismissed.

2026 (3) TMI 597 - JHARKHAND HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: Whether the petitioner is entitled to grant of regular bail in ECIR No. 06 of 2023 under the Prevention of Money Laundering Act, 2002 having regard to the mandatory conditions for bail under Section 45 of the Act and the material on record.

Analysis: The legal framework comprises the definition and scope of proceeds of crime, the offence of money-laundering, the statutory presumption regarding proceeds of crime and the mandatory twin conditions for bail under Section 45 of the Prevention of Money Laundering Act, 2002 as construed by the Supreme Court in Vijay Madanlal Choudhary and subsequent authorities. The material relied upon by the prosecuting agency includes seizure of 17 original government registers and 11 trunks of documents from the petitioner's custody, examination under the relevant evidentiary provision, alleged tampering and forgery of revenue records, corroborative entries in co-accused diaries and recovered communications showing cash payments to the petitioner, and investigative surveys confirming possession of disputed land. The petitioner's defences - that the records were kept for security, that seized cash and jewellery are explainable by familial needs and legitimate income, and that some co-accused have obtained bail - were considered in light of the evidentiary materials and settled principles on parity. The statutory presumption places on the petitioner the burden to show that proceeds of crime are not involved; the Court must be satisfied on reasonable grounds that the accused is not guilty and not likely to reoffend or interfere with the process of justice. The record prima facie shows the petitioner, a public servant and custodian of land records, allegedly provided illegal access to and tampered with official records, received illicit payments and occupied a central role in the syndicate, distinguishing his position from co-accused who were granted bail. The period of incarceration alone was held not to supplant the statutory bail conditions for grave economic offences.

Conclusion: The petitioner has not discharged the burden required to satisfy the mandatory twin conditions for bail under Section 45 of the Prevention of Money Laundering Act, 2002; the bail application is rejected and the relief sought is refused. Decision in favour of the respondent.

Mandatory Bail Conditions under PMLA require proof that proceeds are not involved before bail; application denied.
The document addresses entitlement to regular bail under the Prevention of Money Laundering Act focusing on the mandatory twin conditions for bail and the statutory presumption regarding proceeds of crime. It explains that the accused bears the burden to rebut the presumption that seized property constitutes proceeds of crime and that the court must be satisfied on reasonable grounds the accused is not guilty and will not interfere with justice. The material relied on-seizure of official registers, alleged tampering of revenue records, recovered communications and surveys-was held to be prima facie incriminating, and the bail application was refused for failure to meet statutory conditions.

Entitlement to grant of regular bail - Multi-layered syndicate involving government officials, private individuals, and intermediaries - Mandatory twin conditions for bail under Section 45 of the PMLA - statutory presumption - offence of money laundering - definition and scope of proceeds of crime - tampering with evidence - principle of parity in grant of bail - delay or prolonged custody - commission of Scheduled offence under Sections 420, 467, and 476 of the IPC - Misused of official position as a Revenue Sub-Inspector and custodian of sensitive government records to facilitate a massive land scam and he provided the syndicate with illegal access to original land records and personally carried out or facilitated their forgery and manipulation, thereby enabling the fraudulent acquisition of high-value properties. Mandatory twin conditions for bail under Section 45 of the PMLA - HELD THAT:- The Court applied the jurisprudence of the Supreme Court (including Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)] and Tarun Kumar [2023 (11) TMI 904 - SUPREME COURT]) and held that the mandatory twin conditions in Section 45 - that the court must be satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to commit an offence while on bail - must be met before granting bail. Having considered the material seized (tampered government registers, trunks of documents), statements and digital evidence, and the statutory presumption under Section 24, the Court concluded that the petitioner failed to satisfy those twin conditions and that the stringent rigours of Section 45 preclude bail in the present case. [Paras 76, 77, 102, 103, 104] Bail under Section 45 of the PMLA is refused because the petitioner has not satisfied the statutory twin conditions. Proceeds of crime within Section 2(1)(u) of the PMLA - Whether the seized registers, documents and other material prima facie constitute proceeds of crime or link the petitioner to money laundering activities - HELD THAT: - The Court examined the definition of "proceeds of crime" in Section 2(1)(u) and the evidence on record (seizure of 17 original tampered registers, 11 trunks of documents, forged sale deeds, handwritten diaries and WhatsApp entries indicating cash payments). Relying on the prosecution complaint and investigative material, the Court held that these materials satisfy, at the prima facie stage, the description of property involved in criminal activity relatable to scheduled offences and corroborate the petitioner's alleged role in processes connected with proceeds of crime; therefore the petitioner's contention that no prima facie case under Sections 3 and 4 of the PMLA is made out was rejected. [Paras 62, 66, 69, 71, 79] On the prima facie material, the seized records and corroborative entries are treated as linked to proceeds of crime and indicative of the petitioner's involvement in money laundering processes. Principle of parity in grant of bail - HELD THAT:- The Court applied settled law that parity is available only where facts and role are substantially similar. After comparing the petitioner's alleged role as a public servant and custodian of records with those co accused who received bail, the Court found distinguishable and more serious conduct by the petitioner (active misuse of official position, centrality to the forgery scheme). Accordingly, parity was held inapplicable. [Paras 93, 95, 97, 98, 99] Parity with co accused granted bail is not available to the petitioner because his role is materially different and more serious. Delay or prolonged custody - ground for bail in scheduled offences - HELD THAT:- The Hon’ble Apex Court while dealing with the offences under UAP Act 1967, in the case of Gurwinder Singh v. State of Punjab [2024 (3) TMI 175 - SUPREME COURT] and taking in to consideration the ratio of judgment of Union of India vs. K.A. Najeeb [2021 (2) TMI 1212 - SUPREME COURT] has observed that mere delay in trial pertaining to grave offences as one involved in the instant case cannot be used as a ground to grant bail. Applying precedent, the Court held that while custodial period is a relevant factor, prolonged incarceration alone cannot override the gravity of scheduled offences and the statutory requirements of Section 45. Given the seriousness of the allegations, the strength of prima facie material, and the risk of interference with the investigation/trial, the period of custody did not justify bail. [Paras 81, 85, 86, 103] Length of custody is not a sufficient ground for bail in this case. Final Conclusion: The petition for regular bail is dismissed: the Court found prima facie material linking the petitioner to proceeds of crime and money laundering, determined that the mandatory twin conditions of Section 45 PMLA are not met, rejected the parity and delay grounds, and accordingly refused bail.

2025 (11) TMI 1712 - BOMBAY HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the general exclusion of limitation ordered by the Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 during the COVID-19 period applies to and extends the statutory 180-day validity of a provisional attachment order under Section 5(1) and 5(3) of the Prevention of Money Laundering Act, 2002 (PMLA).

1.2 Whether, notwithstanding the above, the impugned provisional attachment order issued under Section 5(1) PMLA stood lapsed upon expiry of 180 days and, if so, the legal consequences for the attached properties.

1.3 Whether the lapsing or setting aside of a provisional attachment order under Section 5(1) PMLA affects the competence or continuance of adjudication proceedings under Section 8 PMLA.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Applicability of Supreme Court's COVID-19 Suo Motu limitation orders to the 180-day period under Section 5 PMLA

Legal framework

2.1 Section 5(1) PMLA authorises provisional attachment of property "for a period not exceeding one hundred and eighty days from the date of the order". The third proviso to Section 5(1) mandates exclusion only of "the period during which the proceedings under this section is stayed by the High Court" and allows "a further period not exceeding thirty days from the date of order of vacation of such stay" to be counted.

2.2 Section 5(3) PMLA provides that every order of attachment under Section 5(1) "shall cease to have effect" after expiry of the period specified in that sub-section or on the date of an order under Section 8(3), whichever is earlier.

2.3 The Supreme Court's final order dated 10 January 2022 in the Suo Motu Writ Petition directed that the period from 15 March 2020 till 28 February 2022 "shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings" and, in para 5(IV), expressly identified specific provisions of the Arbitration and Conciliation Act, Commercial Courts Act, Negotiable Instruments Act and "any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings."

2.4 The Supreme Court in a subsequent decision (S. Kasi) interpreted the scope of the Suo Motu limitation orders and held that they do not extend the time-limits prescribed in Section 167(2) CrPC, emphasising that those orders were intended to protect litigants from being time-barred in initiating proceedings, not to enlarge statutory periods that embody substantive safeguards, particularly those linked to personal liberty or similar rights.

Interpretation and reasoning

2.5 The Court held that Section 5 PMLA creates a substantive "shelf-life" for a provisional attachment order, capped at 180 days, with the mode of computation and the only permissible exclusion (High Court stay plus up to 30 days post-vacation) expressly and exhaustively provided in the third proviso to Section 5(1). The provision is couched in negative form ("not exceeding") and is reinforced by Section 5(3) which stipulates the consequence that such order "shall cease to have effect" upon expiry of that period or upon adjudication, whichever is earlier.

2.6 The Court relied on the Supreme Court's decision upholding the constitutional validity of PMLA (Vijay Madanlal Chaudhary), where the 180-day cap and the ceasing-to-have-effect clause under Sections 5(1) and 5(3) were specifically recognised as crucial safeguards against arbitrary deprivation of property and as a foundation for upholding the scheme of provisional attachment.

2.7 The Court noted that the Suo Motu limitation order of 10 January 2022 does not mention PMLA or Section 5 at all, while expressly identifying other enactments and confining the exclusion to laws that prescribe limitation periods for instituting proceedings, outer limits for condonation of delay, and termination of proceedings. Section 5(1) PMLA does not prescribe a period of limitation for initiating any "proceedings" before a court or tribunal; it sets a maximum duration for the subsistence of an executive attachment order.

2.8 Referring to S. Kasi, the Court held that the Supreme Court has itself authoritatively explained the object and scope of the Suo Motu orders: they were intended (a) to address the difficulties faced by litigants in filing petitions/suits/appeals and other proceedings during the pandemic, and (b) to obviate the need for physical presence for filing. Those orders were not intended to extend or dilute statutory timelines which protect fundamental or significant legal rights, such as personal liberty or property.

2.9 The Court rejected the contention that S. Kasi is distinguishable on the ground that it concerned Article 21 liberty, noting that:

(a) PMLA itself contains drastic provisions impacting personal liberty; and

(b) even assuming Section 5 relates primarily to "property rights", the right to property is recognised as a constitutional and human right, and any deprivation must be strictly in accordance with law and within express statutory limits.

2.10 Relying on Supreme Court pronouncements on the right to property (Mukesh Kumar and Harikrushna Mandir Trust), the Court observed that interference with property must be expressly authorised; any power to deprive property cannot be implied or derived by expansive interpretation of external orders.

2.11 The Court emphasised that when the Supreme Court has itself interpreted its Suo Motu orders in S. Kasi, that explanation is binding; lower courts cannot adopt a different or broader construction by characterising S. Kasi as limited only to CrPC or Article 21 cases.

2.12 On the nature of the act, the Court observed that issuance of a provisional attachment order under Section 5(1) is, at least prima facie, an administrative act of the enforcement authority. Even if regarded as having some quasi-judicial attributes, the Suo Motu orders, read textually and contextually, were aimed at limitation for initiation and prosecution of proceedings before courts/tribunals, not at extending the internal "life span" of executive orders like PAOs.

2.13 The Court also relied on the fact that the Enforcement Directorate had itself moved an interlocutory application in the Suo Motu proceedings seeking clarification that PMLA timelines be treated as covered; that application was disposed of without any relief or clarification. Applying principles analogous to res judicata (particularly Explanation V to Section 11 CPC), the Court held that a requested relief not granted must be deemed refused; ED cannot indirectly secure from the High Court what it failed to obtain directly from the Supreme Court.

2.14 The Court further noted that Parliament had separately enacted the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (TOLA) to relax timelines in eight specified fiscal statutes during COVID-19, including statutes related to benami and black money laws, but conspicuously omitted PMLA. If the Suo Motu orders were already intended to cover all such statutory timelines, there would have been no need for TOLA; the omission of PMLA in TOLA is a material indication that neither Parliament nor the Supreme Court extended PMLA timelines through those measures.

2.15 The contention that it was impossible for ED to function during the COVID period was rejected both on principle (in light of S. Kasi, where a similar plea by the State was denied) and on facts: in this very case, during the COVID window the ED issued the PAO, filed the complaint before the adjudicating authority, the adjudicating authority issued a show cause notice and even heard applications, demonstrating that effective functioning was in fact possible.

2.16 The Court aligned itself with the reasoning of the Calcutta High Court, which had held that the 180-day period in Section 5(1), read with Section 5(3), is sacrosanct and not extendable by the Suo Motu limitation orders, and expressly declined to follow the contrary view of the Delhi High Court, noting inter alia that the Delhi decision did not consider the earlier Calcutta ruling and that there was no indication that the Calcutta decision had been overturned.

Conclusions

2.17 The Suo Motu limitation orders of the Supreme Court, including the order dated 10 January 2022, do not apply to or extend the 180-day statutory period prescribed for the validity of a provisional attachment order under Section 5(1) PMLA, nor do they affect the consequence prescribed in Section 5(3) that such order "shall cease to have effect" upon expiry of that period or earlier adjudication.

2.18 The only exclusion permissible in computing the 180-day period is that expressly provided in the third proviso to Section 5(1) PMLA (High Court stay plus up to 30 days after its vacation). No further extension/exclusion can be implied from the Suo Motu orders or otherwise judicially engrafted.

Issue 2: Whether the impugned provisional attachment order stood lapsed after 180 days and the legal consequences

Legal framework

2.19 Section 5(1) PMLA: provisional attachment "for a period not exceeding one hundred and eighty days from the date of the order".

2.20 Third proviso to Section 5(1): exclusion of period of stay by the High Court "in proceedings under this section" and allowance of a further period not exceeding thirty days after vacation of such stay.

2.21 Section 5(3) PMLA: every attachment "shall cease to have effect" after the expiry of the period specified in Section 5(1) or on the date of an order under Section 8(3), whichever is earlier.

Interpretation and reasoning

2.22 The impugned provisional attachment order was issued on 27 November 2020. On a plain reading of Section 5(1), the maximum period of its subsistence was 180 days from that date. Absent any applicable High Court stay on "proceedings under this section" prior to the expiry of 180 days, there was no statutory basis to exclude any time under the third proviso.

2.23 The Court examined the timeline and noted:

(a) The 180-day period from 27 November 2020 expired on 26 May 2021.

(b) The stay granted by the High Court on the PAO was by an order dated 19 June 2021, i.e., after the 180-day period had already expired.

(c) The subsequent stay granted by the Supreme Court on the adjudication proceedings (03 September 2021) also came into force after the 180-day period had lapsed.

2.24 Since the statutory period of 180 days had already run its course on 26 May 2021, any later stay order could not revive or retrospectively elongate the life of the provisional attachment; nor does Section 5 contain any such revival mechanism.

2.25 Applying Section 5(3), the Court held that, as no confirming order under Section 8(3) was passed within the period of 180 days, the provisional attachment "shall cease to have effect" on the expiry of that period. The language of Section 5(3) is mandatory and automatic, and does not contemplate any discretion or saving once that period is over.

2.26 The Court underscored that this strict temporal limit is not a mere procedural timeline but a substantive safeguard integral to the constitutional validity of the PMLA scheme and therefore cannot be relaxed in the absence of express legislative intervention.

Conclusions

2.27 The impugned provisional attachment order dated 27 November 2020 stood lapsed by operation of law upon expiry of 180 days, i.e., with effect from 26 May 2021, under Section 5(1) read with Section 5(3) PMLA.

2.28 Upon such lapsing, the order ceased to have any legal effect; consequently, the respondents were not entitled to continue detaining or treating as attached the properties covered by the PAO after 26 May 2021.

2.29 The Court therefore declared that the attachment stood lifted and was without legal effect from 26 May 2021, and issued a writ restraining the respondents from taking any action pursuant to the impugned PAO.

Issue 3: Effect of lapsing/setting aside of provisional attachment on adjudication proceedings under Section 8 PMLA

Legal framework

2.30 Under Section 5(5) PMLA, the authorised officer must, within 30 days of provisional attachment, file a complaint before the adjudicating authority. Under Section 8, the adjudicating authority issues show-cause notice, conducts adjudication, and may confirm attachment and order confiscation or release.

2.31 The Supreme Court in Kaushalya Infrastructure held that success in a challenge to a provisional attachment order under Section 5(1) does not nullify or terminate adjudication proceedings under Section 8; the latter must proceed to their logical end on their own merits.

Interpretation and reasoning

2.32 The Court applied the ratio of Kaushalya Infrastructure, emphasising the distinction between:

(a) the provisional, interim, executive measure under Section 5(1), founded on dual satisfaction (proceeds of crime and likelihood of concealment/transfer); and

(b) the independent adjudicatory process under Section 8, triggered by a complaint under Section 5(5) or applications under Sections 17(4) or 18(10), resulting ultimately in confiscation or release.

2.33 The fact that the PAO has lapsed or is quashed does not vitiate the jurisdiction or competence of the adjudicating authority to proceed on the complaint already filed, nor does the PMLA provide that continuance of adjudication is contingent on the subsistence of the PAO.

2.34 The Court also noted the concession by counsel for the petitioners that the lapsing of the PAO would not affect the adjudication proceedings and that such proceedings may continue in terms of the Supreme Court's pronouncement.

2.35 The Court recorded that the Enforcement Directorate's interests are not irreparably prejudiced by the lapsing of the PAO because:

(a) adjudication under Section 8 can continue, and

(b) under Section 17 PMLA, the ED retains power to trace and proceed against properties related to the offence even if they are transferred to third parties during pendency of proceedings.

Conclusions

2.36 The lapsing of the provisional attachment order under Section 5(1) PMLA does not affect the validity, competence, or continuance of adjudication proceedings under Section 8 initiated on the basis of the complaint filed under Section 5(5).

2.37 The earlier stay on adjudication proceedings, granted in view of the pending writ petition, was vacated. The adjudicating authority is free to proceed and dispose of the adjudication proceedings in accordance with law and on their own merits, with all substantive contentions of the parties kept open.

Provisional PMLA Attachment Under Section 5(1) Lapses After 180 Days; COVID Limitation Orders Not Applicable
HC held that the 180-day validity period for provisional attachment orders under Section 5(1) PMLA is strictly governed by the statute and its Third Proviso, which only permits exclusion of time during which proceedings are stayed by HC plus up to 30 days after vacation of stay. The SC's COVID-19 extension orders did not apply to PMLA timelines. Consequently, the provisional attachment order dated 27 November 2020 automatically lapsed on 26 May 2021 and became without legal effect. HC declared the attachment lifted from that date, restrained respondents from acting on the expired order, and disposed of the petition and interim application.

Money Laundering - time limitation - reasons to believe - impact of the Hon’ble Supreme Court’s orders dated 23 March 2020 and 10 January 2022, [2022 (1) TMI 385 - SC ORDER], on the PMLA timelines - HELD THAT:- The provisions of Section 5 of the PMAL are quite clear. Section 5(1) empowers the authorised officer, by an order in writing, to provisionally attach such property for a period not exceeding 180 days from the date of the order in such manner as may be prescribed. The Third Proviso to Section 5(1) provides that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section are stayed by the High Court shall be excluded, and a further period not exceeding thirty days from the date of the order of vacation of such stay order shall be counted. Thus, the manner of computation of the period of 180 days or the period that could be excluded for computing this period of 180 days has also been specified by the legislature in the Third Proviso to Section 5(1) of the PMLA. Admittedly, para 5(IV) of the Hon’ble Supreme Court’s order dated 10 January 2022, [2022 (1) TMI 385 - SC ORDER], does not mention PMLA. Instead, it refers to specific provisions of the Arbitration and Conciliation Act, 1996, the Commercial Courts Act, 2015, and the Negotiable Instruments Act, 1881. Even these provisions relate to initiating proceedings, setting outer limits for court or tribunal discretion regarding delay, and terminating proceedings. The issuance of a provisional attachment order, at least prima facie, would be an administrative act. However, even if we were to hold that such an act has some quasi-judicial underpinnings, simply because the adjudication proceedings before the adjudicating authority would amount to quasi-judicial proceedings, still, from the language and tenor of the orders, it is thought that they could be made to apply to exclude the time-limits prescribed under PMLA regarding the shelf-life of a provisional attachment order. It is declared that the impugned PAO dated 27 November 2020 has ceased to have any effect after 180 days, i.e., from 26 May 2021, under Section 5(1), read with Section 5(3), of the PMLA. As the impugned PAO (which has since lapsed) is now of no effect, none of the Respondents can continue to detain the Petitioners’ properties, which are the subject of the impugned PAO. The attachment is therefore declared to have been lifted and to have been without legal effect from 26 May 2021. The Respondents are restrained from taking any action pursuant to the impugned PAO, which has expired or ceased to be effective from 26 May 2021. A writ is issued to that effect. This Petition and the Interim Application therein are disposed of.

2025 (11) TMI 1711 - DELHI HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) Whether the writ petitions were maintainable in view of the statutory remedy under the PMLA and the territorial-jurisdiction objection; (ii) Whether the provisional attachment order and the consequential show-cause notice were vitiated for want of proper reason to believe; (iii) Whether the attached properties could be treated as proceeds of crime where the underlying betting activity was said not to be a scheduled offence; (iv) Whether the show-cause notice was invalid because the Adjudicating Authority allegedly functioned as a single-member bench and because prior attachment was absent.

Issue (i): Whether the writ petitions were maintainable in view of the statutory remedy under the PMLA and the territorial-jurisdiction objection?

Analysis: The existence of an efficacious alternative remedy under the PMLA weighed against exercise of writ jurisdiction. The Court held that the writ jurisdiction under Article 226 is to be invoked only in exceptional situations such as violation of fundamental rights, breach of natural justice, or patent want of jurisdiction or challenge to vires. It further held that a substantial part of the cause of action had arisen within Delhi because the relevant acts of procurement and distribution of login IDs were carried out there, and therefore the territorial objection was not sustainable.

Conclusion: The preliminary objections to maintainability were rejected.

Issue (ii): Whether the provisional attachment order and the consequential show-cause notice were vitiated for want of proper reason to believe?

Analysis: Sections 5(1) and 8(1) of the PMLA require the authority to form a reason to believe on the basis of material in its possession. On the material referred to in the attachment order, including the FIR, the report under Section 173 of the Code of Criminal Procedure, 1973, bank records, ledger entries and recorded statements, the Court found a live nexus between the material and the conclusion that the properties were liable to attachment and adjudication. The Court held that the belief was founded on tangible material and was not mechanical or based on mere suspicion.

Conclusion: The provisional attachment order and the consequential show-cause notice were not held to be invalid for want of reason to believe.

Issue (iii): Whether the attached properties could be treated as proceeds of crime where the underlying betting activity was said not to be a scheduled offence?

Analysis: The Court construed the definitions of property and proceeds of crime broadly under the PMLA. It held that intangible digital assets such as login IDs can qualify as property, and that proceeds generated from downstream activity remain traceable to the original tainted property when the chain of criminal conduct originates from a scheduled offence. The Court accepted that the procurement and distribution of the IDs, without lawful verification and in furtherance of a larger conspiracy, brought the case within the ambit of criminal activity relatable to a scheduled offence.

Conclusion: The attached properties were treated as capable of constituting proceeds of crime under the PMLA.

Issue (iv): Whether the show-cause notice was invalid because the Adjudicating Authority allegedly functioned as a single-member bench and because prior attachment was absent?

Analysis: Reading Sections 6(2), 6(5)(b) and 6(7) harmoniously, the Court held that the Adjudicating Authority can validly function through benches including a single-member bench. It also held that issuance of notice under Section 8(1) is triggered by the statutory preconditions and is not dependent upon prior attachment as a jurisdictional prerequisite. The Court therefore rejected the contention that the notice was void for lack of composition or for absence of an earlier attachment order.

Conclusion: The challenge to the show-cause notice on these grounds failed.

Final Conclusion: The Court upheld the impugned PMLA proceedings and found no legal infirmity warranting interference under writ jurisdiction.

Ratio Decidendi: Writ jurisdiction should not ordinarily be used to bypass the PMLA's statutory adjudicatory hierarchy where the impugned action is founded on tangible material, the authority has recorded a reason to believe, and the statutory scheme itself permits adjudication by the Adjudicating Authority without prior attachment as a jurisdictional condition.

PMLA writ jurisdiction and proceeds of crime principles upheld where attachment rested on tangible material and statutory procedure was followed.
Writ jurisdiction was held inappropriate to bypass the PMLA's statutory remedy where the impugned action rested on tangible material and no exceptional ground for interference was shown. The Court accepted territorial jurisdiction because a substantial part of the cause of action arose in Delhi. It further held that the provisional attachment and show-cause notice were supported by a recorded reason to believe based on FIR material, a charge-sheet report, bank records, ledger entries and statements. The Court also treated digital login IDs as property capable of constituting proceeds of crime and rejected challenges based on alleged single-member functioning of the Adjudicating Authority or absence of prior attachment.

Maintainability of petition - availability of alternative remedy of appeal - Money Laundering - proceeds of crime - large scale hawala transactions and illegal international cricket betting operations - lack of proper reason to believe - validity of issuance of the Provisional Attachment Order (PAO) passed u/s 5(1) of the Prevention of Money Laundering Act, 2002 - HELD THAT:- Having regard to the fact that the present matter mirrors, in material respects, the procedural substratum considered in ED v. Prakash Industries [2025 (11) TMI 257 - DELHI HIGH COURT], this Court finds no compelling cause to re-examine the facts or circumstances in the present case, more so, since the argument on maintainability has not been responded to. Nevertheless, this Court is of the view that neither of the three contingencies, stands attracted in the present case. Accordingly, this Court is of the considered view that it would be wholly inappropriate, both in law and in principle, to intercede in the present proceedings under Article 226 of the COI. The constitutional jurisdiction of this Court, though wide and potent, is not intended to supplant the specialised statutory mechanism envisaged under the PMLA and must yield to the legislative framework when none of the exceptional circumstances warranting its invocation are demonstrated. Both Section 5(1) and Section 8(1) of the PMLA, provides for a foundational pre-condition of ‘reason to believe’ for the D/AO and the AA, respectively, to exercise their powers under these provisions. This statutory requirement acts as a crucial safeguard against arbitrary exercise of power and ensures accountability in the enforcement of the PMLA. This Court now adverts to the material on record to see whether the D/AO and the AA had sufficient ‘reason to believe’ before the issuance of PAO and SCN under Sections 5(1) and 8(1) of the PMLA, respectively. Before adverting to the material on record, it is deemed appropriate to clarify that, this Court is conscious of the fact that its jurisdiction in the present matter is inherently circumscribed, since this Court cannot, in exercise of writ jurisdiction, travel in leaps and bounds beyond the procedural limitations imposed by law, particularly when an alternative efficacious statutory remedy exists within the contours of the PMLA. Consequently, the observations in the succeeding paragraphs is confined merely to a prima facie assessment of the existence of jurisdiction pre-requisites, and shall not be construed as a final adjudication on the merits, which falls under the exclusive domain of the statutory authorities, which upon an exhaustive scrutiny of the evidence produced thereof, shall either confirm or reject the powers exercised by the D/AO under the provisions of the PMLA. Having regard to the material relied upon in the PAO and the discussion therein, this Court is of the view, that the D/AO possessed sufficient and cogent material to form the requisite reason to believe and the formation of such belief under Section 5(1) of the PMLA was not mechanical or predicated on mere suspicion. Further, the PAO also indicates the existence of a clear nexus between the material collected and the inference drawn regarding the involvement of the Petitioner in process of money-laundering. In the aforesaid circumstances, and in view of the limited scope of judicial review at this stage, this Court finds no infirmity in the issuance of the PAO or the consequential SCN. Whether the properties attached under PAO constitute “proceeds of crime” particularly in light of the argument that cricket betting is not a scheduled offence? - HELD THAT:- In the present case, the act of the Petitioner to procure and distribute these IDs, without any KYC verification or lawful documentation amounts to forgery, cheating, identity fraud and criminal conspiracy, all of which constitute as a scheduled offence. Moreover, the conduct of the Petitioner was not merely incidental; rather, it was a deliberate act undertaken in furtherance of a larger criminal conspiracy aimed at facilitating the running of an illegal betting racket. Therefore, any benefit indirectly derived by the usage of Super Master Login IDs, would constitute proceeds of crime - In the present case, MA, through utilisation and continuous use of the Super Master Login IDs, generated approximately Rs. 2400 crores as proceeds of crime, from the Int’l Cricket Betting Racket. Out of the said amount Rs. 60 Crores were transferred to the Petitioner, as such the active role of the Petitioner in procuring and distributing Super Master IDs, which were an indispensable requirement for continuation of the Int’l Cricket Betting Racket, clearly amounts to participation in the generation of proceeds of crime arising from scheduled offences. Whether the SCN issued by AA is valid in view of the AA allegedly acting coram non judice under Section 6 of the PMLA? - HELD THAT:- Section 6 (2) of the PMLA provides that AA shall comprise of a Chairperson and two other members; whereas, Section 6(5)(b) authorizes the Chairperson to constitute Benches with either one or two members, as deemed necessary, thereby enabling functional flexibility of the AA. Section 6(7) of the PMLA, also enables the Chairperson to formulate a two-member Bench, wherein she/he is of a view that the matter is of such a nature which needs to be heard by a Bench consisting of two members - this Court is of the view that the SCN issued by a Bench, comprising of a technical member, was valid. Consequently, the contention that the AA was acting coram non judice is founded on a misinterpretation or ignorance of the statutory framework. Thus, in the view of this Court, the issuance of the SCN is well within the contours of the PMLA, and as such, the first limb of argument advanced by the Petitioners, in furtherance of validity of SCN, is devoid of merit. Whether an SCN can be issued even in the absence of prior attachment of properties by the Directorate? - HELD THAT:- Section 8(1) of the PMLA, enables the AA to issue a SCN to a concerned person “if” the AA, on receipt of a complaint under Section 5(5) of the PMLA or application made under Sections 17(4) or Section 18(10) of the PMLA, has a reason to believe that such person is either in possession of proceeds of crime or has committed an offence of money laundering - The quasi-judicial functions exercised by AA must not be conflated with the attachment order passed under Section 5(1) of the PMLA, which is a precautionary and emergent measure undertaken by the Directorate to prevent dissipation or concealment of proceeds of crime. While the SCN initiates the adjudicatory process, attachment under Section 5(1) of the PMLA is provisional in nature and is aimed at safeguarding the assets pending determination, reflecting the deliberate legislative distinction between protective measures and the procedural onset of adjudication. The absence of attachment under Section 5 of the PMLA cannot invalidate the SCN, since it is not a jurisdictional pre-requisite, absence of which will disable the AA to issue such notice in contravention of the provisions of the Act - Accordingly, in view of the aforesaid, the second limb of the argument advanced by the Petitioner also fails. This Court finds no merit in the present Petitions - Petition dismissed.

2025 (11) TMI 1980 - PATNA HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Bail under PMLA denied where statutory presumption and twin conditions were not rebutted by the accused.
In a prosecution under the Prevention of Money-Laundering Act, 2002, the Court applied the statutory framework under Sections 3, 4, 24 and 45 while examining whether the petitioner could be released on bail. The allegations of receipt, transfer and use of alleged proceeds of crime through the petitioner's proprietorship account were treated as sufficient to keep the burden against the petitioner under Section 24, and the material on record was found inadequate to rebut the presumption of involvement. The Court held that reasonable grounds for believing that the petitioner was not guilty were not shown, the twin conditions for bail were not satisfied, and bail was declined.

2025 (11) TMI 1556 - DELHI HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) Whether a search under Section 17 of the Prevention of Money Laundering Act, 2002 could be sustained when the prior complaint or report was not against the very person searched; (ii) Whether the order of the Appellate Tribunal confirming retention could stand in view of the statutory framework governing search, seizure and retention under the Act.

Issue (i): Whether a search under Section 17 of the Prevention of Money Laundering Act, 2002 could be sustained when the prior complaint or report was not against the very person searched.

Analysis: The statutory scheme permits search of any person who is found to be involved in money laundering, in possession of proceeds of crime, records relating to money laundering, or property related to crime. The precondition, as it then stood, was the prior institution of a complaint or forwarding of a report under the Code of Criminal Procedure, 1973, but the provision did not require that such complaint or report must necessarily be against the same person searched. The earlier complaint in the connected matter had already been filed and cognizance had been taken. The search was therefore not invalid merely because the respondent was not shown as an accused in that complaint.

Conclusion: The search under Section 17 was legally permissible and the contrary view was unsustainable.

Issue (ii): Whether the order of the Appellate Tribunal confirming retention could stand in view of the statutory framework governing search, seizure and retention under the Act.

Analysis: The Tribunal had proceeded on an erroneous understanding of the statutory preconditions and had been influenced by the absence of a prosecution complaint specifically against the respondent, although that was not the relevant test for action under Section 17. Since the relevant precondition for search stood satisfied, the impugned order could not be sustained. At the same time, the respondent was to be afforded an opportunity to raise the remaining factual and legal contentions before the Tribunal.

Conclusion: The impugned order was set aside and the matter was remanded to the Appellate Tribunal for fresh consideration in accordance with law.

Final Conclusion: The enforcement appeal succeeded, the Tribunal's order was annulled, and the dispute was sent back for a fresh decision after hearing both sides.

PMLA search validity under Section 17 depends on statutory preconditions, not on prior complaint against the searched person.
A search under Section 17 of the Prevention of Money Laundering Act was treated as valid even though the prior complaint or report was not against the person searched, because the provision did not require the earlier complaint to name that same and the statutory precondition of prior complaint or report had been satisfied. The Appellate Tribunal's retention order was found unsustainable because it proceeded on an incorrect reading of those preconditions. The matter was remanded to the Tribunal for fresh consideration, with the respondent to be heard on remaining factual and legal objections.

Money Laundering - valid search and seizure carried u/s 17 of the Prevention of Money Laundering Act, 2002 or not - respondent responded and asserted that he had no association with his alleged associates and was never involved in any such activity of money laundering - HELD THAT:- A careful perusal of impugned order would indicate that the learned Appellate Tribunal, ostensibly, got swayed away by the fact that there was no “prosecution complaint” against respondent. This was despite the fact that no such argument was even raised by the respondent in his appeal filed before the learned Appellate Tribunal - Admittedly, during the pendency of said appeal before learned Appellate Tribunal, ED did file one supplementary complaint 17.07.2018 before the Sessions Court, Mumbai. It was, however, in continuation of previous ECIR filed on 06.05.2011. The adjudication order under Section 8 of PMLA can be passed when Adjudicating Authority receives a complaint under Section 5(5) or an application under Section 17(4) or an application under Section 18(10) of PMLA. On receipt of any such complaint or application, the Adjudicating Authority, after satisfying itself, is required to issue show cause notice to any such person and after receiving reply, if any, to such show cause notice and hearing all concerned and taking into account all the relevant material placed before it, the Adjudicating Authority is required to record findings to the effect whether the property in question is involved in money laundering or not. In case, its answer is in affirmative, it would result in confirmation of attachment made under Section 5 or under Section 17 or under Section 18 of PMLA, as the case may be - the request for retention had been made under Section 17(4) of PMLA and not under Section 5(5) of PMLA. Section 17 of PMLA does not lay down that the search can be carried out in the premises of that person alone qua whom a complaint has been filed or report had been forwarded to the concerned Magisterial Court. The pre-condition is of ‘prior institution of complaint or forwarding of a report under Section 157 Cr.P.C’. There is no mandate that search should also be of the person shown accused in such report or complaint - A person may be in possession of proceeds of crime but still may not be accused of any scheduled offence or offence of money laundering. In a given situation, a person can be recipient of proceeds of crime, without having any criminal intent and, therefore, it is not necessary that any such person should be an accused in a prior complaint or report. Thus, search was permissible once the conditions specified under Section 17 of PMLA were satisfied. Here, the search was conducted as the concerned officer of ED had ‘reason to believe’ that money laundering activities were still going on and ED, therefore, decided to conduct search to recover incriminating material. As per Section 17(1)(iii), the premises of any person, who is in possession of any records relating to money laundering, can also be searched - Since the precondition is clearly met, the impugned order is not sustainable. While setting aside the impugned order dated 21.05.2019, the matter stands remanded with request to the learned Appellate Tribunal to consider the appeal afresh and to decide the same in accordance with law, after giving due opportunity of hearing to both the sides - Appeal disposed off by way of remand.

2025 (11) TMI 1951 - ORISSA HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) Whether the offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 is a standalone and continuing offence, and whether proceedings can survive despite quashing of cognizance in one predicate case where other scheduled offence proceedings remain; (ii) Whether the existence of proceeds of crime under Section 2(1)(u) is a condition precedent for invoking the Act and how such proceeds are to be identified through the FIR and ECIR process; (iii) Whether Section 24 of the Prevention of Money Laundering Act, 2002 shifts the burden of proof on the accused at the stage of discharge under Section 227 of the Code of Criminal Procedure, 1973; (iv) Whether absence of a monetary component in the scheduled offence defeats proceedings under the Act and whether a property transfer without cash consideration can still amount to proceeds of crime; (v) Whether the supplementary complaint strengthened the basis for cognizance and continuation of proceedings.

Issue (i): Whether the offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 is a standalone and continuing offence, and whether proceedings can survive despite quashing of cognizance in one predicate case where other scheduled offence proceedings remain.

Analysis: The statutory scheme treats money laundering as distinct from the predicate offence. The offence under Section 3 covers concealment, possession, acquisition, use, and projection or claiming of proceeds of crime as untainted property, and the activity is continuing so long as the proceeds remain under illicit enjoyment. The existence of a scheduled offence is a jurisdictional foundation, but the fate of one predicate case does not automatically extinguish proceedings where other FIRs or transactions still disclose a prima facie nexus with proceeds of crime. The independence of PMLA proceedings is reinforced by the special statutory scheme and the separate character of the laundering process.

Conclusion: The offence under the Act is standalone and continuing, and the proceedings were not rendered unsustainable merely because cognizance in one predicate matter had been quashed.

Issue (ii): Whether the existence of proceeds of crime under Section 2(1)(u) is a condition precedent for invoking the Act and how such proceeds are to be identified through the FIR and ECIR process.

Analysis: Proceeds of crime are the foundation of the Act. The expression is wide and includes property derived or obtained directly or indirectly from criminal activity relating to a scheduled offence, as well as its equivalent value. The FIR may provide the criminal foundation and the ECIR may be recorded on that basis, but the ECIR thereafter operates independently for money-laundering investigation. The existence and identification of proceeds of crime are matters of prima facie material and investigation, and the absence of an immediate cash trail does not by itself negate the jurisdiction if the surrounding material indicates illicit derivation.

Conclusion: The existence of proceeds of crime is a jurisdictional prerequisite, but the materials disclosed a prima facie basis for tracing such proceeds and continuing the proceedings.

Issue (iii): Whether Section 24 of the Prevention of Money Laundering Act, 2002 shifts the burden of proof on the accused at the stage of discharge under Section 227 of the Code of Criminal Procedure, 1973.

Analysis: Section 24 creates a rebuttable statutory presumption once material indicates linkage between the property and the scheduled offence. The burden then shifts to the accused to show lawful acquisition and to rebut the presumption. At the discharge stage, the Court is not required to decide rebuttal conclusively, but only to see whether there is sufficient material to proceed. If a prima facie nexus exists, the presumption operates and the matter must ordinarily go to trial.

Conclusion: The statutory burden under Section 24 operates against the accused at the threshold stage, and the petitioners did not establish a ground for discharge.

Issue (iv): Whether absence of a monetary component in the scheduled offence defeats proceedings under the Act and whether a property transfer without cash consideration can still amount to proceeds of crime.

Analysis: Proceeds of crime are not confined to cash. The definition extends to property obtained from criminal activity in any form. A transfer of immovable property, or unlawful gain arising from execution of documents or wrongful title creation, may still constitute proceeds of crime if there is a prima facie nexus with the predicate criminal activity. The absence of direct monetary exchange is therefore not decisive; what matters is whether the property reflects an illicit benefit flowing from the scheduled offence.

Conclusion: The absence of a monetary component did not vitiate the proceedings, and property transactions without cash consideration could still fall within the Act if linked to criminal activity.

Issue (v): Whether the supplementary complaint strengthened the basis for cognizance and continuation of proceedings.

Analysis: A supplementary complaint is a recognised continuation of the investigative process and may place additional material before the Special Court. It does not vitiate the original complaint; rather, it enlarges the material available for assessing a prima facie case. Where such complaint adds further transactions or links to proceeds of crime, it supports continuation of proceedings.

Conclusion: The supplementary complaint reinforced, rather than weakened, the basis for cognizance and continuation of the case.

Final Conclusion: The materials disclosed a prima facie case under the Prevention of Money Laundering Act, 2002, and the revisional challenge to the refusal of discharge failed.

Ratio Decidendi: Money-laundering proceedings are sustainable where there is a prima facie nexus between the property and a subsisting scheduled offence, because the offence under Section 3 is a continuing and independent offence and the accused must rebut the statutory presumption under Section 24 at trial rather than at the discharge stage.

Money-laundering is a continuing, standalone offence where prima facie proceeds of crime and statutory presumption can sustain proceedings.
Money-laundering under the Prevention of Money Laundering Act, 2002 is treated as a distinct, continuing offence, and proceedings may survive even if cognizance in one predicate matter is quashed, so long as other scheduled offence material still shows a prima facie nexus. Proceeds of crime remain the jurisdictional foundation, but they may be traced from the FIR, ECIR and surrounding material without an immediate cash trail. Section 24 creates a rebuttable presumption that operates once such linkage is shown, leaving rebuttal to trial rather than discharge. Property transfers without cash consideration may still constitute proceeds of crime if linked to criminal activity, and supplementary complaints may reinforce cognizance.

Money-laundering as a standalone and continuing offence - proceeds of crime - inclusive and derivative concept - reverse burden of proof u/s 24 of the PMLA - ECIR as an independent investigative document distinct from FIR - prima facie standard at the discharge stage u/s 227 Cr.P.C. - supplementary complaint strengthening cognizance in PMLA proceedings - HELD THAT:- The Hon’ble Supreme Court in the matter of Pradeep Nirankarnath Sharma [2025 (3) TMI 850 - SUPREME COURT], has clarified that money laundering does not conclude with the completion of the scheduled offence; rather, the offence continues so long as the proceeds of crime are enjoyed, held, concealed, layered, or projected in the economy. The legal principle that thus emerges is that the offence of money laundering is a standalone, substantive, and continuing offence, and its prosecution is not automatically extinguished by the outcome of proceedings relating to the predicate offence. Whether, in a given case, the quashing or failure of the scheduled offence removes the foundational facts necessary to sustain a charge under the PMLA is a separate question, to be determined on the facts of each case; but the law does not recognise a mechanical or automatic termination of PMLA proceedings on that basis. The independent nature of the PMLA, therefore, does not dispense with the jurisdictional requirement that the scheduled offence must subsist. it is equally well-settled that where multiple FIRs alleging scheduled offences exist, each such FIR constitutes an independent factual foundation for invocation of the PMLA. The quashing of cognizance in one predicate case does not efface the jurisdiction of the Enforcement Directorate if other FIRs, containing allegations capable of generating proceeds of crime remain pending. PMLA proceedings may therefore validly continue so long as at least one scheduled offence survives with a prima facie nexus to the alleged illicit property. Whether the existence of “proceeds of crime” within the meaning of Section 2(1)(u) of the PMLA is a condition precedent for invoking jurisdiction under the Act, and how such proceeds are to be traced and identified through the FIR and ECIR process? - HELD THAT:- It is well recognised that the proceeds of crime may not always manifest as direct monetary gains. They may assume the form of immovable properties, valuable securities, or other assets derived from or linked to criminal activity. The identification of such proceeds is essentially a matter of evidence and investigation, to be assessed on a case-to-case basis. As observed by the Hon’ble Supreme Court, the definition being inclusive, it covers both the tangible and intangible gains of the underlying criminal activity, and the “value of such property” where the actual property is no longer available. The determination of what constitutes proceeds of crime cannot be made in isolation or at the threshold unless the materials on record clearly demonstrate the absence of any link between the property and the scheduled offence. Where transactions involve large-scale transfers of assets or funds, the presumption under the statute operates in favour of the existence of proceeds of crime until rebutted by the accused through cogent explanation. It is clear that although the ECIR originates from the FIR, the moment it is registered, it stands on its own footing and the connection with the FIR ‘loses its relevance’. The PMLA is a self-contained code, and Sections 65 and 71 give overriding effect to the procedures under the Act. The scheduled offence serves as the jurisdictional trigger; thereafter, investigation into money-laundering proceeds as an independent process. In the present context, the registration of multiple FIRs concerning acts of cheating, forgery, criminal conspiracy, and other cognate offences provided the Enforcement Directorate the necessary jurisdictional basis to initiate ECIR and file the complaint under the PMLA. The mere quashing of cognizance in one of the predicate cases does not extinguish the existence of alleged proceeds of crime arising from the remaining transactions. Each case must therefore be examined on its own factual matrix to ascertain whether the property in question retains the taint of illicit origin. The legal principle that thus emerges is that the existence of proceeds of crime is a condition precedent for invoking the PMLA, but its precise extent, form, and connection to the scheduled offence are matters of investigation and trial. The ECIR, being independent of the FIR, may continue to hold field so long as there is prima facie material indicating that property derived from a scheduled offence exists and is being dealt with in a manner attracting Section 3 of the Act. Whether, under Section 24 of the Prevention of Money Laundering Act, 2002, the statutory presumption regarding the nature of property as “proceeds of crime” shifts the burden of proof upon the accused, and to what extent such burden must be discharged at the stage of consideration under Section 227 Cr.P.C.? - HELD THAT:- The inquiry is confined to whether there exists sufficient ground to proceed namely, whether the material on record, if unrebutted, would constitute the offence alleged. It must also be emphasised that the presumption under Section 24 is rebuttable, not conclusive. The accused may discharge the burden either by producing direct evidence of lawful acquisition or by pointing to inherent inconsistencies in the prosecution’s material that make the presumption untenable. Nevertheless, until such rebuttal is made, the statutory presumption sustains the continuation of proceedings. Accordingly, the legal principle that emerges is that Section 24 of the PMLA reverses the evidentiary burden, requiring the accused to account for the lawful origin of the property once the Enforcement Directorate establishes a prima facie link between the property and the scheduled offence. At the discharge stage, the Court must examine whether such prima facie link exists; if it does, the presumption operates, and the matter must ordinarily proceed to trial. Whether the absence of a monetary component in the scheduled offence vitiates PMLA proceedings, and whether a property transfer without monetary exchange can constitute “proceeds of crime”? - HELD THAT:- Consequently, even a transaction involving immovable property, executed without exchange of cash, can fall within the ambit of proceeds of crime if it reflects an advantage derived from the alleged wrongdoing. However, the mere fact of a civil dispute or an irregular property transaction is not enough to attract the PMLA. There must be a prima facie nexus showing that the property in question is the product of the criminal activity relating to the scheduled offence. If such nexus exists, the absence of direct monetary flow does not invalidate proceedings under the Act; if it does not, invocation of PMLA would be unwarranted. Thus, the governing principle is that PMLA is concerned with illicit gain in any form, and not merely with money, and the assessment is ultimately fact-specific, depending on whether the property reflects the unlawful benefit of the predicate offence. Whether the supplementary complaint filed by the Enforcement Directorate under Section 45 of the PMLA strengthens the foundational requirements for cognizance of the offence of money laundering? - HELD THAT:- The filing of a supplementary complaint also reflects the continuing nature of money laundering, where fresh instances of possession, concealment, or projection may come to light after the initial complaint. Courts have recognised that so long as the proceeds of crime remain in circulation or under control of the accused, investigation may legitimately extend to later transactions, thereby justifying a supplementary complaint. Thus, a supplementary complaint, if supported by additional material connected with the proceeds of crime, reinforces and does not vitiate the cognizance earlier taken by the Special Court. It merely enlarges the evidentiary base on which the Court evaluates the existence of a prima facie case. The initiation or continuation of PMLA proceedings therefore cannot be faulted merely because additional material has been subsequently brought on record through such a complaint. Findings and Conclusion - In light of the foregoing discussion and the settled position of law governing the nature of the offence under the PMLA, the requirement of a subsisting scheduled offence, the principles relating to “proceeds of crime”, and the limited scope of consideration at the stage of discharge, this Court finds no substance in the contention advanced on behalf of the Petitioners that the quashing of cognizance in one predicate case renders the proceedings under the PMLA unsustainable. As already noted, the materials placed by the Enforcement Directorate disclose a series of transactions extending over several years, involving numerous parcels of land and extensive financial dealings, which prima facie warrant examination in trial. These circumstances, viewed cumulatively, are sufficient at this stage to negate the claim that the proceedings are without jurisdiction or that no case under the PMLA can arise. The impugned order warrants no interference, and the Petitioners must face trial in accordance with law.

2025 (12) TMI 105 - KERALA HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the twin conditions under Section 45(1) of the Prevention of Money-Laundering Act, 2002 apply to an application for pre-arrest bail under Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 in respect of an offence under the PMLA.

1.2 Whether, on the materials placed on record, a prima facie case of "money-laundering" under Section 3 read with Section 4 of the PMLA, based on the alleged "proceeds of crime" from scheduled predicate offences, is made out against the applicant.

1.3 Whether, in the facts and circumstances, the applicant satisfies the statutory conditions, including those under Section 45 of the PMLA, so as to be entitled to pre-arrest bail.

---

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Applicability of Section 45 PMLA twin conditions to pre-arrest bail under BNSS

Legal framework

2.1 The Court referred to Section 45 of the PMLA (as amended in 2018), which prescribes that when the Public Prosecutor opposes a bail application, bail can be granted only if there are reasonable grounds for believing that the accused is not guilty of the offence under the Act and is not likely to commit any offence while on bail. It also considered Sections 65 and 71 of the PMLA, which respectively provide for the application of the Code of Criminal Procedure (and correspondingly BNSS) insofar as not inconsistent with the PMLA, and for the overriding effect of the PMLA.

2.2 The Court relied on the decisions of the Supreme Court in Vijay Madanlal Choudhary v. Union of India and Directorate of Enforcement v. M. Gopal Reddy, which held that the twin conditions under Section 45 of the PMLA apply equally to applications for pre-arrest bail under Section 438 Cr.P.C. (now Section 482 BNSS).

Interpretation and reasoning

2.3 The Court held that, by virtue of Sections 65 and 71 of the PMLA, the provisions of the Cr.P.C./BNSS apply only to the extent they are not inconsistent with the PMLA. The specific restrictions on bail under Section 45(1) PMLA, being special provisions, override the general provisions relating to bail under Cr.P.C./BNSS.

2.4 The Court further observed that Section 45(2) PMLA expressly declares that the limitations on granting bail under Section 45(1) are in addition to the limitations under Cr.P.C. or any other law. Hence, the power to grant bail, whether under Sections 438/439 Cr.P.C. (corresponding to Sections 482/483 BNSS), is subject not only to the usual considerations for bail but also to the stricter twin conditions specified in Section 45(1).

Conclusions

2.5 The Court concluded that the twin conditions under Section 45(1) of the PMLA are mandatory, have overriding effect, and apply fully to an application for pre-arrest bail under Section 482 BNSS in respect of offences under the PMLA.

---

Issue 2 - Existence of prima facie case of money-laundering under Section 3 PMLA

Legal framework

2.6 The Court examined Chapter II of the PMLA and specifically Section 3, which stipulates that "money-laundering" is an offence when a person directly or indirectly attempts to indulge or knowingly is a party to, or is actually involved in, any process or activity connected with the "proceeds of crime," including its concealment, possession, acquisition, use and projecting or claiming it as untainted property.

2.7 The Court referred to Section 2(1)(p) which defines "money-laundering" as having the meaning assigned in Section 3, and Section 2(u) which defines "proceeds of crime" as any property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, or the value of such property.

Interpretation and reasoning

2.8 The Court explained that money-laundering has two components: (i) the predicate offence, being the underlying criminal activity generating the proceeds, and (ii) the "surface offence" of money-laundering, which is the activity connected with the proceeds of crime. The predicate offences in this case were the scheduled offences alleged in the five police crimes involving cheating, criminal breach of trust and forgery, some of which are scheduled offences under the PMLA.

2.9 The Court held that "money-laundering" encompasses any process or activity connected with the proceeds of crime, including their concealment, possession, acquisition, use, or projecting/claiming them as untainted. Participation in any one of these processes or activities is sufficient to attract Section 3. The offence under Section 3 is distinct from, and does not otherwise depend on, the underlying scheduled offence except to the extent that the proceeds of crime must originate from such scheduled offence.

2.10 On the factual allegations, the Court noted that the applicant and co-accused allegedly cheated multiple persons under the guise of importing and supplying cashews and by offering job opportunities, thereby obtaining a total of Rs. 25,52,79,015/-, a substantial part of which was transacted through bank transfers. Since the predicate offences involve scheduled offences, the above amount obtained was held to prima facie fall within the definition of "proceeds of crime."

2.11 The Court highlighted that investigation had revealed that Rs. 2.03 crores were credited to the applicant's bank account by the complainants, which were not transferred overseas for imports as claimed. It observed that even mere possession of "proceeds of crime" would attract the offence under Section 3 of the PMLA.

Conclusions

2.12 The Court concluded that, on the materials presently available and the nature of transactions disclosed, a prima facie case of money-laundering under Section 3 read with Section 4 of the PMLA is made out against the applicant.

---

Issue 3 - Entitlement of the applicant to pre-arrest bail under Section 482 BNSS in light of Section 45 PMLA and the facts

Interpretation and reasoning

2.13 The Court considered the applicant's contention that he was falsely implicated, including allegations that the case was a counterblast to a complaint made by him against an Enforcement Directorate officer, and that even if the prosecution case is accepted in toto, no offence under the PMLA is made out. It contrasted this with the respondent's submission regarding the sufficiency of materials, the high magnitude of the alleged economic offence, and the strict constraints of Section 45(1) PMLA.

2.14 Applying Section 45(1) PMLA, the Court examined whether it could at this stage record satisfaction that there are "reasonable grounds for believing" that the applicant is not guilty of the offences alleged and that he is not likely to commit any offence while on bail. The Court held that "reasonable grounds" in Section 45(1)(ii) connote substantial probable cause for such belief, and that such satisfaction cannot be recorded on the present materials.

2.15 The Court noted that investigation in all five predicate crimes and in the money-laundering case is ongoing and at a crucial stage, and that further time would be required by the investigating agency to gather all materials, particularly to establish the nexus between the applicant and the alleged crimes.

2.16 The Court took into account the respondent's assertion, borne out by the counter-affidavit, that although the applicant appeared pursuant to summons on some occasions, he was not cooperating with the investigation. The Court also noted the huge amount involved and found that custodial interrogation of the applicant appears necessary.

2.17 The Court accepted the submission that, if pre-arrest bail were granted, there would be a real possibility of the applicant influencing witnesses and interfering with the investigation, especially given the nature of allegations and scale of transactions.

Conclusions

2.18 The Court held that the applicant had failed to satisfy the mandatory twin conditions of Section 45(1) PMLA and that, on the facts and at the current stage of investigation, it was not possible to form reasonable grounds for believing that he is not guilty or would not commit any offence while on bail. Consequently, the Court declined to exercise its jurisdiction under Section 482 BNSS to grant pre-arrest bail and dismissed the bail application.

Pre-arrest bail under PMLA denied as Section 45(1) twin conditions not met for Section 438/482 relief
The HC dismissed the application for pre-arrest bail under PMLA, holding that its jurisdiction is strictly governed by the twin conditions in Section 45(1), which apply equally to anticipatory bail under Section 438 CrPC (now Section 482 BNSS). Since the Public Prosecutor opposed bail, the court was required to be satisfied that there were reasonable grounds to believe the applicant was not guilty and would not commit an offence while on bail. Given the ongoing investigation, large quantum involved, alleged non-cooperation, need for custodial interrogation, and risk of influencing witnesses and tampering with evidence, the HC found these conditions unsatisfied and refused bail.

Seeking grant of pre-arrest bail - Money Laundering - scheduled offence - proceeds of crime - conditions of Section 45(1) of the PMLA fulfilled or not - HELD THAT:- The jurisdiction of this court to grant bail to a person accused of an offence under PMLA is circumscribed by the provisions of Section 45 as amended in 2018. As per the said provision, if the Public Prosecutor opposes the application, the bail can be granted only in a case where there are reasonable grounds for believing that the accused is not guilty of an offence under the Act and that he is not likely to commit any offence while on bail. The Supreme Court in Vijay Madanlal Choudhary and Others v. Union of India and Others [2022 (7) TMI 1316 - SUPREME COURT (LB)] and in Directorate of Enforcement v. M. Gopal Reddy and Another [2023 (2) TMI 1045 - SUPREME COURT] has made it clear that the twin conditions under Section 45 of PMLA apply to an application for pre-arrest bail under Section 438 of Cr. P.C.(Section 482 of BNSS) as well. The conditions specified under Section 45 of the PMLA are mandatory and need to be complied with, which is further strengthened by the provisions of Sections 65 and 71 of the PMLA. Section 65 of PMLA requires that the provisions of the Cr.P.C shall apply, insofar as they are not inconsistent with the provisions of this Act, and Section 71 of PMLA provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect, and the provisions of the Cr.P.C. would apply only if they are not inconsistent with the provisions of the said Act. Therefore, the conditions enumerated in Section 45 of the PMLA will have to be complied with even in respect of a bail application made under Section 438 or 439 of Cr.P.C - the power to grant bail to a person accused of having committed an offence under the PMLA is not only subject to the limitations imposed under Section 438 or 439 of Cr. P.C. (Sections 482 or 483 of BNSS), but also subject to the restrictions imposed by the twin conditions of sub-section (1) of Section 45 of PMLA. It is not possible at this stage to record satisfaction that there are reasonable grounds for believing that the applicant is not guilty of the offences alleged. The reasonable ground mentioned in S.45(1)(ii) of PMLA connotes substantial probable causes for believing that the accused is not guilty of the offence charged. The investigation is going on and the same is at a crucial stage. Undoubtedly, the investigating agency may require further time to collect all the materials, particularly the alleged nexus of the applicant with the crimes. In the counter affidavit filed by the respondent, it is stated that though the applicant appeared on summons on a few occasions, he is not cooperating with the investigation. The amount involved is huge. The custodial interrogation of the applicant appears to be necessary. As rightly argued by the learned ASGI, if pre-arrest bail is granted, there is every possibility of the applicant influencing the witnesses and interfering with the investigation. There are no reason to exercise the jurisdiction vested with this Court under Section 482 of the BNSS - bail application dismissed.

2025 (11) TMI 1801 - JAMMU AND KASHMIR AND LADAKH HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the Appellate Tribunal under the Prevention of Money Laundering Act, 2002, exercising jurisdiction under Section 26, has the power to remand a matter to the Adjudicating Authority after setting aside an order confirming provisional attachment under Section 8.

1.2 Whether, upon such remand, adjudication proceedings and possible confirmation of provisional attachment can lawfully continue when the initial provisional attachment under Section 5(1) has, according to the appellants, lapsed by efflux of time.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Power of the Appellate Tribunal under Section 26(4) to remand

Legal framework

2.1 The Court set out Section 26 of the Prevention of Money Laundering Act, 2002, particularly Section 26(4), which provides that on receipt of an appeal, the Appellate Tribunal may, after hearing the parties, "pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against."

2.2 The Court examined analogous appellate provisions previously interpreted by the Supreme Court and High Courts, including Section 128(2) of the Customs Act, 1962; Section 254(1) and Section 251 of the Income Tax Act, 1961; and Section 52(3) of the Foreign Exchange Regulation Act, 1973.

Interpretation and reasoning

2.3 The Court held that the expression "may...pass such orders thereon as it thinks fit" in Section 26(4) is of the "widest amplitude" and must be read as vesting in the Appellate Tribunal all ancillary and consequential powers necessary to give effect to its appellate jurisdiction, including the power of remand as a concomitant of setting aside or annulling the order under appeal.

2.4 Relying on the Supreme Court's decision interpreting Section 128(2) of the Customs Act, the Court noted that an order of remand "necessarily annuls" the decision under appeal, and when the appellate authority is empowered both to annul and to pass such order as it deems fit, the power to remand is implicit in that grant.

2.5 The Court adopted the reasoning of a Division Bench of the Calcutta High Court interpreting Section 26(4) of the same Act, which held that the phrases "such orders as it thinks fit" and "setting aside" necessarily encompass the power to remand, especially where the impugned order is vitiated on account of breach of natural justice.

2.6 The Court also relied on the Supreme Court's interpretation of the words "as it thinks fit" in Section 254(1) of the Income Tax Act, which were held wide enough to include the power of remand, and on the Delhi High Court's view that the power to remand is an "important postulate" and "necessary concomitant" of appellate jurisdiction, required to render such jurisdiction effective and not illusory.

2.7 While accepting the general proposition that statutory tribunals are creatures of statute and lack inherent powers beyond those conferred by the statute, the Court found that the power of remand in this context is not an extraneous or inherent power but is embedded in, and flows directly from, the statutory power to set aside or annul an order coupled with the power to pass such orders as the Tribunal thinks fit.

2.8 The Court rejected the contention that recognising a power of remand would amount to adding words to Section 26(4), holding instead that such recognition is necessary to give full and practical effect to the express statutory language and to avoid a paradoxical outcome where an order is set aside on technical or procedural grounds, but the Tribunal is rendered powerless to direct fresh consideration.

2.9 The Court declined to follow the contrary view of the Division Bench of the Karnataka High Court, holding that it had not properly appreciated that an order of remand is an aspect of the power to annul and that remand is a necessary postulate of effective appellate jurisdiction; consequently, that decision was not treated as laying down good law on this point.

Conclusions

2.10 The Court concluded that the Appellate Tribunal under Section 26(4) of the Act has the jurisdiction to remand matters to the Adjudicating Authority as an incident of its power to set aside or annul orders under appeal.

2.11 The remand direction issued by the Appellate Tribunal, after setting aside the confirmation order for breach of natural justice (non-communication of "reasons to believe"), was within its statutory competence and legally valid.

Issue 2 - Effect of alleged lapse of provisional attachment under Section 5(1) on remand and further adjudication

Legal framework

2.12 The Court referred to Section 5(1) of the Act, under which a provisional attachment order remains in force for a period not exceeding 180 days, subject to specified exclusions, and to Section 8, which governs adjudication and confirmation of attachment by the Adjudicating Authority.

2.13 The Court relied on the Supreme Court's decision in Kaushalya Infrastructure Development Corporation Ltd. v. Union of India, which interpreted the scheme of Sections 5 and 8 and held that adjudication proceedings may continue notwithstanding the setting aside or expiry of provisional attachment.

Interpretation and reasoning

2.14 The appellants contended that even if a power of remand is assumed, the Adjudicating Authority cannot now confirm the provisional attachment because the original attachment order has lapsed by efflux of time under Section 5(1) and is non est.

2.15 The Court noted that in Kaushalya Infrastructure, the Supreme Court rejected a similar argument and held that the success of a party in proceedings challenging provisional attachment does not, by itself, nullify the pending adjudication; such adjudication may and must proceed to its logical conclusion.

2.16 Applying this reasoning, the Court held that the setting aside of the confirmation order by the Appellate Tribunal did not extinguish or nullify the adjudication proceedings under Section 8; rather, the remand only restored the proceedings to the position they occupied when the confirmation order was originally passed.

2.17 The Court observed that it was not asserted by the appellants that, on the date the Adjudicating Authority originally passed the confirmation order, the provisional attachment had already lapsed. Accordingly, there was no basis to contend that the confirmation could not have been validly made at that time.

2.18 The Court clarified that the Appellate Tribunal had set aside only the confirmation order and not the entire adjudication proceedings under Section 8. Consequently, on remand, the Adjudicating Authority resumes jurisdiction from the same stage, with the obligation to supply "reasons to believe" and afford a proper opportunity of hearing.

Conclusions

2.19 The Court held that the alleged lapse of the provisional attachment by efflux of time under Section 5(1) does not bar continuation or revival of adjudication proceedings upon remand, nor does it prevent the Adjudicating Authority from reconsidering confirmation of attachment.

2.20 The contention that the provisional attachment has outlived its life and cannot now be confirmed was rejected as devoid of substance.

2.21 Consequently, the order of the Appellate Tribunal setting aside the confirmation and remanding the matter to the Adjudicating Authority for de novo proceedings, with proper communication of "reasons to believe" and opportunity to reply, was upheld, and the appeals were dismissed.

Wide Section 26(4) PMLA powers allow Tribunal to remand Section 8 attachment orders; provisional attachment remains valid
HC held that under Section 26(4) PMLA, the Appellate Tribunal's power to "pass such orders as it thinks fit" is of wide amplitude and necessarily includes the power to remand matters to the Adjudicating Authority after setting aside a confirmation order under Section 8. Relying on SC precedent and Calcutta HC authority, HC held that setting aside on grounds of breach of natural justice, without deciding merits, validly restores proceedings to the stage before confirmation. The provisional attachment had not lapsed by efflux of time. Finding no infirmity in the Tribunal's remand order, HC dismissed the appeals.

Money Laundering - power of appellate Tribunal defined u/s 2 (b) of PMLA 2002 to remand the matter back to the Adjudicating Authority after setting aside the order of confirmation passed by the latter confirming the provisional attachment made by the authorized officer u/s 5 of the Act - HELD THAT:- From a plain reading of Section 26, in particular sub-section (4) thereto, it is abundantly clear that the words “may pass such orders thereon as it thinks fit” are of the widest amplitude and would vest in the Appellate Tribunal powers of remand as consequential to the power to set aside the order appealed against. The Hon’ble Supreme Court in case of Union of India vs Umesh Dhaimode [1997 (2) TMI 140 - SC ORDER] was confronted with a similar provision i.e Section 128(2) of the Customs Act 1962, as it then stood, which also vested the Appellate Authority under the said Act with powers to pass such orders as it deemed fit confirming, modifying or annulling the decision appealed against. In the aforesaid case, the Hon’ble Supreme Court has clearly held that an order of remand necessarily annuls the decision which is under appeal before the Appellate Authority and, therefore, the Appellate Authority cannot be said to have been divested of power to order remand. The judgment of the Division Bench of Calcutta High Court in Partha Chakraborti’s case [2025 (2) TMI 1274 - CULCUTTA HIGH COURT] applies on all fours to the facts of instant case. In the case on hand, the appeals have been allowed by the Appellate Tribunal and order of confirmation passed by the Adjudicating Authority has been set aside for breach of natural justice. The order of confirmation passed by the Adjudicating Authority under Section 8 of the Act of 2002 has not been set aside by the Appellate Tribunal on merits, but on the ground that the appellants have not been conveyed “reasons to believe” while serving upon them the notice of show cause, and such omission has deprived them of a reasonable opportunity to submit an adequate reply. Thus, it is beyond pale of any discussion that the power of remand is an important postulate of any authority exercising appellate jurisdiction and vested with the power to confirm, modify or set aside the order appealed against. Such power is a necessary concomitant to the powers of the Appellate Authority to pass the orders like the order of confirmation, modification or setting aside. Absent such power, the power to set aside or annul the order appealed against, that too, on the technical grounds, like non compliance with the principle of natural justice, would render the power itself illusory and ineffective. It is thus settled law that the power to set aside an order by the Appellate Tribunal includes the power to remand, which is a necessary attribute or concomitant of the power to annul or set aside the order under appeal, unless such power is expressly, or by necessary implication or intendment, taken away by the statute which creates the appellate tribunal. In the instant case, it is nobody’s case that the confirmation order, which was set aside by the appellate Tribunal has lapsed by efflux of time. The Appellate Tribunal has only set aside the confirmation order, not the proceedings before the Adjudicating Authority under Section 8 of the Act of 2002. The Appellate Tribunal, by setting aside the confirmation order and remanding the matter back to the Adjudicating Authority, has merely restored the proceedings to the stage at which the Adjudicating Authority had passed the confirmation order. It is also not the case of the appellants that, as on the date on which the confirmation order was passed by the Adjudicating Authority, the provisional attachment order had lapsed by efflux of time. There are no merit in these appeals and the same are, accordingly, dismissed.

2025 (11) TMI 1710 - MADRAS HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) Whether the proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023 required a pre-cognizance hearing before the Special Court took the second supplementary complaint on file. (ii) Whether the second supplementary complaint was vitiated on the ground that it was founded only on stale material already available when the earlier complaints were filed.

Issue (i): Whether the proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023 required a pre-cognizance hearing before the Special Court took the second supplementary complaint on file.

Analysis: Cognizance is taken of an offence and not of the offender, and once cognizance of the main offence had already been taken, the supplementary complaint was only an addition to the existing proceedings. The proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023 was held inapplicable because the impugned order did not amount to a fresh act of cognizance on a new complaint in the sense contemplated by that provision. The brief order taking the supplementary complaint on file was treated as a curable error of expression and not a jurisdictional defect.

Conclusion: The challenge based on absence of pre-cognizance hearing was rejected and the order was upheld in favour of the respondent.

Issue (ii): Whether the second supplementary complaint was vitiated on the ground that it was founded only on stale material already available when the earlier complaints were filed.

Analysis: The Court distinguished the earlier authority relied upon by the petitioner and held that the Serious Fraud Investigation Office complaint under Section 447 of the Companies Act, 2013 constituted fresh and new material. The supplementary complaint was therefore not a mere re-evaluation of previously collected material. Explanation (ii) to Section 44 of the Prevention of Money Laundering Act, 2002 permits supplementary complaints as part of the prosecution complaint, and the later complaint was found to be legally maintainable on that basis. The underlying past transactions did not make the predicate complaint stale.

Conclusion: The plea of stale material failed and the second supplementary complaint was held to be maintainable.

Final Conclusion: No interference was warranted with the impugned order taking the second supplementary complaint on file, and the revision was dismissed.

Ratio Decidendi: A supplementary complaint under the Prevention of Money Laundering Act, 2002 is maintainable as part of the existing prosecution once cognizance of the offence has already been taken, and the proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023 does not require a fresh pre-cognizance hearing in such a situation.

Supplementary complaint maintainable after cognizance; pre-cognizance hearing not required and stale-material challenge failed.
Once cognizance of the offence had already been taken, a second supplementary complaint under the Prevention of Money Laundering Act was treated as part of the existing prosecution, so the proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023 did not require a fresh pre-cognizance hearing. The Court held that the brief order taking the supplementary complaint on file was at most a curable error of expression, not a jurisdictional defect, and rejected the challenge on that ground. It further held that the complaint was supported by fresh material from the Serious Fraud Investigation Office and was not vitiated as stale merely because earlier complaints existed. The revision was dismissed.

Money Laundering - criminal conspiracy to defraud public sector banks through misappropriation, fraud, and manipulation of accounts - creation of a web of shell and dummy companies to siphon loan funds via fictitious transactions - cognizance of offence/accused - pre-cognizance hearing - reliability of Mariam Fashuddin case [2024 (2) TMI 1130 - SUPREME COURT]. Cognizance meaning - HELD THAT:- Cognizance essentially means that the Judge should have applied his judicial mind and prima facie be satisfied that the allegations in the complaint, if proved, would constitute an offence - Various decisions rendered by the Courts of law have explained the significance of the term cognizance. In R.R.Chari Vs State of Uttar Pradesh [1951 (3) TMI 26 - SUPREME COURT], the Hon'ble Supreme Court of India stated that the word “cognizance” is used by the Court to indicate the point when Magistrate or a Judge first takes judicial notice of an offence. Therefore, it is understood that cognizance of an offence takes place, when a Judicial Magistrate applies his mind and takes judicial notice of the offence - the application of mind plays a pivotal role to fulfil the process of taking cognizance. So this procedure shall not be an empty formality. Second point is that cognizance is taken with regard to the offence and not the offender. Cognizance of offence/accused - HELD THAT:- Explanation (ii) to Section 44 of PMLA specifically provides for supplementary complaints. The Explanation (ii) to Section 44 clarifies that the prosecution complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence, for which complaint has already been filed, whether named in the original complaint or not - Taking multiple cognizance of the same offence would render the judicial process redundant and result in delay in the justice delivery process. Once cognizance of an offence is taken, any further supplementary prosecution complaint is considered as flowing from the main prosecution complaint for which the Court has already taken cognizance. So adding multiple layers of procedure to an already cognized complaint is a futile exercise. In the present case, cognizance of the offence was already taken on 25.11.2022 and so the Second Supplementary Complaint does not involve taking cognizance afresh - the language of the impugned order does not show any irregularity and so the objection raised by the Petitioner at this stage cannot be entertained. Pre-cognizance hearing - HELD THAT:- Pre-cognizance hearing cannot be equated with a mini- trial. It is only for the Court to satisfy itself on jurisdiction and related procedural aspects. Any further delving into the factual defences or evidences at this stage should not be entertained. The Enforcement Directorate further submitted that the Petitioner has failed to appreciate the distinction between "pre-existing evidence" and "new material/fresh evidence." The SFIO complaint, though based on transactions that occurred in the past, constitutes a new scheduled offence that came into existence only on 09.09.2022. This is fresh material for the purposes of the PMLA investigation - It was also submitted that money laundering is a continuing offence and the very nature of this offence permits investigation into various layers of transactions, shell companies, and interconnected entities that are used to launder the proceeds of crime. The SFIO complaint revealed additional entities, transactions, and modus operandi that were not part of the original investigation based solely on the CBI FIR. Reliability of Mariam Fashuddin case [2024 (2) TMI 1130 - SUPREME COURT] - HELD THAT:- There was no fresh material against the Petitioner that the Enforcement Directorate unearthed between the 1st Supplementary Prosecution Complaint and the 2nd Supplementary Prosecution Complaint and the law as held by the Hon'ble Supreme Court in Mariam Fashuddin ought to apply in the present case as well - the SFIO complaint is not a mere re-evaluation of existing material but constitutes fresh evidence obtained during the course of further investigation. This Court finds that the SFIO complaint dated 09.09.2022 constitutes fresh and new material and that the supplementary complaint is not based on stale material and that the decision in Mariam Fashuddin is distinguishable and does not apply to the facts of the present case and hence the supplementary complaint is legally maintainable under Section 44(1) read with Explanation (ii) of the PMLA - it can be deduced that the underlying transactions or events occurred in the past does not render the SFIO complaint "stale." Hence this court finds merit in the argument that the scheduled offence itself (i.e., the SFIO complaint under Section 447 of the Companies Act) is a new development and cannot be termed as stale material. The impugned order on the file of the XIV Additional Special Court for CBI cases need not be interfered with. Consequently, this Court concludes that the revision is devoid of merits and the same is liable to be dismissed. The trial Court shall proceed with the case on merits, uninfluenced by the observations made on facts - the Criminal Revision Case is dismissed.

2025 (11) TMI 1636 - KERALA HIGH COURT Money Laundering

AI TextQuick Glance (AI)Headnote

Issues: (i) Whether a bank may temporarily freeze the operations of an account on the basis of suspicious transactions without a prior requisition from a law enforcement agency or court; (ii) What safeguards and time limits govern such freezing pending verification by the competent authorities.

Issue (i): Whether a bank may temporarily freeze the operations of an account on the basis of suspicious transactions without a prior requisition from a law enforcement agency or court.

Analysis: The decision examined the RBI framework on KYC, anti-money laundering, money mule monitoring, and the bank's reporting obligations under the Prevention of Money-Laundering Act, 2002. It held that the existing directions require monitoring, enhanced due diligence, reporting of suspicious transactions, and compliance with lawful requisitions, but do not expressly spell out a complete mechanism for suspicious accounts. Reading the banking regulator's powers under Section 35A of the Banking Regulation Act, 1949 with the object of preventing financial cyber fraud, the decision concluded that banks must be able to prevent dissipation of suspected proceeds of crime and that prior notice in every case would defeat that object.

Conclusion: Yes. A bank may temporarily freeze the operations of a suspicious account without prior notice, where it has reasonable grounds for suspicion.

Issue (ii): What safeguards and time limits govern such freezing pending verification by the competent authorities.

Analysis: The decision held that the bank's power is not unbridled and must operate only as a temporary protective measure. The account holder must be informed on the date of freezing, the matter must be communicated to the competent cyber crime and other concerned authorities, and the account holder must be given an opportunity to explain the transactions. If the explanation is satisfactory, the account must be de-frozen; if no action is taken by the authorities within a reasonable period, the freeze cannot continue indefinitely. The decision fixed three months as the reasonable outer limit and directed the RBI to frame a standard operating procedure.

Conclusion: The freeze may continue only for a reasonable period, fixed at three months, and must be lifted if no authority acts within that period or if the explanation is accepted.

Final Conclusion: The petitions were disposed of with operational directions to the bank and a direction to the RBI to formulate clear guidelines for handling suspicious accounts, while recognizing a limited bank power to impose temporary debit freeze in suspected fraud cases.

Ratio Decidendi: Where a bank has reasonable grounds to suspect that an account is being used for financial fraud or laundering, it may temporarily freeze the account to preserve the suspected proceeds of crime, but the measure must be time-bound, supported by prompt intimation, and subject to prompt review and action by the competent authorities.

Suspicious account freeze can be imposed without prior notice, but only as a time-bound protective measure with prompt review.
A bank may temporarily freeze a suspicious account without prior notice where it has reasonable grounds to suspect financial fraud or laundering, because immediate restraint may be necessary to prevent dissipation of suspected proceeds of crime. The power is limited to a protective measure and must be exercised with safeguards: the account holder must be informed on the date of freezing, the matter must be reported to the competent authorities, and the account holder must be given an opportunity to explain the transactions. If the explanation is satisfactory, the account must be de-frozen; if no authority acts within a reasonable period, fixed at three months, the freeze cannot continue indefinitely.

Power of banks to freeze accounts on suspicion - Temporary debit freeze without prior notice for a reasonable period - Three-month limit for continued freezing in absence of action by law-enforcement agencies - Requirement to notify Account Holder and jurisdictional Cyber Crime Police Authority - Section 35A of the Banking Regulation Act - RBI power to issue directions - Obligations of reporting entities under the PMLA and enhanced due diligence - Appropriate action under RBI guidelines includes temporary freezing until verification - Right to property under Article 300A in relation to freezing of bank accountsPower of banks to freeze accounts on suspicion - Appropriate action under RBI guidelines includes temporary freezing until verification - Banks have the power to effect temporary debit freezing of customer accounts when they have reasonable grounds for suspicion, even in the absence of a requisition from lawenforcement agencies. - HELD THAT: - The Court reviewed RBI circulars and PMLA obligations and found that while the extant RBI master directions and KYC/AML circulars mandate monitoring, reporting of suspicious transactions and enhanced due diligence, they do not explicitly authorise the precise course of action to be taken by banks when suspicious activities are detected. Reading the regulatory scheme and the object of preventing largescale financial cybercrime together with banks' duties as reporting entities under the PMLA, the Court held that the term "appropriate action" in the RBI directions necessarily includes the power to temporarily freeze (debit freeze) suspicious accounts to prevent dissipation of proceeds and to enable lawenforcement verification. This power is to be exercised only when the bank has reasonable grounds for suspicion and is necessary to achieve the object of the PMLA and the RBI guidelines. The Court emphasised that this conclusion follows from the banks' duty to prevent misuse of accounts and the wide supervisory remit of the RBI under Section 35A of the Banking Regulation Act. [Paras 16, 25, 26]Banks may effect a temporary debit freeze of accounts on reasonable suspicion even without a requisition from lawenforcement agencies; such freezing is part of the "appropriate action" contemplated by RBI guidelines.Temporary debit freeze without prior notice for a reasonable period - Three-month limit for continued freezing in absence of action by lawenforcement agencies - Requirement to notify Account Holder and jurisdictional Cyber Crime Police Authority - Interim procedural safeguards and time limits for a bankinitiated freeze: banks may freeze without prior notice but must follow specified notice, communication and timelimit requirements; continued freezing without action by authorities is limited to three months. - HELD THAT: - To balance banks' duty to prevent fraud and the Account Holder's rights (including Article 300A), the Court prescribed interim guidelines to be followed until RBI frames a Standard Operating Procedure. The banks are permitted to effect debit freezes without prior notice when reasonable suspicion exists, but must (a) communicate the freezing and reasons to the Account Holder by SMS and registered post on the date of freezing, (b) send detailed communication with reasons to the jurisdictional Cyber Crime Police Authority and other relevant authorities and ensure receipt, (c) consider any Explanation from the Account Holder and pass orders within one week; if explanation is satisfactory, the bank must defreeze, and (d) if no satisfactory explanation or no explanation, continue freezing only for a period of three months from last delivery of the communication to the authorities; if no action or instruction is received within the threemonth period the bank must lift the freeze and allow the Account Holder to deal with the credit balance. The Court thus confines the period of deprivation and requires prompt institutional responses. [Paras 26, 27]Banks can freeze without prior notice but must notify the Account Holder immediately, inform relevant authorities, consider explanations within one week, and may continue freezing only up to three months absent action by authorities, after which the freeze must be lifted.Section 35A of the Banking Regulation Act - RBI power to issue directions - Obligations of reporting entities under the PMLA and enhanced due diligence - RBI has wide powers under Section 35A to issue directions in public and banking interest, and banks as reporting entities under the PMLA must undertake enhanced due diligence and monitoring; however RBI must frame a concrete SOP to define banks' powers to freeze suspicious accounts. - HELD THAT: - The Court observed that Section 35A empowers the RBI to issue directions to banks in the public interest and that prevention of financial cybercrime falls within those powers. While banks are reporting entities under the PMLA with duties to monitor and report suspicious transactions and to undertake enhanced due diligence, the existing RBI circulars lack a clearly defined procedure for freezing suspicious accounts without defeating the objective of preventing dissipation of proceeds. The Court directed the RBI to formulate a Standard Operating Procedure delineating the powers and responsibilities of banks in freezing suspicious accounts, thereby clarifying and filling the regulatory gap. [Paras 13, 14, 24, 28]RBI must frame a Standard Operating Procedure defining the powers of banks to freeze suspicious accounts; banks remain subject to PMLA obligations and RBI's supervisory directions under Section 35A.Right to property under Article 300A - Requirement to balance deprivation with prompt review - Deprivation of access to funds by freezing impacts the Account Holder's property rights and must be limited and accompanied by procedural safeguards and review mechanisms. - HELD THAT: - While recognising banks' role in preventing misuse of accounts, the Court cautioned that freezing operations denies the Account Holder use of funds and engages property interests protected under Article 300A. To mitigate this, the Court imposed the procedural safeguards and strict timelines (immediate communication, oneweek consideration of explanations, maximum threemonth freeze absent action) so that deprivation is neither indefinite nor without opportunity for prompt review. The Court also left open the Account Holder's remedy to challenge a bank's rejection of an explanation in accordance with law. [Paras 15, 27]Freezing affects Article 300A rights and therefore must be subject to immediate notice, prompt internal review and a threemonth outer limit absent action by competent authorities; judicial or other legal remedies remain available to the Account Holder.Final Conclusion: The High Court holds that banks may temporarily freeze (debit freeze) accounts on reasonable suspicion even without requisition from lawenforcement agencies, but such freezing must follow the interim procedural safeguards and time limits prescribed by the Court (immediate notice to Account Holder, intimation to cybercrime and other authorities, oneweek consideration of explanations, and a maximum threemonth freeze absent action), directs the banks in the present petitions to comply with those steps forthwith, and directs the RBI to frame a detailed Standard Operating Procedure defining banks' powers to freeze suspicious accounts.

Page of 89

Press 'Enter' after typing page number.

181 to 200 of 1773 Results

Case Laws

All › PMLA › PMLA - HC

All Case Laws

Showing Results for :

Reset Filters

Page of 89

Press 'Enter' after typing page number.

181 to 200 of 1773 Results

No Records Found

Case Laws

All Case Laws

Showing Results for : Reset Filters

Topics

Acts Income Tax

➔Previous Next ➔

Contact Us At :

FAQs :

Most Asked Video Tutorials :

Submit Feedback/Suggestion :

Case Laws

Case Laws

Topics