Money-laundering prosecution can proceed where laundering acts continue later and supplementary complaints are supported by new material.

Money-laundering liability was held to depend on the date of involvement in the laundering process and projection of proceeds as untainted, not on the date of the underlying scheduled offence alone; the prosecution was therefore treated as maintainable for the loan transactions described. A prior adjudication finding that the money was legitimate did not bar criminal proceedings, because it was not treated as conclusive against allegations based on suspicious disclosures, inconsistent records, and doubtful supporting documents. A supplementary complaint was also held permissible, as the term "a complaint" was read to include further material collected during investigation. The challenge to cognizance therefore failed and the PMLA proceedings were allowed to continue.

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Issues: (i) Whether the petitioners could be prosecuted under Section 3 of the Prevention of Money Laundering Act, 2002 for the 2008 loan transactions even though Section 13(1)(e) of the Prevention of Corruption Act was added to the scheduled offences only from 01.06.2009; (ii) Whether the finding of the Adjudicating Authority that the amount of Rs. 1 crore was legitimate money and not connected with proceeds of crime barred the criminal prosecution; (iii) Whether cognizance could be taken on a supplementary complaint under the Prevention of Money Laundering Act, 2002.

Issue (i): Whether the petitioners could be prosecuted under Section 3 of the Prevention of Money Laundering Act, 2002 for the 2008 loan transactions even though Section 13(1)(e) of the Prevention of Corruption Act was added to the scheduled offences only from 01.06.2009.

Analysis: The offence of money-laundering is attracted when a person is directly or indirectly involved in any process or activity connected with proceeds of crime and projects them as untainted property. The relevant date is the date of laundering or projection, not the date on which the scheduled offence was committed. The transactions were treated as part of a continuing and inter-connected chain extending beyond the date of inclusion of Section 13(1)(e) in the schedule, and the presumption applicable to inter-connected transactions was relied upon.

Conclusion: The prosecution was held maintainable, and the challenge based on the alleged non-retrospective reach of the scheduled offence failed.

Issue (ii): Whether the finding of the Adjudicating Authority that the amount of Rs. 1 crore was legitimate money and not connected with proceeds of crime barred the criminal prosecution.

Analysis: The bar on prosecution following adjudication applies only where exoneration is on merits and the allegation in the adjudication proceeding is identical in substance. Here, the Adjudicating Authority's view was held not to be binding because the Enforcement Directorate's case rested on suspicious and inconsistent disclosures, non-reflection of the transaction in income-tax returns, and the later production of documents that were treated as doubtful. The adjudication finding was therefore distinguished and not treated as conclusive against the prosecution.

Conclusion: The adjudication order did not preclude continuation of the criminal proceedings.

Issue (iii): Whether cognizance could be taken on a supplementary complaint under the Prevention of Money Laundering Act, 2002.

Analysis: The reference to "a complaint" in the relevant provisions was held not to exclude a supplementary complaint. The supplementary complaint was treated as analogous to a supplementary charge-sheet and was considered permissible where additional material emerged during investigation.

Conclusion: The supplementary complaint was held to be maintainable.

Final Conclusion: The challenge to the order taking cognizance failed in full, and the proceedings under the Prevention of Money Laundering Act, 2002 were allowed to continue.

Ratio Decidendi: For money-laundering prosecutions, the decisive date is the date of involvement in the laundering process and projection of proceeds as untainted, and a supplementary complaint is permissible where further incriminating material emerges during investigation.

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