Proceeds of crime nexus is essential in money laundering; summoning order set aside where the complaint lacked material linkage.

A money laundering prosecution under section 3 of the Prevention of Money Laundering Act must rest on a prima facie nexus with proceeds of crime. Although absence of conviction in the scheduled offence does not by itself bar proceedings, the complaint must still disclose material linking the accused to such proceeds. Here, the petitioner had been finally discharged from the scheduled offences, that fact was not disclosed in the complaint, and the properties relied on were either acquired before the alleged crime period or were otherwise explained. The summoning order was therefore passed without proper application of mind and was set aside.

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Issues: Whether a person discharged from the scheduled offences can still be proceeded against under section 3 of the Prevention of Money Laundering Act, 2002, and whether the complaint disclosed a prima facie case for summoning the petitioner.

Analysis: The petition challenged the summoning order in proceedings under the Prevention of Money Laundering Act, 2002 on the ground that the petitioner had already been discharged from all the scheduled offences and that the complaint did not disclose any material showing receipt or possession of proceeds of crime. The governing scheme of section 3 read with section 2(1)(u) was examined, and it was held that proceeds of crime remain the foundation of the offence of money laundering. The Court noted that prosecution under the Act is not barred merely because a person has not yet been convicted in the scheduled offence, but the complaint must still disclose material showing nexus with proceeds of crime. On the facts, the discharge of the petitioner from the scheduled offences had attained finality, that fact was not disclosed in the complaint, and the properties relied upon by the respondents were either acquired earlier than the alleged crime period or were supported by an explanation. In these circumstances, the Court found that the summoning order had been passed without proper application of mind to the absence of a live basis for alleging money laundering.

Conclusion: The petitioner was entitled to relief to the extent that the summoning order could not be sustained.

Final Conclusion: The complaint could not proceed against the petitioner on the footing adopted by the Sessions Judge, and the summoning order was set aside.

Ratio Decidendi: A prosecution for money laundering must rest on a prima facie nexus with proceeds of crime, and where the scheduled offences have been finally negatived and the complaint does not disclose material connecting the accused to such proceeds, a summoning order is liable to be quashed.

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