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Issues: (i) Whether proceedings under the Prevention of Money Laundering Act, 2002 and the provisional attachment of property could be interfered with on the ground that the properties were acquired before the Act came into force and the predicate offence proceedings had been closed; (ii) Whether the order taking cognizance and issuing summons in the complaint under the Prevention of Money Laundering Act, 2002 was valid.
Issue (i): Whether proceedings under the Prevention of Money Laundering Act, 2002 and the provisional attachment of property could be interfered with on the ground that the properties were acquired before the Act came into force and the predicate offence proceedings had been closed.
Analysis: The governing test under Section 3 of the Prevention of Money Laundering Act, 2002 is the existence of proceeds of crime and the activity connected with such proceeds, not the conviction or even the pendency of the predicate offence. The Court held that money laundering is a continuing offence and that prosecution can proceed even if the accused is not a party to the predicate offence. It further found that the provisional attachment order was supported by recorded reasons and by material showing a basis to believe that the property represented proceeds of crime, and that an efficacious adjudicatory remedy under Section 8 had already been invoked.
Conclusion: The challenge to the ECIR, private complaint, original complaint, and provisional attachment failed; these proceedings were upheld.
Issue (ii): Whether the order taking cognizance and issuing summons in the complaint under the Prevention of Money Laundering Act, 2002 was valid.
Analysis: The cognizance order merely stated that sufficient material existed and did not disclose application of mind to the allegations or identify the offences for which process was issued. The Court found that, in light of the requirement that cognizance must rest on a judicially formed prima facie satisfaction and the order itself must reflect that satisfaction, the impugned order was bald and unreasoned and therefore unsustainable.
Conclusion: The cognizance and summons order was set aside and the matter was remanded for fresh consideration.
Final Conclusion: The petition succeeded only to the extent of the cognizance order, while the challenge to the money-laundering proceedings and provisional attachment was rejected.
Ratio Decidendi: Proceedings under Section 3 of the Prevention of Money Laundering Act, 2002 depend on the existence of proceeds of crime and may continue independently of the outcome of the predicate offence, but an order taking cognizance must itself disclose application of mind and a prima facie judicial satisfaction.
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