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Issues: Whether a bona fide purchaser of property could be prosecuted under sections 3 and 4 of the Prevention of Money Laundering Act, 2002 for purchasing property alleged to be proceeds of crime, when there was no material to show that he knowingly participated in the laundering process or projected the property as untainted.
Analysis: The prosecution under section 3 of the Prevention of Money Laundering Act, 2002 requires more than mere acquisition or possession of property linked to a scheduled offence. The person must be knowingly or actually involved in a process or activity connected with proceeds of crime and must also project or claim the property as untainted property. The materials relied on by the prosecution showed only that the petitioner purchased the property from the vendor and that the sale deed recorded payment through banking channels, including payment to the vendor's mother as reflected in the document itself. There was no material to show that the petitioner had abetted the original offender in laundering the proceeds or had himself projected the property as untainted. The quash petition therefore could be examined on its own facts notwithstanding earlier attachment proceedings and the reverse-burden principle under section 24 of the Act.
Conclusion: The prosecution against the petitioner under sections 3 and 4 of the Prevention of Money Laundering Act, 2002 was not sustainable and amounted to an abuse of process of law.
Ratio Decidendi: Criminal liability under section 3 of the Prevention of Money Laundering Act, 2002 arises only when a person is knowingly or actually involved in a process or activity connected with proceeds of crime and also projects or claims such property as untainted; a bona fide purchaser without such knowing involvement is not liable to prosecution.
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