Prima facie money-laundering case can proceed where bogus transactions and scheduled offences indicate proceeds of crime.

At the charge stage under the Prevention of Money Laundering Act, 2002, a prima facie showing that the accused knowingly generated, possessed, used or projected property derived from a scheduled offence is sufficient to proceed. The material here linked predicate IPC offences to alleged bogus billing, routing of funds through controlled companies, receipt of cash against entry transactions, and use of the funds in the alleged riots. Section 50 statements were treated as admissible at this stage and, taken at face value, supported grave suspicion. The absence of a separate attachment order did not prevent prosecution, and charge under Sections 3 and 4 was found to be made out.

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Issues: Whether the materials on record disclosed a prima facie case to frame charge for money-laundering under the Prevention of Money Laundering Act, 2002 on the basis that the accused generated proceeds of crime through bogus transactions linked to scheduled offences and used the funds in furtherance of the alleged criminal activity.

Analysis: The complaint and accompanying statements disclosed a scheduled offence foundation in the form of the predicate FIRs involving offences under the Indian Penal Code, 1860. The material further indicated that funds were routed through companies controlled by the accused by means of bogus bills and entry operators, that cash was received against those entries, and that the money was then alleged to have been used for the riots. The definition of proceeds of crime under the Act was applied in its broad form to cover property derived, directly or indirectly, from criminal activity relatable to a scheduled offence. The recorded statements under Section 50 of the Act were treated as admissible at the charge stage and, taken at face value, supported the prosecution version. On that basis, the Court found grave suspicion and held that the absence of a separate attachment order did not defeat the prosecution at this stage.

Conclusion: Charge under Section 3 punishable under Section 4 of the Prevention of Money Laundering Act, 2002 was made out against the accused.

Final Conclusion: The complaint disclosed sufficient prima facie material to proceed against the accused for money-laundering, and the trial was directed to continue on that footing.

Ratio Decidendi: At the stage of framing charge under the Prevention of Money Laundering Act, 2002, a prima facie showing that the accused knowingly participated in the generation, possession, use, or projection of property derived from criminal activity relatable to a scheduled offence is sufficient to proceed.

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