Prima facie money laundering allegations based on diversion of loan funds were enough to keep the proceedings alive.

Proceedings under the Prevention of Money Laundering Act, 2002 were not quashed because the complaint and investigation material disclosed a prima facie case of diversion and misuse of loan funds. The record indicated that farmer loans were credited into an escrow account and then transferred to other accounts for purposes other than those for which the loans had been sanctioned, while the petitioner was alleged to have been the company's Chief Executive Officer responsible for day-to-day affairs during the relevant period. On that material, the Court held that inherent jurisdiction could not be used to terminate the prosecution merely because the petitioner disputed his role, and the proceedings were permitted to continue.

---

---

Issues: Whether the proceedings under the Prevention of Money Laundering Act, 2002 and the summoning order could be quashed on the ground that the petitioner was not shown to have played any role in the alleged diversion of loan funds and that no prima facie offence of money laundering was made out against him.

Analysis: The petition sought exercise of inherent jurisdiction to quash the criminal proceedings arising from the complaint under the Prevention of Money Laundering Act, 2002. The material placed before the Court showed that the company had obtained farmer loans under a tie-up arrangement, the funds were credited into the escrow account and thereafter transferred to other accounts and used for purposes other than those for which the loans had been sanctioned. The petitioner was alleged to have been the Chief Executive Officer of the company during the relevant period and to have been responsible for the company's day-to-day affairs when the corporate loans were obtained and diverted. On the basis of the complaint and the investigation material, the Court found that a prima facie case of money laundering was disclosed. The Court also noted that the observations were confined to the present petition and would not prejudice the trial or any bail consideration.

Conclusion: The prayer for quashing was rejected and the proceedings were held fit to continue against the petitioner.

Final Conclusion: The challenge to the complaint and summoning order failed because the allegations disclosed a prima facie case under the anti-money-laundering law, leaving the prosecution to proceed in accordance with law.

Ratio Decidendi: Where the complaint and investigation material disclose prima facie diversion and misuse of loan funds in the course of the company's financial operations, the proceedings under the Prevention of Money Laundering Act, 2002 cannot be quashed in inherent jurisdiction merely on the plea that the accused disputes his role.

---