Money-laundering liability requires prima facie knowledge and participation; mere negligence is insufficient, and Section 202 inquiry was unnecessary.

Section 202 CrPC was held unnecessary before cognizance where a complaint is filed by an authorised officer and the Special Court acts under Section 44 of the PMLA; the process was therefore not vitiated on that ground. Money-laundering liability under Section 3 was also stated to extend beyond the person arraigned in the predicate offence, so prior prosecution in the scheduled offence was not a precondition. However, on the material available, the petitioner was shown at most to have acted negligently in onboarding merchant IDs, with no prima facie evidence of knowledge or knowing assistance in dealing with proceeds of crime. The proceedings against the petitioner were therefore not sustainable.

---

---

Issues: (i) Whether cognizance and issuance of summons could be taken without an enquiry under Section 202 of the Code of Criminal Procedure, 1973. (ii) Whether a person not arraigned in the predicate offence can nonetheless be prosecuted for the offence of money-laundering under Section 3 of the Prevention of Money Laundering Act, 2002. (iii) Whether the material gathered in the investigation disclosed a prima facie offence under Section 3 against the petitioner.

Issue (i): Whether cognizance and issuance of summons could be taken without an enquiry under Section 202 of the Code of Criminal Procedure, 1973.

Analysis: Section 44 of the Prevention of Money Laundering Act, 2002 empowers the Special Court to take cognizance of the offence under Section 3 notwithstanding the Code of Criminal Procedure, 1973. The complaint was filed by an authorised officer in discharge of official duties, and the statutory framework did not require the Special Court to first resort to Section 202 before issuing process. The objection based on non-compliance with Section 202 was therefore untenable.

Conclusion: The absence of an enquiry under Section 202 did not vitiate the cognizance or issuance of summons.

Issue (ii): Whether a person not arraigned in the predicate offence can nonetheless be prosecuted for the offence of money-laundering under Section 3 of the Prevention of Money Laundering Act, 2002.

Analysis: The offence of money-laundering is not confined to the person charged with the scheduled offence. Liability under Section 3 extends to any person who directly or indirectly attempts to indulge, knowingly assists, or is actually involved in any process or activity connected with proceeds of crime as untainted property. The existence of a scheduled offence is relevant, but prior prosecution in that offence is not a necessary precondition for proceeding under the Act.

Conclusion: Yes, prosecution under Section 3 was maintainable even though the petitioner was not charged in the predicate offence.

Issue (iii): Whether the material gathered in the investigation disclosed a prima facie offence under Section 3 against the petitioner.

Analysis: The ingredients of Section 3 require proceeds of crime, participation in concealment or use of such proceeds, and knowledge or intention. On the material placed, the petitioner's role was at highest one of negligence in onboarding merchant IDs. The record did not disclose that the petitioner had knowledge that the funds were proceeds of crime or that it knowingly assisted in concealing or projecting such funds as untainted. In the absence of prima facie material showing the requisite intent, the presumption and burden-shifting under Section 24 could not be invoked against the petitioner.

Conclusion: No prima facie offence under Section 3 was made out against the petitioner.

Final Conclusion: The continuation of the proceedings against the petitioner was unwarranted, and the criminal action insofar as it related to the petitioner could not be sustained.

Ratio Decidendi: For prosecution under Section 3 of the Prevention of Money Laundering Act, 2002, there must be prima facie material showing knowing participation in a process or activity connected with proceeds of crime; mere negligence or absence of such knowledge is insufficient, and Section 202 of the Code of Criminal Procedure, 1973 does not curtail the Special Court's power under Section 44 of the Act to take cognizance.

---