PMLA prosecution can proceed independently of predicate offence proceedings, Section 3 covers all money laundering stages

The HC dismissed petitions seeking to quash PMLA proceedings. The court held that PMLA prosecution can proceed independently of predicate offence proceedings, as the accused in PMLA cases need not be identical to those in scheduled offence cases. The common element required is proceeds of crime, not the offenders. Money laundering encompasses placement, layering, and integration stages, with Section 3 having wide reach to capture all processes involving proceeds of crime. The 2019 amendment's explanation to Section 3 was clarificatory, not expansive. Since the predicate offence trial had concluded with convictions, the PMLA prosecution could validly proceed at any stage of the money laundering process.

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Issues Involved:
1. Quashing of criminal complaint under PMLA.
2. Validity of proceedings under PMLA in light of pending predicate offence.
3. Interpretation of "proceeds of crime" and its application.
4. Jurisdictional concerns regarding trial courts.

Summary:

Issue 1: Quashing of Criminal Complaint under PMLA

The petitions sought to quash the criminal complaint under \u/s 45(1) of the Prevention of Money-Laundering Act, 2002 (PMLA) for offences punishable under Sections 3, 4, and 8(5) of the Act. The complaint was initiated by the Deputy Director, Enforcement Directorate, Madurai, and taken cognizance in C.C.No.9 of 2017.

Issue 2: Validity of Proceedings under PMLA in Light of Pending Predicate Offence

The petitioners argued that the predicate offence initiated by CBI was still pending, hence the PMLA complaint lacked a basis. They contended that without proving the predicate offence, the money used for property investments could not be deemed proceeds of crime. However, the court noted that the Supreme Court in Vijay Madanlal Choudhary and others vs. Union of India had clarified that the outcome of the predicate offence is not necessary for initiating proceedings under PMLA.

Issue 3: Interpretation of "Proceeds of Crime" and Its Application

The petitioners claimed that the properties were purchased from their own income sources and loans, and not from proceeds of crime. The court referred to the Supreme Court's interpretation in Vijay Madanlal Choudhary case, which stated that "money-laundering" includes every process and activity dealing with proceeds of crime, not limited to the final act of integrating tainted property into the formal economy. The court emphasized that the offence of money-laundering is independent and can be prosecuted even if the predicate offence was committed before the PMLA came into force.

Issue 4: Jurisdictional Concerns Regarding Trial Courts

The petitioners argued that prosecuting the case in different courts caused prejudice. The court clarified that the trial in C.C.No.9 of 2017 was transferred to the Special Court for CBI cases, Madurai, following a notification by the Union of India and the proceedings of the High Court Madras. The court reiterated that the PMLA offence can be tried independently of the predicate offence.

Conclusion

The court dismissed the petitions, stating that the arguments lacked merit in light of the Supreme Court's authoritative pronouncement in Vijay Madanlal Choudhary case. The petitions to quash the criminal complaint under PMLA were dismissed, and consequently, the miscellaneous petitions were also dismissed.

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