Commercial renovation payments cannot become proceeds of crime absent a prima facie scheduled offence or dishonest intent.

An admitted commercial renovation contract and instalment-based payments against work progress could not be treated as proceeds of crime where the record did not disclose any prima facie scheduled offence. The Court also found that the allegations, viewed with the correspondence and partial performance, did not show dishonest intention at inception, entrustment, or misappropriation; the dispute remained civil in nature and the criminal process could not be sustained. On that basis, proceedings under the PMLA and the connected criminal prosecution were set aside, and the attachment of properties was cancelled.

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Issues: (i) Whether the amounts paid under the renovation agreement could be treated as "proceeds of crime" so as to sustain proceedings for money-laundering. (ii) Whether the allegations disclosed the ingredients of cheating or criminal breach of trust, and whether the criminal proceedings and issuance of process were maintainable in the facts and jurisdictional setting.

Issue (i): Whether the amounts paid under the renovation agreement could be treated as "proceeds of crime" so as to sustain proceedings for money-laundering.

Analysis: The alleged money-laundering case rested entirely on the premise that the amounts paid under the renovation agreement were tainted money. The record showed, however, that the parties had entered into a separate, admitted contract for renovation and additional amenities, that payments were made in instalments against progress of work, and that the complainant himself acknowledged completion of substantial work and withheld only a balance for incomplete items. The Court found that the Enforcement Directorate ignored the contractual matrix and wrongly treated a contractual payment as property derived from criminal activity. Since the foundational allegation of a scheduled criminal activity was not made out, the amount received under the renovation agreement could not be characterised as proceeds of crime.

Conclusion: The finding that the renovation payments were proceeds of crime is unsustainable and the money-laundering case fails.

Issue (ii): Whether the allegations disclosed the ingredients of cheating or criminal breach of trust, and whether the criminal proceedings and issuance of process were maintainable in the facts and jurisdictional setting.

Analysis: The dispute arose from a commercial transaction concerning sale of premises and related renovation works, with the complainant's grievance centring on delay in obtaining occupation certificate and possession. The correspondence on record showed performance under the agreements, partial withholding for incomplete work, and recourse by the complainant to civil remedies. On these facts, the essential element of dishonest intention at inception was absent, no entrustment or misappropriation was shown, and the controversy remained civil in nature. The Court also noted that the jurisdictional foundation was infirm, as the matter had already been treated by the police as civil and the later attempt to invoke a different local jurisdiction rested on an unsubstantiated afterthought.

Conclusion: No case for cheating, criminal breach of trust, or lawful continuation of the criminal prosecution was made out, and the process order could not stand.

Final Conclusion: The criminal revision succeeded, the process issued under the PMLA was set aside, and the attachment of the applicant's properties was cancelled, with exemplary costs imposed on the complainant and the Enforcement Directorate.

Ratio Decidendi: Where the underlying transaction is an admitted commercial contract, payments are made pursuant to that contract, and the record shows at most a civil dispute over performance or delay, the amounts paid cannot be treated as proceeds of crime in the absence of a prima facie scheduled offence or the essential ingredients of cheating or criminal breach of trust.

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