2026 (2) TMI 1024 - HC - Money Laundering

Money Laundering treated as independent continuing offence; conviction upheld where proceeds were used and projected as untainted property.

Money laundering under the PMLA is treated as an independent, continuing offence involving possession, acquisition, use or projection of proceeds of crime ... Money-laundering as a continuing offence - application of PMLA to proceeds derived from prior scheduled offences - proceeds of crime used in construction amounting to offence of money-laundering - statutory presumption placing burden on accused in money laundering prosecutions - distinctness of offence under PMLA vis-a -vis predicate/scheduled offences (no double jeopardy) - concurrent running of sentences for distinct offences - retrospective and overriding effect of the PMLA - HELD THAT:- Before proceeding further, it may be necessary to understand the object of PMLA. The Prevention of Money-Laundering Act, 2002 was introduced, as its Statement of Objects and Reasons mentions, to make money laundering an offence, and to attach property involved in money laundering, so that this serious threat to the financial system of India is adequately dealt with. Keeping in view the object behind PMLA and the scope of Section 3 of PMLA as explained by the Supreme Court in Vijay Madanlal Chaudary's case [2022 (7) TMI 1316 - SUPREME COURT (LB)] and on applying the same to the instant case, we are of the view that appellants were convicted for predicate offence under Section 3 and 4 of PMLA read with Section 13(2) and 13(1)(e) of PCA and Section 120B of IPC. From the records, it is discernible that appellants were convicted for predicate offence under Section 3 and 4 of PMLA read with Section 13(2) and 13(1)(e) of PCA and Section 120B of IPC. The proceeds of such crime was used in construction of multi-storied building, which clearly establishes that the appellants were directly involved in possession, acquisition and use of the entire building thereby attracting the wrath of Section 3 of Prevention of Money Laundering Act punishable under Section 4 of the said Act. We find that the Trial Court has in fact found that the prosecution has established and proved through oral and documentary evidence that accused have committed the offence u/s 3 of PML Act, punishable u/s 4 of PML Act, and therefore, the accused are found guilty of the offence under Section 4 of Prevention of Money Laundering Act, 2002 only on considering the above material on record. We agree with the findings of the Trial Court and are of the view that the impugned order does not warrant interference. Issues: Whether the appellants were guilty of the offence of money laundering under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002 (in relation to alleged schedule/predicate offences under Section 13(2) read with Section 13(1)(e) of the Prevention of Corruption Act, 1988 and Section 120B of the Indian Penal Code, 1860), and whether the Trial Court's conviction and sentence under PMLA is sustainable on the materials on record.Analysis: The offence under Section 3 of the Prevention of Money Laundering Act, 2002 is an independent, continuing offence involving processes or activities connected with proceeds of crime, including possession, acquisition, use or projecting as untainted property. The decision under review applied that legal framework and evaluated documentary and oral evidence relevant to possession, acquisition and use of the immovable property and construction costs (including builder invoices and statements, valuation report, bank transaction records, admissions in statutory forms and inconsistent explanations as to sources of funds). The Trial Court's findings on valuation, construction invoices and receipts, cash deposits and disparities between declared and proved construction cost were accepted as establishing that proceeds of crime were used in construction and were projected as untainted property. The appellate consideration applied the established presumption and burden under the PMLA and treated the offences under PMLA as distinct from the predicate offences; concurrent findings that the ingredients of Section 3 were satisfied were not displaced on appeal.Conclusion: Issue decided against the appellants; the conviction and sentence under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002 (in relation to the cited predicate offences) are upheld.