PMLA proceedings need a proven nexus with proceeds of crime; process order quashed for lack of material and application of mind.

Proceedings under the Prevention of Money Laundering Act cannot be sustained unless there is material linking the applicant's acts to proceeds of crime derived from a scheduled offence. Here, the alleged proceeds arose in 2020-2021, while the property relied on against the applicant had been acquired in 2005-2007, so no nexus was shown. The material also did not disclose that the applicant knowingly assisted concealment, possession, acquisition, use, or projection of those proceeds as untainted property. The process order further failed to show application of mind to the material against the applicant, so the threshold of sufficient ground to proceed was not met. Relief was therefore granted to the applicant.

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Issues: Whether the complaint under the Prevention of Money Laundering Act, 2002 and the process order issued against the applicant were liable to be quashed for want of material showing that the alleged property or transaction was connected with proceeds of crime and for absence of sufficient ground to proceed.

Analysis: The complaint alleged that the scheduled offence and the alleged generation of proceeds of crime arose during 2020-2021, whereas the property relied on against the applicant had been acquired in 2005-2007. On the material placed, that property could not be linked to the proceeds of crime said to have arisen much later. The existence of proceeds of crime was treated as the foundational requirement for an offence under Section 3 of the Prevention of Money Laundering Act, 2002, and the material did not disclose that the applicant knowingly assisted concealment, possession, acquisition, use, or projection of such proceeds as untainted property. The process order also did not show application of mind to the material against the applicant, so the test of sufficient ground for proceeding was not satisfied.

Conclusion: The complaint and the order issuing process were held unsustainable qua the applicant, and relief was granted in favour of the applicant.

Ratio Decidendi: For an offence under Section 3 of the Prevention of Money Laundering Act, 2002, there must be material showing a nexus between the applicant's acts and proceeds of crime derived from a scheduled offence, and a process order lacking such material or lacking application of mind to it is liable to be quashed to prevent abuse of process.

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