2026 (3) TMI 511 - HC - Money Laundering

Proceeds of crime linkage: complaint alleging property derived from scheduled offences meets prima facie threshold and warrants trial.

Whether the complaint and summons disclose an offence under the Prevention of Money Laundering Act turns on whether identified property can be prima facie ... Definition of 'proceeds of crime' and 'property' and the offence under Section 3 - commission of an offence under the PMLA - large scale illegal quarrying and quantified illegal extraction and sale of granite - Scope of High Court jurisdiction under Section 482 Cr.P.C. to quash a PMLA complaint. Construction of 'proceeds of crime' under the PMLA - offence of money laundering predicated on dealing with proceeds, not generation timing of predicate offence - HELD THAT:- The Court examined the complaint as a whole, the ECIR registration, the predicate FIRs and the evaluation and verification material and concluded that the averments identify properties and lease transactions said to have been used to generate and launder proceeds of scheduled offences. Relying on the statutory definitions in Sections 2(1)(u), 2(1)(v) and 3 PMLA and the principles in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], the Court held that the complaint furnishes sufficient particulars and material to prima facie link the impugned property and lease transactions to proceeds of crime and to allege offences under Section 3; detailed investigation and evidence on these aspects are matters for trial and not for summary quashing under Section 482 Cr.P.C. [Paras 30, 33, 40, 42, 43] The Special Court rightly took cognizance; the complaint prima facie discloses an offence under the PMLA and requires a fair trial. Offence of money laundering predicated on dealing with proceeds, not generation timing of predicate offence - scope of High Court jurisdiction under Section 482 Cr.P.C. to quash a PMLA complaint - Acquisition of property prior to the period of predicate offences does not preclude its characterization as proceeds of crime where complaint pleads its subsequent use in laundering, and such pleaded material cannot be summarily quashed - HELD THAT:- The Court rejected the petitioner's contention that purchase of the land in 2000 (prior to the 2001 2012 predicate period) by itself negates any charge under PMLA. It observed that the complaint specifically pleads transfer/renewal of mining lease and use of the property to generate and launder proceeds (including Document No.2111/2004) and that under Sections 2(1)(u) and 2(1)(v) property acquired earlier can be involved in continuing laundering activity once used for concealment, possession, acquisition, use or projecting as untainted property. Given these pleaded facts, the matter is fit for trial and not for exercise of extraordinary quashing jurisdiction. [Paras 38, 39, 40, 41, 42] The petitioner's argument based on prior acquisition is misplaced; the complaint's averments about subsequent lease/usage and laundering are sufficient to proceed to trial. Final Conclusion: The petition under Section 482 Cr.P.C. is dismissed; the High Court found that the complaint and accompanying material prima facie disclose offences under the PMLA against the petitioner and that the matters raised are for trial rather than summary quashing. Issues: Whether the complaint in C.C.No.9 of 2018 and the consequential summons issued by the Special Court under the Prevention of Money Laundering Act, 2002 insofar as the petitioner (M/s RR Granites represented by its partner P. Rajasekaran) is concerned, ought to be quashed under the extraordinary jurisdiction of the High Court on the ground that the complaint does not prima facie disclose an offence under the PMLA.Analysis: The statutory definitions in the Prevention of Money Laundering Act, 2002, in particular the definition of 'proceeds of crime' and 'property' and the offence under Section 3, require that property be shown to be derived or obtained, directly or indirectly, as a result of criminal activity relatable to a scheduled offence, and that dealing with such proceeds by concealment, possession, acquisition, use or projecting them as untainted property constitutes money laundering. The complaint before the Special Court arises from investigations (ECIR No.3 of 2014) based on multiple predicate FIRs alleging large scale illegal quarrying and quantified illegal extraction and sale of granite during 2001-2012. The complaint identifies specific properties (including the petitioner's land) and pleads that the properties were used to generate and launder proceeds of the scheduled offences, including particulars of evaluation, quantified volumes and a renewal/lease dated 29.06.2004 related to the petitioner's land. The complaint, read as a whole, supplies prima facie material linking the identified property to the alleged laundering activity and pleads that acquisition/lease/usage of the property formed part of the continuing laundering activity. Under the settled scope of quashing jurisdiction, the Court must determine whether, on the face of the complaint, no offence is disclosed or the proceedings are an abuse of process; it is not to conduct a full trial or engage in a roving inquiry into the merits. The complaint contains specific averments and documentary references that, if accepted for the limited purpose of prima facie scrutiny, disclose ingredients of an offence under Section 3 PMLA requiring a fair trial.Conclusion: The petition to quash the complaint and summons is dismissed; the complaint and summons insofar as they relate to the petitioner raise prima facie allegations under the Prevention of Money Laundering Act, 2002 and require trial before the Special Court and therefore do not merit interference under Section 482 Cr.P.C.