PMLA prosecution needs independent material linking the accused to proceeds of crime; a co-accused statement alone is not enough.

Proceedings under the Prevention of Money Laundering Act require independent prima facie material linking the person proceeded against to proceeds of crime derived from a scheduled offence. A person need not be named in the predicate offence, but liability cannot rest solely on a co-accused's statement where the investigation does not otherwise show handling, diversion, concealment, possession, acquisition, or projection of tainted funds. On the facts noted, the predicate investigation did not implicate the petitioner, and the material was found insufficient to sustain continued prosecution.

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Issues: Whether the money-laundering prosecution could continue against the petitioner when the petitioner was not arraigned as an accused in the predicate offence, the CBI had not attributed criminality or diversion of funds to the petitioner, and the complaint rested mainly on the statement of a co-accused without independent supporting material.

Analysis: The offence under the Prevention of Money Laundering Act, 2002 depends on the existence of proceeds of crime derived from criminal activity relating to a scheduled offence, and liability under Section 3 attaches to any process or activity connected with such proceeds, including concealment, possession, acquisition, use, or projection as untainted property. Although a person need not be named in the scheduled offence to face proceedings under the Act, there must still be material showing involvement with proceeds of crime. Here, the transactions involving warehouse receipts and the movement of funds did not yield independent material establishing that the petitioner had handled proceeds of crime. The CBI investigation had not implicated the petitioner in the predicate offence, had not found diversion of funds in relation to the petitioner, and the allegation in the money-laundering case was substantially built on the statement of a co-accused recorded under Section 50 of the Act. Such a statement, without more, was insufficient to found a prima facie case for trial.

Conclusion: The petitioner could not be proceeded against on the material then available, and continuation of the money-laundering case against the petitioner was unjustified.

Final Conclusion: The revisional application succeeded and the prosecution was quashed against the petitioner, while the case continued against the other accused persons.

Ratio Decidendi: Proceedings under the Prevention of Money Laundering Act, 2002 require independent prima facie material showing involvement with proceeds of crime, and a co-accused's statement alone is insufficient to sustain prosecution where the predicate-investigation materials do not implicate the person proceeded against.

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