TaxTMI 
TaxTMI 
2025 (11) TMI 1951
X X X X Extracts X X X X
X X X X Extracts X X X X
....) has filed CRLMC No.1758 of 2019 challenging the very same order of cognizance. Since the facts and circumstances involved in CRLREV No.119 of 2023, CRLMC No.1756 of 2019 and CRLMC No.1758 of 2019 are substantially identical; inasmuch as Chhatrapur P.S. Case No.119 of 2015, the resultant G.R. Case, and Complaint Case (PMLA) No.61 of 2018 emanates from the same occurrence and the same factual matrix, the present CRLREV and the connected CRLMCs were taken up together for analogous hearing. It is also noted that two additional CRLMCs, namely CRLMC No.1757 of 2019 filed by co-accused Surendranath Mishra, and CRLMC No.1775 of 2019 filed by Sri Sri Mahapurusha Achyutananda Trust represented through its Chairman-cum-Managing Trustee, Trilochan Mishra (Petitioner No.1), were also preferred challenging the same order of cognizance. However, CRLMC No.1775 of 2019 was not pressed. 3. The background facts, in brief, are that Opposite Party No.2-the Deputy Director, Enforcement Directorate, Government of India, Bhubaneswar filed a complaint under Section 45 of the Prevention of Money Laundering Act, 2002, which was registered as Complaint Case (PMLA) No.61 of 2018 before the learned Sess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by a competent court, continuation of proceedings under the PMLA cannot be sustained, as the very foundation for alleging the offence of money laundering ceases to exist. He further submits that the essential ingredients of Section 3 of the PMLA namely, the existence of "criminal activity" and "proceeds of crime" derived therefrom must be demonstrably established. The Petitioners' properties sought to be attached are neither products of any criminal activity nor derived from any proceeds of crime. Learned Senior Counsel asserts that the Enforcement Directorate has not even attempted to lay material to establish that the properties in question were acquired through illicit or tainted funds. On the contrary, the entire allegation in the scheduled offence is limited to the Petitioners having executed a sale deed in place of a gift deed in favour of the informant. As admittedly no monetary transaction is alleged in the scheduled offence, the question of existence of "proceeds of crime" does not arise. He submits that Section 5 of the PMLA mandates that the person concerned must be in possession of property "derived or obtained, directly or indirectly, as a result of criminal activit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lable on record, the learned Special Court had rightly rejected their prayer for discharge, particularly as the Petitioners failed to discharge the statutory burden cast upon them under Section 24 of the PMLA to establish that the properties acquired by them were not "proceeds of crime" and were untainted. According to Mr. Agarwal, offences under the PMLA must be viewed with seriousness having regard to their deleterious impact on the economy. Section 3 of the Act clearly encompasses any person who directly or indirectly attempts to indulge in, knowingly assists, or is actually involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition, or use, and its projection or claiming as untainted property. Such a person is liable to be prosecuted for the offence of money laundering. Drawing the attention of this Court to Section 44 of the PMLA, learned Senior Counsel submits that it is well settled by a catena of decisions of the Hon'ble Supreme Court that the quashing of a scheduled offence does not ipso facto terminate proceedings under the PMLA. The offence of money laundering is an independent offence, and its existenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....LA is a distinct and standalone offence, and that quashing of the predicate offence does not, by itself, render PMLA proceedings unsustainable. In view of the foregoing, it is submitted that the impugned order declining the Petitioners' prayer for discharge suffers from no infirmity and warrants no interference, and that the Petitioners must face trial. 6. Mr. S. Nayak, learned Special P.P. (CBI), while supporting the submissions advanced on behalf of the Enforcement Directorate and submits that the present case discloses a clear and consistent pattern of large-scale fraudulent transactions constituting the foundational criminal activity from which the alleged "proceeds of crime" have arisen. It is contended that the scheduled offences registered and investigated by the CBI reveal the generation of illicit assets through systematic manipulation of land records, abuse of official position and criminal conspiracy, forming the very predicate upon which the PMLA proceedings rest. He thus argued that the quashing of cognizance in one of the connected FIRs does not efface the criminal activity constituting the scheduled offences which continue to subsist independently in the remaining....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. 24. Burden of proof.-In any proceeding relating to proceeds of crime under this Act,- (a) in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and (b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering. 8. A scheduled offence constitutes the predicate criminal activity from which illicit gain may arise. The property so derived or obtained, directly or indirectly, from such criminal activity is defined as "proceeds of cri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f money laundering an independent and continuing character. Judicial pronouncements have consistently affirmed this principle. The Hon'ble Supreme Court in the matter of Pradeep Nirankarnath Sharma vs. Directorate of Enforcement & Anr., reported in 2025 SCC OnLine SC 560 has clarified that money laundering does not conclude with the completion of the scheduled offence; rather, the offence continues so long as the proceeds of crime are enjoyed, held, concealed, layered, or projected in the economy. "24. In the present case, the material on record establishes that the misuse of power and position by the appellant, coupled with the alleged utilization and concealment of proceeds of crime, has had an enduring impact. The act of laundering money is not a one-time occurrence but rather a process that continues so long as the benefits derived from criminal activity remain in circulation within the financial system or are being actively utilized by the accused. The respondent has submitted that fresh instances of the utilization of the proceeds of crime have surfaced even in recent times, thereby extending the offence into the present and negating the appellant's contention tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e offence. Whether, in a given case, the quashing or failure of the scheduled offence removes the foundational facts necessary to sustain a charge under the PMLA is a separate question, to be determined on the facts of each case; but the law does not recognise a mechanical or automatic termination of PMLA proceedings on that basis. 14. In Pavana Dibbur vs. Directorate of Enforcement, reported in 2023 SCC OnLine SC 158, the Hon'ble Supreme Court while citing Vijay Madanlal Choudhary vs. Union of India (Supra), held the following and further clarified that while proceedings under the PMLA are independent and the accused in the money-laundering case need not necessarily be an accused in the predicate offence, the scheduled offence must nevertheless exist as a foundational fact. "15. Coming back to Section 3 of the PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled offence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es deserves to be rejected. 25. The legislative intent which can be gathered from the definition of the scheduled offence under clause (y) of sub-Section (1) of Section 2 of the PMLA is that every crime which generate proceeds of crime need not be a scheduled offence. Therefore, only certain specific offences have been included in the Schedule. Thus, if the submissions of the learned Additional Solicitor General are accepted, the Schedule will become meaningless or redundant. The reason is that even if an offence registered is not a scheduled offence, the provisions of the PMLA and, in particular. Section 3 will be invoked by simply applying Section 120-B. If we look at Section 120-B, only because there is a conspiracy to commit an offence, the same does not become an aggravated offence. The object is to punish those involved in conspiracy to commit a crime, though they may not have committed any overt act that constitutes the offence. Conspiracy is an agreement between the accused to commit an offence. If we look at the punishments provided under Section 120-B, it becomes evident that it is not an aggravated offence. It only incorporates the principle of vicarious liabili....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uired; d. The issue of whether the appellant has used tainted money forming part of the proceeds of crime for acquiring the second property can be decided only at the time of trial; and e. The offence punishable under Section 120-B of the IPG will become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule." 15. In this context, if all accused in the predicate offence are acquitted or discharged, or the scheduled offence is quashed in its entirety, the prosecution under the PMLA cannot survive, as there would be no proceeds of crime in the eyes of law. The independent nature of the PMLA, therefore, does not dispense with the jurisdictional requirement that the scheduled offence must subsist. it is equally well-settled that where multiple FIRs alleging scheduled offences exist, each such FIR constitutes an independent factual foundation for invocation of the PMLA. The quashing of cognizance in one predicate case does not efface the jurisdiction of the Enforcement Directorate if other FIRs, containing allegations capable of generating proceeds of crime remain pending. PMLA proceedings may th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es in favour of the existence of proceeds of crime until rebutted by the accused through cogent explanation. 17. This position finds support from the Division Bench of the Madras High Court in Asst. Directorate (PMLA) of Enforcement v. Ashok Anand, reported in 2024 SCC OnLine Mad 8258, held as follows: "19. Section 65 of PMLA stipulates that "Criminal Procedure Code, 1973 to apply." Accordingly, the provisions of Criminal Procedure Code, 1973 shall apply, in so far as they are not inconsistent with the provisions of the Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act. 20. When Section 65 of PMLA stipulates that the special enactment namely PMLA would prevail over Cr. P.C. Thus, the reliance placed on by the learned Senior Counsel would have no assistance to support the case of the respondent. When the procedures contemplated under PMLA are independent and distinct to other penal laws, the same would prevail over the general provisions and the commencement of proceedings under PMLA, thereafter will be a standalone process. 21. Section 71 of PMLA states that the provisions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ach case must therefore be examined on its own factual matrix to ascertain whether the property in question retains the taint of illicit origin. The legal principle that thus emerges is that the existence of proceeds of crime is a condition precedent for invoking the PMLA, but its precise extent, form, and connection to the scheduled offence are matters of investigation and trial. The ECIR, being independent of the FIR, may continue to hold field so long as there is prima facie material indicating that property derived from a scheduled offence exists and is being dealt with in a manner attracting Section 3 of the Act. Issue 3: Whether, under Section 24 of the Prevention of Money Laundering Act, 2002, the statutory presumption regarding the nature of property as "proceeds of crime" shifts the burden of proof upon the accused, and to what extent such burden must be discharged at the stage of consideration under Section 227 Cr.P.C.? 20. Section 24 of the PMLA introduces a departure from the ordinary rule of criminal jurisprudence by prescribing a reverse burden of proof. Ordinarily, the prosecution bears the obligation to establish the guilt of the accused beyond reasonable doub....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be considered is whether there is a ground for presuming that the offence has been committed and not a ground for convicting the accused has been made out. At that stage, even strong suspicion founded on material which leads the court to form a presumptive opinion as to the existence of the factual ingredients constituting the offence alleged would justify the framing of charge against the accused in respect of the commission of that offence." 56. Then again in the case of Som Nath Thapa (supra), a three- Judge Bench of this Court, after noting the three pairs of Sections i.e. (i) Sections 227 and 228 resply in so far as the sessions trial is concerned; (ii) Sections 239 and 240 resply relatable to the trial of warrant cases; and (iii) Sections 245(1) and (2) qua the trial of summons cases, which dealt with the question of framing of charge or discharge, stated thus: (SCC p. 671, para 32). "32...if on the basis of materials on record, a court could come to the conclusion that commission of the offence is a probable consequence, a case for framing of charge exists. To put it differently, if the court were to think that the accused might ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the face value and accepted in their entirety do not constitute the offence for which the accused has been charged." 76. Thus, the revisional power cannot be exercised in a casual or mechanical manner. It can only be exercised to correct manifest error of law or procedure which would occasion injustice, if it is not corrected. The revisional power cannot be equated with appellate power. A revisional court cannot undertake meticulous examination of the material on record as it is undertaken by the trial court or the appellate court. This power can only be exercised if there is any legal bar to the continuance of the proceedings or if the facts as stated in the charge-sheet are taken to be true on their face value and accepted in their entirety do not constitute the offence for which the accused has been charged. It is conferred to check grave error of law or procedure." 22. At the stage of consideration under Section 227 Cr.P.C., the Court is not required to test whether the accused has conclusively rebutted the presumption. The inquiry is confined to whether there exists sufficient ground to proceed namely, whether the material on record, if unrebutted, would constitut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lects an advantage derived from the alleged wrongdoing. However, the mere fact of a civil dispute or an irregular property transaction is not enough to attract the PMLA. There must be a prima facie nexus showing that the property in question is the product of the criminal activity relating to the scheduled offence. If such nexus exists, the absence of direct monetary flow does not invalidate proceedings under the Act; if it does not, invocation of PMLA would be unwarranted. Thus, the governing principle is that PMLA is concerned with illicit gain in any form, and not merely with money, and the assessment is ultimately fact-specific, depending on whether the property reflects the unlawful benefit of the predicate offence. Issue 5: Whether the supplementary complaint filed by the Enforcement Directorate under Section 45 of the PMLA strengthens the foundational requirements for cognizance of the offence of money laundering? 26. A supplementary complaint under the PMLA stands on a similar footing as a supplementary charge sheet under the Code of Criminal Procedure. It is a recognised procedural mechanism enabling the Enforcement Directorate to bring on record additional materials....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... considering discharge under Section 227 Cr.P.C., the Court is not required to arrive at definitive conclusions regarding the laundering methodology. It is sufficient if the materials placed by the Enforcement Directorate indicate that the transactions are not isolated, but part of a larger chain in which the property in question may have changed hands, form, or value in a manner warranting closer scrutiny. Large-scale transfers, repeated conveyances, or shifting of title over time can therefore supply a legitimate basis to proceed to trial, particularly when such transactions coincide with the period of alleged criminal activity or pertain to assets which are otherwise under investigation as possible proceeds of crime. 30. The legal position that emerges is that patterns of successive land or property dealings, especially when temporally aligned with the alleged predicate activity, may justify a presumption of laundering processes at the prima facie stage. Whether these transactions ultimately constitute placement, layering, or integration is a matter of evidence, to be established through trial; but their presence at the threshold is sufficient to decline discharge and require....