Case Note & Summary
The appellant, Pradeep Nirankarnath Sharma, was implicated in a money laundering case under the Prevention of Money Laundering Act, 2002 (PMLA) based on two scheduled offences: one under the Prevention of Corruption Act, 1988 (FIR No. 03/2010) and another under various sections of the IPC (FIR No. 09/2010). The Enforcement Directorate (ED) registered an ECIR in 2012 and filed a complaint in 2016. The appellant sought discharge under Section 227 CrPC before the Special Judge (PMLA), Ahmedabad, arguing that the scheduled offences predated the PMLA and its amendments, and thus the PMLA could not be applied retrospectively. He also contended that the transactions were of his wife's company and that his US bank accounts were opened during his studies. The Special Judge rejected the discharge application, finding prima facie material of the appellant's involvement in hawala transactions and possession of proceeds of crime, and noting that the appellant failed to discharge the burden under Section 24 PMLA. The High Court of Gujarat dismissed the criminal revision, holding that the trial court's order did not suffer from any illegality. The Supreme Court, after hearing arguments, dismissed the appeal. The Court held that money laundering is a continuing offence, and as long as the proceeds of crime remain in circulation, PMLA applies regardless of when the scheduled offence was committed. The Court also noted that the issue of retrospective application is pending before a three-judge bench in ED v. M/s Obulapuram Mining Company Pvt. Ltd., but in the present case, the appellant had not made out a case for discharge. The appeal was dismissed.
Headnote
A) Criminal Law - Money Laundering - Continuing Offence - Prevention of Money Laundering Act, 2002, Sections 3, 4, 2(1)(u), Schedule - The offence of money laundering under Section 3 PMLA is a continuing offence; as long as tainted money remains in circulation, PMLA is applicable irrespective of when the scheduled offence was committed. The court held that the retrospective application of PMLA is permissible in such circumstances (Paras 18-20). B) Criminal Procedure - Discharge - Section 227 CrPC - Standard of Proof - At the stage of discharge, the court is to consider only the material produced by the prosecution and not the defence evidence; if there is prima facie material to proceed, discharge should not be granted. The High Court correctly upheld the trial court's rejection of discharge where the ED had placed material indicating prima facie involvement of the appellant in money laundering (Paras 8, 14-15). C) Evidence - Burden of Proof - Section 24 PMLA - Reverse Burden - Once the prosecution establishes that the accused is in possession of proceeds of crime, the burden shifts to the accused to prove that such property is untainted. The appellant failed to discharge this burden at the stage of discharge (Para 8).
Issue of Consideration
Whether the appellant is entitled to discharge under Section 227 CrPC in a PMLA case where the scheduled offences predate the PMLA or its amendments, and whether the PMLA can be applied retrospectively to such offences.
Final Decision
The Supreme Court dismissed the appeal, upholding the orders of the Special Judge and the High Court rejecting the appellant's discharge application. The Court held that money laundering is a continuing offence and the PMLA applies irrespective of when the scheduled offence was committed, as long as proceeds of crime remain in circulation. The appeal was dismissed.
Law Points
- Money laundering is a continuing offence
- PMLA applies to proceeds of crime in circulation regardless of when scheduled offence was committed
- burden of proof under Section 24 PMLA shifts to accused to show property is untainted
- revisional court should not interfere with well-reasoned trial court orders unless manifest error or miscarriage of justice
