Source: Supreme Court 

Why in News? 

A bench of Justice Vikram Nath and Justice PB Varale held that the offences under PMLA are of a continuing nature.  

• The Supreme Court held this in the case of Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr. (2025). 

What was the Background of Delhi Development Authority v. S.G.G.  Towers (P) Ltd. & Ors. (2025) Case?   

• The appellant has filed an appeal against the Gujarat High Court’s order dated 14th March 2023, which dismissed his criminal revision application and upheld the Trial Court’s rejection of his discharge application in a money laundering case. 
• The Appellant had earlier approached the High Court through Criminal Revision Application No. 66 of 2018, challenging the Special Judge (PMLA), Ahmedabad’s order dated 08th January 2018 in PMLA, which had refused to discharge him under Section 227 of the CrPC. 
• The case arose from allegations of economic offences, where the Enforcement Directorate (ED) initiated proceedings against the appellant under the Prevention of Money Laundering Act, 2002 (PMLA). 
• The prosecution alleged that the appellant was involved in financial transactions linked to proceeds of crime, generated through fraudulent activities that caused significant financial losses to the State of Gujarat. 
• The ED claimed that the appellant facilitated money laundering by using banking channels and financial instruments to conceal the illicit origins of funds. 
• The appellant was arrested on 31st July 2016 in connection with ECIR/01/AZO/2012, registered by the ED on 12th March 2012, which stemmed from two FIRs: dated 31st March 2010 and FIR dated 25th September 2010. 
• The ED filed a complaint on 27th September 2016 before the Special Judge for offences under Sections 3 and 4 of the PMLA, citing two scheduled offences—one under the Prevention of Corruption Act, 1988, and another under various IPC provisions related to forgery and criminal conspiracy. 
• Charge sheets had been filed in both scheduled offences, and the appellant had secured bail—anticipatory bail in one case granted by the High Court on 03rd February 2012 and regular bail in another granted by the Supreme Court on 13th December 2011. 
• The appellant filed a discharge application under Section 227 of the CrPC, arguing that he was falsely implicated, no offence under the PMLA was made out, and the alleged offences predated the enforcement of the PMLA, making its application retrospective and legally impermissible. 
• He further contended that the financial transactions in question were linked to a company in which his wife was a partner, and that his bank accounts in the USA were unrelated to any criminal activity as they were opened during his studies. 
• The Special Judge (PMLA), in its order dated 08th January 2018, found prima facie evidence suggesting the appellant’s involvement in Hawala transactions and possession of proceeds of crime. 
• The Trial Court observed that the appellant had failed to discharge the burden of proof under Section 24 of the PMLA and rejected his discharge application. 
• The appellant then approached the High Court, claiming that the allegations against him were baseless, there was no direct evidence linking him to money laundering, and the prosecution had failed to establish a prima facie case. 
• The ED opposed the petition, arguing that the appellant played a key role in the money laundering scheme, facilitated the concealment of illicit funds, and derived financial benefits from the proceeds of crime. 
• The ED also contended that money laundering is a continuing offence, and as long as tainted money remains in circulation, the PMLA remains applicable. 
• The Gujarat High Court, in its order dated 14th March 2023, upheld the Special Judge’s decision, finding no procedural irregularity or legal infirmity. 
• The High Court held that the material on record indicated prima facie involvement of the appellant and emphasized the need for a strict approach in economic offences. 
• Concluding that the rejection of the discharge application was justified, the High Court dismissed the appellant’s revision application. 
• The appellant, aggrieved by the High Court’s decision, has now approached the Supreme Court, challenging the correctness of the judgment. 

What were the Court’s Observations? 

• The court rejected the appellant's contention that the alleged acts are not subject to PMLA proceedings because they occurred before relevant offences were included in the PMLA schedule. 
• The court established that offences under PMLA are of a continuing nature, persisting as long as proceeds of crime are concealed, used, or projected as untainted property. 
• The court referenced the judgment in Vijay Madanlal Chaudhary case, which confirmed that money laundering is an independent offence related to activities connected with proceeds of crime. 
• The court found that even if the criminal activity occurred before it was notified as a scheduled offence, continued dealing with its proceeds after notification makes one liable for prosecution under PMLA. 
• The court determined that in this specific case, material evidence shows the appellant's misuse of power, coupled with utilization and concealment of proceeds of crime, has had an enduring impact. 
• The court rejected the appellant's argument about the monetary threshold, finding that the quantum of proceeds of crime significantly exceeds the statutory threshold of Rs. 30 lakhs. 
• The court emphasized that the alleged offences involve land allotment transactions facilitated through forgery and fraud, resulting in a loss of over Rs. 1 crore to the government, plus hawala transactions and illegal gratification. 
• The court concluded that discharging the appellant at the pre-trial stage would be premature and contrary to principles governing prosecution in money laundering cases. 
• The court determined that a full trial is necessary given the severe nature of allegations to unearth the complete extent of the offence and analyze the chain of financial transactions.

What is Prevention of Money Laundering Act, 2002? 

• About: 
  • Prevention of Money Laundering Act, 2002 is an Act of the Parliament of India enacted by the National Democratic Alliance (NDA) government to prevent money-laundering and to provide for confiscation of property derived from money-laundering. PMLA and the Rules notified thereunder came into force with effect from 1st July 2005. 
• Objective of PMLA: 
  • The PMLA seeks to combat money laundering in India and has three main objectives: 
    • To prevent and control money laundering. 
    • To confiscate and seize the property obtained from the laundered money. 
    • To deal with any other issue connected with money laundering in India. 
• Important Provisions of the Act: 
  • Section 45: Offences to be cognizable and non-bailable. 
    • It lays down conditions to be satisfied for the purpose of granting bail to an accused charged with the offence of money laundering. 
  • Section 50: Powers of authorities regarding summons, production of documents and to give evidence, etc. 
    • It details the powers of authorities in issuing summons, producing documents, and giving evidence. It equates the director's powers to those of a civil court under the Code of Civil Procedure, 1908, for matters like discovery and inspection, enforcing attendance, compelling production of documents, and issuing commissions. 
    • Section 50(2) empowers the Director and other officers to summon any person during any investigation or proceedings under the PMLA. Rule 2(p) and Rule 11 of PML Rules, 2005 further specify these powers. 
    • Section 50(3) mandates that all summoned persons must attend in person or through authorized agents, state the truth upon examination, and produce required documents. 
    • Section 50(4) deems every proceeding under Section 50(2) and Section 50(3) as a judicial proceeding as per Sections 193 and 228 of the Indian Penal Code, 1860. 
    • Section 50(5) allows any officer referred to in Section 50(2) to impound and retain any records produced before him in any proceedings under Act 15 of 2003. There are safeguards in place to prevent misuse of this power.