Mere Possession Of Proceeds Of Crime Would Be Sufficient To Invoke Provisions Of PMLA: Madras High Court

The Court was hearing a Criminal Revision Case filed against dismissal of discharge petition filed by the accused.

The bench of Justice SM Subramanian and Justice AD Maria Clete observed, “…mere possession of proceeds of crime would be sufficient to invoke the provisions of PMLA. Using the proceeds of crime by itself is an offence. Since the scope of Section 3 is wider enough to cover various circumstances in order to curb the economic offences, High Court cannot restrict its meaning so as to restrain the Authorities from invoking the provisions of PMLA.”

Senior Advocate R Raja Rathinam appeared for the Appellant and Senior Public Prosecutor P Sidharthan appeared for the Respondent.

Brief Facts-

The CBI filed multiple FIRs against an individual under Section 120 B and Section 420 of IPC and Sections 7, 8, 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 including charges of collecting money from Indian Overseas Bank employees and accumulating disproportionate assets, as well as diverting union funds for personal property purchases. Following the investigation, the Enforcement Directorate (ED) initiated proceedings under the Prevention of Money Laundering Act (PMLA), attaching assets including bank deposits, cars, and property, which were classified as "proceeds of crime." The attachment was confirmed by the Adjudicating Authority, and a prosecution complaint has been filed in the Special Court, pending trial.

The Court said, “…The act of projecting or claiming proceeds of crime to be untainted property presupposes that the person is in possession of or is using the same (proceeds of crime), also an independent activity constituting offence of money-laundering.”

“… it is not open to read the different activities conjunctively because of the word “and”. If that interpretation is accepted, the effectiveness of Section 3 of the 2002 Act can be easily frustrated by the simple device of one person possessing proceeds of crime and his accomplice would indulge in projecting or claiming it to be untainted property so that neither is covered under Section 3 of the 2002 Act. Thus, a person who is as longer as in possession and enjoyment of Proceeds of Crime, PMLA can certainly be invoked.”, the Court clarified further.

The Court said that the Petitioner failed to make out a prima facie case for discharge.

Accordingly, the Court confirmed the impugned order and dismissed the Criminal Revision Case.