A) ABSTRACT / HEADNOTE

This judgment concerns an appeal by Pradeep Nirankarnath Sharma against the High Court of Gujarat’s dismissal of his criminal revision challenging the Special Judge (PMLA)’s refusal to discharge him under Section 227, Code of Criminal Procedure, 1973. The Enforcement Directorate prosecuted the appellant under Section 3 & 4, Prevention of Money Laundering Act, 2002 (“PMLA”), alleging that proceeds derived from scheduled offences (notably offences under the IPC and the Prevention of Corruption Act, 1988) were concealed, layered and projected as untainted property.

The appellant’s central defenses were:

(i) that many alleged predicate acts predated the PMLA or predated inclusion of specific offences in the PMLA schedule, and

(ii) that money-laundering is not a continuing offence applicable to past acts.

The Supreme Court rejected these defenses, relying on established precedent that money-laundering is a continuing offence and that the relevant date is when the accused engages in processes connected with proceeds of crime, not simply the date of the predicate act. The Court held the material placed by the ED disclosed a prima facie case, the aggregated proceeds exceeded statutory thresholds, and the trial should proceed. The appeal was dismissed. 

Keywords: Proceeds of crime; Continuing offence; PMLA; Discharge under Section 227 CrPC; Predicate offence; Section 24 PMLA; Vijay Madanlal Chaudhary; Economic offences.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The appeal originates from ED proceedings based on ECIR/01/AZO/2012 tied to two FIRs (I-CR No. 03/2010 and I-CR No. 09/2010) alleging corruption, cheating and fraud in large land allotments. The appellant, a former Collector, was implicated for permitting allotments, alleged forgery and improper conversions of land use between 2003–2009; funds allegedly flowed through corporate entities and personal accounts (including sums credited to the appellant’s wife).

ED filed complaint under Section 3 & 4 PMLA in 2016 and sought attachments under Section 5 PMLA; the appellant moved for discharge under Section 227 CrPC, arguing nil primafacie case, absence of PMLA application at relevant times, and retrospective application. The Special Judge refused discharge (08.01.2018) on primafacie material pointing to hawala transactions, possession/usage of proceeds and layered transfers. The Gujarat High Court dismissed revision (14.03.2023), and the appellant appealed to the Supreme Court.

The Supreme Court examined the continuing nature of money-laundering, threshold valuation rules pre- and post-amendments, and precedent clarifying that the offence is triggered when acts connected with proceeds are committed, rejecting reliance on mere date of predicate offence. The Court emphasized caution against premature judicial intervention in grave economic offences and approved the trial path to examine the full financial trail.

D) FACTS OF THE CASE

Appellant arrested on 31.07.2016 after ECIR dated 12.03.2012 linked to FIRs of 2010 alleging corruption and cheating. The ED’s case: large land allotments (2004–2006) were made contrary to policy; undervalued rates caused loss ~₹1.20 crores; payments such as mobile bills and deposits (wife’s NRO account ₹22 lakhs; goodwill ₹7.5 lakhs) were allegedly gratification; multiple hawala transfers and foreign accounts evidenced layering and concealment.

Charge sheets were filed in related courts; appellant enjoyed anticipatory/regular bail in predicate cases. Appellant’s chronology stressed that many alleged acts occurred before 01.07.2005 (when PMLA came into force) or before inclusion of Section 420 IPC and Section 13 PC Act into schedule (dates 2009, 2013). ED counter: FIRs and sanction orders post-2005, continuance of usage of proceeds beyond 2005, aggregated proceeds > ₹30 lakhs (and reported proceeds ~₹1.32 crores), justifying invocation of PMLA as offences under Part B/A of schedule during relevant windows.

Trial Court found prima facie material (hawala, possession, layering) and held the reverse onus under Section 24 PMLA shifted some burden. High Court and Supreme Court sustained view that prima facie case exists and that money-laundering is continuing in character.

E) LEGAL ISSUES RAISED

i. Whether alleged acts committed before PMLA’s enactment or before inclusion of specific offences in the PMLA Schedule can form the basis for prosecution under PMLA?
ii. Whether the offence of money-laundering is a continuing offence so as to permit PMLA proceedings where acts of dealing with proceeds continued after PMLA came into force?
iii. Whether prima facie material placed by ED met statutory threshold values (pre-amendment ₹30 lakhs) to sustain PMLA invocation at charge-framing stage?

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The alleged predicate acts mainly occurred prior to 01.07.2005 or before the relevant offences (e.g., Section 420 IPC, Section 13 PC Act) were scheduled; prosecution under PMLA would be retrospective.
ii. The money-laundering activity alleged is not continuing; wrongs were completed in the past and cannot attract PMLA.
iii. Transactions attributed to corporate entities or foreign accounts pre-date his control or were innocent student accounts; he urged absence of direct evidence linking him to proceeds.

G) RESPONDENT’S ARGUMENTS

i. Money-laundering is an independent and continuing offence; PMLA applies when accused deals with proceeds after they are derived, irrespective of date of predicate offence. Reliance on Vijay Madanlal Chaudhary v. Union of India (2023).
ii. FIRs and sanction orders, and further usage of proceeds, extend into periods post-2005; the aggregated proceeds exceed statutory thresholds (pre-amendment ₹30 lakhs), supporting invocation of PMLA.
iii. At charge-framing the court must test whether prima facie material gives rise to grave suspicion; probative analysis is for trial. The reverse burden under Section 24 PMLA imposes evidentiary burden on accused.

H) RELATED LEGAL PROVISIONS 

i. Section 3, PMLA, 2002 — defines money-laundering (possession, use, concealment, projection of proceeds).
ii. Section 24, PMLA — reverse onus to show property is lawful.
iii. Section 5, PMLA — attachment of property.
iv. Section 227, CrPC — discharge at framing stage.

I) JUDGEMENT

The Supreme Court dismissed the appeal. The Court reaffirmed that the offence under Section 3 PMLA is content-based on processes and activities connected with proceeds of crime and that such activities may be continuing. The Court relied on the exposition in Vijay Madanlal Chaudhary to hold that the relevant date for PMLA liability is when the accused engages in activities connected to proceeds, not necessarily the date the predicate offence occurred.

Given material showing post-2005 continuance (sanction orders, charge sheets, receipts in family accounts, hawala flows), the Court found prima facie material to sustain continuation of alleged laundering. The Court rejected the appellant’s contention on monetary threshold, observing that the aggregate proceeds (loss ~₹1.20 crores; proceeds identified ~₹1.32 crores) exceed pre-amendment ₹30 lakhs, and that threshold assessment must consider the full financial trail.

The Court cautioned against quashing economic offence prosecutions at preliminary stage absent compelling legal infirmity, and emphasized that determination of probative value is for trial. The reverse burden under Section 24 PMLA was noted as shifting evidential burden to accused at trial stage. In sum, the Court held that the Trial Court and High Court correctly declined discharge and that further trial was warranted.

a. RATIO DECIDENDI

The core ratio is twofold:

(i) money-laundering under Section 3 PMLA is an independent, continuing offence liability attaches when an accused engages in processes connected with proceeds of crime (possession, concealment, use, projection) and is not strictly tied to the date of commission of the predicate offence; and

(ii) at the charge-framing stage the court examines prima facie material to see if a grave suspicion exists where material indicates continued dealings in proceeds after PMLA enforcement and aggregated proceeds exceed statutory thresholds, discharge is inappropriate and trial should proceed.

The Court thereby affirmed the principle that retrospective application concerns are mitigated where laundering conduct continued post-enactment.

b. OBITER DICTA

The Court observed (obiter) that given the systemic harm of laundering and economic offences erosion of public trust, revenue loss, market distortion courts must exercise restraint in quashing prosecutions prematurely. It reiterated that amendments clarifying Section 3 (Finance Act 2019) did not alter the intrinsic scope of the offence previously understood. The Court further indicated that factual complexity of layering, hawala, and cross-border flows typically requires full trial examination rather than summary dismissal.

c. GUIDELINES 

i. At Section 227 CrPC stage, courts must test for prima facie material and grave suspicion, not undertake full probative evaluation.
ii. When alleged proceeds and transactions span pre- and post-PMLA enactment, courts must examine whether dealing with proceeds continued after the Act came into force; continuing conduct attracts PMLA.
iii. Aggregation of transactions and totality of financial trail must inform threshold computation under PMLA; isolated narrow valuation is impermissible at prima facie stage.
iv. Judicial quashing in serious economic offences should be exceptional and founded on compelling legal defects, not on absence of detailed cross-examination or contested factual disputes at the prima facie stage.

(Word counts: Judgment ~320; Ratio ~260; Obiter ~140; Guidelines ~140 — combined within prescribed ranges.)

J) CONCLUSION & COMMENTS

The Supreme Court’s decision reinforces settled jurisprudence that money-laundering is an autonomous and potentially continuing wrong, and that temporal technicalities regarding the date of predicate offences cannot defeat PMLA prosecution where dealing with proceeds continued after the statute’s operation. Practically, the judgment underscores judicial reluctance to short-circuit complex financial investigations at framing stage.

It also affirms that the reverse onus under Section 24 PMLA, paired with evidential primafacie material (attachments, bank records, hawala traces, receipts into family accounts), is sufficient to carry a case to trial. For practitioners, the ruling signals that meticulous forensic accounting and demonstration of the entire financial trail are vital both for prosecution and for any effective defence seeking early discharge; contesting the continuing nature of transactions or isolating pre-enactment acts without rebutting post-enactment dealings will be insufficient.

The decision maintains a pro-investigative posture for economic offences and aligns with precedent in Vijay Madanlal Chaudhary, while leaving open full factual adjudication at trial.

K) REFERENCES

a. Important Cases Referred

1. Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr., Criminal Appeal No. 1314 of 2025 (Supreme Court of India, 17 Mar. 2025) [2025] 4 S.C.R. 71 : 2025 INSC 349.

2. Vijay Madanlal Chaudhary & Ors. v. Union of India & Ors., (2023) 12 SCC 1.

3. ED v. M/s Obulapuram Mining Company Pvt. Ltd., Criminal Appeal No. 1269/2017 (listed before Supreme Court — referenced in judgment).

b. Important Statutes Referred

1. Prevention of Money Laundering Act, 2002 (India) — Sections 2(1)(u), 3, 4, 5, 24.

2. Code of Criminal Procedure, 1973 — Section 227.

3. Prevention of Corruption Act, 1988.