Supreme Court: In a criminal appeal against the Gujarat High Court’s decision, whereby, the retired Indian Administrative Service (IAS) officer/ accused person’s criminal revision application against the Trial Court’s decision rejecting his discharge application for offences under the Prevention of Money Laundering Act, 2002 (‘PMLA’), the Division Bench of Vikram Nath* and Prasanna B. Varale, JJ. held that the offence alleged against him constituted a ‘continuing offence’ under the PMLA and the quantum of proceeds of crime involved exceeded the statutory threshold and required proper investigation and judicial scrutiny.
Hence, the Court refused to interfere with the impugned decision opining that the present case involved grave allegations of financial misconduct, misuse of position, and involvement in transactions constituting money laundering.
In another plea against Gujarat High Court’s decision dismissing the accused’s plea seeking a writ of mandamus directing the respondent authorities to conduct a preliminary inquiry before registering any First Information Report against him for acts performed in his official capacity, the Bench refused to issue a blanket direction restraining the registration of FIRs against the accused or mandating a preliminary inquiry in all future cases involving him, opining that such a direction would not only be contrary to the statutory framework of the Code of Criminal Procedure, 1973 (CrPC) but would also amount to judicial overreach.
The Court held that the allegations against him fell squarely within the category of cognizable offences, and there existed no legal requirement for a preliminary inquiry before the registration of an FIR in such cases.
Background
The primary allegations against Pradeep Nirankarnath Sharma were that he was involved in financial transactions related to proceeds of crime, generated through fraudulent activities causing significant financial losses to the State of Gujarat. The prosecution alleged that the appellant had actively facilitated the process of money laundering by utilizing banking channels and other financial instruments to conceal the illicit origins of funds.
The accused happened to be the District Collector (‘DC’) of Kachchh-Bhuj at a time when a Non-agricultural Permission (‘NA Permission’) for a piece of land in the district was granted to a co-accused. The allegations levelled against him were that to gain some undue monetary benefit, the accused performed his duties dishonestly and allotted the government land in favour of a co-accused for a lesser price compared to its actual value by making illegal conversation of the land from non-agricultural to residential land thereby committed criminal breach of trust to the Government by misusing his powers illegally and arbitrarily.
He was arrested on 31-07-2016 in connection with an inquiry in furtherance of the Enforcement Case Information Report (‘ECIR’) registered by the Directorate of Enforcement (ED).
came to be registered in furtherance of FIR No. 03/2010 dated 31.03.2010 and FIR No. 09/2010 dated 25.09.2010. Upon completion of the investigation, ED filed a complaint before the Special Judge for offences under Sections 3 and 4 of the PMLA. In the present case, there were two scheduled offences (i) registered with Rajkot Zone, CID Crime for offences under Sections 7, 11, 13(1)(B), 13(2) of the Prevention of Corruption Act, 1988; and ii. registered with Rajkot Zone, CID Crime for offences under Sections 217, 409, 465, 467, 468, 471, 476, 120-B of the Penal Code, 1860 (IPC).
The accused contended that the alleged acts did not constitute an offence under the PMLA as the predicate offences as alleged were not included in the schedule to the PMLA at the relevant time and, therefore, the same could not be subject to proceedings under the PMLA.
Analysis and Decision
Regarding the contention that the alleged offences were not included in the schedule of the PMLA and that they did not constitute a continuing offence, the Court refused to accept the contention reiterating that the established offences under the PMLA are of a continuing nature, and the act of money laundering does not conclude with a single instance but extends so long as the proceeds of crime are concealed, used, or projected as untainted property.
The Court added that an offence is deemed continuing when the illicit act or its consequences persist over time, thereby extending the liability of the offender. Section 3 of the PMLA defines the offence of money laundering to include direct or indirect attempts to indulge in, knowingly assist, or knowingly be a party to, or actually be involved in any process or activity connected with the proceeds of crime. Such involvement, if prolonged, constitutes a continuing offence.
The Court also relied on Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 wherein, regarding the offence of money laundering and its nature as a continuing offence, the Court stated that, the criminal activity may have been committed before the same had been notified as a scheduled offence for the purpose of the PMLA, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money laundering under the PMLA— for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted.
In the matter at hand, the Court noted that the material on record established misuse of power and position by the accused, coupled with the alleged utilization and concealment of proceeds of crime. The Court upon noting that there were recent instances of the utilization of the proceeds of crime, said that the offence was extended into the present negating the accused’s contention that the act was confined to a particular point in the past.
“Money laundering is not a static event but an ongoing activity, as long as illicit gains are possessed, projected as legitimate, or reintroduced into the economy.”
The Court emphasised that prima facie the accused was involved in financial transactions linked to proceeds of crime beyond the initial point of commission. The utilization of such proceeds, the alleged layering and integration, and the efforts to project such funds as untainted all constituted elements of a continuing offence under the PMLA.
“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.”
Further, regarding the contention that the amount involved did not meet the statutory monetary threshold of Rs. 30 Lakhs for initiating proceedings under the PMLA as it stood prior to the amendment, the Court said that the financial trail indicated that the aggregated value of assets derived from the alleged criminal activity was well beyond the prescribed limit. The Court reiterated that the determination of the threshold value must be based on the entirety of the transaction and not an isolated instance or a narrow interpretation of specific amounts at any given time. The Court noted that the allegations involved alleged land allotment transactions facilitated through forgery, cheating, and fraud, resulting in an alleged loss of over Rs. 1 crore to the Government, along with hawala transactions of crores of rupees, and illegal gratification through his wife of around Rs. 22 Lakhs.
Hence, the Court dismissed the appeal opining that discharging the accused at this stage would be premature and contrary to the principles governing the prosecution in money laundering cases. Given the severe and grave nature of the allegations, he must undergo thorough judicial scrutiny during trial.
[Pradeep Nirankarnath Sharma v. Enforcement Directorate (ED), 2025 SCC OnLine SC 560, Decided on: 17-03-2025]
[Pradeep Nirankarnath Sharma v. State of Gujarat, 2025 SCC OnLine SC 559, Decided on: 17-03-2025]
Advocates who appeared in this case:
For Petitioners: Mr. Kapil Sibal, Sr. Adv., Mr. Devadatt Kamat, Sr. Adv., Mr. Divyesh Pratap Singh, AOR, Ms. Rupali Francesca Samuel, Adv., Mr. Rajesh Inamdar, Adv., Mr. Ajay Desai, Adv., Mr. Amit Sangwan, Adv.
For Respondents: Mr. Tushar Mehta, Solicitor General, Mr. Maninder Singh, Sr. Adv., Mr. Mitesh Amin, A.A.G., Ms. Swati Ghildiyal, AOR, Mr. Kanu Agarwal, Adv., Ms. Neha Singh, Adv.
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