PMLA Offence is Independent of Predicate Offence: Madras HC upholds Conviction of Ex-FCI DGM for Money Laundering despite PCA Conviction [Read Order]

The Madras High Court has upheld the conviction of a former Food Corporation of India (FCI) Deputy General Manager under the Prevention of Money Laundering Act, 2002 (PMLA), ruling that money laundering is an independent offence and its prosecution alongside the predicate offence does not constitute double jeopardy.

A Division Bench comprising Justices S.M. Subramaniam and Mohammed Shaffiq dismissed the appellants' challenge against their conviction by the Special Court for CBI Cases, which had sentenced them to three years’ rigorous imprisonment.

The case was that a CBI investigation revealed that the appellants had acquired assets disproportionate to his known sources of income between 2002 and 2009.

Based on these findings, the Directorate of Enforcement (ED) initiated proceedings under the PMLA by registering an Enforcement Case Information Report (ECIR) in 2016, alleging that the proceeds of crime were laundered through the acquisition of property and construction of a residential complex.

Before the High Court, the appellants argued that facing PMLA proceedings after already being prosecuted and convicted under the Prevention of Corruption Act, 1988, violated the constitutional protection against double jeopardy under Article 20 of the Constitution of India.

They further contended that the predicate offence predated certain PMLA amendments. Therefore it barred the retrospective application of the Act.

The Court rejected the claims of the appellants. It clarified that while a predicate offence generates illicit funds, money laundering under Section 3 of the PMLA is a distinct, subsequent process involving the concealment, possession, acquisition, or projection of those funds as untainted property.

Therefore, prosecution under the PMLA does not duplicate the prosecution for the underlying offence.

The bench noted the Supreme Court’s judgment in Vijay Madanlal Choudhary v. Union of India, where the bench stated that money laundering is a continuing offence, remaining actionable as long as the accused retain or project the illicit assets as legitimate, regardless of when the original crime occurred.

With regard to the buildings, the appellants failed to provide a credible, legitimate source for these excess funds or reconcile their stated loans and income, noted the court. This led to the conclusion that the construction was clearly financed through proceeds of crime.

The Madras High Court, confirming the trial court’s findings, ruled that the ingredients of Section 3 of the PMLA were fully satisfied by the appellants' acquisition and use of illicit funds.

The criminal appeal was dismissed.

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