Criminal Petition No. 15518 of 2024 · The High Court · 2025
Case Details
Mr.I. Shyam F rrsad Reddy (Accused No. 3 in the ,:hargt:slreet)
6. [n . urtherance of their association, it is a tleged that, Petitioner No. 1 f-acilitated the payment of bribe by Mr'. L Shyam Prasad Reddv o Mr. Jagan Mohan Reddy (Accused No. 1 in the chargesheet). Ihc alleged rnodus operandi was that Vr . I. Shyam Prasad Reddl paid money through his compan) lVI/s Walden II 3 Properties Pvt. Ltd. to Petitioner No. 2 - company which is owned by Petitioner No. 1
7. The details of the transactions as stated in the chargesheet are extracted below mAS/Ch.No. & Amount From lhe A/c To tle A/c of Datc ot Ccdil Dat€ R-ICS Lm No BXIDH072l200 9093 31.07.2007 No. 5 Cm1t M/!.Walden M/!
31.07.2007 Prolerties Cornerstonc Pmpdd.s C.A/r N0.8600201I 13010030r000J 0000073 Eank of lndia, Hyderabad. 25, Mjaya Bank, CMH Road, Bangalore RrCS UTR No. l5 Crolt
0608.2007 BKDH072l800 0523 06-08.2007 dL RTCS UTR No 20 Croft BnDH0726900 990, 26.09 2001 dL. dG
[email protected] RrGS LITR tio. 6 Crore
09.i0.2007 BKlDH0728200 291 09.r0.200? dt. Ch.N0.842043, 4 Cmn M/s.walden
08.08.2007 dt.06.08.2007 Pmpenics 015r0200006 515, UCo Bank, Esngalot Total imounl Rs. 50 Cffc
8. In the charge sheet, there is an allegation that after receiving an amount of Rs. 50 crores from Petitioner No. 1 through his company i.e. Petitioner No. 2 transferred the said amount in favour of three comp2lnies i.e M/s Gilchrist Investments Pvt. Ltd., M/s Alpha Villas .1 Pvt. Ltd., anc l\4/s Alpha Avenues Pvt. Ltd. These thre : companies were allegedl , owned by one Mr. Nimmagadda I'rasac (rLot anaigned as an accus,ed 'n the chargesheet). The details of the said payments as provided in th : cl.rargesheet are extracted below: A. Pavnrents made to M/s Gilchrist [nvestments Pvt. Ltd. GEqUC No. & Ort 3251 26, 01.082007 p6ljl3, G,@:007 345134, ([email protected] Amount Rs. 5 CJore 15 Crore 4 Crore In favour of M/s Gllchrlst Irwestments pr't Ltd., C.A/c No.0o422ff!0023009, HDFq Seornderabad. {o.. -do- Oata o{ CredlL oz.oe.o7 i
08.08.07
09.08 B. Paymclrts made to M/s Alpha Villas Pvt. Ltd. Cheque Nr & Date 0420058,
13.08.200 7 Amount Rs. 4 Crore I irar. -- C're dit 13.08.2007 In favour of M/s. Alpha Villas ht. Ltd., c. A/c No.0042256000169 I, HDFC, Secunderabad. 326161, 27 .09.2007 1 I Crore -do-
28.09.2007 C. Pay,1q6115 made to M/s Alpha Avenues Pvt. Lttd. l 5 Cheque No & Date 326162, 27 .09.2007 Amount Rs. 9 Crore Date Credit 28.O9.2007 In favour of M/s. Alpha Avenues h,t. Ltd. C. Al c No.0O42256OoO 17O 9, HDFC, Secunderabad. 326171, L2.tO.2007 11 Crore -do-
15.10.2007
9. After receiving Rs. 50 crores from the Petitioners, the chargesheet alleges that the said three companies - M/s Gilchrist Investments Pvt. Ltd., M/s Alpha Villas I'vt. Ltd., and IWs Alpha Avenues Pvt. Ltd., in tum, transferred the money to thc bank account of M/s Jagati Publications Pr.,t. Ltd. (Accused No. 14 in the chargesheet). M/s Jagati Publications Pvt. Ltd. is said to be or.vned by Mr. Jagan Mohan Reddy. The details of the transactions in favour of M/s Jagati Publications Pvt. Ltd. are extracted below: ue No. & Aatc 429053,
11.04.2007 346705, 76:OA-2oo7 346707,. 07-70-2007 346,A14, o,..to.z@7 3468L5, 16-tO.2007 Arnount Rs. 5 Crore Frcm thc Nc ot t'4ls Gidrrfst InvEstrnenG *t lta. Nc No. OO422NAOZ3AO9. Dak o( Debit
[email protected])7 15 crore 4o-
73.OA-2007 4 Oore Ws tJpha V as Pvt. Ltd., Nc N1-OO42256mlO1691. Ll cro(e 9 Oore 6 oDre 4o- Ws Nphd Avenues M- Lty'. Nc No.OO42E6OOOl7Og
78.B.Zoa7 to.zoaT 04-70,2007 -do- t7.to-7o()7 Total Arnount Rs 50 clorE 6 I [).. -l-rerefore, lt was alleged that thr: Pcliti,)ners herein conspired rvi 1r the other accused to pay bribe to N{r. Jagan Mohan Reddy and M/; Jagati Publications Pvt. Ltd. The said chargesheet was taken on tlre lle of Principal Special Judge for ('BI Cas,.)s, Nampally and numbeler. as C.C. No. 28 of 2013.
11. Alrr the filing of the chargesheet, tJie Petitioners herein filed a pi:ti1 on under Section 482 of the (lrPC to quash the proceedings ir tl.re predicate offence i.e., C.C. No. .l!l ol20l3. This Cowt vidc .i rCgment dated 04. 11.2022 in Crl.P.No.9i 92 of 2014 dismissed the r;aid petition. [n the said judgment, this (]orLrt noted that there is enou6 1r material to prosecute Petitioner No. I
12. Agr.inst the judgment dated 04.11.2022in (lrl.F.No. 9292 of 2014, the Iret tioner No. I had preferred a Special Leave Petition and the Suprerne Court, after granting leave, vide .irrd1:;ment dated
03.10.2024. s:t aside the judgment dated 04. 11.2022 passed by this Court. While Joing so, the Supreme Court held thar. ttrere was no material ag,airrr;t Petitioner No. 1 to proceed fufiher. The Court noted that none o1-'tLe companies through which money u,as alleged to be paid were rrt <le parties. Therefore, the Courl held that for want of requisite nrat :'ial, the criminal proceedings against tl e petitioner I 7 cannot continue. However, the Court noted that its judgment would have no bearing on the pending proceedings against the other accused. The relevant proceedings are extracted below:
11. Taking into account the facts as narrated in the chargesheet and the subsequent counter affidavit filed, we find absolutely no material to implicate the appellant and if that is the case, continuing the trial against him would amount to a travesty of justice. This we hold so while rejecting the contention of the lcarned senior counsel appcaring for the appellant that without arraying the company, the appellant cannot be arrayed as an accused as it is the specific casc of thc prosecution that accused No.3 is the one who has created the shell companies. However, in thc absence of any material to implicatc him, especially, without arraying any onc from M/s Gilchrist Investments Pvt. Ltd., Mis Alpha Villas Pvt. Ltd. and M/s Alpha Avenues Pvt. Ltd. or any other third party such as Sri Nimmagadda Prasad, it will be very difficult to continue the proceedings against him. It is not even the case of the prosecution that the appellant has any role in these companies. While holding so, we are conscious of the fact that the primary accused are A-1, A-3 and A-14.
12. It is the case of the prosecution that accused No.l4 is nothing but a shell company created by accused No.1 and the transfer was made by Accused No.3 to Accused No.l4. Therefore, we are not going into those foundational facts which form the basis to the case of the prosecution. Perhaps the prosecution can make out a case against the other accused persons, a fact which we are not going into at this stage, as we are confining ourselves only to ' '.t I 8 thc rre alleged to have been played by the appellr,nt u'ho has been zruaycd as accused No.13 alone. Suffice it is to srate that in th e ahscnce of any further role attribufed to thc a ppellant in tl r transaction madc by him, or in thr: absenc,.r of any matt rial attributcd to the appellant, espccialll', br in;;ing him rrithirr the purview of Section 1208 of the IPC, it ttill be very diffi, rrlt to hold that the proceedings againsl him :r.re liablc to contrrue. Thcre is also no material to hold that hc rvrrs hand- in-gl o ve with accused No.3, Li. 're offences as charged, in our considt:red r cu are not mircl rut against the appellant for want of requisite n ak'rial. 1.1. lr such view of the matter, the impugneJ orrler s'ands set aside rnd the proceedings initiated against the apptllart alonc, are c r ashed. We make it clear that our ortler rvill rrot have any lrearing on the trial against the otlter :rccuscd and, ther,.fbre, there is no bar for thc pcnding proceedirLgs to go on. l.l. lrere is also no allegation of any bcncfit bein; at crued to tbe r rpellant as the specific case against hinr is that he trans r:rrcd the money which was received b1 his com ranv and s1r[5,r1uently sent forward to the three other compan cs as statcd ahor: Iti. I r,r the aforesaid reasons, we are inclinetl to intcrL'ere rvith thc .j Lrlgment rendered by the High Court as it did no . gt, into the srrbn issions made on the point of law. (emphas is ;upplied) 13 R.el.'ing on the Supreme Court's judgment date(l 03.10.2024 wherein the prtceedings against Petitioner No wcrr (luashed, the J 9 Petitioners have filed the present criminal petition seeking to quash the PMLA proceedings.
14. At this stage, it is apposite to refer to some relevant facts conceming the PMLA proceedings. While the criminal proceedings in the predicate offence were pending, the Respondent, in the PMLA offence i.e., ECIR/O9/LIZO/2011, filed a prosecution complaint bearing S.C. No. 3 of 202l.In the said complaint, Petitioner No. 1 was arraigned as Accused No. 8 and Petitioner No. 2 was arraigned as Accused No. 10. The other accused viz., Mr. Jagan Mohan Reddy was arraigned as Accused No. 1 , Mr. l. Shyam Prasad Reddy was arraigned as Accused No. 3, IWs Jagati Publications was Accused No. 6, IV[/s Walden Properties Pvt. Ltd. was araigned as Accused No. 9 and IWs Gilchrist Investments Pvt. Ltd., M/s Alpha Villas Pvt. Ltd., and IWs Alpha Avenues Pvt. Ltd. were araigned as Accused Nos. 11, 12, and 13 respectively.
15. The prosecution complaint in the PMLA offence reiterated the allegations against the Petitioners as stated in the chargesheet pertaining to the predicate offence. It was alleged that the Petitioners herein facilitated the payment of bribe by Mr. I. Shyam Prasad Reddy to Mr. Jagan Mohan Reddy. Therefore, it was alleged that, any person I r0 assisting in t'rinsfer of tainted money commits the offerce of money laundering urr,ler Section 3 of the PMLA. The relevan: p,rrtions of the prosecut.ion :omplaint in S.C. No. 3 of 201.1 pertaining to the allegations; e 1 ,rrinst the Petitioners are extracted belou : 't/ll I Shri B.P. Kumar Babu (A-8): :ihr ts.P Kumar Babu, Chairman & Managing Dilector ol-M/s (-lc,r nerstone Property Investments Private l,inrir-e,.l. Sangalore rnl iiend and long business associate of Slrri I iylm Prasad lletcv of Indu group of companies facilitrrted Shri 1. Syam J)ra r d Reddy, in smooth transler of bribe amorLnt Ri.50 Crorc ric,r r the companies of Shri 1. Syam Prasad Reddy ,;ol rpanies ol Shr YS Jagan Mohan Reddy. In this process. Sh.i l].P Babu, rec( ilied an amount of Rs. 50 Crore from M/s Walcl:n rropefties Pn, i te Limited of Shri I . Syam Prasad Ilcdd,v lh,ough his (ior l)any namely M/s Comerstone Property lnvestt lcrts Privatc 1.in i,ed and transferred the same to group conrpanr' of Shri lrlin Lrlagadda Prasad to suit their needs. He It aglir t:11 involved in t Lt offence of money laundering in transfer ol brirc rmount of Its. il) Crore to Shi Y.S Jagan Mohan Reddy fronr illi l. Syam l'rrr r d Reddy. as discussed supra. lihr B.P Kumar Babu has directly involved in tbc r'l}'er.rcc of rnor .t v laundering under Section 3 read with Section 4 ,rf PN{LA, -100 I by indulging and actively involved in thc tr ansfer of l)ro rreds of Crime from Shri 1. Syam Prasad Redd., t<, Shri Y.S Jagr rL Mohan Reddy tkough corporate colour of inv*itments. It is ,-', dent that of M/s Comerstone Propefiy Ll-esln-enrs. Private l-in- i ed, Bangalore is also involved in the offent t: rf monev laur dering with the consent and connivance ,tf Shr U P Kumar I Babu. He is therefore guilty of the offence of money laundering under Section 3 read with Section 70(2) of PMLA. 2002 punishable under Section 4 of PMLA, 2002. IX. M/s Walden Properties Private Limired (A-9): M/s Walden Properties Private Limited is a company belongs to Shri I. Syam Prasad Reddy. Shri l. Syam Prasad Reddy had paid an amount of Rs.50 Crore to Shd Y.S Jagan Mohan Reddy for the purpose of allotment of 8844.01 Acres of Land at Budili, Chilamatturu, Hussainapuram, Kodur, Manimakulapalli, Narmuddalapalli, Settipalli, Vadigepalli villages of Gorantla./Chilamattur Mandals of Anantapur District, Andhra Pradesh in the name of "Lepakshi Knowledge Hub project for M/s Lepakshi Knowledge Hub Private Limited. Investigation conducted revealed that the above amount of Rs.50 Crore was routed through lws Walden Properlies Limited by Shri I. Syam Prasad Reddy to the company of Shri Y.S Jagan Mohan Reddy namely IWs Carmel Asia Hotdings Private Limitcd through the companies of Slri B.P Kumar Babu and Shri Nimmagadda Prasad namely lWs Comerstone Property Investment Private Limited, M/s Alpha Villas Private Limited and M/s Atpha Avenues Private Limited and lWs Gilchrist Investments Privare Limitedas discussed supra. Further, M/s Walden Properties Limited is also played pivotal role in routing of the funds of Rs. 25 Crore in the name of land development works at Lepakshi Knowledge Hub, etc., as discussed supra. Therefore, this company is one of the company played vital role in transfer of proceeds of crime from one party to other and played active role in the offence of money laundering. M/s Walden Properties Private Limited, is therefore, deemed to be guilty of the offence of money laundering under Section 3 of PMLA, 2002 read with ' -:_,:.:*-_-*-_--.'!wa!!":!'t":F.'ttt ) Sect r,n 70 of PMLA, 2002 punishable undcr S:ct'on 4 of PN4 r .. \. 2002. X. '4ls Cornerstone Property Investments Privrltc Limitcd ( \- l0): N4,'; ('omerstone Property Investments Privatc [,irnited. Fiar r rlore is private limited company incorporated bv Shli B.P I..Lrn .rLr Babu. Sh-ri B.P Kumar Babu is the ( lha rtnatr & \4ar a ging Director of M/s Comerstone Properlv in' 'estments I"rir r e Limited, Bangalore and friend of Shri I . !,-varn Prasad Iiled I ; oi Indu group of companies. M/s Comerstone Property Irrcs.ments Private Limited, Bangalore, facihtated lihr 1. Syam Ir'ras r .l tleddy, in smooth transfer of bribe amount o1' Rs.50 Clrore (ron the companies of Shd l. Syam Prasad R:dtly to the cunr :r:uries of Shri Y.S Jagan Mohan Reddy. In this orc ccss. M/s (lon (rstone Property Investments Private Limited. I langalore r,rCC ,ed an amount of Rs 50 Crore from NtVs Waldtn J'roperties I'rir r e Limited of Shri 1. Syam Prasad Reddy anrl h atrsferred t 're r me to Group Company of Shri Nimmagadda L las ad to suit tnc r ce ds of Shri 1. Syam Prasad Reddl and (rtl rers. M/s (lor r,:rstone Property Investments Private Limited. Ba lgalore is acri 'r'lf involved in the offence of money launderirg il trallsfcr i,f r -ibe amount of Rs.50 Crore to. Shri Y.S Jagan lvtoh m Reddy lron Shri L Syam Prasad Reddy, as discussed supla -l'h,: c tbre, this company is one of the comparly plal e d vital role in l insfer of proceeds of crime from one part) ro rther and f'la) :J active role in the offence of moncy laur deling. M/s (lor r,rrstone Property Investments Private Limited, is .herefore. dcr:rrcd to be guilty of the offence of mone'r laun,lerng under Sler: i,rn 3 of PMLA, 2002 read with Section '70 ol' l'M -A, 2002 f,un shable under Section 4 of PMLA,2002. Xl \l/s Gilchrest Investments Private Limited (A-11): I J I\4/s Gilchrist Investments Private Limited is a company belongs to Shri Nimmagadda Prakash This company is one of the companies which facilitated transfer of quid pro que amounts from Shri l. Syam Prasad Reddy to Shri YS Jagan Mohan Reddy in lieu of benefits doled out by the Govemment of Andhra Pradesh namely allotment of 8844.01 Acres of Land at Budili, Chilamatturu, Hussa-napuram, Kodur, Marrimakulapalli Narmuddalapalli, Settipalli, Vadi gepalli villages of Gorantla,/Chilamattur Mandals of Anantapur District, Andhra Pradesh in the name of 'Lepakshi Knowledge Hub irom the Govemment of Andhra Pradesh in the name of M/s Lepakshi Knowledge Hub Private Limiled. From the investigation carried it is evident that an amount of Rs.20 Crore was invested in Mis Jagati Publications Limited belong to Shri Y.S Jagan Mohan Reddy (A-1) by Shri 1. Syam Prasad Reddy (A-3) from his company namely M/s Walden Properties Limited (A-9) routing the funds through M/s Comerstone Prope(y Investments Private Limited, as discussed supra. Thus, M/s Gitchrist Investments Private Limited has actually involved in transfer of proceeds of crime from Shri 1. Syam Prasad Reddy (A-3) to Shri YS Jagan Mohan Reddy (A-1). Iv{/s Gilchrist Investments Private Limited is therefore, deemed to be guilty of the offence of money laundering under Section 3 of PMLA, 2002 read' with Section 70 of PMLA, 2002 punishable under Section 4 of PMLA, 2002. XII. M/s AtphaVillas Private Limited (A-12): lWs Alpha Villas Private Limited is a company belongs to Shri Nimmagadda Prasad. This company is one of the companies which facilitated transfer of quid pro quo amounts from Sfui l. Syam Prasad Reddy to Shri Y.S Jagan Mohan Reddy in lieu of benefits doled out by the Government of Andhra Pradesh namely allotment of 8844.0 i Acres of Land at Budili, Chilamatturu. '.'.*=----:---"-' -l::r-..x"r*31 l.l []us:ainapuram, Kodur, Manimakulapalli, Narn.r.Ld,Ialapalli, Serr r rlli. Vadigcpalli villages of Gorantia/Ch ilamattur N{andals of ,\ r:Lntapur District, Andka Pradesh in the name 11''Lepakshi K no rledgc Hub'from the Govemment of Andhra l)radesh in the n:nr: o1'M/s Lepakshi Knowledge Hub Private Lirnit.:d. F'rom the riestigation carried it is evident that an anlrl Itt of Rs 15 ( rc,r: u'as invested in M/s Jagati Publications Limitcd r)elong to Shri /.S Jagan Mohan Reddy (A-1) by Shri l. S1'arn Prasad R.ed t (A-3) from his company namely NlVs Waltlen I'roperties I inr t:d (A-9) routing the funds through M/s Co:nerstone Pr-o1 ertl' [nvestments Private Limited, as discussed iu[rra. Thus, N'fi s \lpha Villas Private Limited has aclualll inr olved in tr irnr 1:r oi proceeds ol crime from Shri I. S,'am Plasr.d Reddy (\-.. ) Lo Shri Y.S Jagan Mohan Reddy (A-l) M/s ,\lpha'Villas Pri', rre Limited is therefore, deemed to be guilty ot th,: ollence ol'n r nc\' laundcring under Section 3 of PMLA, 20()] ead with Sccti,n 70 of PMLA, 2002 punishable undcr S:ct'on 4 of PN,t L \. 2002. XII . M/s AlphaAvenues Private Limited (A-13): \1,'; .\lpha Avcnucs Private Limited is a companl b,rlongs to Shri l''immagadda Prasad. This company is one of thc c,rmpanies r,,,hir I lacilitated transfer of quid pro quo amounts fion Shri i. Svar r Prasad Reddy to Shd Y.S Jagan Mohan Redrl;' n lieu of be rrr I ts doled out by the Govemment of Andhra Pralcsh namely allot nrent oi 8844.01 Acres of Land at Budili. C hilrrmatturu, I Ius r,inapuram, Kodur, Manimakulapalli. Namruc dalapalli, Sctt Jalli. Vadigepalti villages of Gorantla./Chilam at tur Mandals c'i.r r antapur District, Andhra Pradesh in the name cf Lepakshi h.nlr r ledge Hub'from the Govemment of Andhra Pradr.,sh in the narn: ol' M/s Lepakshi Knowledge Hub Private I-ilit,:d. From the r r.,estigation canied it is evident that an amolrllt ol Rs.15 1,.. ,"*rai!&: - -_*_ ,l l5 Crore was invested in M/s Jagati Publications Limited belorig to Shri YS Jagan Mohan Reddy (A-l) by Shri l. Syam Prasad Reddy (A-3) from his company namely M/s Walden Propertics Limited (A-9) routing the funds through M/s Comerstone Property Investments Private Limited, as discussed supra. I'hus, M/s Alpha Avenues Private Limited has actually involved in transfer of proceeds of crime from Shri I. Syam Prasad Reddy (A-3) to Shri YS Jagan Mohan Reddy (A-l). M/s Alpha Avenues Private Limited is therefore, deemed to be guilty of the offence of money laundering under Section 3 ol PMLA, 2002 read with Scction 70 of PMLA, 2002 punishabte under Section 4 ol PMLA,2OO2.
16. Therefore, the question before this Court is whether the PMLA proceedings in S.C. No. 312021 are liable to be quashed as the predicate oflence against Petitioner No. I was quashed. CONTENTIONS OF THE PETITIONERS:-
17. Relying on the decision in Vijay Madanlal Chaudhary v. Union of Indiar, it was contended that as the predicate offence was quashed by tfre Supreme Court, the PMLA proceedings qua the Petitioners cannot continue.
18. The Supreme Court held that when there is lack of requisite material in the predicate offence, the said findings equally apply to the ' 2022 SCC Onl-ioe SC 929 I t6 proceedirlg's i I tl.re predicate offence. Therefore. the' prt 'ceedings S.C. No. 3i 2() ll shall be quashed. CONTEN'I'I()NS O F THE RESPONDENTS:- l9 Off : rce of money laundering is an independt:nt offence and quashing of 1t'edicate offence will have no bearing or the PMLA proceedings. Ihe allegations against the Petitioners r;ht'w that they actively assist:d the other accused to pay the bribe noney. The allegations. ir dependent of the predicate offence, constrrute an offence under Sectjor I of the PMLA. Therefore, the PMLA pro.:eedings can continue Rt: iance was placed on Vijay IVIadanl:rl Chaudhary (supra), Par a na Dibbur v. Directorate of Enforc,,rment2, Pradeep lr-ir: nkarnath Sharma v. Enforcement Dircct,orate3. FINDINGS 0F THE COURT:-
20. 'Tl r only question before this Court i ; ''vhether the proceedings Ir the PMLA case can continue wher the predicate offence qu,..t l1e Petitioner-Accused is quashed. It is p,:rlrnent to note that the Petiti r rers in the present case rely on the follo arirrg paragraph of Vijal' Madtanlal Chaudhary (supra) to contend tlLat quash of t 2023 scc ont-ir ic r568 tzo2s scc onLine :( 560. t7 predicate offence against them will automatically terminate the proceedings under the PMLA:
253. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as proceeds of crime. The authorities under the 2002 Act cannof resorl to action against any person for money- laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled oifence has been committed, unless the same is registered rvith the jurisdictional police or pending inquiry by way of finallv complaint before the competent forum. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished. Simila rly . in the event the person named in the criminal activity relatins to a scheduled offence is absolved by a court of competent iurisdiction owins to an order of discha rse. acouittal or because of o uashIns of the criminal case (scheduled offen ce) asainst him/her. there can be no action for monev- lau nderins asainst such a person or person claimine throueh him in relation to the orooertv linked to the stated scheduled offence. This inter pretatio n alone can be countenanced on the basis of the provisions of the 2002 Act, in particular section 2(1) u) read with section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause "proceeds of crime", as it obtains as of now. l8
21. Tt i; Court cannot accept the contention o: t:te Petitioners and their ir1 :rpretation of the law in Vijay Madanlal Chaudhary (supra) 'l 'ht dependence of money launderin6i prot:ee,dings on the predicate oIi'nce / scheduled offence IS limited to the issue of generation o1 rroceeds of crime. This is because the oilerrce of money laundering is an independent oflence dealing not u.i,_h the predicate offence / sch : luled offence, but with the proceeds ol :rime generated as a result o.i tre predicate offence / scheduled offence Ir, this context, it is apposir,: o refer to this Couft's judgment dated, 13.12.2024 in Criminal Petition No. 9314 of 2022 (Vem Krishna Keerthan v. Directorate r ,1' Enforcement) 3il \['hite the offcnce of money laundering is deJ on.lent on the er{ stence of the prcdicate offence. it is also an i rdependent ol ence which seeks to prosecute thc persons de aling with p:( ( ceds of crime. In other words, the offenoe of money lar rdering is not concerned with the ingredients rf rhs .11.a.a pr-t c icate offence. It is only concerned with the ge reration of prr c eeds of crime and whether thc accused has doalt rvith such plrreeds of crime. The independent natur,l of the ol'fence of mr rev laundering and its connection to scheduled ofl'ences was er:l rlained by the Supreme Court in Vijay Madanlul tlhaudhary ('su:ra) as follows: II t9
269. From the bare lansuage of section 3 of it is amolv clear that the the 2002 Act, offence of money-laundering is an independent offence rcgarding the process or activitv connected with the oroceeds of crime rvhich had been derived or obtained as a result of criminal activitv relatine to or in relation to a scheduled offence. The Drocess or activitv can be in an form-be it one of concealment. possession. acouisition. usc of Droceeds of crime as much 4q Droiecting it as untainted proDerty or claiming it to be so. Thus. involvement in anv one of such Drocess or activitv connected with thc proceeds of crime would constitute o ffence of monev-Iaunderins. This offence otherwise has nothins to do with the criminal activiW relatins to a scheduled offcnce-excent the rrroceeds of crime derived or obtained as a rcsult of that crime.
31. It is in the above context that the grounds taken by the Petitioner will be dealt with. As stated above, one of the contentions of the Petitioner was that he was not named as an accused in the predicate offence, therefore, the offence ofmoney laundering qua him is not maintainable. According to this Court, the said contention cannot be accepted. The offence of money laundering deals with the money/property derived after the commission of the scheduled o lfence. A person may not be involved in the commission of the scheduled offence, but he/she may be involved in the offence of money laundering by aiding/assisting the accused in the scheduled offence. ln Pavana Dibbur (stpra), the Supreme Court explained that an accused in the PMLA proceedings need not be an accused in the scheduled offence. I 20 )-he relevant paragraphs are extracted below -1_l
17. Coming back to Sectiqn 3 qf [he PM L& on its plain rcadins. an offence uo der Section 3 can bc committt'd aftcr a scheduled offence is committcd. For examDle, let us take thc case of a Derso n r,vho is unconnected rvith the schcdulcd offc Icc. knowingly assists the conceahncnt of the proceeds of crime or knorvinglv assi:its the use of proceeds of crime. In that case, he can be held guiltv of committing an offt'nce under Scction 3 of thc PMLA. To gir e a concrete example, the offences under Sections 384 to 389 of the IPC rclating to "cxtortion" are schedulcd offences inrcluded in ta ragraBh I of the Schcdulc to thc PMLA. An accused mav commit a crimr: of extortion covered Sections 384 to 389 of IPC and cx Lorf monev. Subseouentl v. a pcrson u ncon ncr:tcd with the offence of extortion mav assist the said accused in the concealment of the ptaeeedl at glta(ian. In such a cas,e, thc oerson who assists the accused in thc scheduled offence for concealinll the proceeds of the crime of extortion t'an bc guiltv of the offencc of moncv launclerigg. Therefore, it is not neccssan, that a l)crson against whom the offence under Section .1 of the PMLA is alleged must have becn shown as the accused in the scheduled ofifence. What is held in paragraph 270 ot the d,:cirion of this Court in the case of Vi.i,t1 \[tdu, al ChoudharS) supports the above couclusron. The conditions precedent for attracLing the offence under Section 3 of the PN4LA arc hat there must be a scheduled offence ard 'hat there must be proceeds of crimc in relatiorr to the scheduled offence as defined in clausc (u) of sub-section ( I ) of Section 3 of thc PM [.A . 18. In a given case, if the prosecutior lilr thc scheduled offence ends in the acquittal ol all the accused or discharge of all the accuserl or the proceedings of the schcduled olfcnce ale quashed in its entirety, the scheduied cllt,rce 'l 2t will not exist, and therefore, no one can be prosecuted for the offence punishable under Section 3 of the PMLA as there will not be any proceeds of crime. Thus, in such a case, the accused against whom the complaint under Section 3 of the PMLA is filed will benefit from the scheduled offence ending by acquittal or discharge of all the accused. Similarly, he will get the benefit ofquashing the proceedings of the scheduled offence. However accused in the PMLA case who comes into the rricture aftcr the scheduled offence is committed by assistins in the concealment or use of proceeds of crime need not be an accused in the scheduled offence. Such an accused can still be prosecutcd under PMLA so lons as thc scheduled offence cxists. Thus. the learned the second contention raised senior counsel aDIrcarins for the anpellant on the sro und that the aooellant was not shown as an accus ed in thc charsesheets filed in the schcduled offences descrves to be reiected. (emphasis original)
22. Therefore, the olfence of money laundering ls an independent offence which prosecutes a person who has dealt with or continues to deal with proceeds of crime.
23. Unless the predicate offence / scheduled offence is quashed in its entirety qua all the accused, the PMLA proceedings will not terminate. In other words, as long as there is a predicate offence / scheduled offence in which the issue of generation of proceeds of crime is pending adjudication, the proceedings under the PMLA shall continue qua all the accused -.".'-..._-..-nd-_ -l 22
24. In lre present case, merely because the pre,licate offence / scheduled ,rfl : nce was quashed qua Petitioner Nc,. l. tlLe ;ame will not result in aul<,rnatic termination of PMLA proccedinrrs against both Petitioner' \,:. I and Petitioner No. 2. The Petitjoners ct.nnot rely on the judgrnen dated 03.10.2024 passed by the Sttprerne Court to contend that they were fully absolved of any wron1l cloing. lt was based on tht: :hargesheet in the predicate offence thrt the Supreme Court held th rt there was lack of requisite matelial itr.ai tst Petitioner No. l. L,ikeu ise. the Court noted that none of lhe ccm ranies which were allegecl'1 involved in transferring the brihe uere arraigned as accused. FIor,.:r,er, in the present case, a perusal o1' tht' prosecution complaint in !.C1. No.3/2021 clearly indicates the lol-- played by the Petitioners -ikewise, all the companies which *ere allegedly involved in rJ r: alleged transfer of bribes are also nrLnre<l as accused Further. the I rrpreme Court noted that the pending ploc,:edings shall -fh:refore, the quash of predicate olfetrce / scheduled continue. offence agairst Petitioner No. 1 will not automaticalll' tenninate the proceedings r e ainst the Petitioners herein -['hr,r'e
25. may be various factors at play .,vhich nray influence the outconre i,r the scheduled offence. For instance. tlrere may be I :) defective investigation in the scheduled offence or procedural irregularities and based on such defective investigation and procedural irregularities, the proceedings may result in a quash. In such cases, the Court will have to see whether such quash was on merits indicating that no proceeds of crime were generated or could have been generated. If the answer is yes, then the proceedings under the PMLA cannot continue. However, for such an inquiry to be conducted, the scheduled offence has to be in existence
26. To clarifli, if the predicate offence involves only one accused and the proceedings against that accused in the predicate offence are quashed, then the PMLA proceedings automatically terminate as there is no scheduled offence in existence. On the other hand, if there are multiple accused and the proceedings under the scheduled offence are quashed qua any cine of the accused and the proceedings against the other accused are still pending, the PMLA proceedings do not automatically terminate as the scheduled offence still exists.- In such cases, if the accused against whom the scheduled offence is quashed relying on such quashment files another quash petition against the continuation of the PMLA proceedings, the Court can refuse to entertain such a petition taking note of the fact that the I 21 issue of genor i,tion of proceeds of crime is still pendi'rg adjudication and if it find:, that the accused was prima facie inv olvcd in dealing with procecds ,rf crime.
27. ..\s can be seen from the allegations againsl tle Petitioners as extracted i Lirove, the Petitioner No. 1 used Petitio ne No. 2 as a conduit 1o pa'z the bribe amount. Even a person assistinll a person in dealing with rloceeds of crime is enough to attfact Secr.ion 3 of the PMLA. It i; also pertinent to note that the Petilioncrs have not provided anl e xplanation conceming the transfer of th,: a lleged bribes through th,:m . In this regard, it is apposite to reler t tt :he Supreme Court's dec:isic n in Pradeep Nirankarnath Sharma (srrpra), wherein this Court he Id that the economic offences like PNII- \ cannot be nipped in the :ud. The accused, in such cases, shall fac''tlial.
28. l-he 'elevant paragraphs are extracted belou'
30. Ihe PMLA was enacted with the prirnarl ,rhj,:ctive of prer cnting money laundering and confiscating t te proceeds ol c r ime, thereby ensuring that such illjcit find; do not unrl :'mine the financial system. Money laundcrinl has lar- react ing consequencesl not only in terms of indivi,lual acts of i oruption but also in causing significant lo:rs to the pub i: cxchequer. The laundering of procccds rf clinre l 25 results in a significant loss to the economy, disrupts lawful financial transactions, and erodes public trust in the system. The alleged offences in the prcsent case have a direct bearing on the economy, as illicit fr4ancial transactions deprive the state of legitimate revenuc, distort market integrity, and contribute to economic instability. Such acts, when committed by persons in positions of power, erode public confidence in govemance and lead to systemic r,r-rlnerabilities within fi nancial institutions.
31. The illegal diversion and layering ol lunds havc .a cascading effect, leading to revenue losses for the state and depriving legitimate sectors of investment and financial resources. It is settled law that in cases involving serious economic offences, judicial intcrvention at a preliminary stage must be exercised with caution, and proccedings should not be quashed in the absence of compelling lcgal grounds. The respondent has rightly argued that in cases involving allegations of such rnagnitude, a trial is imperative to establish the full extent of wrongdoing and to ensure accountability.
32. The PMLA was enacted to combat the menace ol money laundering and to curb the use of proceeds of crime in the formal economy. Given the evolving complexity of financial crimes, courts must adopt a strict approach in matters concerning economic oflences to ensure that perpetrators do not exploit procedural loopholes to evade justice. 26
33. I he present case involves grave and seriorrs allegations lnancial misconduct, misuse o1' p,rs iti, rn. and c I inrc lvement in transactions constifuting nronel, larrndcring. 1'h': appellant seeks an end to the procr:cdirrgs at a prcl.rninary stage, effectively "preventing lhc full adjt lication ol facts and evidence befbre tlic c.)mpetent lorrr r. However, as established in rnultiple .iudicial p,ror rr )uncements, cases involving economi,: oft-ences re<:r::,sitate a thorough trial to unearth the complete chain of cvr:rr s. financial transactions, and culpabilil,v ol the a cc:r Lled.
34. I he rnaterial submitted by the respondent. c ruplcd rvith tnc r[oad legislative lramework of the PMLA. i ld cates the necr::rsitv of allowing the trial to proceerl and not discharging thc appellant at the nascent stagt c,f charge Iranr ng. The argument that the procccdi rgs are rnrr r ranted is devoid of substance in light ol the statutory c,blr < tives, the continuing nature of thc off'en:e. and the sign i ficant hnancial implications arising lronr t.h,.: alleged acts Discharging the appellant at this stage v,'ould be frsrrature and contrary to the principles go',,erning the pros r cution in money laundering cases.
35. - iven the severe and grave nature ol thc allcgations agairst the hppellant, it is imperative that he mrsl undergo thc,rr,ugh judicial scrutiny during trial. .4 proper trial is neccl,sary to unearth the full extent ol' ther ot'ence, to evalr ate the evidence produced by the appellanl, t( analyze the cornplete chain of final transactions, and 1'rnr, out the 'I 27 veracity of the severe allegations and the amount of proceeds of crime. The legal framework under the pMLA serves as a crucial mechanism to ensure that individuals involved in laundering proceeds of crime are brought to justice and that economic offences do not go unpunished. 29" Therefore, this court holds that the petitioners have failed to make out a case to quash the proceedings in S.C. No. 3/2021 and they shall face the trial.
30. In light of the aforesaid discussion, the present criminal petition is dismissed. Interim orders, if any, stand vacated. Consequently, miscellaneous petitions, if any, pending, shall also stand closed. \ To, //TRUE COPY// Sd/- MOHD. ISMAIL DEPUTY REGISTRAR (,, dr.f SECTI OFFIcER l The Principar Speciar Judge for Triar of cBr cases-cum-speciar court under the Prevention of Money Launilering Act, 2002 ,t f.firp"liy, Hyderabad
2. The Station-House Officer, CBI-ACB, Hyderabad_ 3. One CC to Mr. SVS Chowdary Advocaie [OpUC] 4. One CC to Mr. D. Narendar Naik, SC for iO 1OPUC1 5. Two CD Copies HIGH COUR'I- DATED:21 l0tLt2025 ORDER CRLP.No.155i18 of 2024 I t $ e$ -) . :i - ''.-.i/rcrrt o)-, '-:__=:--::7 DISMISSING OF THE CRIMINAL PE:TlTlON { r1