Kolkata: The Calcutta High Court has ruled that proceedings under the Prevention of Money Laundering Act (PMLA) can continue if the alleged laundering activity continued after the offence was included in the schedule of the Act, even if the original crime was committed earlier.
Allowing a revision petition filed by the Enforcement Directorate (ED), Justice Ajay Kumar Gupta set aside an order of a special court that had discharged two accused and ordered the return of seized property, holding that money laundering is a continuing offence and that the timing of the original offence alone cannot halt PMLA proceedings.
The case arises from allegations of cheating and forgery linked to the encashment of mutual fund investments. It was alleged that bank accounts were opened using fabricated documents and that the funds were diverted and later used for personal benefit. Following a police investigation, the ED initiated PMLA proceedings, claiming that the funds were proceeds of crime and were projected as legitimate through banking transactions and acquisition of property.
The special court had earlier discharged the accused because the alleged acts were committed before forgery was notified as a scheduled offence under the PMLA and that the law could not be applied retrospectively, and had ordered the return of attached assets. Disagreeing, it held that the focus under the PMLA is not confined to the date of the original offence but extends to whether the proceeds of crime continued to be possessed, used or projected as legitimate after the offence became a scheduled one. The Court noted that the allegations included continued handling of funds and acquisition of property even after the relevant provisions came into force. The court observed that while the existence of a scheduled offence is necessary to invoke the PMLA, a conviction in that offence is not required at the stage of initiating or continuing proceedings.