Proceedings under PMLA can be initiated even if person was not accused in predicate offence: Madras High Court

The Madras High Court recently observed that persons who were not accused in the predicate offence, i.e, the original criminal activity that resulted in the generation of the proceeds of the crime, could still be prosecuted under the Prevention of Money Laundering Act (PMLA). [P Rajendran vs The Assistant Director, Directorate of Enforcement].A division bench of Justice PN Prakash and Justice Teeka Raman made this observation while referring to the judgment of the Supreme Court in Vijay Madanlal Choudhary & Ors. v Union of India & Ors. in which it was held that the acquittal or discharge in the predicate offence or quashing of such offence will lead to acquittal or discharge in the offence of money laundering as well.The bench opined that this could not be applied in a case where the accused in the PMLA case was not arrayed as an accused in the predicate offence in the first place. "... paragraph No.467(d) of the Vijay Madanlal's case [supra] only speaks about the discharge/ acquittal or quashment of proceedings of the accused in the predicate offence and the consequences that will follow for him in the PMLA prosecution. In that context, the Supreme Court has held that such an accused cannot be prosecuted under the PMLA if the case against him in the predicate offence has been quashed or he has been discharged/acquitted... We cannot enlarge the scope of paragraph 467(d) of Vijay Madanlal's case and read into it things that have not been said, in the name of logical reasoning. Law is not always logic," the bench said in its order..The prosecution case was that in 2009, a group of men entered into a criminal conspiracy where they obtained a loan of rupees 15 crore from a private finance company while using fraudulent documents. Using a portion of this money, one of the accused persons bought several plots of land in the name of different persons including the petitioner, Rajendran. When the fraudulent loan case came to light, the Central Bureau of Investigation booked the accused persons under the Prevention of Corruption Act. The present petitioner, Rajendran, was not an accused in the CBI case. Later however, the Enforcement Directorate (ED) registered a related case for the offences under PMLA, in which Rajendran was also arrayed as an accused. .Rajendran then approached the High Court by way of the present plea, seeking to quash the proceedings against him.Relying on Vijay Madanlal Choudhary, it was argued that since Rajendran was not an accused in the predicate proceedings by the CBI, his prosecution by the Enforcement Directorate under PMLA was illegal and not maintainable..However, counsel for ED pointed out that the observation made by the apex court was in regards to persons who had also been named as accused in the predicate offence. This benefit was not applicable to a person who was not made an accused in the predicate offence, it was contended.The ED counsel argued that even after commission of the Predicate offence, and generation of proceeds of crime, different persons can join the main accused either as abettors or conspirators for committing the offence of money laundering by helping him in laundering the proceeds of crime. Such persons may not be involved in the original criminal activity that had resulted in the generation of "proceeds of crime", and thus may not be convicted in the predicate offence. But at the same time their prosecution under the PMLA cannot be said to be illegal as the offence under PMLA is a stand alone offence and is different and distinct from the predicate offence, it was contended..The High Court concurred with the arguments raised on behalf of the ED. Noting that the accused had voluntarily lent his name to purchasing a property using 'tainted money', the Court refused to quash the proceedings against the petitioner..Advocates Sharath Chandran and S Ramesh appeared for the petitioner.Special Public Prosecutor [ED] N Ramesh appeared for the Enforcement Directorate. .[Read Order].Acquittal on discharge in predicate offence, twin conditions for bail upheld: The Supreme Court's PMLA judgment explained