Supreme Court of India
PRADEEP NIRANKARNATH SHARMAversusDIRECTORATE OF ENFORCEMENT & ANR.
- Citation
- 2025 INSC 349
- Decided
- 16 March 2025
- Disposal
- Dismissed
- Bench
- VIKRAM NATH
Holding
The Court held that money laundering under the PMLA is a continuing offence, the Act applies to post‑enactment conduct irrespective of when the predicate offence occurred, and the alleged proceeds exceed the statutory threshold, so the trial court’s order stands.
Summary
The appellant, a former collector, was charged under the Prevention of Money Laundering Act, 2002 (PMLA) for alleged financial transactions involving proceeds of crime arising from land allotments, bribery and hawala. He sought discharge at the pre‑trial stage, arguing that the PMLA could not be applied retrospectively to acts committed before the Act or before the predicate offences were scheduled, and that the alleged amount did not meet the statutory threshold. The High Court dismissed his revision, upholding the Special Judge’s refusal to discharge him. The Supreme Court examined whether money laundering is a continuing offence, whether the PMLA can be applied to conduct after its enactment irrespective of the date of the predicate offence, and whether the quantum of proceeds exceeds the threshold. Relying on established jurisprudence, the Court held that the offence is continuing, the Act applies to post‑enactment conduct, and the proceeds far exceed the threshold, rendering the trial necessary. Consequently, the Court dismissed the appeal, leaving the trial proceedings intact.
Issues considered
- Whether the Prevention of Money Laundering Act, 2002 can be applied retrospectively to conduct alleged to have occurred before its enactment or before the predicate offences were included in its schedule.
- Whether the alleged money‑laundering activities constitute a continuing offence under the PMLA.
- Whether the value of the alleged proceeds of crime satisfies the statutory monetary threshold for invoking the PMLA.
- Whether the trial court’s rejection of the appellant’s discharge application should be interfered with at the pre‑trial stage.
Legislation cited
- Code of Criminal Procedure, 1973s. 227
- Prevention of Money Laundering Act, 2002s. 2(1)(u), s. 2(1)(y), s. 24, s. 3, s. 4, s. 5
Subjects
Proceeds of crimeConcealment of proceeds of crimeFraudulent activitiesFinancial losses to the StateMoney launderingDischargePredicate offenceStatutory thresholdJudicial interventionContinuing offenceSection 227 of CrPCEconomic offencesPreliminary stageIllicit financial transactionsLoss to the public exchequer
Judgment
[2025] 4 S.C.R. 71 : 2025 INSC 349
Pradeep Nirankarnath Sharma
v.
Directorate of Enforcement & Anr.
(Criminal Appeal No. 1314 of 2025)
17 March 2025
[Vikram Nath* and Prasanna B. Varale, JJ.]
Issue for Consideration
The High Court dismissed the appellant’s criminal revision
application and refused to the quash the order of the Trial Court
rejecting the appellant’s discharge application in a case for offences
under the Prevention of Money Laundering Act, 2002.
Headnotes†
Prevention of Money Laundering Act, 2002 – The allegation
against the appellant was that he was involved in financial
transactions related to proceeds of crime, generated through
fraudulent activities causing significant financial losses to
the State – The appellant has contended that the alleged acts
do not constitute an offence under the PMLA as the same
was not in force during the relevant period, or the predicate
offences as alleged were not included in the schedule to the
PMLA at the relevant time and, therefore, cannot be subject
to proceedings under the PMLA:
Held: The contention is untenable – It is well established that
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 legislative intent behind
the PMLA is to combat the menace of money laundering, which
by its very nature involves transactions spanning over time – In
the present case, the material on record establishes that the
misuse of power and position by the appellant, coupled with the
alleged utilization and concealment of proceeds of crime, has
had an enduring impact – 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
* Author
72 [2025] 4 S.C.R.
Supreme Court Reports
within the financial system or are being actively utilized by the
accused – The respondent has submitted that fresh instances
of the utilization of the proceeds of crime have surfaced even in
recent times, thereby extending the offence into the present and
negating the appellant’s contention that the act was confined to
a particular point in the past – The respondent has successfully
demonstrated prima facie that the appellant remained involved
in financial transactions linked to proceeds of crime beyond the
initial point of commission – As far as the statutory threshold for
initiating proceedings under the PMLA is concerned, the financial
trail indicates that the aggregated value of assets derived from
the alleged criminal activity is well beyond the prescribed limit –
Thus, the material submitted by the respondent, coupled with the
broad legislative framework of the PMLA, indicates the necessity
of allowing the trial to proceed and not discharging the appellant at
the nascent stage of charge framing.[Paras 21, 24, 25, 26, 27, 34]
Prevention of Money Laundering Act, 2002 – Continuing
offence:
Held: The concept of a continuing offence under PMLA has
been well-settled by judicial precedents – 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. [Para 22]
Prevention of Money Laundering Act, 2002 – Objective:
Held: The PMLA was enacted with the primary objective of
preventing money laundering and confiscating the proceeds of
crime, thereby ensuring that such illicit funds do not undermine
the financial system – Money laundering has far-reaching
consequences, not only in terms of individual acts of corruption
but also in causing significant loss to the public exchequer – The
laundering of proceeds of crime results in a significant loss to the
economy, disrupts lawful financial transactions, and erodes public
trust in the system.[Para 30]
Prevention of Money Laundering Act, 2002 – Judicial
intervention at a preliminary stage:
[2025] 4 S.C.R. 73
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
Held: The illegal diversion and layering of funds have 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 intervention at a preliminary stage must be exercised with
caution, and proceedings should not be quashed in the absence
of compelling legal grounds – The respondent has rightly argued
that in cases involving allegations of such magnitude, a trial is
imperative to establish the full extent of wrongdoing and to ensure
accountability – The PMLA was enacted to combat the menace
of 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 offences to ensure that perpetrators do not exploit
procedural loopholes to evade justice. [Paras 31, 32]
Case Law Cited
Vijay Madanlal Chaudhary and Others v. Union of India and Others
[2022] 6 SCR 382 : (2023) 12 SCC 1 – relied on.
ED v. M/s Obulapuram Mining Company Pvt. Ltd., Criminal Appeal
No. 1269/2017 – referred to.
List of Acts
Prevention of Money Laundering Act, 2002.
List of Keywords
Proceeds of crime; Concealment of proceeds of crime; Fraudulent
activities; Financial losses to the State; Money laundering;
Discharge; Predicate offence; Statutory threshold; Judicial
intervention; Continuing offence; Section 227 of CrPC; Economic
offences; Preliminary stage; Illicit financial transactions; Loss to
the public exchequer.
Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
1314 of 2025
From the Judgment and Order dated 14.03.2023 of the High Court
of Gujarat at Ahmedabad in CRLRA No. 66 of 2018
74 [2025] 4 S.C.R.
Supreme Court Reports
Appearances for Parties
Advs. for the Appellant:
Kapil Sibal, Sr. Adv., Aljo K. Joseph, Vinay Kumar Puvvala, Santosh
Kumar Kolkonda, Saket Jee.
Advs. for the Respondents:
Tushar Mehta, Solicitor General, Zoheb Hussain, Annam Venkatesh,
Kanu Agrawal, Vivek Gurnani, Arvind Kumar Sharma, Ms. Swati
Ghildiyal, Ms. Devyani Bhatt, Ms. Neha Singh.
Judgment / Order of the Supreme Court
Judgment
Vikram Nath, J.
1. Leave granted.
2. The present appeal has been filed against an order dated 14.03.2023
passed by the High Court of Gujarat dismissing the appellant’s criminal
revision application and refusing to the quash the order of the Trial
Court rejecting the appellant’s discharge application in a case for
offences under the Prevention of Money Laundering Act, 2002.1
3. The appellant had approached the High Court through a Criminal
Revision Application No. 66 of 2018, challenging the order dated
08.01.2018 passed by the Special Judge (PMLA), Ahmedabad, in
PMLA Case No. 02 of 2016. The Special Judge had rejected the
discharge application filed by the appellant under Section 227 of
the Code of Criminal Procedure, 19732 seeking discharge from the
case registered under the PMLA. The appellant had been implicated
based on allegations of money laundering arising out of scheduled
offences under the PMLA.
4. The case against the appellant arose from an alleged economic
offence wherein the respondent no. 1 – Enforcement Directorate3
initiated proceedings against him under the PMLA. The primary
allegation was that the appellant was involved in financial transactions
1 PMLA
2 CrPC
3 ED
[2025] 4 S.C.R. 75
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
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.
5. Appellant was arrested on 31.07.2016 in connection with inquiry in
furtherance of ECIR/01/AZO/2012 registered by respondent no.1. This
Enforcement Case Information Report4 dated 12.03.2012 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,
respondent no.1 filed a complaint before the Special Judge on
27.09.2016 for offences under Section 3 and 4 of the PMLA. In the
present case there were two scheduled offences as per the two FIRs:
i. I-CR No. 03/2010 registered with Rajkot Zone, CID Crime for
offences under Sections 7, 11, 13(1)(B), 13(2) of the Prevention
of Corruption Act, 1988;5 and
ii. I-CR No. 09/2010 registered with Rajkot Zone, CID Crime for
offences under Sections 217, 409, 465, 467, 468, 471, 476,
120-B, IPC.
6. In both these cases, the charge sheet has been filed before the
concerned Court. Appellant is on anticipatory bail in the first scheduled
offence, in furtherance of High Court’s order dated 03.02.2012. In
the second scheduled offence, the appellant has been on regular
bail in furtherance of this Court’s order dated 13.12.2011.
7. Appellant approached the Special Judge under Section 227 of CrPC
seeking discharge in the PMLA case on the grounds that he has
been falsely implicated in the case and also no offence under the
PMLA is made out. Further, the appellant was arrested on 06.01.2010
and thereafter suspended on 08.01.2010, during which period he
had attained the age of superannuation and therefore now there
is no question of him being in service. He further contended that
the offences are alleged to have been committed when the PMLA
was not in force and thus these provisions cannot be invoked
retrospectively. It was his case the transaction alleged against him
4 ECIR
5 PC Act
76 [2025] 4 S.C.R.
Supreme Court Reports
were of the company in which his wife is a partner and thus these
cannot be attributed to him. Further, the transactions made to the
accounts held by him the bank in United States of America cannot
be deemed to be in furtherance of any offence, as he had opened
those accounts during his studies there and they were used for
transactions in that period.
8. The Special Judge (PMLA) in its judgment dated 08.01.2018 observed
that from the material on record and on the basis of the investigation by
respondent no.1, it prima facie appears that the appellant is involved in
Hawala, that is, illegal transfer of money to foreign countries, he also
appears to be in possession of proceeds of crime, and prima facie
appears to be involved in offences likely to affect the economy of the
country. It was further held that it appears from the material on record
that the appellant is prima facie involved in Hawala transaction of crores
of rupees as well. Further, in the Trial Court’s opinion, the appellant
had miserably failed to discharge the burden of proof under Section
24 of the PMLA which had shifted upon him to show that proceeds
of crime are untainted property. Such prima facie material sufficient
to infer the appellant’s involvement in such a serious case did not
warrant interference in the opinion of the Special Judge (PMLA) and
therefore the Trial Court refused to discharge the appellant, thereby
rejecting his application under Section 227 of the CrPC.
9. Aggrieved, the appellant approached the High Court seeking to
quash and set aside the above judgment of the Special Judge.
The appellant contended before the High Court that the allegations
against him were baseless and did not constitute an offence under
the PMLA. He argued that the scheduled offences alleged against
him predated the introduction of money laundering provisions in
the PMLA, and therefore, the application of the PMLA sought in the
present case was retrospective and thus impermissible in law. There
was no direct evidence linking him to the generation, possession,
concealment, or transfer of proceeds of crime.
10. It was further argued that the prosecution had failed to establish a
prima facie case against him, as the allegations were based purely
on assumptions and conjectures. The Special Judge erred in rejecting
his discharge application without properly considering the absence
of cogent material against him. The enforcement proceedings were
initiated in a mala fide manner with the sole intent of harassing him,
despite the lack of substantive evidence.
[2025] 4 S.C.R. 77
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
11. The State and the Enforcement Directorate vehemently opposed
the petition and argued that the appellant was a key player in the
entire money laundering scheme and had facilitated the layering and
placement of funds through multiple transactions to project them as
untainted.
12. It was also contended that the investigation had revealed substantial
material to suggest that the appellant had knowingly assisted in the
money laundering activities and had derived financial benefits from
the proceeds of crime.
13. It was further submitted that the appellant’s argument regarding
the retrospective application of the PMLA was misplaced since the
offence of money laundering is a continuing offence, and as long
as the tainted money remains in circulation, PMLA is applicable.
The Special Court had examined the materials on record and found
sufficient grounds to proceed against the appellant, thereby justifying
the rejection of his discharge application. They also argued that the
High Court, in the exercise of its revisional jurisdiction, ought not to
interfere with well-reasoned orders passed by the Trial Court unless
there was a manifest error or miscarriage of justice, which was not
the case here.
14. The High Court vide the impugned order dated 14.03.2024 dismissed
the Criminal Revision Application, thereby upholding the Special
Judge’s order rejecting the appellant’s discharge application. The
High Court observed that the material placed on record by the
Enforcement Directorate indicated prima facie involvement of the
appellant in the alleged offence. The High Court held that, in light
of the charge sheet and the documents to be considered at the
stage of charge framing, without going into the evidence produced
by the accused, the order of the Trial Court does not suffer from any
illegality, irregularity or impropriety.
15. The High Court found no procedural irregularity or legal infirmity in
the Special Judge’s order warranting interference under its revisional
jurisdiction. It also emphasized that economic offences of this nature
require a strict approach, and courts must be cautious while exercising
their discretionary powers to quash proceedings at an early stage. In
light of these findings, the High Court concluded that the rejection of
the appellant’s discharge application was justified and did not warrant
interference. The revision application was accordingly dismissed.
78 [2025] 4 S.C.R.
Supreme Court Reports
16. The appellant, aggrieved by the High Court’s decision, has now
approached this Court in appeal, seeking to challenge the correctness
of the judgment.
17. We have heard Mr. Kapil Sibal, learned senior counsel for the appellant
and Mr. Tushar Mehta, learned Solicitor General appearing for the
respondents at length.
18. Learned senior counsel for the appellant has made the following
submissions:
18.1 The alleged predicate offences, which supposedly generated
proceeds of crime, took place before the PMLA came into force.
Additionally, these offences predate the PMLA (Amendment)
Act, 2009. As a result, such actions could not have generated
proceeds of crime as defined in Section 2(1)(u) of the PMLA,
which stipulates that a property can only be categorized as
proceeds of crime if it is derived from criminal activity related
to a scheduled offence. The substantiate this argument, the
appellant has submitted a detailed summary of the enforcement
of the PMLA and the various amendments. The PMLA came
into effect on 1st July 2005, and various predicate offences
were incorporated into its schedule on different dates. Initially,
Section 420 of the Indian Penal Code (IPC) and the Prevention
of Corruption Act, 1988 were not included as scheduled
offences under the PMLA. Section 467 IPC was originally
part of the PMLA schedule (Part B), but only if the total value
involved in such offences was thirty lakh rupees or more. Later,
Section 420 IPC was added to Part B of the PMLA schedule
on 1st June 2009, with a similar monetary threshold. Similarly,
Section 13 of the Prevention of Corruption Act was included
in Part B of the PMLA schedule from 1st June 2009, again
applicable only when the offence involved more than thirty lakh
rupees. Subsequently, with the PMLA (Amendment) Act, 2012,
effective from 4th January 2013, Sections 420 IPC, 467 IPC,
and 13 of the Prevention of Corruption Act were moved to Part
A of the PMLA schedule, removing any monetary threshold.
18.2 It has been further submitted that the Enforcement Directorate
(ED) has relied on the judgment in Vijay Madanlal Chaudhary
and others v. Union of India and others,6 to argue that the
6 (2023) 12 SCC 1
[2025] 4 S.C.R. 79
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
issue of PMLA’s retrospective application is settled. However,
it has been contended, the only paragraphs dealing with
retrospectivity in this judgment are Paragraphs 270 and
296, despite extensive submissions made on this issue. The
judgment merely holds that “in a given fact situation,” the
offence of money laundering under Section 3 of the PMLA
may be considered a continuing offence, irrespective of when
the scheduled offence was committed. The appellant argued
that the conclusions in Paragraph 467 of this judgment do
not address the issue of retrospectivity. Currently, a three-
judge bench of this Court is deliberating on the retrospective
application of the PMLA and its amendments in ED v. M/s
Obulapuram Mining Company Pvt. Ltd. (Criminal Appeal No.
1269/2017) and related cases.
18.3 It is further the argument of the appellant that the allegations
in the eight predicate offence FIRs primarily concern actions
allegedly taken by the accused during his tenure as Collector
at Bhuj and Rajkot. It is alleged that he approved large-scale
land allotments in 2004 and 2005 to private companies
and individuals, exceeding his authorized power, thereby
committing offences under Section 420 IPC. Further, it is
claimed that he hastily approved the conversion of land use
from agricultural to industrial to unduly benefit certain persons,
thereby committing offences under Sections 420 and 467 IPC.
Additionally, he allegedly facilitated land allotments at below-
market rates, causing notional losses to the government in
2004 and 2005, amounting to offences under Sections 420
and 467 IPC. Furthermore, between 2004 and 2009, certain
private companies allegedly paid his mobile phone bills totaling
approximately ₹2.24 lakhs and ₹46,554/-, which has been
characterized as bribery under the Prevention of Corruption
Act, 1988. It is submitted that these alleged actions all took
place either before the PMLA came into force or when the
offences under Section 420 and 467, IPC were not predicate
offences.
18.4 To underscore and highlight the non-application of the PMLA
to these allegations, a chronological analysis of the alleged
acts and the application of the PMLA at the relevant time was
submitted by the appellant.
80 [2025] 4 S.C.R.
Supreme Court Reports
Period Allegations in the predicate offence Applicable
FIRs Law
Prior to i. That during his tenure as Collector PMLA not in
01.07.2005 a t B h u j w h i c h b e g a n f r o m force.
02.05.2003, while in discharge of
his official duties, he was in charge
of a land revenue policy of 1997
[Circular dated 25.09.1997] that
allowed allotment of fallow lands
to private persons. He allotted
such lands contrary to the policy
and cheated the government,
caused loss, committed forgery
by allowing false documents to be
used for these allotment requests
and engaged in corruption.
ii. As per Gujarat Govt Order
03.02.2002 for allotment of land to
those affected by the earthquake
at Bhuj, a certificate was required
from the Collector to verify that
the victim was in fact impacted
by the earthquake. The accused
provided a fake certificate to a
trust to facilitate their fraudulent
application for compensatory land.
iii. As per Gujarat Govt’s
Revenue Dept Resolution No.
J a m a n /3 9 2 0 0 3 /4 54/A dated
06.06.2003, the Collector was
authorized to allot land upto 2
hectares only for industrial use.
iv. When the accused Pradip Sharma
was Collector, Bhuj, he allowed
allotment of fallow land to M/s
Saw Pipes Ltd. for setting up an
industrial unit. These applications
were submitted on 23.01.2004 and
sanctioned on 05.03.2004, after
which accused Pradip issued an
order on 05.03.2004 for allotment
above the cap of 2 hectares.
[2025] 4 S.C.R. 81
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
v. Accused Pradip received a mobile
SIM card no. 9925133799 from
Asim Niranjan Chakravorty,
Director of M/s Wellspun Company
for which a bill of Rs. 2.24 lakhs
were paid by the company for
the period from 2004-2009 which
was allegedly a bribe punishable
under Section 7/11/13 of the
Prevention of Corruption Act,
1988, as this was in exchange for
allotments of land to M/s Wellspun
in the year 2004 at an allegedly
undervalued rate.
vi. These undervalued allotments
to M/s Wellspun in 2004 at the
rate of Rs. 15/- and not Rs.
30/- per sq metre on 22.07.2004
caused a financial loss of Rs.
1,20,30,824/- to the government.
An application dated 01.02.2005
was made by a company M/s
Value Packaging in which the
wife of the accused Pradip is a
partner, for converting land from
agricultural to non- agricultural
use. Accused Pradip allowed this
within 40 days by passing an order
on 10.03.2005 which amounted
to an offence punishable under
Section 217/409/465/467/471/476
and 120-B IPC.
vii. Accused Pradip received mobile
sim card no. 9824001729 from
Ranjit Singh Bhaktasingh Bhat,
owner of M/s Ratan Enterprises
Company and used it and the bill
of Rs. 46,554/- was paid by Mr.
Bhat for the period from 2004-
2009 which was allegedly a bribe
punishable under Section 7/11/13
of the Prevention of Corruption
Act, 1988.
82 [2025] 4 S.C.R.
Supreme Court Reports
Between i. That during his tenure as Collector PMLA in force.
01.07.2005 at Bhuj between 02.05.2003 and
03.07.2006 and thereafter in S. 420 IPC
and
Rajkot till 28.03.2008, while in and PC Act
01.06.2009
discharge of his official duties, not scheduled
he was in charge of a land offences.
revenue policy of 1997 [Circular
dated 25.09.1997] that allowed
allotment of fallow lands to private
persons. He allotted such lands
contrary to the policy and cheated
the government, caused loss,
committed forgery by allowing
False documents to be used for
these allotment requests and
engaged in corruption.
ii. While accused Pradip was
Collector, Bhuj, he received an
application dated 18.07.2005 from
one Chandan Mandali requesting
extension of a lease of land from
the government to him was initially
rejected by the accused. Allotment
of 30 units vide applications made
in 2005 were awarded instead
despite it crossing the threshold
of 2 hectares.
iii. While accused Pradip was
Collector, Rajkot, he passed an
order dated 23.05.2007 to reinstate
allotment of agricultural land to
applicants who were resident
abroad, despite their ineligibility.
iv. Accused Pradip received a mobile
SIM card no. 9925133799 from
Asim Niranjan Chakravorty,
Director of M/s Wellspun Company
for which a bill of Rs. 2.24 lakhs
was paid by the company for the
period from 2004-2009 which was
allegedly a bribe punishable under
Section 7/11/13 of the Prevention
of Corruption Act, 1988, as this was
in exchange for allotments of land
to M/s Wellspun in the year 2004
at an allegedly undervalued rate.
[2025] 4 S.C.R. 83
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
v. Accused Pradip received mobile
sim card no. 9824001729 from
Ranjit Singh Bhaktarsingh Bhat,
owner of M/S Ratan Enterprises
Company and used it and the bill
of Rs. 46,554/- was paid by Mr.
Bhat for the period from 2004-
2009 which was allegedly a bribe
punishable under Section 7/11/13
of the Prevention of Corruption
Act, 1988.
vi. On retirement from the partnership
in April 2009, his wife received
Rs 22 lakhs in her NRO Bank
account maintained with Bank of
India from M/s Value Packaging.
Subtracting her original
investment of Rs. 1,50,000/-, this
amounted to profits of Rs. 20.5
lakhs which was allegedly a bribe
punishable under Section 7/11/13
of the Prevention of Corruption
Act,1988.
vii. Pradip Sharma’s wife received
Rs. 7.5 lakhs as goodwill payment
from M/s Value Packaging which
was allegedly a bribe punishable
under Section 7/11/13 of the
Prevention of Corruption Act,
1988.
Between i. Accused Pradip received a mobile PMLA was
01.06.2009 SIM card no. 9925133799 from amended by
and Asim Niranjan Chakravorty, the PMLA
04.01.2013 Director of M/s Wellspun Company (Amendment)
for which a bill of Rs. 2.24 lakhs Act, 2009 which
were paid by the company for came into force
the period from 2004-2009. This on 01.06.2009:
was in exchange for allotments S. 420/467 IPC
of land to Wellspun in the year and S. 13 PC
2004 at an allegedly undervalued Act were in the
rate which was allegedly a bribe PMLA Schedule
punishable under Section 7/11/13 (Part B) Which
of the Prevention of Corruption stipulated that
Act, 1988. the offence
84 [2025] 4 S.C.R.
Supreme Court Reports
ii. Accused Pradip received mobile was made out
sim car no. 9824001729 from only if the total
Ranjit Singh Bhaktasingh Bhat, value involved
owner of M/s Ratan Enterprises in such offences
Company and used it and the bill is R. 30 Lakhs
of Rs. 46,554/- was paid by Mr. or more.
Bhat for the period from 2004-
2009 which was allegedly a bribe
punishable under Section 7/11/13
of the Prevention of Corruption
Act, 1988.
iii. Accused Pradip got a SIM card
while in custody at Palora Jail as
an under trial offence was made
out only if the total value involved
in such offences is thirty lakh or
more.
From No allegations PMLA in force.
04.01.2013
S.420/467 IPC
and S.13 PC
Act was in the
PMLA schedule
(Part A) with
no minimum
monetary value
specified.
18.5 Thus, on the basis of the above allegations, the following
submissions were made with regards to the application of
the PMLA:
A. Before 1st July 2005, the PMLA was not in force. During
his tenure as Collector at Bhuj, beginning on 2nd May
2003, the accused was responsible for implementing
a land revenue policy from 1997, which permitted the
allotment of fallow lands to private entities. It is alleged that
he misused this policy to approve land allotments contrary
to regulations, thereby committing offences of cheating,
forgery, and corruption. Under a Gujarat Government
Order dated 3rd February 2002, land allotments to
earthquake victims required a certificate from the Collector
verifying their eligibility. The accused allegedly issued a
[2025] 4 S.C.R. 85
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
fraudulent certificate to a trust, facilitating a wrongful land
allotment. Further, the Gujarat Government’s Revenue
Department Resolution dated 6th June 2003 authorized
the Collector to allot up to two hectares of land for
industrial purposes. However, it is alleged that in 2004,
he exceeded this limit by allotting large tracts of land
to M/s Saw Pipes Ltd. and M/s Wellspun Company at
significantly undervalued rates, causing a financial loss
of ₹1,20,30,824/- to the government. Additionally, his wife
was a partner in M/s Value Packaging, which applied for
land-use conversion in 2005, and he allegedly facilitated
the approval within 40 days, constituting offences under
multiple IPC sections, including 217, 409, 465, 467, 471,
476, and 120-B.
B. Between 1st July 2005 and 1st June 2009, while the
PMLA was in force, Sections 420 IPC and the Prevention
of Corruption Act were not scheduled offences, though
Section 467 IPC was included in Part B of the schedule,
applicable only if the offence involved a value exceeding
thirty lakh rupees. During this period, similar allegations
continued against the accused, including improper land
allotments in Bhuj and Rajkot, approval of ineligible
applications for agricultural land, and further instances
of alleged bribery. Notably, during this period, his wife
received ₹22 lakhs in her NRO bank account from M/s
Value Packaging upon her retirement from the partnership
in April 2009. After deducting her original investment
of ₹1.5 lakhs, the remaining ₹20.5 lakhs was allegedly
an illicit benefit under the Prevention of Corruption
Act. Additionally, she received ₹7.5 lakhs as a goodwill
payment, which was also considered a bribe under the Act.
C. From 1st June 2009 to 4th January 2013, the PMLA
(Amendment) Act, 2009 was in effect, which added
Sections 420 and 467 IPC and Section 13 of the
Prevention of Corruption Act to the PMLA schedule
(Part B), again with a monetary threshold of thirty lakh
rupees. During this time, the accused allegedly continued
to benefit from mobile phone bills paid by companies in
return for past land allotments. Moreover, it is alleged
86 [2025] 4 S.C.R.
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that while in custody at Palora Jail as an undertrial, he
obtained a SIM card, though it is unclear whether this
constitutes an offence under the PMLA.
D. Finally, from 4th January 2013 onward, the PMLA was
amended to include Sections 420 and 467 IPC and
Section 13 of the Prevention of Corruption Act in Part A
of its schedule, thereby removing any minimum monetary
threshold. However, there are no allegations against the
accused for actions taken during this period.
18.6 The primary submission made in light of the above timeline is
that the allegations primarily pertain to acts committed before
the PMLA was in force or during periods when the relevant
offences were not scheduled under the Act. It is further the
argument that given the legal framework and the pending
deliberations before this Court regarding the retrospective
application of the PMLA, it is evident that the accused cannot
be prosecuted under the PMLA for alleged predicate offences
that occurred prior to its enactment or prior to the inclusion of
those offences in the PMLA schedule
19. The learned Solicitor General has made the following submission
on behalf of the respondent authorities and the State:
19.1 The respondent argues that the appellant’s arguments
regarding the retrospective application of PMLA are legally
untenable, as the offence of money laundering is a continuing
offence as has been held by this Court and has been correctly
applied based on the facts of the case.
19.2 The respondent emphasizes that at the stage of framing of
charges, the court only needs to determine whether there is
sufficient material to raise a “grave suspicion” of the commission
of an offence. The probative value of evidence is not assessed
at this stage, and the case must proceed to trial if a prima
facie offence is made out.
19.3 The respondent submits that the predicate offences forming
the basis of the money laundering case were scheduled
offences under the PMLA at the relevant time. Specifically,
the predicate offences under the IPC and the Prevention of
Corruption Act, 1988 (PC Act), were already included in the
[2025] 4 S.C.R. 87
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
Schedule to PMLA when they were committed. Section 7 of
the Prevention of Corruption Act, 1988, was part of Part B,
Para 5 of the PMLA Schedule as originally enacted in 2005.
Section 467 of the IPC was part of Part B, Para 1 of the
PMLA Schedule as enacted in 2005. The total value of the
alleged offence exceeded Rs. 30 lakhs, satisfying the monetary
threshold under Section 2(1)(y) of PMLA for a Part B offence.
The amendments to PMLA in 2009 and 2013 only expanded
the scope of money laundering offences but did not introduce
retrospective liability in this case.
19.4 The respondent provided a detailed factual timeline to establish
that the offence was committed after PMLA came into force. FIR
No. 3/2010 was registered on 31.03.2010 under Section 7 of
the PC Act, a scheduled offence under PMLA since 01.07.2005.
Similarly, FIR No. 9/2010 was registered on 25.09.2010 under
Section 467 IPC, a scheduled offence under PMLA since
01.07.2005. Additionally, the sanction order for the illegal
land allotment was issued by the appellant on 09.06.2006,
establishing the continuation of criminal conduct after PMLA
came into force. The charge sheet under the Prevention of
Corruption Act and IPC, filed in 2011, confirmed that the total
proceeds of crime exceeded Rs. 1.32 crores, justifying the
invocation of PMLA.
19.5 The respondent asserted that the amount allegedly laundered
by the appellant is far in excess of the Rs. 30 lakhs threshold
required for a Part B scheduled offence before the 2013
amendment. The charge sheet records that the total loss to
the government was Rs. 1.20 crores, which by itself exceeds
the threshold limit. Furthermore, the total proceeds of crime
laundered amount to Rs. 1.32 crores, as identified through
investigation and attachment proceedings under Section 5 of
PMLA. The accused allegedly projected Rs. 22 lakhs received
by his wife as profits from a business entity, which was in
reality an attempt to disguise illegal gratification. Several
hawala transactions linked to the accused involved amounts
exceeding Rs. 1 crore, reinforcing the magnitude of the financial
crime. These figures demonstrate that the case is well within
the purview of PMLA, even under the pre-amendment legal
framework.
88 [2025] 4 S.C.R.
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19.6 The respondent strongly contended that the offence of money
laundering is independent and continuing and is not confined
to the date when the predicate offence was committed.
The ED relies on this Court’s judgment in Vijay Madanlal
Choudhary (supra), which held that the offence of money
laundering extends beyond the mere commission of the
scheduled offence. Any process or activity connected with the
proceeds of crime, including possession, use, concealment,
or projection as untainted property, continues to attract
liability under PMLA. The relevant date for determining the
offence of money laundering is when the accused engages
in activities connected to the proceeds of crime, not the date
of the scheduled offence. The amendment to Section 3 of
PMLA in 2019 was merely clarificatory and did not introduce
new liabilities.
19.7 The respondent refuted the appellant’s claim that PMLA has
been applied retrospectively in this case. It submits that the
appellant continued to enjoy and utilize the proceeds of crime
well after 2005, making the offence of money laundering
applicable under PMLA. The sanction orders for land allotments
were passed in 2006, after PMLA came into force, and were
based on forged documents, constituting an independent
offence. The reverse burden of proof under Section 24 of
PMLA places the onus on the appellant to prove that the
attached properties were not proceeds of crime, which he
has failed to do.
19.8 The respondent submitted that the Special Court and High
Court correctly applied the law in framing charges against
the appellant. The scheduled offences were part of the PMLA
Schedule at the time they were committed, and the offence
of money laundering continued well beyond the enactment
of PMLA. Additionally, the total amount involved far exceeds
the Rs. 30 lakhs threshold required under Part B of the
Schedule before its amendment. Therefore, the appellant’s
argument regarding retrospective application is misconceived
and without merit.
20. Having considered the rival submissions, the material on record,
and the statutory framework under the PMLA, this Court finds no
merit in the appeal.
[2025] 4 S.C.R. 89
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
21. A significant ground raised by the appellant pertains to the nature of
the alleged offence under the PMLA. The appellant has contended
that the alleged acts do not constitute an offence under the PMLA
as the same was not in force during the relevant period, or the
predicate offences as alleged were not included in the schedule to
the PMLA at the relevant time and, therefore, cannot be subject to
proceedings under the PMLA. It has also been argued that these
instances do not constitute continuing offences. This contention,
however, is untenable. It is well established that 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 legislative intent behind the PMLA is to combat the
menace of money laundering, which by its very nature involves
transactions spanning over time.
22. The concept of a continuing offence under PMLA has been well-
settled by judicial precedents. 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.
23. Even though the issue of retrospective application of the PMLA
is pending adjudication before this Court, the reliance by the
respondent on the observation of this Court in Vijay Madanlal
Chaudhary (Supra) cannot be said to be misplaced. This Court, in
its judgment in this case made the following observations regarding
the offence of money laundering and its nature as a continuing
offence:
“134. From the bare language of Section 3 of the 2002 Act,
it is amply clear that the offence of money laundering is
an independent offence regarding the process or activity
connected with the proceeds of crime which had been
derived or obtained as a result of criminal activity relating
to or in relation to a scheduled offence. The process or
activity can be in any form — be it one of concealment,
90 [2025] 4 S.C.R.
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possession, acquisition, use of proceeds of crime as much
as projecting it as untainted property or claiming it to be so.
Thus, involvement in any one of such process or activity
connected with the proceeds of crime would constitute
offence of money laundering. This offence otherwise
has nothing to do with the criminal activity relating to a
scheduled offence — except the proceeds of crime derived
or obtained as a result of that crime.
135. Needless to mention that such process or activity
can be indulged in only after the property is derived or
obtained as a result of criminal activity (a scheduled
offence). It would be an offence of money laundering
to indulge in or to assist or being party to the process
or activity connected with the proceeds of crime; and
such process or activity in a given fact situation may
be a continuing offence, irrespective of the date and
time of commission of the scheduled offence. In other
words, the criminal activity may have been committed
before the same had been notified as scheduled
offence for the purpose of the 2002 Act, 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 2002 Act — 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. The offence of money laundering is not
dependent on or linked to the date on which the
scheduled offence, or if we may say so, the predicate
offence has been committed. The relevant date is the
date on which the person indulges in the process
or activity connected with such proceeds of crime.
These ingredients are intrinsic in the original provision
(Section 3, as amended until 2013 and were in force till
31-7-2019); and the same has been merely explained
and clarified by way of Explanation vide Finance (No. 2)
Act, 2019. Thus understood, inclusion of clause (ii) in the
[2025] 4 S.C.R. 91
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
Explanation inserted in 2019 is of no consequence as it
does not alter or enlarge the scope of Section 3 at all.”
[Emphasis supplied]
24. In the present case, the material on record establishes that the
misuse of power and position by the appellant, coupled with the
alleged utilization and concealment of proceeds of crime, has had
an enduring impact. 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. The respondent
has submitted that fresh instances of the utilization of the proceeds
of crime have surfaced even in recent times, thereby extending the
offence into the present and negating the appellant’s contention that
the act was confined to a particular point in the past.
25. The law recognizes that 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. Thus, the argument
that the offence is not continuing does not hold good in law or on
facts, and therefore, the judgment of the High Court cannot be set
aside on this ground. Even if examined in the context of the present
case, the appellant’s contention does not hold water. The material on
record indicates the continued and repeated misuse of power and
position by the appellant, resulting in the generation and utilization
of proceeds of crime over an extended period. The respondent has
successfully demonstrated prima facie that the appellant remained
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 constitute elements of a continuing offence under the
PMLA. Thus, the proceedings initiated against the appellant are well
within the legal framework and cannot be assailed on this ground.
26. Another ground urged by the appellant is that the amount involved
does not meet the statutory threshold for initiating proceedings under
the PMLA as it stood prior to the amendment. The appellant has
relied upon the monetary threshold of Rs. 30 lakhs to argue that at
the relevant time, the offence did not attract the provisions of the
PMLA. This argument is equally devoid of merit.
92 [2025] 4 S.C.R.
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27. The respondent has placed substantial material on record to
demonstrate that the quantum of proceeds of crime significantly
exceeds the statutory threshold. The financial trail indicates that
the aggregated value of assets derived from the alleged criminal
activity is well beyond the prescribed limit. It is settled law 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.
28. The respondent has categorically established that the amount in
question far exceeds the threshold of Rs. 30 lakhs, even under
the unamended provisions of the PMLA. The allegations against
the appellant involve 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. The financial transactions in the alleged acts, as
evidenced from the record, reveal a considerably higher amount of
proceeds of crime, rendering the appellant’s reliance on the threshold
limit baseless.
29. Furthermore, it is settled law that the determination of the amount
involved in a money laundering offence is not to be viewed in
isolation but in the context of the overall financial trail and associated
transactions. The totality of the evidence must be assessed, which is
a matter of trial; but even on a prima facie assessment, it is clear that
the proceeds of crime in the present case are significantly higher than
the statutory threshold. The appellant has failed to substantiate his
claim with any material that contradicts the respondent’s submissions
in this regard. Therefore, this ground also does not aid the appellant
in any manner.
30. The PMLA was enacted with the primary objective of preventing
money laundering and confiscating the proceeds of crime, thereby
ensuring that such illicit funds do not undermine the financial system.
Money laundering has far-reaching consequences, not only in
terms of individual acts of corruption but also in causing significant
loss to the public exchequer. The laundering of proceeds of crime
results in a significant loss to the economy, disrupts lawful financial
transactions, and erodes public trust in the system. The alleged
offences in the present case have a direct bearing on the economy,
[2025] 4 S.C.R. 93
Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Anr.
as illicit financial transactions deprive the state of legitimate revenue,
distort market integrity, and contribute to economic instability. Such
acts, when committed by persons in positions of power, erode public
confidence in governance and lead to systemic vulnerabilities within
financial institutions.
31. The illegal diversion and layering of funds have 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 intervention at a
preliminary stage must be exercised with caution, and proceedings
should not be quashed in the absence of compelling legal grounds.
The respondent has rightly argued that in cases involving allegations
of such magnitude, a trial is imperative to establish the full extent of
wrongdoing and to ensure accountability.
32. The PMLA was enacted to combat the menace of 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 offences to ensure
that perpetrators do not exploit procedural loopholes to evade justice.
33. The present case involves grave and serious allegations of financial
misconduct, misuse of position, and involvement in transactions
constituting money laundering. The appellant seeks an end to the
proceedings at a preliminary stage, effectively preventing the full
adjudication of facts and evidence before the competent forum.
However, as established in multiple judicial pronouncements, cases
involving economic offences necessitate a thorough trial to unearth
the complete chain of events, financial transactions, and culpability
of the accused.
34. The material submitted by the respondent, coupled with the broad
legislative framework of the PMLA, indicates the necessity of allowing
the trial to proceed and not discharging the appellant at the nascent
stage of charge framing. The argument that the proceedings are
unwarranted is devoid of substance in light of the statutory objectives,
the continuing nature of the offence, and the significant financial
implications arising from the alleged acts. Discharging the appellant
at this stage would be premature and contrary to the principles
governing the prosecution in money laundering cases.
94 [2025] 4 S.C.R.
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35. Given the severe and grave nature of the allegations against the
appellant, it is imperative that he must undergo thorough judicial
scrutiny during trial. A proper trial is necessary to unearth the full
extent of the offence, to evaluate the evidence produced by the
appellant, to analyze the complete chain of final transactions, and
find out the 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.
36. In light of the above discussion, it is evident that the appellant
has failed to establish any legally sustainable ground warranting
interference by this Court at a pre-trial stage. The submissions made
in support of the appeal are neither legally untenable nor in the best
interest of justice. The offence alleged against the appellant is clearly
a continuing offence under the PMLA, and the quantum of proceeds
of crime involved far exceeds the statutory threshold and requires
proper investigation and judicial scrutiny. The findings of the Courts
below are well-reasoned and do not call for interference.
37. Consequently, the appeal is dismissed.
38. Pending applications, if any, also stand disposed of.
Result of the case: Appeal dismissed.
†
Headnotes prepared by: Ankit Gyan
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