Trilochan Mishra Vs Union of India

In the present criminal revision, the Petitioners call in question the legality, propriety and correctness of the order dated 20.01.2023 passed by the Court of the CBI-I, Special Court (PMLA), Bhubaneswar in Crl. Misc. Case (PMLA) No.61 of 2018, whereby their prayer for discharge under Section 227 Cr.P.C. was declined.

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Biranchi Narayan Mishra (hereinafter referred to as “Petitioner No.2”) has also filed CRLMC No.1756 of 2019 assailing the order of cognizance dated 25.09.2018 passed by the learned Sessions Judge, Khurda in Complaint Case (PMLA) No.61 of 2018. Likewise, Trilochan Mishra (hereinafter referred to as “Petitioner No.1”) has filed CRLMC No.1758 of 2019 challenging the very same order of cognizance. Since the facts and circumstances involved in CRLREV

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No.119 of 2023, CRLMC No.1756 of 2019 and CRLMC No.1758 of 2019 are substantially identical; inasmuch as Chhatrapur P.S. Case No.119 of 2015, the resultant G.R. Case, and Complaint Case (PMLA) No.61 of 2018 emanates from the same occurrence and the same factual matrix, the present CRLREV and the connected CRLMCs were taken up together for analogous hearing. It is also noted that two additional CRLMCs, namely CRLMC No.1757 of 2019 filed by co-accused Surendranath Mishra, and CRLMC No.1775 of 2019 filed by Sri Sri Mahapurusha Achyutananda Trust represented through its Chairman-cum-Managing Trustee, Trilochan Mishra (Petitioner No.1), were also preferred challenging the same order of cognizance. However, CRLMC No.1775 of 2019 was not pressed.

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The background facts, in brief, are that Opposite Party No.2-the Deputy Director, Enforcement Directorate, Government of India, Bhubaneswar filed a complaint under Section 45 of the Prevention of Money Laundering Act, 2002, which was registered as Complaint Case (PMLA) No.61 of 2018 before the learned Sessions Judge, Khurda at Bhubaneswar-cum-Special Court under the said Act. In the complaint, it was prayed that cognizance be taken of the offence of money laundering and that the Petitioners be proceeded against in accordance with law. A further prayer was made for punishing the accused persons for the offences under Section 3 read with Sections 70(1) and 70(2) of the PMLA, punishable under Section 4 thereof, as well as for the scheduled offences arising out of Chhatrapur P.S. Case No.119 dated 03.09.2015, later converted to CID, CB P.S. Case No.28 of 2015 under Sections 420, 423, 467, 468, 471, 506, 120-B and 34 of the IPC. The

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Enforcement Directorate also sought confiscation of the properties alleged to be involved in the offence of money laundering in terms of Section 8(5) of the PMLA. Pursuant to the said complaint, the learned court below took cognizance of the offence under Section 4 of the PMLA by order dated 25.09.2018. It is also relevant to note that Opposite Party No.2 subsequently filed a supplementary complaint under Section 45 of the PMLA reiterating its earlier prayers.

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Contentions of the Respective Parties

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Mr. B. P. Tripathy, learned Senior Advocate appearing for the Petitioners, submits that the Petitioners had earlier approached this Court in CRLMC No.3068 of 2019 challenging the order of cognizance dated 02.02.2016 passed by the learned S.D.J.M., Chhatrapur in G.R. Case No.258 of 2015 arising out of Chhatrapur P.S. Case No.119 of 2015, which was subsequently converted to CID, CB P.S. Case No.28 of 2015. This Court, by order dated 07.09.2021, was pleased to quash the said order of cognizance. Consequent upon the aforesaid order, the Petitioners moved the Court of the CBI-I, Special Court (PMLA), Bhubaneswar under Section 227 Cr.P.C. seeking discharge from the proceedings in Crl. Misc. Case (PMLA) No.61 of 2018. Learned Senior Counsel draws attention to the fact that the application under Section 227 Cr.P.C. was filed in the backdrop of the judgment of the Hon’ble Supreme Court dated 27.07.2022 in Vijay Madanlal Choudhary and others vs. Union of India , reported in 2022 SCC OnLine 929 . It is contended that the learned Special Court failed to appreciate the ratio and “spirit” of the said judgment. According to Mr. Tripathy, the law declared by the Hon’ble Supreme Court unequivocally holds that where the scheduled offence stands quashed by a competent court,

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continuation of proceedings under the PMLA cannot be sustained, as the very foundation for alleging the offence of money laundering ceases to exist.

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He further submits that the essential ingredients of Section 3 of the PMLA namely, the existence of “criminal activity” and “proceeds of crime” derived therefrom must be demonstrably established. The Petitioners’ properties sought to be attached are neither products of any criminal activity nor derived from any proceeds of crime. Learned Senior Counsel asserts that the Enforcement Directorate has not even attempted to lay material to establish that the properties in question were acquired through illicit or tainted funds. On the contrary, the entire allegation in the scheduled offence is limited to the Petitioners having executed a sale deed in place of a gift deed in favour of the informant. As admittedly no monetary transaction is alleged in the scheduled offence, the question of existence of “proceeds of crime” does not arise. He submits that Section 5 of the PMLA mandates that the person concerned must be in possession of property “derived or obtained, directly or indirectly, as a result of criminal activity” relating to a scheduled offence. The properties of the Petitioners, which were not purchased with illegal or tainted money, cannot by any stretch of imagination be termed as “proceeds of crime”. The provisions of the Act, he contends, do not empower the authorities to “trace and chase” properties of bona fide purchasers in the absence of any connection with criminal proceeds.

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Placing reliance on the judgment of the Allahabad High Court in Sushil Kumar Katiyar vs. Union of India & others , reported in 2016 SCC OnLine All 2632 learned Senior Counsel submits that Section 3

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of the PMLA uses the conjunctive “and”, thereby requiring satisfaction of two cumulative conditions:

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(i) the person must have directly or indirectly attempted to indulge, knowingly assisted, or actually been involved in any process or activity connected with the proceeds of crime relating to a scheduled offence; and

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(ii) the person must have projected or claimed such proceeds as untainted property

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Mr. Tripathy places that both these conditions, are completely absent in the present case. There is no oral, documentary, or circumstantial evidence to indicate that the Petitioners generated any property from criminal proceeds. Assailing the impugned order, Mr. Tripathy submits that the learned Special Court failed to apply the mandate of the Hon’ble Supreme Court and proceeded on a presumption that a prima facie case exists, despite the absence of material to support such a conclusion. The impugned order, according to him, suffers from patent illegality, is unsustainable in law, and warrants interference by this Court.

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Mr. G. Agarwal, learned Senior Counsel appearing for Opposite Party No.2, vehemently opposed the submissions advanced on behalf of the Petitioners. At the outset, he submits that the order dated 07.09.2021 passed by the Co-Ordinate Court in CRLMC No.3068 of 2019, wherein the cognizance order dated 02.02.2016 in G.R. Case No.119 of 2015 was quashed pertained only to Petitioner Trilochan Mishra and does not ensure to the benefit of the remaining accused persons. Learned Senior Counsel contends that the Petitioners were

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knowingly and actively involved in the processes and activities constituting the offence of money laundering within the meaning of Section 3, punishable under Section 4 of the PMLA, 2002. Upon a detailed consideration of the material available on record, the learned Special Court had rightly rejected their prayer for discharge, particularly as the Petitioners failed to discharge the statutory burden cast upon them under Section 24 of the PMLA to establish that the properties acquired by them were not “proceeds of crime” and were untainted.

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According to Mr. Agarwal, offences under the PMLA must be viewed with seriousness having regard to their deleterious impact on the economy. Section 3 of the Act clearly encompasses any person who directly or indirectly attempts to indulge in, knowingly assists, or is actually involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition, or use, and its projection or claiming as untainted property. Such a person is liable to be prosecuted for the offence of money laundering. Drawing the attention of this Court to Section 44 of the PMLA, learned Senior Counsel submits that it is well settled by a catena of decisions of the Hon’ble Supreme Court that the quashing of a scheduled offence does not ipso facto terminate proceedings under the PMLA. The offence of money laundering is an independent offence, and its existence does not depend upon the pendency of prosecution in the predicate offence. In the present case, the I.I.C., Balipatna had forwarded FIR No.189 of 2015 under Sections 294/506/120-B/34/420/509 IPC and FIR No.191 of 2015 under Section 34 IPC and Section 25 of the Arms Act to the Enforcement Directorate. Thus, even assuming that the cognizance

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order in G.R. Case No.119 of 2015 was quashed qua Petitioner Trilochan Mishra, the prosecution complaint filed by the Enforcement Directorate against four accused persons survives unaffected.

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Reliance is placed on the judgment of the Hon’ble Supreme Court in Pradeep Nirankarnath Sharma vs. Directorate of Enforcement , reported in 2025 SCC OnLine SC 560 , wherein it has been held that money laundering is an independent and continuing offence which does not conclude with a single act, but continues so long as the proceeds of crime are possessed, concealed, used, or projected as untainted. Money laundering is not a static but an ongoing activity, extending throughout the chain of handling illicit gains, their integration into the financial system, and their projection as legitimate. Learned Senior Counsel further submits that the determination of the amount involved in the offence of money laundering is not to be examined in isolation but must be viewed in the context of the overall financial trail and interconnected transactions. Such assessment, he submits, is purely a matter for trial.

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Referring to the legislative objective underlying the PMLA, Mr. Agarwal submits that the Act was enacted with the primary purpose of preventing money laundering and confiscating the proceeds of crime so as to safeguard the integrity of the financial system. Money laundering, it is submitted, not only facilitates corruption but also causes substantial loss to the public exchequer, distorts legitimate financial flows, undermines market stability, and erodes public trust in economic institutions. Offences of the present nature, particularly when committed by persons in positions of influence, have grave ramifications on governance and institutional integrity.

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Learned Senior Counsel also placed reliance on the decision of the Division Bench of the Madras High Court in Assistant Directorate of Enforcement vs. Ashok Anand , reported in 2024 SCC OnLine Mad 825 8, which reiterates that the offence of money laundering under Section 3 of the PMLA is a distinct and standalone offence, and that quashing of the predicate offence does not, by itself, render PMLA proceedings unsustainable. In view of the foregoing, it is submitted that the impugned order declining the Petitioners’ prayer for discharge suffers from no infirmity and warrants no interference, and that the Petitioners must face trial.

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Mr. S. Nayak, learned Special P.P. (CBI), while supporting the submissions advanced on behalf of the Enforcement Directorate and submits that the present case discloses a clear and consistent pattern of large-scale fraudulent transactions constituting the foundational criminal activity from which the alleged “proceeds of crime” have arisen. It is contended that the scheduled offences registered and investigated by the CBI reveal the generation of illicit assets through systematic manipulation of land records, abuse of official position and criminal conspiracy, forming the very predicate upon which the PMLA proceedings rest. He thus argued that the quashing of cognizance in one of the connected FIRs does not efface the criminal activity constituting the scheduled offences which continue to subsist independently in the remaining cases forwarded to the Enforcement Directorate. The material collected during the investigation, including the chain of transactions spanning numerous properties and substantial financial gain, provides a prima facie basis for the Enforcement Directorate to proceed under Section 3 of the PMLA, and the Petitioners have failed

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to dispel the statutory presumption under Section 24 of the PMLA and that the order of the learned Special Court rejecting their discharge application warrants no interference.

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Court’s Analysis

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Before examining the rival, contentions and adjudicating the issues that arise in the present criminal revision, it is considered appropriate to advert to the relevant statutory framework under the Prevention of Money Laundering Act, 2002. Accordingly, the relevant provisions are reproduced hereinbelow for ready reference.

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2. Definitions.

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( u ) “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;

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Explanation .—For the removal of doubts, it is hereby clarified that “proceeds of crime” include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;

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3. Offence of money-laundering.— Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.

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Explanation. — For the removal of doubts, it is hereby clarified that, —

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( i ) a person shall be guilty of offence of moneylaundering if such person is found to have directly or

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indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:—

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(a) concealment; or

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( b ) possession; or ( c ) acquisition; or ( d ) use; or

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( e ) projecting as untainted property; or

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( f ) claiming as untainted property,

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in any manner whatsoever;

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the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.

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24. Burden of proof.— In any proceeding relating to proceeds of crime under this Act,—

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( a ) in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in moneylaundering; and

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( b ) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering.

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A scheduled offence constitutes the predicate criminal activity from which illicit gain may arise. The property so derived or obtained, directly or indirectly, from such criminal activity is defined as “proceeds of crime” under Section 2(1)(u). These proceeds form the very core of the Act, for without them, the machinery of the PMLA is not set in motion. The offence of money-laundering under Section 3

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concerns not the commission of the scheduled offence itself, but the subsequent processes involving the proceeds of crime such as concealment, possession, acquisition, use, transfer or projecting them as untainted property. Thus, while the scheduled offence provides the origin of the illicit property, the act of handling or disguising that property constitutes a distinct and often continuing offence under the PMLA.

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These three elements: scheduled offence, proceeds of crime, and the laundering activity operate in a structured but interrelated manner. The scheduled offence explains the source, the proceeds of crime identify the property, and the laundering activity criminalises its handling. With this conceptual framework in view, the issues arising in the present case may now be taken up for consideration.

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Having reproduced the relevant provisions of the PMLA for ready reference, the Court now proceeds to examine their applicability, the extent of their operation, and the legal consequences that arise therefrom. This necessitates a structured analysis, guided by the issues framed hereunder.

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Issue 1: Whether the offence of money laundering under Section 3 of the PMLA is a standalone and continuing offence independent of the pendency or outcome of proceedings in the scheduled offence, and whether the existence of multiple FIRs alleging scheduled offences is sufficient to sustain jurisdiction under the PMLA even if cognizance in one predicate case has been quashed?

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The statutory scheme of the PMLA, particularly Sections 3 and 8 read with Section 44, makes it abundantly clear that the offence of money laundering is distinct from, and not dependent upon, the result of proceedings relating to the scheduled offence. The definition under Section 3 criminalises not merely the initial act of generating proceeds of crime, but the entire chain of “processes or activities” connected with such proceeds, including concealment, possession, acquisition, use, and projection or claiming of such property as untainted. These activities, by their very nature, are capable of continuing long after the occurrence of the predicate offence, thereby conferring upon the offence of money laundering an independent and continuing character.

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Judicial pronouncements have consistently affirmed this principle. The Hon’ble Supreme Court in the matter of Pradeep Nirankarnath Sharma vs. Directorate of Enforcement & Anr., reported in 2025 SCC OnLine SC 560 has clarified that money laundering does not conclude with the completion of the scheduled offence; rather, the offence continues so long as the proceeds of crime are enjoyed, held, concealed, layered, or projected in the economy.

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“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

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contention that the act was confined to a particular point in the past.

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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”

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The act of laundering, therefore, is a distinct wrong which survives irrespective of whether the scheduled offence is pending trial, compounded, compromised, stayed, or, in certain circumstances, even quashed. The rationale underlying this interpretation is that the laundering of illicit gains undermines the integrity of financial systems and constitutes a separate harm which the PMLA seeks to remedy.

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Furthermore, Section 44 of the PMLA reinforces this independence by permitting the Special Court to proceed with the offence of money laundering notwithstanding the stage of the scheduled offence. The two proceedings are separate in nature, and while the existence of a scheduled offence is a jurisdictional starting point for

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initiating action under the Act, the fate of such offence does not, by itself, determine the advisability or legality of continuing proceedings under Section 3 of the Act.

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The legal principle that thus emerges is that the offence of money laundering is a standalone, substantive, and continuing offence, and its prosecution is not automatically extinguished by the outcome of proceedings relating to the predicate offence. Whether, in a given case, the quashing or failure of the scheduled offence removes the foundational facts necessary to sustain a charge under the PMLA is a separate question, to be determined on the facts of each case; but the law does not recognise a mechanical or automatic termination of PMLA proceedings on that basis.

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In Pavana Dibbur vs. Directorate of Enforcement , reported in 2023 SCC OnLine SC 158 , the Hon’ble Supreme Court while citing Vijay Madanlal Choudhary vs. Union of India (Supra), held the following and further clarified that while proceedings under the PMLA are independent and the accused in the money-laundering case need not necessarily be an accused in the predicate offence, the scheduled offence must nevertheless exist as a foundational fact.

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“15. Coming back to Section 3 of the PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled offence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing an offence under Section 3 of the PMLA. To give a concrete example, the offences under Sections 384 to 389 of the IPG relating to “extortion” are scheduled offences

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Included in Paragraph 1 of the Schedule to the PMLA, an accused may commit a crime of extortion covered by Sections 384 to 389 of IPG and extort money. Subsequently, a person unconnected with the offence of extortion may assist the said accused in the concealment of the proceeds of extortion. In such a case, the person who assists the accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering. Therefore, it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offence. What is held in paragraph 270 of the decision of this Court in the case of Vijay Madanlal Choudhary supports the above conclusion. The conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of sub-section (1) of Section 3 of the PMLA.

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In a given case, if the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of the scheduled offence are quashed in its entirety, the scheduled offence 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 of quashing the proceedings of the scheduled offence. However, an accused in the PMLA case who comes into the picture after the scheduled offence is committed by assisting in the concealment or use of proceeds of crime need not be an accused in the scheduled offence. Such an accused can still be prosecuted under PMLA so long as the scheduled offence exists. Thus, the second contention raised by the learned senior counsel appearing for the appellant on the ground that the appellant was not shown as an accused in the

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charge sheets filed in the scheduled offences deserves to be rejected.

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The legislative intent which can be gathered from the definition of the scheduled offence under clause (y) of sub-Section (1) of Section 2 of the PMLA is that every crime which generate proceeds of crime need not be a scheduled offence. Therefore, only certain specific offences have been included in the Schedule. Thus, if the submissions of the learned Additional Solicitor General are accepted, the Schedule will become meaningless or redundant. The reason is that even if an offence registered is not a scheduled offence, the provisions of the PMLA and, in particular. Section 3 will be invoked by simply applying Section 120-B. If we look at Section 120-B, only because there is a conspiracy to commit an offence, the same does not become an aggravated offence. The object is to punish those involved in conspiracy to commit a crime, though they may not have committed any overt act that constitutes the offence. Conspiracy is an agreement between the accused to commit an offence. If we look at the punishments provided under Section 120-B, it becomes evident that it is not an aggravated offence. It only incorporates the principle of vicarious liability. If no specific punishment is provided in the Statute for conspiracy to commit a particular offence. Section 120-B treats a conspirator of the main accused as an abettor for the purposes of imposing the punishment. The interpretation suggested by the ED will defeat the legislative object of making only a few selected offences as scheduled offences. If we accept such an interpretation, the statute may attract the vice of unconstitutionality for being manifestly arbitrary. It cannot be the legislature’s intention to make every offence not included in the Schedule a scheduled offence by applying Section 120-B. Therefore, in our view, the offence under Section 120-B of IPC included in Part A of the Schedule will become a scheduled offence only if the criminal conspiracy is to commit any offence already included in Parts A, B or C of the Schedule. In other words, an offence punishable under Section 120-B of IPC will become a scheduled

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offence only if the conspiracy alleged is of committing an offence which is otherwise a scheduled offence.

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Coming back to the facts of the case, in the charge sheets filed in the alleged scheduled offences, there is no allegation of the commission of criminal conspiracy to commit any of the offences included in the Schedule. As pointed out earlier, except for Section 120B of the IPC, no other offence in the schedule has been applied. Therefore, in this case, the scheduled offence does not exist at all. Hence, the appellant cannot be prosecuted for the offences punishable under Section 3 of the PMLA.”

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While drawing a conclusion in the aforesaid decision the Hon’ble Supreme Court drew the following conclusions: -

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“a. It is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged, must have been shown as the accused in the scheduled offence:

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b. Even if an accused shown in the complaint under the PMLA is not an accused in the scheduled offence, he will benefit from the acquittal of all the accused in the scheduled offence or discharge of all the accused in the scheduled offence. Similarly, he will get the benefit of the order of quashing the proceedings of the scheduled offence;

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c. The first property cannot be said to have any connection with the proceeds of the crime as the acts constituting scheduled offence were committed after the property was acquired;

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d. The issue of whether the appellant has used tainted money forming part of the proceeds of crime for acquiring the second property can be decided only at the time of trial; and

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e. The offence punishable under Section 120-B of the IPG will become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule.”

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In this context, if all accused in the predicate offence are acquitted or discharged, or the scheduled offence is quashed in its entirety, the prosecution under the PMLA cannot survive, as there would be no proceeds of crime in the eyes of law. The independent nature of the PMLA, therefore, does not dispense with the jurisdictional requirement that the scheduled offence must subsist. it is equally wellsettled that where multiple FIRs alleging scheduled offences exist, each such FIR constitutes an independent factual foundation for invocation of the PMLA. The quashing of cognizance in one predicate case does not efface the jurisdiction of the Enforcement Directorate if other FIRs, containing allegations capable of generating proceeds of crime remain pending. PMLA proceedings may therefore validly continue so long as at least one scheduled offence survives with a prima facie nexus to the alleged illicit property.

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Issue 2: Whether the existence of “proceeds of crime” within the meaning of Section 2(1)(u) of the PMLA is a condition precedent for invoking jurisdiction under the Act, and how such proceeds are to be traced and identified through the FIR and ECIR process?

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The definition of proceeds of crime is intentionally wide, encompassing not only the original tainted property but also its transformed form and equivalent value. The legislative intent is to ensure that illicit wealth, irrespective of its current form or possessor, does not escape the reach of law. The existence of proceeds of crime is therefore a foundational jurisdictional fact for initiating proceedings under the PMLA. The Enforcement Directorate may trace such proceeds through information derived from a police report, a charge

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sheet, or even an FIR registered for the scheduled offence. Once such information suggests that property has been generated or obtained from a scheduled offence, the ED is empowered to record an Enforcement Case Information Report (ECIR), which serves as an internal document analogous to a preliminary record of investigation. While the ECIR may have its genesis in the FIR of the predicate offence, the two are distinct in scope and purpose the FIR records the crime; the ECIR traces its financial consequence.

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It is well recognised that the proceeds of crime may not always manifest as direct monetary gains. They may assume the form of immovable properties, valuable securities, or other assets derived from or linked to criminal activity. The identification of such proceeds is essentially a matter of evidence and investigation, to be assessed on a case-to-case basis. As observed by the Hon’ble Supreme Court, the definition being inclusive, it covers both the tangible and intangible gains of the underlying criminal activity, and the “value of such property” where the actual property is no longer available.

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The determination of what constitutes proceeds of crime cannot be made in isolation or at the threshold unless the materials on record clearly demonstrate the absence of any link between the property and the scheduled offence. Where transactions involve large-scale transfers of assets or funds, the presumption under the statute operates in favour of the existence of proceeds of crime until rebutted by the accused through cogent explanation.

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This position finds support from the Division Bench of the Madras High Court in Asst. Directorate (PMLA) of Enforcement v.

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Ashok Anand , reported in 2024 SCC OnLine Mad 8258 , held as follows:

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“19. Section 65 of PMLA stipulates that “Criminal Procedure Code, 1973 to apply.” Accordingly, the provisions of Criminal Procedure Code, 1973 shall apply, in so far as they are not inconsistent with the provisions of the Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act.

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When Section 65 of PMLA stipulates that the special enactment namely PMLA would prevail over Cr. P.C. Thus, the reliance placed on by the learned Senior Counsel would have no assistance to support the case of the respondent. When the procedures contemplated under PMLA are independent and distinct to other penal laws, the same would prevail over the general provisions and the commencement of proceedings under PMLA, thereafter will be a standalone process.

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Section 71 of PMLA states that the provisions of PMLA shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

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Holistic reading of the provisions of PMLA would indicate that schedule offence is prerequisite condition for initiation of proceedings under PMLA. Once proceedings are initiated under PMLA by recording ECIR, thereafter the investigation and offence of money laundering traced out by the Enforcement Directorate become independent and to be dealt with under the provisions of PMLA and the application of Cr.P.C. is undoubtedly limited in view of Section 65 and 71 of PMLA.

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ECIR cannot be equated with FIR. The schedule offence is quintessential for initiation of proceedings and recording of ECIR but both the offences cannot be placed on the same footing. PMLA proceedings are distinct and the said Act is a complete code in itself. Whereas scheduled offences are tried under other penal laws. When two documents are difference and distinct in their own nature, a combined reading and implication cannot be adduced to them.

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ECIR is born from FIR, but once the ECIR is born, the umbilical cord that connects the ECIR with FIR looses its relevance and the ECIR becomes an independent document in itself. Consequently, a new life in the form of ECIR emerges, which has breath on its own without the support of FIR. So, the FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other.

¶135

From the above it is clear that although the ECIR originates from the FIR, the moment it is registered, it stands on its own footing and the connection with the FIR ‘loses its relevance’. The PMLA is a self-contained code, and Sections 65 and 71 give overriding effect to the procedures under the Act. The scheduled offence serves as the jurisdictional trigger; thereafter, investigation into money-laundering proceeds as an independent process.

¶136

In the present context, the registration of multiple FIRs concerning acts of cheating, forgery, criminal conspiracy, and other cognate offences provided the Enforcement Directorate the necessary jurisdictional basis to initiate ECIR and file the complaint under the PMLA. The mere quashing of cognizance in one of the predicate cases does not extinguish the existence of alleged proceeds of crime arising from the remaining transactions. Each case must therefore be examined on its own factual matrix to ascertain whether the property in question retains the taint of illicit origin. The legal principle that thus emerges is that the existence of proceeds of crime is a condition precedent for invoking the PMLA, but its precise extent, form, and connection to the scheduled offence are matters of investigation and trial. The ECIR, being independent of the FIR, may continue to hold field so long as there is prima facie material indicating that property derived from a

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scheduled offence exists and is being dealt with in a manner attracting Section 3 of the Act.

¶140

Issue 3: Whether, under Section 24 of the Prevention of Money Laundering Act, 2002, the statutory presumption regarding the nature of property as “proceeds of crime” shifts the burden of proof upon the accused, and to what extent such burden must be discharged at the stage of consideration under Section 227 Cr.P.C.?

¶141

Section 24 of the PMLA introduces a departure from the ordinary rule of criminal jurisprudence by prescribing a reverse burden of proof. Ordinarily, the prosecution bears the obligation to establish the guilt of the accused beyond reasonable doubt. However, under Section 24, once the prosecution produces material indicating that certain property is linked to the scheduled offence, a statutory presumption arises that such property constitutes “proceeds of crime” and that the person in possession of it has engaged in moneylaundering. The burden then shifts upon the accused to prove, by cogent explanation or evidence, that the property is untainted and lawfully acquired.

¶142

The legislative intent behind this provision is to prevent offenders from disguising illicit assets under the cover of legitimate ownership. Economic offences involving complex layering and concealment make it practically difficult for the prosecution to trace every element of the laundering chain; therefore, the statute justifiably imposes a rebuttable presumption on those in possession of the suspected property to explain its legitimate origin. This reverse burden, however, does not dispense with the foundational requirement that the

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prosecution must first demonstrate a prima facie nexus between the property and a scheduled offence.

¶146

In State by Deputy Superintendent of Police vs. R. Soundirarasu Etc. , reported in (2023) 6 SCC 768 , the Hon’ble Supreme Court reiterated and clarified the governing principles, observing as follows: –

¶147

“55. The nature of evaluation to be made by the court at the stage of framing of charge came up for consideration of this Court in Onkar Nath Mishra and others v. State (NCT of Delhi) and another , (2008) 2 SCC 561, and referring to its earlier decisions in the State of Maharashtra v. Som Nath Thapa , (1996) 4 SCC 659, and the State of M.P. v. Mohanlal Soni , (2000) 6 SCC 338, it was held that at that stage, the Court has to form a presumptive opinion as to the existence of the factual ingredients constituting the offence alleged and it is not expected to go deep into the probative value of the materials on record. The relevant observations made in the judgment are as follows:-

¶148

“11. It is trite that at the stage of framing of charge the court is required to evaluate the material and documents on record with a view to finding out if the facts emerging therefrom, taken at their face value, disclosed the existence of all the ingredients constituting the alleged offence. At that stage, the court is not expected to go deep into the probative value of the material on record. What needs to be considered is whether there is a ground for presuming that the offence has been committed and not a ground for convicting the accused has been made out. At that stage, even strong suspicion founded on material which leads the court to form a presumptive opinion as to the existence of the factual ingredients constituting the offence alleged would justify the framing of charge against the accused in respect of the commission of that offence.”

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¶151

Then again in the case of Som Nath Thapa (supra), a three- Judge Bench of this Court, after noting the three pairs of Sections i.e. (i) Sections 227 and 228 resply in so far as the sessions trial is concerned; (ii) Sections 239 and 240 resply relatable to the trial of warrant cases; and (iii) Sections 245(1) and (2) qua the trial of summons cases, which dealt with the question of framing of charge or discharge, stated thus: (SCC p. 671, para 32).

¶152

“32...if on the basis of materials on record, a court could come to the conclusion that commission of the offence is a probable consequence, a case for framing of charge exists. To put it differently, if the court were to think that the accused might have committed the offence it can frame the charge, though for conviction the conclusion is required to be that the accused has committed the offence. It is apparent that at the stage of framing of a charge, probative value of the materials on record cannot be gone into; the materials brought on record by the prosecution has to be accepted as true at that stage.”

¶153

In a later decision in Mohanlal Soni (supra), this Court, referring to several of its previous decisions, held that: (SCC p. 342, para 7) “7. The crystallised judicial view is that at the stage of framing charge, the court has to prima facie consider whether there is sufficient ground for proceeding against the accused. The court is not required to appreciate evidence to conclude whether the materials produced are sufficient or not for convicting the accused.”

¶154

Reiterating a similar view in Sheoraj Singh Ahlawat and others v. State of Uttar Pradesh and another, (2013) 11 SCC 476 , it was observed by this Court that while framing charges the court is required to evaluate the materials and documents on record to decide whether the facts emerging therefrom taken at their face value would disclose existence of ingredients constituting the alleged offence. At this stage, the court is not required to go deep into the probative value of the materials on record. It needs to evaluate whether there is a ground for presuming that the accused had committed the offence and it is not

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required to evaluate sufficiency of evidence to convict the accused. It was held that the Court at this stage cannot speculate into the truthfulness or falsity of the allegations and contradictions & inconsistencies in the statement of witnesses cannot be looked into at the stage of discharge. 75. In Munna Devi v. State of Rajasthan & Anr. , (2001) 9 SCC 631, this Court held as under:-

¶158

“3.....The revision power under the Code of Criminal Procedure cannot be exercised in a routine and casual manner. While exercising such powers the High Court has no authority to appreciate the evidence in the manner as the trial and the appellate courts are required to do. Revisional powers could be exercised only when it is shown that there is a legal bar against the continuance of the criminal proceedings or the framing of charge or the facts as stated in the first information report even if they are taken at the face value and accepted in their entirety do not constitute the offence for which the accused has been charged.”

¶159

Thus, the revisional power cannot be exercised in a casual or mechanical manner. It can only be exercised to correct manifest error of law or procedure which would occasion injustice, if it is not corrected. The revisional power cannot be equated with appellate power. A revisional court cannot undertake meticulous examination of the material on record as it is undertaken by the trial court or the appellate court. This power can only be exercised if there is any legal bar to the continuance of the proceedings or if the facts as stated in the chargesheet are taken to be true on their face value and accepted in their entirety do not constitute the offence for which the accused has been charged. It is conferred to check grave error of law or procedure.”

¶160

At the stage of consideration under Section 227 Cr.P.C., the Court is not required to test whether the accused has conclusively rebutted the presumption. The inquiry is confined to whether there exists sufficient ground to proceed namely, whether the material on

¶161

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record, if unrebutted, would constitute the offence alleged. The presumption under Section 24 thus operates in a limited manner even at this stage, in the sense that the accused seeking discharge must at least demonstrate from the record an absence of any nexus between the property and the alleged criminal activity, or that the material relied upon by the Enforcement Directorate is manifestly insufficient to sustain such a presumption.

¶164

It must also be emphasised that the presumption under Section 24 is rebuttable, not conclusive. The accused may discharge the burden either by producing direct evidence of lawful acquisition or by pointing to inherent inconsistencies in the prosecution’s material that make the presumption untenable. Nevertheless, until such rebuttal is made, the statutory presumption sustains the continuation of proceedings. Accordingly, the legal principle that emerges is that Section 24 of the PMLA reverses the evidentiary burden, requiring the accused to account for the lawful origin of the property once the Enforcement Directorate establishes a prima facie link between the property and the scheduled offence. At the discharge stage, the Court must examine whether such prima facie link exists; if it does, the presumption operates, and the matter must ordinarily proceed to trial.

¶165

Issue 4: Whether the absence of a monetary component in the scheduled offence vitiates PMLA proceedings, and whether a property transfer without monetary exchange can constitute “proceeds of crime”?

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¶168

The statutory definition of proceeds of crime under Section 2(1)(u) is not confined to cash or monetary receipts; it covers any property obtained as a result of the criminal activity forming the scheduled offence. Therefore, the presence or absence of a monetary transaction in the predicate offence is not determinative. What matters is whether the property acquired, transferred, or retained represents an illicit benefit flowing from the criminal activity alleged.

¶169

In situations where the scheduled offence involves wrongful execution of documents, illegal transfer of title, or obtaining property in a manner contrary to law, the resulting gain, whether monetary or not, may still amount to “property derived or obtained” from the offence. Consequently, even a transaction involving immovable property, executed without exchange of cash, can fall within the ambit of proceeds of crime if it reflects an advantage derived from the alleged wrongdoing. However, the mere fact of a civil dispute or an irregular property transaction is not enough to attract the PMLA. There must be a prima facie nexus showing that the property in question is the product of the criminal activity relating to the scheduled offence. If such nexus exists, the absence of direct monetary flow does not invalidate proceedings under the Act; if it does not, invocation of PMLA would be unwarranted. Thus, the governing principle is that PMLA is concerned with illicit gain in any form, and not merely with money, and the assessment is ultimately fact-specific, depending on whether the property reflects the unlawful benefit of the predicate offence.

¶170

Issue 5: Whether the supplementary complaint filed by the Enforcement Directorate under Section 45 of the PMLA strengthens

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the foundational requirements for cognizance of the offence of money laundering?

¶174

A supplementary complaint under the PMLA stands on a similar footing as a supplementary charge sheet under the Code of Criminal Procedure. It is a recognised procedural mechanism enabling the Enforcement Directorate to bring on record additional materials unearthed during the course of investigation. The filing of such a complaint does not require withdrawal or reopening of the original complaint; rather, it forms part of a continuous investigative process contemplated under Section 173(8) Cr.P.C., which applies to PMLA proceedings by virtue of Section 65 of the Act. When the ED places further material before the Special Court through a supplementary complaint, the Court is entitled to examine the entire set of materials both in the original and supplementary complaints to determine whether a prima facie case of money laundering is made out. If the supplementary complaint introduces new facts, connects additional transactions, or demonstrates further handling of the suspected property, it strengthens the jurisdictional foundation for cognizance under Sections 3 and 4 of the Act.

¶175

The filing of a supplementary complaint also reflects the continuing nature of money laundering, where fresh instances of possession, concealment, or projection may come to light after the initial complaint. Courts have recognised that so long as the proceeds of crime remain in circulation or under control of the accused, investigation may legitimately extend to later transactions, thereby justifying a supplementary complaint.

¶176

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¶178

Thus, a supplementary complaint, if supported by additional material connected with the proceeds of crime, reinforces and does not vitiate the cognizance earlier taken by the Special Court. It merely enlarges the evidentiary base on which the Court evaluates the existence of a prima facie case. The initiation or continuation of PMLA proceedings therefore cannot be faulted merely because additional material has been subsequently brought on record through such a complaint.

¶179

Findings and Conclusion

¶180

Allegations involving multiple property transactions undertaken over an extended period must be assessed in the context of the statutory definition of money-laundering, which criminalises not only the initial acquisition of illicit property but also subsequent processes such as concealment, possession, transfer, or projection of such property as untainted. When transactions occur in a pattern suggesting systematic movement or conversion of assets, they may form a prima facie basis for inferring elements of layering or integration processes characteristic of the laundering cycle.

¶181

At the stage of considering discharge under Section 227 Cr.P.C., the Court is not required to arrive at definitive conclusions regarding the laundering methodology. It is sufficient if the materials placed by the Enforcement Directorate indicate that the transactions are not isolated, but part of a larger chain in which the property in question may have changed hands, form, or value in a manner warranting closer scrutiny. Large-scale transfers, repeated conveyances, or shifting of title over time can therefore supply a legitimate basis to proceed to trial,

¶182

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particularly when such transactions coincide with the period of alleged criminal activity or pertain to assets which are otherwise under investigation as possible proceeds of crime.

¶185

The legal position that emerges is that patterns of successive land or property dealings, especially when temporally aligned with the alleged predicate activity, may justify a presumption of laundering processes at the prima facie stage. Whether these transactions ultimately constitute placement, layering, or integration is a matter of evidence, to be established through trial; but their presence at the threshold is sufficient to decline discharge and require the allegations to be tested on merits.

¶186

In light of the foregoing discussion and the settled position of law governing the nature of the offence under the PMLA, the requirement of a subsisting scheduled offence, the principles relating to “proceeds of crime”, and the limited scope of consideration at the stage of discharge, this Court finds no substance in the contention advanced on behalf of the Petitioners that the quashing of cognizance in one predicate case renders the proceedings under the PMLA unsustainable. As already noted, the materials placed by the Enforcement Directorate disclose a series of transactions extending over several years, involving numerous parcels of land and extensive financial dealings, which prima facie warrant examination in trial. These circumstances, viewed cumulatively, are sufficient at this stage to negate the claim that the proceedings are without jurisdiction or that no case under the PMLA can arise.

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¶189

It is, however, clarified that the above analysis has been undertaken solely for the purpose of addressing the legal issues raised and for determining whether the Petitioners have made out a case for interference in revisional jurisdiction. This Court has not expressed any opinion on the merits of the allegations, the authenticity of the transactions, or the evidentiary value of the materials collected, all of which remain matters to be established in accordance with law before the Special Court. It is well settled that a revisional court does not embark upon a re-appreciation of evidence or conduct a meticulous examination of disputed facts at the pre-trial stage.

¶190

In the given circumstances, and having regard to the limited scope of interference, this Court finds no infirmity in the order of the learned Special Court declining the Petitioners’ prayer for discharge. The impugned order warrants no interference, and the Petitioners must face trial in accordance with law.

¶191

(Chittaranjan Dash)

¶192

Judge

¶193

Bijay

¶194

Signature Not Verified

¶195

Digitally Signed Signed by: SARBANI DASH Designation: Junior Stenographer Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 24-Nov-2025 16:25:11

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Trilochan Mishra v. Union of India

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Trilochan Mishra v. Union of India

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