Punjab and Haryana High Court Upholds Independent Prosecution Under PMLA

Court dismisses Sukhpal Singh Khaira's plea to defer PMLA trial despite scheduled offence proceedings being stayed by Supreme Court

In a significant ruling, the Punjab and Haryana High Court has dismissed the petition filed by Sukhpal Singh Khaira seeking to defer the proceedings under the Prevention of Money Laundering Act (PMLA), 2002, despite the Supreme Court staying proceedings in the scheduled offence under the Narcotic Drugs and Psychotropic Substances (NDPS) Act. The judgment, delivered by Justice Tribhuvan Dahiya, reinforces the principle that the offence of money laundering is independent and can proceed irrespective of the status of the trial for the scheduled offence.

Sukhpal Singh Khaira, implicated in a case involving proceeds of crime from drug smuggling, argued for deferment of the PMLA trial on the grounds that the trial in the scheduled offence, FIR No.35 dated 05.03.2015, remained stayed as per the Supreme Court's interim order. The proceedings against him under the NDPS Act were revived based on fresh investigation leading to his arrest, a move that he contested before the Supreme Court, resulting in the temporary stay.

The Enforcement Directorate (ED) had registered a case under Sections 3 and 4 of the PMLA, citing Khaira's involvement in utilizing drug money provided by co-accused Gurdev Singh, who stands convicted. Despite the stay on the scheduled offence proceedings, the PMLA trial continued, leading Khaira to seek its deferment, arguing that the outcome of the scheduled offence trial would impact the PMLA proceedings.

Justice Dahiya, however, emphasized that the offence under the PMLA is standalone, relying on proceeds of crime from the scheduled offence, but not contingent on the trial outcome of the scheduled offence itself. The court cited precedents from the Supreme Court, particularly the case of Vijay Madanlal Choudhary v. Union of India, affirming that money laundering is an independent offence and can be prosecuted separately as long as the proceeds of crime exist.

The court further clarified that Khaira's prosecution under PMLA remains unaffected by his status in the scheduled offence due to Gurdev Singh's conviction for the predicate offence, establishing the existence of proceeds of crime. The judgment underscores the legal position that a person accused under PMLA need not be an accused in the scheduled offence, aligning with international obligations under the Financial Action Task Force (FATF).

Khaira's petition was dismissed as the court found no merit in his argument for deferment, allowing the PMLA trial to proceed independently.

Bottom Line:

Money Laundering - The offence of money laundering is independent of the scheduled offence but relies on the proceeds of crime obtained from the scheduled offence. Conviction or acquittal in the scheduled offence does not necessarily affect the prosecution under PMLA unless the scheduled offence itself ceases to exist.

Statutory provision(s): Prevention of Money Laundering Act, 2002 Section 3, Section 4; NDPS Act Sections 21, 24, 25, 27, 28, 29, 30; Arms Act, 1959 Section 25/54; Information Technology Act, 2000 Section 66; Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528; Code of Criminal Procedure Section 319.

Sukhpal Singh Khaira v. Directorate of Enforcement, Government of India, (Punjab And Haryana) : Law Finder Doc Id # 2801781