PMLA Prosecution After Conviction In Predicate Offence Does Not Attract Double Jeopardy: Karnataka High Court

The Karnataka High Court has held that prosecution under the Prevention of Money Laundering Act, 2002 (PMLA) after conviction in the predicate offence does not amount to double jeopardy.

It observed that money laundering is a distinct statutory offence and prosecution under the PMLA is not a second trial for the same offence.

A bench of Justice M. Nagaprasanna held, "The prosecution under the PMLA is neither the second trial for the same offence nor constitutional transgression. It is a prosecution of an independent statutory offence, in which the petitioners have to come out clean in a full blown proceedings before the special Court, as the prohibition under Section 300 of the Cr.P.C extends only to a second trial for the same offence and not to a prosecution for a distinct offence under another enactment."

The court was hearing petitions challenging proceedings initiated by the Enforcement Directorate (ED) under Sections 3 and 4 of the PMLA. The petitioners contended that continuation of the proceedings after their conviction in the predicate offence was barred by the doctrine of double jeopardy.

The petitioners had earlier been convicted in a predicate offence arising from allegations that they exchanged demonetised currency notes for new notes at a premium following demonetisation in November 2016.

Appeals against their conviction are pending. Meanwhile, the ED had registered an Enforcement Case Information Report (ECIR) and initiated proceedings under the PMLA.

The petitioners sought quashing of the PMLA proceedings, arguing that Section 300 of the Code of Criminal Procedure prohibited a second trial for the same offence after conviction. A coordinate Bench of the High Court had earlier granted an interim stay on the proceedings.

Opposing the petitions, the ED argued that the bar against double jeopardy applies only to a second trial for the same offence. It submitted that prosecution under the PMLA is for a distinct statutory offence under a different enactment.

Rejecting the plea, the Bench examined Section 300 of the Code of Criminal Procedure. It held that the provision bars only a second trial for the same offence arising from the same set of facts after a person has already been convicted or acquitted by a competent court.

"The submission that the prosecution under the PMLA amounts to double jeopardy is wholly misconceived and legally unsustainable.", the court observed.

The court observed that extending the doctrine of double jeopardy to proceedings under the PMLA would stretch Section 300 beyond the limits intended by the legislature.

"To transplant that doctrine into the proceedings under the PMLA, which creates a distinction of the statutory offence, is to stretch the provision far beyond the contours delineated by the legislature. Such an expansive interpretation cannot be countenanced.", the court added.

The bench further held that once a person is convicted in the predicate offence, there is no legal impediment to continuation of proceedings under the PMLA. Whether the assets or money in question constitute "proceeds of crime" is a matter to be decided by the Special Court after evidence is led. It cannot be determined in proceedings seeking quashing of the case.

Distinguishing its earlier decision in Razorpay Software Private Limited v. Union of India, the court observed that the case involved quashing of PMLA proceedings because the predicate offence itself failed to disclose any offence. It therefore had no application to the present case.

The court also held that the remaining judgments relied upon by the petitioners arose from successive prosecutions under the Indian Penal Code based on the same facts and were therefore inapplicable.

"The prosecution, in the case at hand, is not a second trial for the same offence. It is a prosecution under a different and distinct statutory regime founded upon ingredients that are separate and independent from those constituting the predicate offence.", the court ruled.

The bench further relied on decisions of the Madras High Court and the Madhya Pradesh High Court, both of which held that prosecution under the PMLA is for an independent statutory offence distinct from the scheduled offence.

Agreeing with those decisions, it held that the doctrine of double jeopardy does not apply to the facts of the present case.

Accordingly, the court dismissed the petitions.

For Petitioners: Advocates N.R Krishnappa and V. Lakshmi Kantha Rao

For Respondent: Advocates Arvind Kamath, Addl Solicitor General and H.R Showri, CGC