NEW DELHI: Observing that proceedings in economic offences should not be quashed by courts at a preliminary stage without trial, Supreme Court on Monday refused a plea of high-profile former Gujarat cadre IAS officer Pradeep Sharma for discharge in a money laundering case.
While turning down Sharma’s plea in both corruption and money laundering cases, the apex court also held that it was not mandatory for police to conduct preliminary inquiry before the registration of an FIR in corruption cases as pleaded by the former IAS officer. A bench of Justices Vikram Nath and P B Varale also rejected his plea that PMLA provision could not be invoked against him as it was not there at the time of alleged offence and held that money laundering was not a static event but an ongoing activity.
“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… Thus, the argument that the offence is not continuing does not hold good in law or on facts,” SC said.
The court said ED successfully demonstrated prima facie that Sharma remained involved in financial transactions linked to proceeds of crime beyond the initial point of commission and the proceedings initiated against him were well within the legal framework and could be assailed on that ground.
“PMLA was enacted with the primary objective of preventing money laundering and confiscating the proceeds of crime, thereby ensuring 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… . Such acts, when committed by persons in positions of power, erode public confidence in governance and lead to systemic vulnerabilities within financial institutions,” it said.
“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 court said, adding it is imperative that he (Sharma) 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 analyse 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,” it said.
