PMLA court can continue trial but must await predicate-offence verdict before judgment, Madras High Court rules

The petitioner, A14 in the pending PMLA prosecution in C.C. No. 12 of 2021, sought to prevent the Special Court from pronouncing judgment until the predicate-offence case, C.C. No. 89 of 2023, was decided.

The PMLA complaint arose from a CBI case concerning alleged bank-loan fraud; the predicate-offence trial was pending before the Chief Judicial Magistrate, Tiruchirappalli.

The High Court had previously directed the PMLA Special Court to proceed and dispose of the case within six months, later extending that period.

The petitioner relied on authorities linking the existence of proceeds of crime to a scheduled offence and argued that the PMLA judgment should await the predicate-offence decision.

The Enforcement Directorate accepted that the PMLA trial could proceed up to judgment, but raised the concern that earlier directions required the trial to be concluded within the extended period.

Whether the PMLA trial could continue while the predicate-offence trial remained pending, or whether it should be stayed.

Whether the PMLA Special Court should defer pronouncing judgment until judgment was pronounced in the predicate-offence case.

Section 3 of the Prevention of Money-Laundering Act, 2002, concerns money laundering involving “proceeds of crime,” which are linked to criminal activity relating to a scheduled offence; the existence of a scheduled offence is therefore material to establishing the PMLA charge.

Relying on V. Senthil Balaji v. Deputy Director, Directorate of Enforcement and Vijay Madanlal Choudhary, the Court recognised the connection between the scheduled offence and proceeds of crime.

It also applied M/s. Bharathi Cements Corporation v. Directorate of Enforcement, as endorsed in the Court’s earlier order, for the proposition that the PMLA trial may proceed independently, but the Special Court may pause before judgment to await the outcome of the scheduled-offence trial.

The Court’s earlier directions to proceed with the PMLA trial did not require judgment to be pronounced before the predicate-offence case was decided.

The Court found that C.C. No. 12 of 2021 was based on the scheduled-offence prosecution in C.C. No. 89 of 2023, and that the latter’s outcome would directly affect the findings in the PMLA case.

Because the petitioner had not been a party to the earlier revisions directing expedition of the PMLA trial, he had not had an opportunity to raise this objection there.

Applying Bharathi Cements, the Court distinguished continuing the trial from pronouncing judgment: the former could proceed, while deferring judgment avoided the risk of inconsistent outcomes if the predicate-offence case later ended in acquittal.