‘Proceeds of Crime’ Includes Property Derived Indirectly From Scheduled Offence: Jharkhand HC Explains PMLA Scope

The Jharkhand High Court has clarified that the expression “proceeds of crime” under the Prevention of Money Laundering Act, 2002 (PMLA) has a broad ambit and includes property derived not only directly from a scheduled offence but also assets obtained indirectly from criminal activity connected with such offence.

The Court observed that the offence of money laundering encompasses various processes linked to such property including its concealment, possession, acquisition, use, or projection as legitimate property and continues so long as a person is enjoying those proceeds.

A Single Judge Bench of Justice Sujit Narayan Prasad made the observation while dismissing a batch of criminal revision petitions challenging an order of the Special Judge (PMLA), Ranchi rejecting applications for discharge filed by several accused entities and individuals in connection with ECIR Case No. 08 of 2023.

Upholding the Special Court’s order dated 21.08.2025, the High Court held that the materials collected during investigation disclosed a prima facie case warranting trial and that no interference was required in revisional jurisdiction.

The case arose from an investigation initiated by the Enforcement Directorate (ED) on the basis of several FIRs registered in Jharkhand relating to alleged offences including fraudulent land transactions, illegal sand mining and illicit liquor trade.

These FIRs formed the basis for the registration of an Enforcement Case Information Report (ECIR), following which the ED began probing the alleged generation and laundering of illicit funds.

According to the prosecution, the investigation revealed that the prime accused, Jogendra Tiwari, was allegedly running multiple businesses through a network of entities that were used to channel and integrate proceeds of crime.

The agency alleged that illegal activities such as land grabbing through forged documents, unauthorized sand mining and unlawful liquor trading generated large amounts of cash which were subsequently routed through bank accounts of various entities under the accused’s control.

The ED also pointed to financial records showing unusual patterns of cash deposits in the bank accounts of several entities connected to the accused.

According to the agency, there was a sudden surge in deposits during a limited period, coinciding with the time when applications were invited for wholesale liquor licences in the State.

The agency argued that these deposits were inconsistent with the entities’ previous financial activity and suggested that illicit cash was being introduced into the formal financial system.

Searches conducted by the ED in August 2023 allegedly led to the seizure of documents and digital records which, according to the agency, indicated that certain entities were merely fronts while the actual control remained with the prime accused.

Based on the material gathered during investigation, the ED filed a prosecution complaint before the Special Court (PMLA), Ranchi in December, 2023 alleging laundering of substantial proceeds of crime generated from the alleged unlawful activities.

After cognizance was taken by the Special Court, the accused filed separate discharge applications contending that the PMLA proceedings could not continue because the predicate offences forming the basis of the ECIR had either been quashed, closed or had not resulted in cognizance by competent courts.

The petitioners argued that in the absence of a subsisting scheduled offence, the alleged proceeds of crime could not exist in law and the prosecution under the PMLA was therefore unsustainable.

They also contended that the ED had incorrectly quantified the alleged proceeds of crime and relied on transactions that were, according to them, legitimate business dealings.

It was further submitted that certain FIRs relating to sand mining and liquor trade had either been quashed or had resulted in acquittals, while others had concluded with final reports without courts taking cognizance.

On this basis, the petitioners argued that the foundation of the money laundering case had collapsed.

Opposing the plea, the ED maintained that several predicate offences were still pending and that the investigation had uncovered a clear financial trail linking the accused entities to proceeds generated from unlawful activities.

The agency argued that large sums of cash were deposited into the accounts of the entities and subsequently used in business operations, suggesting deliberate attempts to conceal the origin of the funds and present them as legitimate income.

Examining the statutory scheme of the PMLA, the High Court referred to the definition of “proceeds of crime” under Section 2(1)(u) of the Act, noting that it includes property obtained directly or indirectly as a result of criminal activity related to a scheduled offence.

The Court observed that the offence of money laundering under Section 3 extends to any process connected with such property, including its possession, use or projection as untainted property.

The Court also reiterated that at the stage of discharge, the trial court is required only to determine whether the materials on record disclose a prima facie case against the accused; Detailed examination of the evidence or adjudication of disputed facts is not permissible at that stage.

Applying these principles, the High Court held that the materials collected during investigation, including the alleged financial transactions and the existence of predicate FIRs, were sufficient to raise a strong prima facie case against the accused.

The Court concluded that the issues raised by the petitioners required examination during trial and therefore did not justify discharge at the threshold.

Accordingly, the High Court dismissed the criminal revision petitions and upheld the order of the Special Judge rejecting the discharge applications.

Case Title: M/s Gupta Traders & Ors v. State through Enforcement Directorate

Bench: Justice Sujit Narayan Prasad

Date of Judgment: 27.02.2026