# Vishnu Prabhakar v. Union of India Opp.Party

- **Citation:** (2025) 5 ILRA 1017
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-05-01
- **Case number:** Application U/S 482 No. 5057 of 2024
- **Bench:** Subhash Vidyarthi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/vishnu-prabhakar-v-union-of-india-opp-party-53284
- **Pages:** 11

## Headnote

Kuldeep Srivastava

No allegation against the applicant that he had
generated or acquired any proceeds of crimeonly allegation is that he has assisted in
generation of money -it is only when money is
generated as a result of such acts that PMLA
1018 INDIAN LAW REPORTS ALLAHABAD SERIES
steps in as soon as proceeds of crime-prima
facie no offence made out.

Application allowed. (E-9)

List of Cases cited:

## Text

5 All. Vishnu Prabhakar Vs. Union of India
1017
situation, if the prosecution against some
other accused person(s) is going on in
respect of a scheduled offence, even if a
person is not named as an accused in the
scheduled offence or if he / she has been
exonerated / discharged in respect of the
scheduled offence, it will not create a bar
against his / her prosecution under the
PMLA, if there is material to proceed
against him / her for prosecution under the
PMLA.

24. Having considered the aforesaid
facts and circumstances of the case, in the
light of the aforesaid cases, I am of the
considered
view
that
although
the
applicant's name has not been included in
the
charge-sheet
submitted
by
the
Investigating Officer regarding commission
of the scheduled offence, the complaint
filed by the Directorate of Enforcement
categorically states that besides aiding and
abetting her husband in commission of the
scheduled offence and generation of
proceeds of crime, the applicant is also
involved in assisting her husband Ajit
Kumar Gupta in layering and concealment
of the proceeds of crime. She has been a
recipient of the proceeds of crime. Some
part of the proceeds of crime have been
transferred to the applicant's bank account,
some part of the proceeds of crime have
been used for purchasing immovable
properties in the name of the applicant and
some part has been used for conversion of
land use of the property purchased in the
name of the applicant. Therefore, even if
the applicant's involvement in commission
of scheduled offences through which the
proceeds of crime were generated, has not
been established, the allegation that the
applicant is involved in concealment and
laying the proceeds of crime and that she
has utilized the proceeds of crime, still
needs to be investigated.

25. Therefore, I am of the view that
although the applicant has been absolved of
all the charges regarding commission of the
scheduled offence, she still has to face
prosecution for the offence of money
laundering which is a standalone offence
and which is independent and distinct from
the scheduled offence.

26. The application under Section 528
BNSS lacks merit and the same is hereby
dismissed.

27. It is clarified that this Court has
not examined the merits of the allegation
and any observation made in this order will
not affect the trial.
----------
(2025) 5 ILRA 1017
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 01.05.2025

BEFORE

THE HON'BLE SUBHASH VIDYARTHI, J.

Application U/S 482 No. 5057 of 2024

Vishnu Prabhakar ...Applicant
Versus
Union of India ...Opp.Party

Counsel for the Applicant:
Purnendu Chakravarty, Alok Kumar Singh,
Ankit Kumar Pandey, Ashutosh Verma,
Aviral Raj Singh, Dhruv Kumar Singh,
Palash Banerjee, Ritwick Rai, Vaibhav
Tiwari

Counsel for the Opp. Party:
Kuldeep Srivastava

No allegation against the applicant that he had
generated or acquired any proceeds of crimeonly allegation is that he has assisted in
generation of money -it is only when money is
generated as a result of such acts that PMLA
1018 INDIAN LAW REPORTS ALLAHABAD SERIES
steps in as soon as proceeds of crime-prima
facie no offence made out.

Application allowed. (E-9)

List of Cases cited:

1. Y. Balaji Vs Kartik Desari & anr.: 2023 SCC
OnLine SC 645

2. Vijay Madan Lal Chaudhari Vs U.O.I. & ors.:
(2023) 12 SCC 1 2022 SCC OnLine SC 929

(Delivered by Hon'ble Subhash Vidyarthi, J.)

1. Heard Sri Purnendu Chakravarti, Sri
Ritvik Rai and Sri Aviral Raj Singh, the
learned counsel for the applicant and Sri
Kuldeep Srivastava, the learned counsel for
the
respondent
-
Directorate
of
Enforcement (which will hereinafter be
referred to as 'the E.D.').

2. By means of the instant application
filed under Section 482 Cr.P.C., the
applicant has prayed for quashing of a
complaint dated 16.09.2017 filed by the
Directorate of Enforcement against the
applicant, the cognizance and summoning
order dated 02.04.2018 and the entire
proceedings of Sessions Case No. 123 of
2023, under Section 3 & 4 of the
Prevention of Money Laundering Act, 2002
in the Court of Special Judge (C.B.I.),
Court No. III, Lucknow, qua the applicant.

3. Briefly stated, facts of the case are
that initially on 27.12.2008, the Chief
Regional Manager, Indian Overseas Bank,
Zonal Office, Lucknow sent a complaint to
the Superintendent of Police, C.B.I., Bank
Securities and Frauds Cell, New Delhi
complaining
about
certain
fraudulent
transactions and stating that : -

"It would thus be clear from the
above that the functioning of the Branch
during the tenure of Shri. A.K. Dutta was
anything but proper. The investigation
report also gives clear indications that
Shri. Vijay Kumar Jaiswal was inclined to
use all his means, fair and mostly unfair, to
have his ways and that Shri. A.K. Dutta
was willing to co-operate with him even at
the cost of exposing the Bank to huge risks
and losses. Some of the contents of the
investigation report detailed below point to
undesirable and criminal acts on the part
of the duo.

• Handing over signed Bankers
Cheques to M/s. Shiva Distributors / M/s.
Vinayak Distributors without debiting their
a/c, or without accounting for the BCs in
the books of the Bank.

•
Erasure
of
the
countersignature of Shri. A.K. Dutta on the
Bankers Cheque for Rs. 40 lakhs issued
favouring
'Reliance
Communications
Infrastructure Ltd.', before presentation of
the cheque to the clearing house and
returned by the Branch on 05.10.2006.

• Sanction of a CC limit of Rs. 40
lakhs to M/s. Vinayak Distributors after
erasing the subjects' request for limit of Rs.
25 lakhs only.

• The above acts of Shri. Vijay
Jaiswal and Shri A.K. Dutta clearly smack
of criminality and it is evident that Shri. A.
K. Dutta had abused his powers to confer
undue pecuniary gains on Shri. Vijay
Kumar
Jaiswal
and
other
unknown
persons. Their activities have not only
caused wrongful loss of a mammoth size to
our Bank, but also pose direct threats to the
lives and limbs of the staff members of the
Branch/Bank. The Involvement of some
other outsiders also cannot be ruled out.
The fraudulent transactions put through by
Shri. Dutta has been assessed at Rs. 852.61
lakhs, as per details provided In the
Annexure enclosed. This amount does not
Include
the
likely
loss
of
Interest/
5 All. Vishnu Prabhakar Vs. Union of India
1019
commission/exchange incomes to the Bank
on a/c. undue excesses/ credits provided in
certain a/cs and the excess amount of
charges
claimed
on
a/c,
of
cash
remittances, as detailed in the foot note of
the Annexure. These accounts have become
NPA on 01.04.2008 & suits have been filed
in DRT Lucknow on 28.05.2007 except M/s.
Kritarth Communications.

We therefore request you to
register a regular case against Shri. Vijay
Kumar Jaiswal, (Proprietor: M/s. Shiva
Distributors), Shri. A.K. Dutta, then Senior
Manager, Varanasi Cantonment Branch
(presently under suspension) and other
unknown, persons who are involved in
conspiring against the Bank to perpetrate
the fraud, cause a thorough and in-depth
investigation, bring the culprits to book and
initiate further action according to law."

4. On 06.02.2009, the Superintendent
of Police, C.B.I., Bank Securities and
Frauds Cell, New Delhi endorsed on the
complaint that the facts stated in it prima
facie disclose commission of offences
punishable under Sections 120-B read with
420, 468, 471 I.P.C. and Section 13(2) read
with
13(1)(d) of
the
Prevention
of
Corruption Act, 1988 and substantive
offences thereunder on the part of (1) Sri A.
K. Dutta, the then Senior Manager, Indian
Overseas Bank, Varanasi and (2) Sri Vijay
Kumar Jaiswal, Proprietor of M/s Shiva
Distributors,
Varanasi
and
(3)
other
unknown persons.

5. On 06.02.2009 itself, F.I.R. No.
RCBD1/2009/E/0003 was lodged at Police
Station C.B.I/Bank Securities and Fraud Cell,
New Delhi under Sections 120-B, 420, 468
and 471 I.P.C. and Section 13(2) read with
Section 13(1)(d) of the Prevention of
Corruption Act, 1988 and substantive
offences thereunder against - (1) Sri A. K.
Dutta, the then Senior Manager, Indian
Overseas Bank, Varanasi and (2) Sri Vijay
Kumar Jaiswal, Proprietor of M/s Shiva
Distributors, Varanasi and (3) other unknown
persons, on the basis of the aforesaid
complaint dated 27.12.2008

6. After investigation, a charge-sheet
was submitted on 10.06.2010 for the offences
under Section 120-B read with Section 420,
477-A, 201 IPC and Section 13(2) read with
13(1)(c) and (d) of Prevention of Corruption
Act and substantive Offences thereof against
six persons - (1) Ashok Kumar Dutta, the
then Senior Manager, Indian Overseas Bank,
Cantt., Varanasi, (2) Vijay Kumar Jaiswal,
(3) Vishnu Prabhakar, the then Assistant
Manager, Indian Overseas Bank, Cantt.,
Varanasi (the applicant), (4) Vivek Ballabh
Chaturvedi, the then Senior Manager, Indian
Overseas Bank, Cantt., Varanasi (5) Jay
Shree Jaiswal, wife of Vijay Kumar Jaiswal
and (6) Rishi Mohan. The charge-sheet states
that undue facilities were granted by A. K.
Dutta to Vijay Kumar Jaiswal and the
accesses were not reported in the monthly
returns by A. K. Duta, Vishnu Prabhakar and
Vivek Ballabh Chaturvedi, as per the
guidelines of the bank. The firm was
enjoying O.C.C. limit of 40 lakh and accesses
that were allowed in the account of the firm
were more than Rupees 1 Crore. The account
became highly irregular after September 17,
2005. The C.C. limit of the firm was
enhanced of Rs.90 lakhs and thereafter the
accused persons further allowed accesses in
the account of the firm and banker's cheques
were issued to M/s Shiva Distributors without
receipt of any consideration. The trial
instituted on the basis of the aforesaid chargesheet is still pending.

7. On 19.05.2010, the Directorate of
Enforcement registered ECIR/1/VCI/ 2010
against (1) Sri A. K. Dutta and (2) Sri Vijay
1020 INDIAN LAW REPORTS ALLAHABAD SERIES
Kumar Jaiswal only. After investigation, on
16.09.2017 the Directorate of Enforcement
filed Complaint No. 1 of 2018 in the Court
of Special Judge, PMLA, Allahabad against
six persons - (1) Vijay Kumar Jaiswal, (2)
Ashok Kumar Dutta, (3) Vishnu Prabhakar,
(4) Vivek Ballabh Chaturvedi, (5) Rishi
Mohan and (6) Jay Shree Jaiswal. On
02.04.2018, the Court passed an order
summoning the accused persons to face the
trial. Presently the trial is pending in the
Court of Special Judge C.B.I. Court No. 3 /
Special Judge PMLA, Lucknow

8. The applicant has been granted
anticipatory bail by means of an order
dated 24.07.2023 passed by this Court in
Anticipatory Bail Application No. 954 of
2023. The learned Counsel for the parties
have informed the Court that the trial Court
has framed Charges on the last date during
pendency of this application.

9. The applicant has sought quashing
of the proceedings under the Prevention of
Money
Laundering
Act
(which
will
hereinafter be referred to as 'PMLA') on
the ground that the only allegation leveled
against the applicant in the complaint filed
by the Directorate of Enforcement is that
the applicant has violated the provisions of
Section 3 of PMLA by knowingly assisting
the other accused persons in generation of
proceeds of crime. The learned counsel for
the applicant has submitted that the
applicant is already facing prosecution for
the scheduled offences instituted on the
allegation that he has participated in
commission of offence through which the
proceeds of crime have been generated by
the co-accused Vijay Kumar Jaiswal. He
has submitted that providing assistance in
generation of proceeds of crime does not
make out the offence of money laundering
under PMLA. He has placed reliance on the
judgment of the Hon'ble Supreme Court in
the case of Vijay Madan Lal Chaudhari
Vs. Union of India and Others: (2023) 12
SCC 1 = 2022 SCC OnLine SC 929.

10.
Per
contra,
Sri
Kuldeep
Srivastava, the learned counsel for the ED
has submitted that acquisition of proceeds
of crime and providing assistance in
acquisition of proceeds of crime are
included in the definition of money
laundering contained in Section 3 of the
PMLA. He has placed reliance upon the
following passage from the judgment of the
Hon'ble Supreme Court in the case of Y.
Balaji Vs. Kartik Desari and Another:
2023 SCC OnLine SC 645: -

"100. ...The argument that the
mere generation of proceeds of crime is not
sufficient to constitute the offence of
money-laundering,
is
actually
preposterous. As we could see from Section
3, there are six processes or activities
identified
therein.
They
are,
(i)
concealment;
(ii)
possession;
(iii)
acquisition; (iv) use; (v) projecting as
untainted property; and (vi) claiming as
untainted property. If a person takes a
bribe, he acquires proceeds of crime. So,
the activity of "acquisition" takes place.
Even if he does not retain it but "uses" it,
he will be guilty of the offence of moneylaundering, since "use" is one of the six
activities mentioned in Section 3."

11.
In
reply
to
the
aforesaid
submission, the learned counsel for the
applicant has submitted that generation of
proceeds of crime and acquisition of
proceeds of crime are different and
distinct things. The applicant is alleged to
have assisted in generation of proceeds of
crime and not in acquisition of proceeds of
crime.
5 All. Vishnu Prabhakar Vs. Union of India
1021

12. The offence of money laundering
is defined in Section 3 of the PMLA, which
is as follows: -

"3.
Offence
of
moneylaundering.-Whosoever
directly
or
indirectly attempts to indulge or knowingly
assists or knowingly is a party or is
actually involved in any process or activity
connected with the proceeds of crime
including its concealment, possession,
acquisition or use and projecting or
claiming it as untainted property shall be
guilty of offence of money-laundering.

Explanation.-For the removal of
doubts, it is hereby clarified that,-

(i) a person shall be guilty of
offence of money-laundering if such person
is found to have directly or indirectly
attempted to indulge or knowingly assisted
or knowingly is a party or is actually
involved in one or more of the following
processes or activities connected with
proceeds of crime, namely-

(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e)
projecting
as
untainted
property; or

(f)
claiming
as
untainted
property,

in any manner whatsoever;

(ii)
the
process
or
activity
connected with proceeds of crime is a
continuing activity and continues till such
time a person is directly or indirectly
enjoying the proceeds of crime by its
concealment or possession or acquisition
or use or projecting it as untainted
property or claiming it as untainted
property in any manner whatsoever."

13. Section 3 of the PMLA has been
interpreted by a Bench consisting of three
Hon'ble Judges of the Hon'ble Supreme
Court in the case of Vijay Madan Lal
Chaudhari (Supra) in the following
manner: -

"124. This
section
was
first
amended vide Act 2 of 2013. The
expression
"proceeds
of
crime
and
projecting"
was
substituted
by
the
expression "proceeds of crime including its
concealment, possession, acquisition or use
and projecting or claiming". We are not so
much
concerned
with
this
change
introduced vide Act 2 of 2013. In other
words, the provision as it stood prior to
amendment vide Finance (No. 2) Act, 2019
remained as it is. Upon breaking-up of this
provision, it would clearly indicate that-it
is an offence of money laundering, in the
event of direct or indirect attempt to
indulge or knowingly assist or being
knowingly party or being actually involved
in "any process or activity" connected with
the proceeds of crime. The latter part of the
provision is only an elaboration of the
different process or activity connected with
the proceeds of crime, such as its
concealment, possession, acquisition, use,
or projecting it as untainted property or
claiming it to be as untainted property.
This position stands clarified by way of
Explanation inserted in 2019.
* * *

128. To put it differently, the
section as it stood prior to 2019 had itself
incorporated the expression "including",
which is indicative of reference made to the
different process or activity connected with
the proceeds of crime. Thus, the principal
provision
(as
also
the
Explanation)
predicates that if a person is found to be
directly or indirectly involved in any
process or activity connected with the
proceeds of crime must be held guilty of
offence of money laundering. If the
1022 INDIAN LAW REPORTS ALLAHABAD SERIES
interpretation set forth by the petitioners
was to be accepted, it would follow that it
is only upon projecting or claiming the
property in question as untainted property,
the offence would be complete. This would
undermine the efficacy of the legislative
intent behind Section 3 PMLA and also will
be in disregard of the view expressed by
FATF in connection with the occurrence of
the word "and" preceding the expression
"projecting or claiming" therein.
* * *

132. The Explanation as inserted
in 2019, therefore, does not entail in
expanding the purport of Section 3 as it
stood
prior
to
2019,
but
is
only
clarificatory
in
nature.
Inasmuch
as
Section 3 is widely worded with a view to
not only investigate the offence of money
laundering but also to prevent and regulate
that
offence.
This
provision
plainly
indicates that any (every) process or
activity connected with the proceeds of
crime
results
in
offence
of
money
laundering. Projecting or claiming the
proceeds of crime as untainted property, in
itself, is an attempt to indulge in or being
involved in money laundering, just as
knowingly
concealing,
possessing,
acquiring or using of proceeds of crime,
directly or indirectly. This is reinforced by
the statement presented along with the
Finance Bill, 2019 before Parliament on
18-7-2019 as noted above [See paras 119
to 121 of this judgment.] .

133. Independent of the above,
we have no hesitation in construing the
expression "and" in Section 3 as "or", to
give full play to the said provision so as to
include
"every"
process
or
activity
indulged
into
by
anyone,
including
projecting or claiming the property as
untainted property to constitute an offence
of money laundering on its own. The act of
projecting or claiming proceeds of crime to
be untainted property presupposes that the
person is in possession of or is using the
same
(proceeds
of
crime),
also
an
independent activity constituting offence of
money laundering. In other words, it is not
open to read the different activities
conjunctively because of the word "and". If
that
interpretation
is
accepted,
the
effectiveness of Section 3 of the 2002 Act
can be easily frustrated by the simple
device of one person possessing proceeds
of crime and his accomplice would indulge
in projecting or claiming it to be untainted
property so that neither is covered under
Section 3 of the 2002 Act.

134. From the bare language of
Section 3 of the 2002 Act, it is amply clear
that the offence of money laundering is an
independent offence regarding the process
or activity connected with the proceeds of
crime which had been derived or obtained
as a result of criminal activity relating to
or in relation to a scheduled offence. The
process or activity can be in any form - be
it
one
of
concealment,
possession,
acquisition, use of proceeds of crime as
much as projecting it as untainted property
or claiming it to be so. Thus, involvement
in any one of such process or activity
connected with the proceeds of crime
would
constitute
offence
of
money
laundering. This offence otherwise has
nothing to do with the criminal activity
relating to a scheduled offence - except
the proceeds of crime derived or obtained
as a result of that crime.

135. Needless to mention that
such process or activity can be indulged in
only after the property is derived or
obtained as a result of criminal activity (a
scheduled offence). It would be an offence
of money laundering to indulge in or to
assist or being party to the process or
activity connected with the proceeds of
crime; and such process or activity in a
5 All. Vishnu Prabhakar Vs. Union of India
1023
given fact situation may be a continuing
offence, irrespective of the date and time of
commission of the scheduled offence. In
other words, the criminal activity may have
been committed before the same had been
notified as scheduled offence for the
purpose of the 2002 Act, but if a person has
indulged in or continues to indulge directly
or indirectly in dealing with proceeds of
crime, derived or obtained from such
criminal activity even after it has been
notified as scheduled offence, may be liable
to be prosecuted for offence of money
laundering under the 2002 Act - for
continuing to possess or conceal the
proceeds of crime (fully or in part) or
retaining possession thereof or uses it in
trenches until fully exhausted. The offence
of money laundering is not dependent on or
linked to the date on which the scheduled
offence, or if we may say so, the predicate
offence has been committed. The relevant
date is the date on which the person
indulges
in
the
process
or
activity
connected with such proceeds of crime.
These ingredients are intrinsic in the
original provision (Section 3, as amended
until 2013 and were in force till 31-72019); and the same has been merely
explained
and
clarified
by
way
of
Explanation vide Finance (No. 2) Act,
2019. Thus understood, inclusion of clause
(ii) in the Explanation inserted in 2019 is of
no consequence as it does not alter or
enlarge the scope of Section 3 at all.

136. As mentioned earlier, the
rudimentary understanding of "money
laundering" is that there are three
generally
accepted
stages
to
money
laundering, they are:

136.1. Placement : which is to
move the funds from direct association of
the crime.

136.2. Layering
:
which
is
disguising the trail to foil pursuit.

136.3. Integration : which is
making the money available to the
criminal from what seem to be legitimate
sources.
* * *

147. We may also note that
argument that removing the necessity of
projection from the definition will render
the
predicate
offence
and
money
laundering indistinguishable. This, in our
view, is ill founded and fallacious. This
plea cannot hold water for the simple
reason that the scheduled offences in the
2002 Act as it stands (amended up to date)
are independent criminal acts. It is only
when money is generated as a result of
such acts that the 2002 Act steps in as
soon as proceeds of crime are involved in
any process or activity. Dealing with such
proceeds of crime can be in any form -
being process or activity. Thus, even
assisting in the process or activity is a part
of the crime of money laundering. We must
keep in mind that for being liable to suffer
legal consequences of one's action of
indulging in the process or activity, is
sufficient and not only upon projection of
the ill-gotten money as untainted money.
Many members of a crime syndicate could
then simply keep the money with them for
years to come, the hands of the law in such
a situation cannot be bound and stopped
from proceeding against such person, if
information of such illegitimate monies is
revealed even from an unknown source.

148. The next question is :
Whether the offence under Section 3 is a
stand-alone
offence?
Indeed,
it
is
dependent on the wrongful and illegal gain
of property as a result of criminal activity
relating
to
a
scheduled
offence.
Nevertheless, it is concerning the process
or activity connected with such property,
which
constitutes
offence
of
money
laundering. The property must qualify the
1024 INDIAN LAW REPORTS ALLAHABAD SERIES
definition of "proceeds of crime" under
Section 2(1)(u) of the 2002 Act.
* * *

153. In
other
words,
the
authority under the 2002 Act is to
prosecute a person for offence of money
laundering only if it has reason to believe,
which is required to be recorded in writing
that the person is in possession of
"proceeds of crime". Only if that belief is
further supported by tangible and credible
evidence indicative of involvement of the
person concerned in any process or
activity connected with the proceeds of
crime, action under the Act can be taken
forward for attachment and confiscation
of proceeds of crime and until vesting
thereof in the Central Government, such
process initiated would be a stand-alone
process." (Emphasis added)

14. Y. Balaji Vs. Kartik Desari and
Another: 2023 SCC OnLine SC 645 is a
judgment rendered by a Bench consisting
of two Hon'ble Judges of the Hon'ble
Supreme Court. One of the two questions
involved in the case before the Two-Judge
Bench was:-

"Question 1: Whether without
identifying the proceeds of crime or a
property representing the proceeds of
crime and without identifying any process
or activity connected to proceeds of crime
as required by Section 3, which constitute
the foundational/jurisdictional fact, ED can
initiate
an
investigation
and
issue
summons?"

15. The relevant facts of that case
relevant for answering the above mentioned
question are that three FIRs were lodged
alleging that the accused had committed
offences included in the Schedule by taking
illegal
gratification
for
providing
appointment to several persons in the
Public Transport Corporation. In one case it
was alleged that a sum of more than Rs. 2
Crores had been collected and in another
case a sum of Rs. 95 lakhs had been
collected. In this factual background, the
Hon'ble Supreme Court held that: -

"100. ...It is this bribe money
that constitutes the 'proceeds of crime'
within the meaning of Section 2(1)(u). It
is no rocket science to know that a public
servant receiving illegal gratification is in
possession of proceeds of crime. The
argument that the mere generation of
proceeds of crime is not sufficient to
constitute
the
offence
of
moneylaundering, is actually preposterous. As
we could see from Section 3, there are six
processes or activities identified therein.
They are, (i) concealment; (ii) possession;
(iii) acquisition; (iv) use; (v) projecting as
untainted property; and (vi) claiming as
untainted property. If a person takes a
bribe, he acquires proceeds of crime. So,
the activity of "acquisition" takes place.
Even if he does not retain it but "uses" it,
he will be guilty of the offence of moneylaundering, since "use" is one of the six
activities mentioned in Section 3.

101. The FIRs for the predicate
offences identify all the three components
of Section 3, namely, (i) persons; (ii)
process; and (iii) product. Persons accused
in the FIRs are those who have indulged in
the process or activity. The illegal
gratification
that
they
have
taken,
represents the proceeds of crime. The (i)
acquisition of such illegal gratification in
the first instance; (ii) the possession of the
tainted money before putting it to use; and
(iii) today projecting it as untainted money,
is the process or activity in which the
accused have indulged. The corruption
money represents the proceeds of crime."
5 All. Vishnu Prabhakar Vs. Union of India
1025

16.
In
the
aforesaid
factual
background, the Hon'ble Supreme Court
held in Y. Balaji (Supra): -

"97. If the main part of Section 3
is dissected with forensic precision, it will
be clear that Section 3 addresses itself to
three things (we may call them 3 'P's)
namely, (i) person; (ii) process or activity;
and (iii) product. Insofar as persons
covered by Section 3 are concerned, they
are, (i) those who directly or indirectly
attempt to indulge; or (ii) those who
knowingly assists; or (iii) those who are
knowingly a party; or (iv) those who are
actually involved. Insofar as process is
concerned,
the
Section
identifies
six
different activities, namely (i) concealment;
(ii) possession; (iii) acquisition; (iv) use;
(v) projecting; or (vi) claiming as untainted
property, any one of which is sufficient to
constitute the offence. Insofar as product is
concerned, Section 3 identifies "proceeds
of crime" or the property representing the
proceeds of crime as the product of the
process or activity.

98. Out of the three things that
Section 3 addresses, namely (i) person; (ii)
process; and (iii) product, the first two do
not require any interpretation or definition.
The third aspect namely "product", which
Section 3 refers to as "proceeds of crime"
requires a definition and hence it is defined
in Section 2(1)(u) as follows:-

"2. Definitions. (1) In this Act,
unless the context otherwise requires,-

XXX XXX XXX

(u) "proceeds of crime" means
any property derived obtained, directly or
indirectly, by any person as a result of
criminal activity relating to a scheduled
offence or the value of any such property or
where such property is taken or held
outside the country, then the property
equivalent in value held within the country
or abroad; JO

Explanation. For the removal of
doubts, it is hereby clarified that "proceeds
of crime" including property not only
derived or obtained from the scheduled
offence but also any property which may
directly or indirectly be derived or
obtained as a result of any criminal activity
relatable to the scheduled offence;"
* * *

100. All the three FIRs allege that
the accused herein had committed offences
included in the Schedule by taking illegal
gratification for providing appointment to
several persons in the Public Transport
Corporation. In one case it is alleged that a
sum of more than Rs. 2 crores had been
collected and in another case a sum of Rs. 95
lakhs had been collected. It is this bribe
money that constitutes the 'proceeds of
crime' within the meaning of Section
2(1)(u). It is no rocket science to know that a
public servant receiving illegal gratification is
in possession of proceeds of crime. The
argument that the mere generation of
proceeds of crime is not sufficient to constitute
the offence of money-laundering, is actually
preposterous. As we could see from Section 3,
there are six processes or activities identified
therein. They are, (i) concealment; (ii)
possession;
(iii)
acquisition
(iv) use; (v) projecting as untainted property;
and (vi) claiming as untainted property. If a
person takes a bribe, he acquires proceeds of
crime. So, the activity of "acquisition" takes
place. Even if he does not retain it
but "uses" it, he will be guilty of the offence of
money-laundering, since "use" is one of the
six activities mentioned in Section 3.

101. The FIRs for the predicate
offences identify all the three components
of
Section
3,
namely, (i) persons; (ii) process;
and (iii) product. Persons accused in the
1026 INDIAN LAW REPORTS ALLAHABAD SERIES
FIRs are those who have indulged in the
process or activity. The illegal gratification
that they have taken, represents the
proceeds of crime. The (i) acquisition of
such illegal gratification in the first
instance; (ii) the possession of the tainted
money
before
putting
it
to
use;
and (iii) today projecting it as untainted
money, is the process or activity in which
the accused have indulged. The corruption
money represents the proceeds of crime.

102. Therefore, all the arguments
as though there are no foundational facts
or jurisdictional facts, are simply aimed at
hoodwinking the Court." (Emphasis added
in original)

17. It appears that although the judgment
rendered by a Bench consisting of three
Hon'ble Judges in the case of Vijay Madan
Lal Chaudhari (Supra) was placed before the
two Judge Bench which decided Y. Balaji
(Supra), the scope of definition of money
laundering given by the Hon'ble Supreme
Court in Vijay Madan Lal Chaudhari
(Supra) has not been dealt with in the
judgment passed in the case of Y. Balaji. In
Vijay Madan Lal Chaudhari (supra) the
Hon'ble Supreme Court has considered
various provisions of PMLA and has
interpreted the same and has laid certain
principles of law based on the interpretation of
the provision of PMLA. Y. Balaji (supra) has
been decided on the basis of peculiar facts and
circumstances of that case noted above.

18. It is settled law that a precedent is
to be read keeping in view the background
in which the case was decided. In Y. Balaji
the accusation against the accused persons
was of having taken the bribe and thus
generated proceeds of crime by this. The
Hon'ble Supreme Court held that taking
bribe amounts to acquisition of proceeds of
crime.

19. In the present case, there is no
allegation against the applicant that he had
generated or acquired any proceeds of
crime. The only allegation against the
applicant is that he has assisted in
generation of crime and thereby violated
the provision of Section 3 of Prevention of
Money Laundering Act. The allegation
against the applicant in the case relating to
the scheduled offence is that in the monthly
returns he did not report accesses made by
A. K. Dutta in granting undue facilities to
Vijay Kumar Jaiswal and thus he did not
follow the guidelines of the bank.

20. In Parasa Raja Manikyala Rao
v. State of A.P.: (2003) 12 SCC 306, the
Hon'ble Supreme Court held that: -

"9. Each case, more particularly
a criminal case, depends on its own facts
and a close similarity between one case
and another is not enough to warrant like
treatment because a significant detail may
alter the entire aspect. In deciding such
cases, one should avoid the temptation to
decide cases (as said by Cordozo) by
matching the colour of one case against the
colour of another. To decide, therefore, on
which side of the line a case falls, the
broad resemblance to another case is not at
all decisive."

21. As per the law laid down in Vijay
Madan Lal Chaudhary (Supra), the
process or activity of money laundering can
be indulged in only after the property is
derived or obtained as a result of a
scheduled offence. The fundamental stages
of "money laundering" are - (1) Placement:
which is to move the funds from direct
association of the crime, (2) Layering:
which is disguising the trail to foil pursuit
and (3) Integration: which is making the
money available to the criminal from what
5 All. Furkan S/o Akhtar Ali & Ors. Vs. State of U.P. & Anr.
1027
seems to be legitimate sources. There is no
allegation in the complained filed by ED
that the applicant was involved in any of
the aforesaid activities. It is only when
money is generated as a result of such acts
that PMLA steps in as soon as proceeds of
crime are involved in any process or
activity but in the present case, the
applicant is not alleged to have been
involved in any process or activity after
generation of the proceeds of crime.

22. A person can be prosecuted under
PMLA only if the ED has reason to believe
that the person is in possession of proceeds
of crime, which belief is supported by
tangible and credible evidence indicative of
involvement of the person concerned in any
process or activity connected with the
proceeds of crime. In the present case, there
is no allegation that the applicant has at any
point of time been in possession of any
proceeds of crime.

23. The applicant is already facing
trial for the scheduled offence since the
year 2010 and the learned counsel for the
parties have informed that in that case also
merely charges have been framed till date
and no prosecution witness has been
examined.
The
case
lodged
by
the
Directorate of Enforcement was initiated by
lodging the ECIR in the year 2010, the
complaint was filed in the year 2017,
charges have been framed in the year 2025
and further proceedings are yet to take
place. It appears that neither the case
relating to the scheduled offence instituted
by the CBI nor the case relating to PMLA
instituted by the ED could make any
substantial progress during the past 11⁄2
decade.

24.
In
view
of
the
foregoing
discussion, I am of the considered view that
the facts of the present case where the only
allegation against the applicant is of
providing assistance in generation of the
proceeds of crime and he is not alleged to
have been involved in any process or
activity after generation of the proceeds of
crime or to have at any point of time been
in possession of any proceeds of crime, do
not even prima facie make out the offence
of money laundering defined under Section
3 of the Prevention of Money Laundering
Act. In these circumstances, continuance of
the proceedings under PMLA against the
application would only amount to his
persecution.

25. Accordingly, the application filed
under Section 482 Cr.P.C. is allowed. The
complaint dated 16.09.2017 filed by the
Directorate of Enforcement against the
applicant, the cognizance and summoning
order dated 02.04.2018 and the entire
proceedings of Sessions Case No. 123 of
2023, under Section 3 & 4 of the
Prevention of Money Laundering Act, 2002
in the Court of Special Judge (C.B.I.),
Court No. III, Lucknow, against the
applicant only, are quashed.
----------
(2025) 5 ILRA 1027
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 08.05.2025

BEFORE

THE HON'BLE ARUN KUMAR SINGH
DESHWAL, J.

Crl. Misc. Application U/S 528 BNSS No. 14448
of 2025

Furkan S/o Akhtar Ali & Ors. ...Applicants
Versus
State of U.P. & Anr. ...Opp. Parties

Counsel for the Applicants: