Money Laundering Is Not Frozen in Time – It Flows with the Proceeds of Crime: Calcutta High Court Revives PMLA Trial Against Accused Despite Pre-Amendment Predicate Offence

"So long as the proceeds of crime are being used, possessed or projected as untainted property, the laundering continues" – In a critical reaffirmation of the evolving jurisprudence under the Prevention of Money Laundering Act, 2002, the Calcutta High Court set aside an order of discharge passed by the Special PMLA Court, holding that the offence of money laundering is a “continuing offence” which cannot be quashed merely because the underlying scheduled offence was committed before its inclusion in the PMLA Schedule.

The ruling came in Enforcement Directorate v. Papia Rozario & Stanley Indrajit Rozario [CRR No. 914 of 2018], where Justice Ajay Kumar Gupta overruled the Special Court’s conclusion that proceedings under the PMLA could not continue since Section 467 IPC—one of the predicate offences in the case—was added to the PMLA Schedule only on 1 June 2009, after the alleged acts took place.

Calling the Special Court’s interpretation “fundamentally flawed”, the High Court held that it had failed to grasp the core statutory architecture of PMLA as laid down by the Supreme Court in Vijay Madanlal Choudhary v. Union of India.

“The date of the scheduled offence is not decisive — it is the continued possession or use of tainted assets that attracts Section 3 of PMLA”

At the heart of the controversy was whether the accused could be discharged under Section 227 CrPC on the ground that the alleged forgery under Section 467 IPC took place before it was added to the list of scheduled offences under the PMLA.

The High Court answered this with unequivocal clarity:
"The offence of money laundering is not frozen in the past. It lives and breathes through the continued activity involving proceeds of crime. So long as the tainted property is possessed, used or projected as untainted after the scheduled offence is notified, the offence under Section 3 is made out."

Rejecting the accused's plea of retrospective application, the Court clarified that the Act does not punish the past criminality, but the continuing enjoyment of its proceeds.
"Application of PMLA in such circumstances does not violate Article 20(1) of the Constitution," Justice Gupta observed, "since the penal consequence is not attached to the earlier act of forgery, but to the continued laundering activity after 1 June 2009."

“Conviction in predicate offence is not a precondition — material indicating derivation from crime suffices”

The Special Court had discharged the accused solely on the basis that there could be no laundering if the scheduled offence itself did not legally exist at the time of commission. However, the High Court firmly rejected this logic.

"The requirement under the PMLA is the existence of a scheduled offence, not a concluded conviction. What the Court must look for is material suggesting that the property in question was derived or obtained from criminal activity related to a scheduled offence."

The Court noted that the ED’s complaint alleged a well-orchestrated act of fraud, involving fake documents, forged identities, and diversion of funds — culminating in purchase of immovable property using illicit gains.
"These are not allegations of past misconduct alone. They indicate a systematic laundering of money through layering and integration even after the relevant amendment to the PMLA came into force."

“Attachment of property under PMLA is civil, not penal — it survives even if the offence predates amendment”

The Special Court had also set aside the ED’s attachment of properties on the belief that such action was penal and could not survive retrospectively. This too was rejected.

Justice Gupta invoked Vijay Madanlal Choudhary, reiterating that “attachment and confiscation under Section 5(1) are civil and preventive mechanisms. They do not depend on the date of the predicate offence, but on whether the proceeds of crime still subsist and are traceable.”

The High Court reminded the lower court that the PMLA is a “sui generis” statute — neither wholly penal nor purely regulatory, but a hybrid tool designed to dismantle the financial infrastructure of crime.

“The laundering is alive — so must the trial be”

In strong words, the High Court concluded that the discharge was not only premature but legally unsustainable.

"At the stage of discharge, the Court is not called upon to deliver a verdict on guilt or innocence. If the complaint prima facie discloses post-amendment laundering activity, it must proceed to trial."

The Court further clarified that “continued enjoyment of criminal proceeds after the inclusion of Section 467 IPC as a scheduled offence brings the accused within the net of the PMLA, even if the original forgery took place earlier.”

On this basis, the Court allowed the ED’s revisional application, vacated the discharge, and directed the Special PMLA Court to resume the trial in accordance with law.

“When tainted money walks in the present, the law cannot sleep in the past”

The ruling serves as a definitive reiteration that the PMLA is forward-looking — aimed not merely at punishing past crimes, but at disrupting the ongoing flow and use of illicit wealth.

In rejecting the accused’s argument, the Court effectively held that the law must remain alive to the dynamic nature of money laundering — a crime whose essence lies not in the initial fraud, but in the conversion of its profits into clean capital.

The accused, if they continued to “enjoy, possess or integrate tainted property” post 1 June 2009, must now stand trial — not for the crime of 2008, but for laundering it in the years that followed.

Date of Decision: 21 January 2026