As per case facts, the Applicant filed a Criminal Application to quash a Designated Court's order that issued process against him in a PMLA Special Case. The original FIR pertained ...
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO. 1075 OF 2023
WITH
INTERIM APPLICATION NO. 575 OF 2026
IN
CRIMINAL APPLICATION NO. 1075 OF 2023
Shri. Kishore S/o. Pessulal Dewani,
Major of age, Occupation : Advocate,
Residing at Plot No. 614, Prag, Byramji Town,
Nagpur – 440 013.…Applicant
Versus
1.The Directorate of Enforcement,
Through the Assistant Director,
Mumai Zonal Office-I, Mumbai.
2.The State of Maharashtra …Respondents
Mr. Sunil Manohar, learned Senior Advocate a/w Mr. Pralhad
Paranjape, Ms. Sakshi Jogdand i/b Mr. Omkar Prashant Mulekar,
learned Advocates for Applicant.
Ms. Pallavi N. Dabholkar, learned A.P.P. for the State/Respondent.
Mr. Prashant Mishra, Special Counsel a/w Mr. Bharat Jadhav &
Mr. Krish Kariya, learned Advocates for Respondent No. 1-ED.
CORAM:ASHWIN D. BHOBE, J.
DATED:23
rd
FEBRUARY, 2026
ORAL JUDGMENT:
1. Heard, Mr. Sunil Manohar, learned Senior Advocate for the
Applicant, Mr. Prashant Mishra, learned Advocate for
Respondent No. 1-ED and Ms. Pallavi Dabholkar, learned A.P.P.
for the State/Respondent.
Gitalaxmi
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2. This Criminal Application, filed under Section 482 of the
Code of Criminal Procedure, 1973 (“Cr.P.C.”), is preferred by the
Applicant against the Order dated 16.09.2021 passed by the City
Civil Court & Additional Sessions Judge, Greater Bombay (the
Designated Court for the Prevention of Money Laundering Act,
2002) (for short “Designated Court”), issuing process against the
Applicant in PMLA Special Case No. 1089 of 2021 and quashing
the complaint in PMLA Special Case No. 1089 of 2021 filed
against the Applicant for the offence under Section 3 punishable
under Section 4 of the Prevention of Money Laundering Act,
2002 (for short “PMLA, 2002”).
3. The facts of the case are that, on 21.04.2021, a First
Information Report (“FIR”) was registered against Anil
Deshmukh and other unknown persons for the offence under
Sections 7 of the Prevention of Corruption Act, 1988, and 120-B
of the Indian Penal Code, 1980. Column 3(b) of the FIR states
that the subject offence was committed “
During the period
2020-2021
”.
4. Pursuant to the investigation carried out in connection
with the FIR, a complaint under the second proviso to Section
45 of the PMLA, 2002, was filed. ECIR No. ECIR/MBZO-
1/66/2021, dated 11.05.2021, was recorded under the
provisions of PM.L.A
. The Applicant is shown as “Accused No.
11” in the complaint. The predicate offence is referred to in
paragraph 3.3 of the complaint. The money trail, as evidenced
by the investigation, is referred to in paragraph 7 of the
complaint. A chart showing the money trail is in paragraph 8 of
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the complaint. The estimation of proceeds of crime is referred to
in paragraphs 9.2 to 9.4 of the complaint. The role assigned to
the Applicant is referred to in paragraph 12.11 of the complaint.
Proceedings were registered as PMLA Special Case No. 1089 of
2021.
5. A Supplementary Charge-sheet was filed on 29.12.2021.
6. By order dated 16.09.2021, passed in PMLA Special Case
No. 1089 of 2021, the Designated Court issued process against
the Applicant and the other accused. The order is reproduced
below:
“ORDER
1. Read the complaint thoroughly. Also carefully
examined the documents filed with the complaint. I have
carefully read the statements of the witnesses recorded
under section 50(2) and (3) Prevention of Money
Laundering Act (for short P.M.L.A.). The record further
shows that the Hon'ble High Court directed CBI to inquire
the matter and accordingly directed preliminary enquiry in
respect of the allegations of collections of money by them
Home Minister Mr. Anil Deshmukh through accused No.1
and others. Accordingly CBI conducted enqruiry and prima-
facie found involvement of present accused, hence
registered FIR No. RC2232021A0003 dated 21.04.2021
under section 7 of P.C. Act, 2018 r/w section 120-B of IPC,
which are scheduled offences under Schedule-A of PM.LA.
Act. ECIR No. ECIR/MBZO-1/66/2021 dated 11.05.2021
was recorded under the provisions of PM.L.A. and
investigation was conducted. It is therefore, clear that,
Scheduled offence was already registered which is the basic
qualification and requirement to initiate proceedings under
PM.L.A.
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2. On careful perusal of the statements and the charge
showing trail of money prima-facie indicate that Rs.4.7
Crore received by Mr. Anil Deshmukh from Sachin Waze
(accused No.1) and Kundan Shinde (accused No.3). Mr.
Anil Deshmukh then transferred the said cash through
Havala on the instructions of Mr. Hrishikesh Deshmukh to
Surendra Jain (accused No.4) and Virendra Jain (accused
No. 5). Then both of them through their companies which
are on paper only, deposited the said amount by
RTGS/cheques in the account of Shri. Sai Shikshan
Sanstha, which is owned by Mr. Anil Deshmukh. The said
transactions indicate that Rs.1.71 Crore transferred from
November, 2020 to March, 2021 and total Rs.4.18 Crore
transferred in the account of Shri Sai Shikshan Sanstha
since 2013. In this way the said amount which was
laundered through shell companies prima-facie indicates
the proceeds of crime pointing out involvement of accused
No.1 to 14 in the said money trail. Hence, there are prima-
facie sufficient grounds to proceed against accused No.1 to
14 as per section 3 punishable under section 4 of P.M.L.A.
Hence, following order is passed.
ORDER
(a) Issue process against accused Nos.1 to 14 as
mentioned in the title, in P.M.L.A. Spl. Case No. 1089 of
2021 arising out of ECIR No.ECIR/MBZO-I/66/2021 for
the offence under Section 3 punishable under Section 4 of
The Prevention of Money Laundering Act, 2002.
(b) Issue summons to all accused including accused
persons who are in the jail presently.
”
7. Mr. Sunil Manohar, learned Senior Advocate for the
Applicant, has placed on record a brief synopsis of the
arguments and canvassed the oral arguments. He submits that
the prosecution’s case is that the proceeds of crime were
generated between December 2020 and February 2021. He
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submits that vague statements are made that moneys were also
transferred to the Trust account of the principal accused, Anil
Deshmukh, from the year 2013. He submits, however, that there
is no mention of whether these are proceeds of crime or how
they were generated. He submits that the only allegation against
the Applicant is that one company, M/s. Premier Port Links Pvt.
Ltd., in which the Deshmukh Family and the Dewani Family held
50% shareholding and 50% investment, had purchased certain
properties at Dhutum Village in the years 2005-2007. He
submits that the said properties were purchased well before the
alleged generation of proceeds of crime, as such, no offence
under Section 3 of the PMLA, 2002, was made out against the
Applicant. He submits that there is no averment in the charge-
sheet that the Applicant had knowledge of the said proceeds of
crime, which were generated 15 years after the purchase of the
properties by M/s. Premier Port Links Pvt. Ltd. He submits that
the Applicant was neither a shareholder nor a director of M/s.
Premier Port Links Pvt. Ltd.
8. Mr. Prashant Mishra, learned Advocate for Respondent No.
1, has filed written submissions and advanced oral arguments.
He submits that the Applicant, who seeks to invoke this Court's
discretionary jurisdiction, has an alternative remedy by way of a
revision application or a discharge application at the appropriate
Court. He submits that no case is made out for the exercise of
this Court's extraordinary jurisdiction. He further submits that
the Applicant is a close aide of Anil Deshmukh, the erstwhile
Home Minister, who has been named as an accused for misusing
his post and attempting to collect Rs. 100 crores a month from
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various bars and restaurants by directing officials of the Mumbai
Police and the Government of Maharashtra. He submits that the
investigation conducted by the ED has revealed that the
Applicant has been the Director of M/s. Premier Port Links Pvt.
Ltd. since 2009, and that his wife and Anil Deshmukh’s sons are
joint shareholders. He submits that M/s. Premier Port Links Pvt.
Ltd. received loans worth Rs. 2 crores 20 lakhs from M/s.
Flourish Properties Pvt. Ltd., an entity linked to the Deshmukh
Family, and that these funds were used to purchase properties in
Dhutum Village, as referred to in paragraph 5.12.20 of the
complaint. He submits that the Applicant’s role in permitting
and facilitating financial transactions through Corporate Entities
under his control, including transactions used for layering and
routing of tainted funds, is specifically brought out in the
complaint, which, according to Mr. Mishra, was sufficient to
prima facie initiate process against the Applicant. He submits
that the Designated Court has rightly issued the process. He
relies on the decision of the Hon’ble Supreme Court in
Vijay
Madanlal Choudhary v/s. Union of India
1
.
9. Ms. Pallavi Dabholkar, learned A.P.P. for the
State/Respondent No. 2, submits that the State is a formal party
to the present proceedings.
10. Arguments heard. Records perused with the assistance of
the learned Advocates. The rival contentions fall for
consideration.
11. The prosecution’s case is that proceeds of crime were
1. 2022 SCC OnLine SC 929.
Gitalaxmi
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generated between December 2020 and February 2021. Material
on record suggests that moneys were also transferred into the
Trust account of the principal accused, Anil Deshmukh, from
2013.
12. FIR bearing no. RC2232021A0003, dated 21.04.2021,
registered with the Central Bureau of Investigation, Anti-
Corruption V, New Delhi, for offences punishable under Section
7 of the Prevention of Corruption Act, 1988, as amended by the
Prevention of Corruption (Amendment) Act, 2018, relates to the
suspected offence committed during the period 2020-2021.
13. The predicate offence is described by the prosecution in
paragraph 3.3 of the complaint registered as PMLA Special Case
No. 1089 of 2021, which reads as follows:
“
3.3 On the basis of the aforesaid
information/documents(s), prima-facie, a case for offence
of money laundering (Section 3 of the Prevention of Money
Laundering Act, 2002) punishable under Section 4 of the
said Act appears to have been made out. Therefore, an
ECIR No. ECIR/MBZO-1/66/2021 dated 11.05.2021 was
recorded under the provisions of Prevention of Money
Laundering Act 2002 for conducting investigation in this
matter.
”
14. According to the prosecution, the money trail indicates
that the principal accused, Anil Deshmukh, collected Rs.
40,00,000/- in December 2020; Rs. 1.64 crores in January and
February 2021; Rs. 2.66 crores in January and February 2021;
and Rs. 4.70 crores between December 2020 and February 2021
from various bar owners.
Gitalaxmi
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15. Money trail, as evidenced by the investigation, is referred
to in paragraph 7 of the complaint, which is reproduced herein
below:
“7. Money Trails :
7.1 Investigation has revealed that accused Sachin Waze on
the instructions of Shri Anil Deshmukh, the then Home
Minister of State of Maharashtra has collected Rs. 40 lakhs in
the month of December, 2020 as good luck money from various
orchestra bar owners/managers.
7.2 Shri Sachin Waze on the instructions of Shri Anil
Deshmukh, the then Home Minister of State of Maharashtra
has collected Rs.1.64 Crore in the months of January and
February, 2021 from various orchestra bar owners/managers
falling under jurisdiction of Zone I to Zone VII of Mumbai
Police Commissionerate.
7.3 Shri Sachin Waze on the instructions of Shri Anil
Deshmukh, the then Home Minister of State of Maharashtra
has collected Rs.2.66 Crore in the months of January and
February, 2021 from various orchestra bar owners/managers
falling under jurisdiction of Zone VIII to Zone XII of Mumbai
Police Commissionerate.
7.4 Thus from above it in seen that the Sachin Waze, the
then Head of CIU, Mumbai Police has collected money
amounting to Rs. 4.70 Crore from various Orchestra bar
owners/managers for smooth functioning of their orchestra
bars.
7.5 Investigation further revealed that Shri Hrishikesh
Deshmukh, son of Shri Anil Deshmukh was regularly
transferring cash money to Shri Surendra Kumar Jain and Shri
Virendra Jain through Hawala who further infused the cash
into the banking channel upon layering through their various
paper companies namely M/s Reliable finance corporation Pvt.
Ltd., M/s VA Realcon Pvt. Ltd., M/s Utsav Securities Pvt. Ltd.
and M/s SITAL Leasing and Finance Pvt. ltd.
7.6 The total cash amounting to Rs.4.18 Crore of was
received by Trust from said Delhi based companies in the garb
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of donations. Out of that Rs 1.71 crore was transferred in
February and March 2021. The details of donation received
from Delhi based shell companies of Shri Surendra Jain and
Shri Virendra Jain in the account no. 442402010051625 with
Union Bank of India pertaining to Shri Sai Shikshan Sanstha is
as under:-
A/C HOLDER Transaction Date Narration Credit in Rs.
Shri Sai Shikshan Sanstha 24-04-2019 RTGS:VA REALCON PVT LTD 2500000
Shri Sai Shikshan Sanstha 09-03-2021 RTGS:VA REALCON PVT LTD 1500000
Shri Sai Shikshan Sanstha 27-08-2013 RTGS:RELIABLE FINANCE COR 1000000
Shri Sai Shikshan Sanstha 13-05-2019 RTGS:RELIABLE FINANCE COR 3000000
Shri Sai Shikshan Sanstha 13-11-2020 RTGS:RELIABLE FINANCE COR 4300000
Shri Sai Shikshan Sanstha 17-11-2020 RTGS:RELIABLE FINANCE COR 2000000
Shri Sai Shikshan Sanstha 19-11-2020 RTGS:RELIABLE FINANCE COR 1700000
Shri Sai Shikshan Sanstha 20-11-2020 RTGS:RELIABLE FINANCE COR 2000000
Shri Sai Shikshan Sanstha 15-02-2021 RTGS:RELIABLE FINANCE COR 3490856
Shri Sai Shikshan Sanstha 17-02-2021 RTGS:RELIABLE FINANCE COR 5000000
Shri Sai Shikshan Sanstha 10-03-2021 RTGS:RELIABLE FINANCE COR 3500000
Shri Sai Shikshan Sanstha 11-03-2021 RTGS:RELIABLE FINANCE COR 2500000
Shri Sai Shikshan Sanstha 09-03-2018 RTGS:UTSAV SECURITIES PVT 5000000
Shri Sai Shikshan Sanstha 16-03-2018 RTGS:UTSAV SECURITIES PVT 2000000
Shri Sai Shikshan Sanstha 12-02-2021 RTGS:UTSAV SECURITIES PVT 654252
Shri Sai Shikshan Sanstha 12-02-2021 RTGS:UTSAV SECURITIES PVT 227960
Shri Sai Shikshan Sanstha 19-09-2020 RTGS:SITAL LEASING AND FI 920466
Shri Sai Shikshan Sanstha 22-09-2020 RTGS:SITAL LEASING AND FI 322973
Shri Sai Shikshan Sanstha 15-02-2021 RTGS:SITAL LEASING AND FI 251275
TOTAL 4,18,67,782
16. The chart showing the money trail in the complaint is
reproduced below:
8. Chart showing trail of Money:
8.1 Flow Chart depicting the trail of money is as under:-
Cash through Sachin Waze &
Kundan Shinde transferred
Gitalaxmi
Placement
Layering
Orchestra Bar (Rs. 4.7 Crores)
Anil Deshmukh
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Cash through Hawala
on the instructions of
Shri Hrishikesh Deshmukh
transferred
RTGS/Cheque through
Paper companies of
Shri Surendra Jain & Virendra Jain
(Remarks : Rs. 1.71 Crore was transferred from November 2020 to
March,2021. However, total Rs. 4.18 Crore was transferred in the account
of Trust Shri Sai Shikshan Sanstha since 2013.)
8.2 Thus all three steps of Money laundering, i.e. Placement, Layering &
Integration have been completed as elaborated above.
17. As per paragraph 9.2 of the complaint, the proceeds of
crime are estimated at Rs. 4.70 crores, collected in cash from
various bar owners between December 2020 and February 2021.
Paragraph 9.3 of the complaint details how the tainted money is
alleged to have been laundered by the principal accused, Anil
Deshmukh, in collusion with Delhi-based shell companies.
18. Paragraph 9.4 of the complaint reads as follows:
“
9.4 Shri Hrishikesh Deshmukh, son of Shri Anil
Deshmukh, was indirectly controlling M/s Flourish
Properties Pvt. Ltd. through his close associates and infused
capital which was used for giving loan amounting to
approx. Rs.2.20 Crore to M/s Premier Port Links Pvt. Ltd.
and subsequently purchase of land in the name of M/s
Premier Port Links Pvt. Ltd. Shri Kishore Dewani, 50%
Gitalaxmi
Shri Sai Sikshan Sanstha (Rs. 1.71 Crores) Bank A/c.
No. 442402010051625
Integration
Surendra Jain & Virendra Jain
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owner, has categorically stated that this amount of Rs.2.2
Crore was the investment of Deshmukh's towards the
purchase of the land. It can be noticed that Deshmukh
family later acquired the M/s Flourish Properties Pvt. Ltd.
at a mere value of approx. Rs.11 lakhs by way of
purchasing the shares from close associates and also
became 50% shareholder in M/s Premier Port Links Pvt.
Ltd. which was acquired in mere Rs.17.95 lakh only. Thus,
Deshmukh family have infused their funds by way of
raising share capital through various dummy companies
and upon layering the same funds were utilized through
another company which purchased land and later by way of
transfer of shares in nominal amount again established
their control over both the companies including their assets
i.e. land & building. The entire transaction was done with
ulterior motive and without any authority on the part of
Deshmukh family to execute purchase of land parcels on
behalf of Deshmukh family in the name of M/s Premier Port
Links Pvt. Ltd. The purchase transactions were done with
malafide intentions for hiding its identity at the time of
purchase and subsequently by way of purchasing shares of
company at nominal price became 50% owner over the
assets of company M/s Premier Port Links Pvt. Ltd. Further,
this malafide intention is also clearly evident from the fact
that Deshmukh family further infused money amounting to
Rs.75 lakhs share application money from M/s Flourish
Properties Pvt Ltd. and was given as loan to M/s Premier
Port Links Pvt. Ltd. in the year 2006-07 whereas actual
transfer of share of M/s Flourish Properties Pvt Ltd affected
in the year 2010. Accordingly, the land which was
purchased by M/s Premier Port Links Pvt. Ltd. on behest of
Deshmukh family have been used for commission of
offence under PMLA, 2002. Further, summons was issued
to the directors of companies to whom shares were allotted
and share application money of Rs.75 Lacs was received by
the company. However, summons returned undelivered. It
is suspected that cash had been infused in the guise of
share application money in the company by Deshmukh
family. Further, it is also suspected that part payment for
purchase of land located at Dhutum Village by M/s Premier
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Port Links Pvt. Ltd. had also been made in cash to farmers
from whom the land was purchased. Investigations in this
regard are still under progress.
”
19. The role assigned to the Applicant is set out in paragraph
12.11 of the complaint, which reads as follows:
“
12.11 Kishore Dewani, Director of M/s Premier Port Links
Pvt. Ltd has assisted Deshmukh family in concealment and
money laundering activities by allowing the company to
take illegally loans of Rs.2.20 Crore from M/s Flourish
properties Pvt. Ltd. in which Deshmukh family had infused
the funds through bogus share capital. In furtherance to
this, he conspired with Deshmukh family and transferred
50% shares of PPLPL to Shri Salil Deshmukh for a mere Rs.
17.5 Lakh while having asset of approx. Rs.5.4 Crore at
that time He, therefore, was an active participant in the
generation of proceeds of crime and actually involved in
the laundering of the said proceeds of crime as defined
under Section 3 read with Section 70 of the PMLA, 2002
and is liable for punishment under Section 4 of PMLA,
2002.
”
20. Section 3 of the PMLA, 2002 reads thus :-
“
3. Offence of money-laundering.- 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
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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.
”
21. Section 2(1)(u) of the PMLA, 2002 defines “proceeds of
crime”, Section 2(1)(v) of the PMLA, 2002 defines “property”
and Section 2(1)(y) of the PMLA, 2002 defines “scheduled
offence”, read thus,
“
2.
Definitions.—(1) In this Act, unless the context
otherwise requires,—
(u) “proceeds of crime” means any property derived or
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];
[Explanation.—For the removal of doubts, it is hereby
clarified that “proceeds of crime” include property not only
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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;]
(v) “property” means any property or assets of every
description, whether corporeal or incorporeal, movable or
immovable, tangible or intangible and includes deeds and
instruments evidencing title to, or interest in, such property
or assets, wherever located;
[Explanation.—For the removal of doubts, it is hereby
clarified that the term “property” includes property of any
kind used in the commission of an offence under this Act or
any of the scheduled offences;
(va) “real estate agent” means a real estate agent as
defined in clause (88) of section 65 of the Finance Act,
1994 (32 of 1994);]
(y) “scheduled offence” means—
(i) the offences specified under Part A of the Schedule; or
[(ii) the offences specified under Part B of the Schedule if
the total value involved in such offences is 7 [one crore
rupees] or more; or
(iii) the offences specified under Part C of the Schedule.]
”
22. Under the PMLA, 2002, property not only derived or
obtained from the scheduled offence already accomplished but
also any property which may be directly or indirectly derived or
obtained as a result of any criminal activity related to the
scheduled offence already accomplished, constitutes proceeds of
crime. The existence of proceeds of crime is a
sine qua non of
the offence under Section 3 of the PMLA, 2002.
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23.Mr. Prashant Mishra has referred to paragraph 5.12.20 of
the complaint to contend that the Applicant has a role in the
crime. Said paragraph 5.12.20 is quoted below:
“5.12.20 Statement of Shri Kishore Pesaulal Dewani
was recorded on 08.06.2021 & 10.07.2021 under the
Provisions of Sub-Section (2) & (3) of Section 50 of
the Prevention of Money Laundering Act, 2002
wherein he interalia stated that he is a Chartered
Accountant and engaged in tax practice which
includes advisory on tax matters; that his source of
income is from profession, rent, interest & profit of
companies owned by family.
On being asked about M/s Premier Port Links Pvt.
Ltd. he interalia state that company was incorporated
on dt. 07.09.2000; that the shareholders of the
company till 28.03.2010 were Shri Hira
Bhagchandani (100 shares with face value 10), Smt.
Nisha Bhagchandani (100 shares with face value 10),
Jitendra Motwani (4800 shares with face value 10),
Jayesh Motwani (5000 shares with face value 10);
that his son namely Akshay Dewani was appointed as
director on 30.09.2004 who ceased to be director on
01.03.2010 and Shri Salil Deshmukh, son of Anil
Deshmukh, was appointed as Director on dt.
10.01.2006 who ceased to be Director on
28.08.2012; that Shri Salil Deshmukh and he became
the shareholder of the company on 28.03.2010 by
acquiring 50% shares each from the earlier
shareholders; that at present Shri Salil Deshmukh
(25% shares), Hrishikesh Deshmukh (25% shares) &
his wife namely Bharti Dewani (50% shares) are the
shareholders of the company; that at present
company has two directors namely Shri Umesh
Agarwal & himself; that company has purchased
approx. 20 acres of agriculture land located at
Dhutum Village from various individuals/farmers
between the year 2004-2008; that there are approx.
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40-45 sale deeds for the purchase of the land at
Dhutum Village by M/s Premier Port Links Pvt. Ltd.;
that he had invested approx.. Rs.2 crore and
Deshmukh Family also invested approx.. Rs.2 crore
through a company namely M/s Flourish Properties
Pvt. Ltd. as per books; that the said land at Dhutum
Village was purchased for setting up for custom
freight station (CFS) as it was not viable, the project
could not materialised; that Shri Salil Deshmukh had
invested Rs.5 lacs through cheque in the shares of
the company March, 2010 and Rs.12.95 lacs through
cheque in the year March, 2017, thereby holding
50% shares in the company; that Shri Salil
Deshmukh out of 50% shares gifted his 25% shares
to Shri Hrishikesh Deshmukh in the year March,
2017, thereby both holding 25% shares each.
”
24. Even if the allegations in the charge-sheet and the material
on record are taken as a true and correct depiction of the
circumstances, it is seen that the proceeds of crime were
generated between December 2020 and February 2021. As
submitted by Mr Sunil Manohar, learned Senior Advocate for the
Applicant, even if the statement in the complaint that the money
was transferred to the Trust account of the principal accused,
Anil Deshmukh, is accepted, the proceeds of crime will still have
to be treated as generated in 2013. As per the charge-sheet, the
Applicant, by entering transactions (sale deeds for the purchase
of property at Dhutum Village) in the years 2005-2007,
committed an offence under the PMLA, 2002. The other
allegation against the Applicant is that he permitted the
Deshmukh Family to invest in M/s. Premier Port Links Pvt. Ltd.
by raising a loan of Rs. 2.20 crores. The charge-sheet reveals
that the Applicant has also invested an equal amount. The
supplementary charge-sheet does not refer to any further
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material
qua the Applicant.
25. From the material on record, the property purchased by
M/s. Premier Port Links Pvt. Ltd. in the years 2005-2007,
unarguably, cannot be said to have any connection with the
proceeds of crime, as the acts constituting the scheduled offence
took place after its acquisition, i.e. after December 2020 and up
to February 2021. Even assuming the prosecution’s case that the
moneys were transferred to the Trust account of the principal
accused, Anil Deshmukh, from 2013, the property purchased in
2005-2007 would still have no connection to the proceeds of
crime.
26. Mr. Prashant Mishra, Special Counsel for Respondent No.
1, in paragraph 8 of his written submissions, has contended as
follows:-
“
8. It is submitted that in Vijay Madanlal Chaudhary v.
Union of India (2022 SCC OnLine SC 929), the Hon'ble
Supreme Court held that “270. ...In other words, the
criminal activity may have been committed before the same
had been notified on 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
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ingredients are intrinsic in the original provision (Section 3,
as amended until 2013 and were in force till 31.7.2019);
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 Explanation inserted
in 2019 is of no consequence as it does not alter or enlarge
the scope of Section 3 at all.
It was also held that “463. The person may be involved in
any one or more than one process or activity connected
with the proceeds of crime. All of them are treated as one
class of offender involved in money-laundering. The
proceeds of crime may be derived or obtained as a result of
criminal activity with which the offender involved in money
laundering offence may not be directly concerned at all.
Even so, he becomes liable to be proceeded under Section 3
and punished under Section 4 of the 2002 Act. The
principle of an accessory after the fact will have no
application to the offence of money-laundering.
”
27. Useful reference can be made to the pronouncement of the
Hon’ble Supreme Court in the case of
Pavana Dibbur v/s.
Directorate of Enforcement
2
, which refers to the case of Vijay
Madanlal Choudhary (supra) in paragraphs 15 to 19 and holds
as follows:
“
15. The condition precedent for the existence of
proceeds of crime is the existence of a scheduled offence.
On this aspect, it is necessary to refer to the decision of this
Court in Vijay Madanlal Choudhary [Vijay Madanlal
Choudhary v. Union of India, (2023) 12 SCC 1] . In para
109 of the said decision [Vijay Madanlal Choudhary v.
Union of India, (2023) 12 SCC 1] , this Court held thus :
(SCC p. 166)
“109. Tersely put, it is only such property which is
derived or obtained, directly or indirectly, as a result
2. (2023)15 Supreme Court Cases 91.
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of criminal activity relating to a scheduled offence
that can be regarded as proceeds of crime. The
authorities under the 2002 Act cannot resort to
action against any person for money laundering on
an assumption that the property recovered by them
must be proceeds of crime and that a scheduled
offence has been committed, unless the same is
registered with the jurisdictional police or pending
inquiry by way of complaint before the competent
forum. For, the expression “derived or obtained” is
indicative of criminal activity relating to a scheduled
offence already accomplished. Similarly, in the event
the person named in the criminal activity relating to a
scheduled offence is finally absolved by a court of
competent jurisdiction owing to an order of
discharge, acquittal or because of quashing of the
criminal case (scheduled offence) against him/her,
there can be no action for money laundering against
such a person or person claiming through him in
relation to the property linked to the stated
scheduled offence. This interpretation alone can be
countenanced on the basis of the provisions of the
2002 Act, in particular Section 2(1)(u) read with
Section 3. Taking any other view would be rewriting
of these provisions and disregarding the express
language of definition clause “proceeds of crime”, as
it obtains as of now.”
(emphasis in original and supplied)
16. In paras 134 and 135, this Court held thus : (Vijay Madanlal
Choudhary case [Vijay Madanlal Choudhary v. Union of India, (2023)
12 SCC 1] , SCC p. 182)
“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
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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 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 31-7-2019);
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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
Explanation inserted in 2019 is of no consequence as
it does not alter or enlarge the scope of Section 3 at
all.”
(emphasis supplied)
17. Coming back to Section 3 PMLA, on its plain
reading, an offence under Section 3 can be committed after
a scheduled offence is committed. For example, let us take
the case of a person who is unconnected with the scheduled
offence, knowingly assists the concealment of the proceeds
of crime or knowingly assists the use of proceeds of crime.
In that case, he can be held guilty of committing an offence
under Section 3 PMLA. To give a concrete example, the
offences under Sections 384 to 389 IPC relating to
“extortion” are scheduled offences included in Para 1 of the
Schedule to PMLA. An accused may commit a crime of
extortion covered by Sections 384 to 389 IPC and extort
money. Subsequently, a person unconnected with the
offence of extortion may assist the said accused in the
concealment of the proceeds of extortion. In such a case,
the person who assists the accused in the scheduled offence
for concealing the proceeds of the crime of extortion can be
guilty of the offence of money-laundering. Therefore, it is
not necessary that a person against whom the offence
under Section 3 PMLA is alleged must have been shown as
the accused in the scheduled offence. What is held in para
135 of the decision of this Court in Vijay Madanlal
Choudhary [Vijay Madanlal Choudhary v. Union of India,
(2023) 12 SCC 1] supports the above conclusion. The
conditions precedent for attracting the offence under
Section 3 PMLA are that there must be a scheduled offence
and that there must be proceeds of crime in relation to the
scheduled offence as defined in clause (u) of sub-section
(1) of Section 3 PMLA.
18. In a given case, if the prosecution for the scheduled
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offence ends in the acquittal of all the accused or discharge
of all the accused or the proceedings of the scheduled
offence are quashed in its entirety, the scheduled offence
will not exist, and therefore, no one can be prosecuted for
the offence punishable under Section 3 PMLA as there will
not be any proceeds of crime. Thus, in such a case, the
accused against whom the complaint under Section 3 PMLA
is filed will benefit from the scheduled offence ending by
acquittal or discharge of all the accused. Similarly, he will
get the benefit of quashing the proceedings of the
scheduled offence. However, an accused in PMLA case who
comes into the picture after the scheduled offence is
committed by assisting in the concealment or use of
proceeds of crime need not be an accused in the scheduled
offence. Such an accused can still be prosecuted under
PMLA so long as the scheduled offence exists. Thus, the
second contention raised by the learned Senior Counsel
appearing for the appellant on the ground that the
appellant was not shown as an accused in the charge-sheets
filed in the scheduled offences deserves to be rejected.
Acquisition of the first and second property
19. The allegation against the appellant in the
complaint is that she purchased the property worth crores,
though she did not have the source of income which would
generate enough money to buy the subject properties. The
allegation against the appellant is that she allowed and
facilitated Accused 1 Madhukar Angur, to conceal the
siphoned/misappropriated amounts by using her bank
account. Another allegation is that she is shown to have
purchased the second property from Accused 1, though she
did not have the resources to pay the consideration. The
allegation is that she allowed Accused 1 to use her bank
accounts to facilitate siphoning the proceeds of the crime.
Another allegation is that both the first and second
properties have been acquired out of the proceeds of crime.
The first property, ex facie, cannot be said to have any
connection with the proceeds of crime as the acts
constituting the scheduled offence took place after its
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acquisition. The case of the appellant is that she possessed
a substantial amount, as can be seen from the declaration
made by her under the Income Declaration Scheme, 2016
in September 2016 and therefore, at the time of the
acquisition of the second property, more than sufficient
money was available with her to acquire the second
property. The issue of whether the appellant used tainted
money to acquire the second property can be decided only
after the evidence is adduced. This is not a case where any
material is placed on record to show that the sale
consideration was paid from a particular bank account of
the appellant. Therefore, it is not possible to record a
finding at this stage that the second property was not
acquired by using the proceeds of crime. We also make it
clear that we have considered the issue only in the context
of the applicability PMLA. We have not dealt with the
issues of valuation and legality of the sale deeds.
”
28. Mr Prashant Mishra, learned Advocate for Respondent No. 1,
was unable to point out any material in the record indicating that the
property at Dhutum Village purchased between 2005 and 2007, had
any remote connection with the alleged proceeds of crime. He was
also unable to point out any material to indicate the involvement of
Applicant in the crime in question.
29. What is declared as an offence is knowingly dealing with the
proceeds of crime, whether by concealment, possession, acquisition,
use or by claiming or projecting the proceeds of crime as untainted
property. The property at Dhutum Village, acquired between 2005
and 2007,
ex facie, cannot be said to have any connection with the
proceeds of crime, as the acts constituting the scheduled offence took
place during the period 2020-2021, i.e. after its acquisition. The
charge-sheet and the material on record do not make out any case for
the offence under Sections 3 and 4 of the PMLA, 2002, against the
Applicant.
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30. Taking cognizance is a judicial act that requires the application
of the mind. The Hon’ble Supreme Court in the case of Sunil Bharti
Mittal v/s. Central Bureau of Investigation
3
, in paragraphs 52 and 53,
has held as follows:
“
52. A wide discretion has been given as to grant or
refusal of process, and it must be judicially exercised. A
person ought not to be dragged into court merely because
a complaint has been filed. If a prima facie case has been
made out, the Magistrate ought to issue process and it
cannot be refused merely because he thinks that it is
unlikely to result in a conviction.
53. However, the words “sufficient ground for
proceeding” appearing in Section 204 are of immense
importance. It is these words which amply suggest that an
opinion is to be formed only after due application of mind
that there is sufficient basis for proceeding against the said
accused and formation of such an opinion is to be stated in
the order itself. The order is liable to be set aside if no
reason is given therein while coming to the conclusion that
there is prima facie case against the accused, though the
order need not contain detailed reasons. A fortiori, the
order would be bad in law if the reason given turns out to
be ex facie incorrect.
”
31.The order dated 16.09.2021 passed by the Designated
Court in PMLA Special Case No. 1089 of 2021 does not indicate
that the Designated Court applied its mind to the material, if
any, available against the Applicant. The said aspect has not
been considered in the order dated 16.09.2021. The test of
“sufficient ground for proceeding” against the Applicant is not
satisfied. No reasons are found in the order dated 16.09.2021 to
conclude that there is
prima facie ground to proceed against the
Applicant. The order dated 16.09.2021 is therefore bad in law
3. (2015)4 Supreme Court Cases 609.
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and liable to be set aside.
32. The ingredients of the offence under Sections 3 and 4 of
the PMLA, 2002, are not established against the Applicant. The
present case squarely falls within the principles for the exercise
of powers under Section 528 of the Bharatiya Nagarik Suraksha
Sanhita, 2023 (Section 482 of Cr.P.C.), to quash the impugned
order dated 16.09.2021 passed by the Designated Court and to
quash the complaint in PMLA Special Case No. 1089 of 2021,
qua the Applicant (Accused No. 11), to prevent abuse of the
process of law.
33. This Criminal Application is therefore allowed in terms of
the prayer clauses (A) and (B). Consequently, the impugned
order dated 16.09.2021, passed by the Designated Court in
PMLA Special Case No. 1089 of 2021 against the Applicant, is
quashed and set aside. The complaint in PMLA Special Case No.
1089 of 2021,
qua the Applicant (Accused No. 11), is quashed.
34. Criminal Application No. 1075 of 2023 is disposed of. In
the facts and circumstances of the present case, there shall be no
order as to costs.
35. In view of Criminal Application No. 1075 of 2023 is
disposed of, nothing would survive in Interim Application No.
575 of 2026, as such stands disposed of.
[ASHWIN D. BHOBE, J.]
Gitalaxmi
GITALAXMI
KRISHNA
KOTAWADEKAR
Digitally signed
by GITALAXMI
KRISHNA
KOTAWADEKAR
Date:
2026.02.23
20:36:50 +0530
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