Knowledge of illicit origin is essential for prosecution under the Prevention of Money Laundering Act; mere possession of proceeds does not suffice.

1. The cognizance in Spl.C.C.No.731/2023 taken by the Principal City Civil and Sessions Judge at Bangalore of the offence under Section 3 r/w Section 70 of the Prevention of Money Laundering Act, 2002 (for short, 'the PMLA') and Section 4 of PMLA, is impugned in this petition by the petitioner-accused No.17.

2. The Jurisdictional Police after conducting investigation submitted a charge sheet before the Trial Court for the offences punishable under Sections 120B, 409, 420, 458 & 471, r/w Section 34, of IPC in Crime No.10/2020 registered by the Commercial Street Police Station, Bengaluru.

3. The case of the prosecution is that, the Deputy General Manager of the Karnataka State Agriculture Marketing Board, Bangalore (for short, 'the KSAMB') and officials of Syndicate Bank, Uttarahalli Branch, misappropriated the funds of the KSAMB by opening bank accounts by forging the documents and thereafter transferring to different NC: 2024:KHC:25046 CRL.P No. 10026 of 2023 accounts in various other banks and finally withdrawing and syphoning of the amounts related to the amounts related to the KSAMB.

4. On reference from the Jurisdictional Police, the Enforcement Directorate conducted the investigation and the said investigation reveals that during the course of investigation, statements of several accused persons were recorded including the petitioner-accused No.17, and in the said statement, petitioner-accused No.17 is stated to have allegedly admitted that the proceeds of the crime in the scheduled offence was received without his knowledge, and after receipt of the amount, one Krishna Kumar-accused No.5 called upon him stating that the said amounts have been credited to him from the source known to him, and on instructions, he withdrew the said amount and handed over to his father Gunashekar, and as per the instruction of Krishna Kumar-accused No5, transferred the amount of Rs.46,62,500/- to various bank accounts belonging to accused No.5, and finally withdrawn the said amount and handed over to the father of accused No.5.

5. After investigation, it was concluded that, petitioner-accused No.17 along with accused No.5 had indirectly indulged, and actually involved in the process or connected with the proceeds of crime including its concealment, possession, acquisition or use of the proceeds of the crime. Thus, committed an offence under Section 3 r/w Section 70 of and Section 4 of PMLA.

6. Learned counsel for the petitioner submits that the investigation conducted by the respondent does not establish that the petitioner NC: 2024:KHC:25046 CRL.P No. 10026 of 2023 knowingly assisted in concealing or utilising the proceeds of the crime by projecting it as untainted money, and in the absence of essential elements to constitute the commission of offence under Section 3 read with Section 70 punishable under Section 4 of the PMLA Act, the prosecution of the petitioner for the aforesaid offences will be an abuse of process of legal process of law.

7. In support, he places reliance on the decision of the Hon'ble Supreme Court in the case of Pavana Dibbur -vs- Directorate of Enforcement, 2023 SCC OnLine SC 1586 , and also decision of this Court in the case of Razorpay Software Private Limited -vs- Union Of India Represented By The Assistant Director Directorate Of Enforcement in WP No. 10329/2023 ; DD. 5.3.2024.

8. Per contra, learned counsel for the respondent would submit that, the material collected during the course of investigation clearly establishes that the petitioner knowingly assisted in concealing the proceeds of the crime in collusion with accused No.5 and whether the petitioner-accused No.17 had the knowledge or not is the matter which can be considered at after full fledged trial.

9. He further argued that the possession of proceeds of crime being key to the offence of money laundering, and the petitioner, who was in possession of proceeds of the crime is required to rebut the presumption under Section 24 of the Act. There is no