Introduction
In the landmark judgment that was delivered on March 17, 2025, the Supreme Court had dismissed the appeal of the former Gujarat IAS officer Pradeep Sharma, refusing to discharge him in a money laundering case under the Prevention of Money Laundering Act (PMLA), 2002. The Court had stated that the money laundering is a continuing offence and not confined to a single occurrence. The bench, that was comprising of Justice Vikram Nath and Justice Prasanna B. Varale, upheld the Enforcement Directorate’s (ED) arguments and also further emphasized that the PMLA applies to activities involving proceeds of crime even if the predicate offence occurred before its enactment.
Background
Pradeep Sharma was accused of generating proceeds of crime during his tenure as Collector by allegedly with malice accepting bribes. He sought discharge on the grounds that the alleged predicate offence bribery had occurred before the enactment of the PMLA in 2002. Sharma argued that no offence of money laundering could be established since the criminal activity leading to the generation of proceeds of crime predated the law that was in force. However, the ED countered this claim, asserting that money laundering is an ongoing offence as long as illicit proceeds are concealed, used, or projected as untainted property. The Supreme Court had placed its reliance on its earlier judgment in the case of Vijay Madanlal Chaudhary vs. The Union of India (2023) . this case was used to clarify that the offence of money laundering continues until the proceeds of crime are exhausted or are being said to be legitimized.
Key Points
The act of money laundering extends beyond the initial generation of proceeds of crime and continues as long as such proceeds are possessed, concealed, used, or projected as being legit. The PMLA was enacted to combat financial crimes involving transactions over time. The activities connected to proceeds of crime after the enactment of PMLA fall within its ambit, even if the predicate offence occurred earlier. The relevant date for prosecution under PMLA is not when the predicate offence occurred but when activities related to proceeds of crime were carried out. The bench observed that Sharma’s alleged misuse of power and involvement in financial transactions linked to proceeds of crime extended well beyond his initial acts of corruption. The Court stated:
“The act of money laundering does not conclude with a single instance but extends so long as illicit gains are possessed, projected as legitimate, or reintroduced into the economy. The material on record indicates and showcases the continued misuse of power by the appellant resulting in repeated financial transactions which are involving proceeds of crime.” The judgment also highlighted that the economic offences like money laundering have cascading effects on public revenue as a whole and legitimate sectors, thereby further necessitating stringent judicial scrutiny.
Recent Developments
The judgment referenced Vijay Madanlal Chaudhary vs. Union of India (2023), which held that money laundering is independent of the predicate offence and continues until illicit proceeds are fully exhausted or legitimized. It clarified that preventive measures under PMLA apply even if predicate offences predate its enactment. The Court emphasized that judicial intervention at preliminary stages in economic offences must be exercised cautiously to prevent procedural exploitation by offenders.
Conclusion
Dismissing Pradeep Sharma’s appeal, the Supreme Court reaffirmed that money laundering is a continuing offence under PMLA. It upheld the ED’s investigation into Sharma’s alleged misuse of power and financial dealings involving proceeds of crime. The judgment reinforces stringent judicial standards for tackling financial crimes and ensures offenders cannot evade accountability through legal technicalities.
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Written by POOJA PARAMESWARAN
