The Delhi High Court ruled that donations by Popular Front of India (PFI) officials cannot be deemed “proceeds of crime” under the Prevention of Money Laundering Act (PMLA). The court emphasized funds must directly result from a criminal act to qualify as money laundering, underscoring safeguards for constitutional rights in legal proceedings. Bail was granted.
New Delhi: The Delhi High Court ruled that donations collected by Popular Front of India (PFI) office bearers cannot be classified as “proceeds of crime” under the Prevention of Money Laundering Act (PMLA). Justice Jasmeet Singh emphasized that the Enforcement Directorate (ED) can invoke Section 3 of PMLA only when the money in question is directly generated from a criminal activity.
The case involved three PFI office bearers: Parvez Ahmed (President), Mohd Ilyas (General Secretary), and Abdul Muqeet (Office Secretary) of the Delhi unit. They were accused of using collected funds for illegal activities, including organizing anti-CAA-NRC protests in 2020. However, the court highlighted a key distinction in the application of the PMLA.
“The case set up by the ED that the funds which the petitioners were generating were used for committing a scheduled offence, hence proceeds of crime, is not the scheme of PMLA,”
Justice Singh observed.
The judge clarified that while the collection of funds for committing crimes may be an offence under other laws, it does not constitute money laundering under PMLA unless the funds are directly generated through a scheduled offence.
“The collection of funds in an illegal way to commit a scheduled offence in the future is not an offence of money laundering under PMLA. The case set up by the ED is putting the cart before the horse,”
the Court noted.
The Court granted bail to the three accused, considering several factors:
- Substantial Period of Incarceration: The accused had already spent more than two years in custody.
- Prolonged Trial Timeline: With 185 prosecution witnesses, 456 documents, and voluminous digital evidence, the trial is unlikely to conclude soon.
- Article 21 Considerations: Justice Singh underscored that stringent bail conditions under special enactments like PMLA must not infringe on the fundamental rights guaranteed under Article 21 of the Constitution.
The defense team argued that the funds were collected for organizational purposes and were not proceeds of crime. Advocates Adit S. Pujari, A Nowfal, Shaurya Mittal, and Mantika Vohra represented Parvez Ahmed. Advocates Satyakam, Talha Abdul Rahman, and others represented Abdul Muqeet, while Senior Advocate Shadan Farasat and his team defended Mohd Ilyas.
The ED, represented by Special Counsel Zoheb Hossain and Panel Counsel Vivek Gurnani, argued that the funds were used to facilitate crimes, making them proceeds of crime under PMLA.
This judgment draws a clear line in the interpretation of PMLA. The Court stated that:
- Proceeds of crime must result directly from a scheduled offence.
- The intent to commit future crimes using collected funds does not qualify as money laundering under PMLA.
By granting bail, the Delhi High Court reaffirmed that procedural safeguards and constitutional rights cannot be sidelined, even in cases involving special enactments like PMLA. The ruling is a significant legal precedent clarifying the scope of money laundering laws in India.
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