Collection of funds for future illegal activity is not money laundering under PMLA: Delhi High Court

Donations collected by the office bearers of Popular Front of India (PFI) cannot be termed as proceeds of crime to invoke the offence of money laundering against them, the Delhi High Court observed on Wednesday [Parvez Ahmed vs Directorate of Enforcement]..Justice Jasmeet Singh explained that the Enforcement Directorate (ED) can invoke Section 3 of the Prevention of Money Laundering Act (PMLA) only in a case with ‘proceeds of crime’, that is money obtained as a result of a criminal activity. In contrast, in the case against PFI leaders, the Court said the allegation was they had collected the money for committing crimes.“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. The offence committed by the collection of funds may be an offence under any law including a scheduled offence but cannot be termed as a proceeds of crime to invoke section 3 of PMLA,” it said..The Bench made these observations while granting bail to three office bearers of the Delhi Unit of PFI - Parvez Ahmed (President), Mohd Ilyas (PFI General Secretary) and Abdul Muqeet (Office Secretary).They were accused of being involved in the anti CAA-NRC protests in 2020 and collection of funds for PFI, which was banned by the Ministry of Home Affairs in 2022..After going through the ED complaint, Justice Singh noted that collection of funds had preceded the Delhi riots of 2020The PMLA states that the proceeds of crime have to be generated as a result of criminal activity, the Court said."The collection of funds in an illegal way to commit a scheduled offence in future is not an offence of money laundering under PMLA. The funds so collected are not proceeds of crime and can be proceeds of crime only when they were generated as a result of scheduled offence. The case set up by the ED is putting the cart before the horse,” it added..The collection of funds in an illegal way to commit a scheduled offence in future is not an offence of money laundering under PMLA.Delhi High Court.However, the Court also said that even if the accused had generated proceeds of crime, they prima facie did not have control over them as the funds were deposited with the PFI.In this backdrop, the Court concluded that the accused have met the twin conditions for bail under Section 45 of the PMLA. .In addition, the Court also noted that the three accused have undergone a substantial period of incarceration of more than two years and the trial was unlikely to be concluded in the near future.In this context, it observed that stringent tests for bail under special enactments do not take away the fundamental rights guaranteed under Article 21.The Court also took note of the fact that there are a total of 185 prosecution witnesses in the case and 456 documents. Besides, digital evidence run into lakhs of pages, the Court observed.Therefore, it granted bail to the three accused..Advocates Adit S Pujari, A Nowfal, Shaurya Mittal and Mantika Vohra represented Parvez Ahmed.Advocates Satyakam, Talha Abdul Rahman, Sudhanshuy Tewari and Arif Hussain represented Abdul Muqeet.Senior Advocate Shadan Farasat with advocates A Nowfal, Harshit Anand, Aman Naqvi and Niharika represented Mohd Ilyas.Special Counsel Zoheb Hossain, Panel Counsel Vivek Gurnani with advocates Kartik Sabhdarwal, Pranjal Tripathi, Kanishk Maurya and Azeeq Mushtaque represented the ED..[Read Judgment]