Introduction:

The Kerala High Court, in A.K. Samsuddin & Connected Cases (WA No. 2076 of 2016 & Connected Cases, 2025 LiveLaw (Ker) 213), addressed the critical question of whether trials under the Prevention of Money Laundering Act (PMLA) should proceed independently or be kept in abeyance until the conclusion of the trial for the predicate offence. A division bench comprising Justice A. Muhamed Mustaque and Justice P. Krishna Kumar examined the scope of discretion available to trial courts under the Bharatiya Nagarik Suraksha Sanhita (BNSS) and Bharatiya Sakshiya Adhiniyam (BSA), ruling that the trial court has the authority to decide the sequencing of witness examination and whether to delay PMLA trials pending the resolution of predicate offences. The Court acknowledged the risks of delaying PMLA trials, including the potential loss of crucial witnesses for the Enforcement Directorate (ED). However, it also noted that if an accused is ultimately acquitted of the predicate offence, continuing a PMLA trial may prove futile. Consequently, the Court held that trial courts must take a balanced approach, allowing the ED to examine witnesses essential to proving money laundering elements while deferring the examination of other witnesses if deemed necessary. The Court declined to impose a blanket requirement to suspend PMLA trials until the conclusion of predicate offence trials, emphasizing that trial courts must exercise discretion based on the facts of each case. The decision came in response to a constitutional challenge regarding the prosecution of individuals under the PMLA for alleged offences committed before the enactment of the law or its amendment in 2009.

Arguments:

The appellants argued that under the PMLA framework, prosecution for money laundering is contingent upon a prior conviction for the predicate offence. They contended that if the accused is not convicted of the predicate offence, the very basis for the PMLA prosecution collapses. Thus, they sought a judicial directive mandating that all PMLA trials be put on hold until the completion of predicate offence trials. The appellants also raised concerns about procedural fairness, asserting that proceeding with PMLA trials while the predicate offence trial is ongoing could lead to inconsistent findings and prejudice the accused. They further argued that prosecuting individuals under PMLA for acts committed before its enactment, or before the 2009 amendment that expanded the schedule of predicate offences, violates constitutional protections against retrospective penal laws. The appellants maintained that criminal liability cannot be imposed for acts that were not offences at the time they were committed.

Conversely, the Enforcement Directorate (ED) countered that PMLA trials and predicate offence trials should run concurrently to prevent undue delays in prosecuting financial crimes. The ED contended that money laundering is an independent offence and does not require a prior conviction for the predicate offence. While the underlying offence generates illicit funds, the act of laundering those funds constitutes a separate criminal act. The ED emphasized that if PMLA trials are indefinitely deferred, key witnesses and evidence may be lost, undermining effective enforcement. The agency also pointed out that courts retain the discretion to withhold final judgments in PMLA cases until a verdict is rendered in the predicate offence trial, ensuring that no accused is unfairly convicted of money laundering in cases where the predicate offence is ultimately not proven. The ED dismissed concerns about retrospective application of the PMLA, arguing that once an offence is included in the PMLA schedule, all acts of laundering proceeds derived from that offence, even if committed earlier, fall within its ambit.

Judgement:

The Kerala High Court, in its judgment, meticulously analyzed the provisions of the BNSS and BSA to determine whether trial courts have the discretion to regulate the summoning and examination of witnesses. The Court highlighted Section 253 of the BNSS, which grants trial courts discretion in issuing process for compelling the attendance of witnesses. The phrase “may … issue any process for compelling the attendance of any witness” was interpreted as conferring broad discretion on trial courts to determine which witnesses should be summoned and in what order. Further, the Court examined Section 254 of the BNSS, which mandates that courts take all evidence produced by the prosecution on the designated date. However, it clarified that if a court decides not to summon certain witnesses at a particular stage under Section 253, it is not obliged to examine them on the fixed date for prosecution evidence. This interpretation reinforced the principle that trial courts can exercise flexibility in structuring the trial process. Additionally, the Court referred to Section 140 of the BSA, which similarly vests trial courts with discretion over the order in which witnesses are produced and examined.

Applying these principles to PMLA trials, the Court reasoned that trial courts must adopt a case-specific approach in determining whether to proceed with PMLA trials or defer them until the resolution of predicate offence trials. The Court underscored that while delaying PMLA proceedings could compromise the ED’s ability to prove money laundering, rushing the trial before the predicate offence is decided could lead to an eventual collapse of the case if the accused is acquitted in the predicate offence trial. Striking a balance, the Court ruled that trial courts may permit the ED to examine witnesses essential to establishing key elements of money laundering—such as the use of proceeds of crime or their projection as untainted—while deferring the examination of other witnesses until the predicate offence trial concludes. However, if a trial court finds that proceeding with only a partial set of witnesses would unfairly prejudice either side, it should allow the trial to proceed in full but postpone pronouncing the final judgment until the predicate offence trial concludes.

On the question of retrospective application of the PMLA, the Court held that while penal statutes generally do not have retrospective effect, money laundering is a continuing offence. Thus, once an offence is included in the PMLA schedule, laundering proceeds derived from that offence, even before its inclusion, can be prosecuted under the PMLA. The Court noted that the ED had relied on sufficient material to initiate proceedings under the PMLA in the present case, making it inappropriate to quash the proceedings at this stage. The bench observed that the ED had not yet filed a final report in some cases due to the Court’s interim directions and clarified that parties retain the right to challenge the proceedings if they believe that the material evidence does not substantiate the alleged offences.

Ultimately, the Kerala High Court dismissed the appeals, affirming that trial courts must exercise their discretion in a manner that ensures both procedural fairness and effective enforcement of anti-money laundering laws. The ruling establishes a precedent for managing simultaneous trials in PMLA and predicate offence cases, reinforcing the judiciary’s role in balancing due process with the imperatives of financial crime prosecution.