'Money Laundering Is Independent Offence': P&H High Court Rejects Sukhpal Khaira's Plea To Defer PMLA Trial In View Of Stay On NDPS Case

The Punjab and Haryana High Court has dismissed Punjab Congress MLA Sukhpal Singh Khaira's plea seeking to set aside an order of the Special Court refusing to defer trial in a money laundering case registered against him. 

Khaira argued that since the trial in the NDPS case remained stayed in view of State of Punjab's statement before the Supreme Court, continuation of the PMLA trial would be contrary to law.

For context, the Supreme Court had in April 2024 noted the State's submission that it would not proceed with the trial in the NDPS Case. This interim order remains in operation to date. 

Khaira has been booked under in a PMLA case  in connection with a predicate and scheduled offence alleged to have been committed under the Narcotic Drugs and Psychotropic Substances Act, 1985 in 2015.

Justice Tribhuvan Dahiya concluded:

"the offence of money laundering is independent of the scheduled offence; nevertheless, it gets its substratum from the proceeds of crime obtained as a result of commission of a scheduled offence. Therefore, existence of scheduled offence is a sine qua non so far as commission of offence under the PMLA is concerned, though the accused under the PMLA need not necessarily be a person accused of committing the scheduled offence as he can still indulge in a process and activity connected with proceeds of the crime derived from commission of a scheduled offence."

The Court pointed that even if the petitioner is to be acquitted of charges pertaining to the scheduled offences, his prosecution under the PMLA will remain unaffected. It is because the conviction of Gurdev Singh (co-accused) and generation of drug money/proceeds of crime by commission of the scheduled offences by him is not an issue before the trial Court, where proceedings remain stayed.

In this view of the matter, the outcome of trial before the Special Court in PMLA case cannot be said to be connected to trial of the scheduled offences, as the latter will have no bearing on the former, the Court added.

Khaira had approached the High Court challenging the Special Court's order dated February 7, 2025, which dismissed his plea to defer further proceedings on the ground that the trial in the predicate offence, under the NDPS Act, the Arms Act, and the Information Technology Act—stood stayed by an interim order of the Supreme Court.

Background

Khaira was initially summoned as an additional accused under Section 319 Cr.P.C. after the conclusion of trial in the 2015 NDPS case. The Supreme Court, while answering a reference on the scope of Section 319, subsequently set aside his summoning order on February 9, 2023, holding that once a trial court pronounces its order of sentence, it becomes functus officio and cannot summon an accused under Section 319 thereafter.

Meanwhile, the Enforcement Directorate (ED) registered ECIR on January 21, 2021, nearly six years after the registration of the predicate FIR, alleging offences under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA). Khaira was arrested in November 2021 but was later released on bail.

The ED's complaint alleged that co-accused Gurdev Singh was involved in multiple heroin smuggling operations and had received money through Western Union transfers, allegedly in collusion with Sukhpal Singh Khaira. It was further alleged that the petitioner had used proceeds of crime derived from drug trafficking and borne election-related expenses for Khaira.

Senior Counsel Vikram Chaudhri appearing for Khaira, argued that since the proceedings in NDPS case remained stayed, continuation of the PMLA trial would be contrary to law.

Relying upon Vijay Madanlal Choudhary v. Union of India  and M/s Bharti Cement Corporation Pvt. Ltd. v. Directorate of Enforcement (Telangana High Court, 2022), he contended that the outcome of the scheduled offence would have a direct bearing on the money laundering trial. It was, therefore, urged that while the trial may proceed, pronouncement of judgment in the PMLA case should be deferred pending the Supreme Court's decision.

Opposing the plea, Special Counsel for the ED, Zohed Hossain and Senior Panel Counsel Lokesh Narang, argued that the PMLA offence is distinct and independent of the scheduled offence. Referring Pavana Dibbur v. Directorate of Enforcement, he submitted that it is not necessary for an accused under PMLA to be an accused in the predicate offence.

He emphasized that several co-accused in the NDPS case, including Gurdev Singh, already stand convicted, thereby establishing the existence of “proceeds of crime.” Consequently, he argued, the PMLA trial cannot be deferred merely because the petitioner's role in the predicate offence is under challenge before the Supreme Court.

Findings

After examining the rival submissions, the Court noted that the ECIR had been registered on the basis of the 2015 NDPS FIR, in which Gurdev Singh had already been convicted. The petitioner's alleged role was limited to facilitating sale of contraband and receiving drug money from the co-accused.

Relying on Vijay Madanlal Choudhary and Pavana Dibbur, the Court held that while the existence of a scheduled offence is a sine qua non for prosecution under PMLA, the money laundering offence is otherwise independent of the predicate crime.

The Court observed:

“Even if the petitioner were to be acquitted of charges pertaining to the scheduled offence, his prosecution under the PMLA will remain unaffected, as the conviction of co-accused Gurdev Singh and the generation of proceeds of crime are not in dispute.”

The Court further held that since cognizance in the PMLA case had been taken much before the filing of the supplementary chargesheet against the petitioner in the NDPS case, the Special Court rightly declined to defer proceedings.

The Court distinguished the Bharti Cement judgment, noting that in that case the accused was also the principal accused in the scheduled offence—unlike the present case where the petitioner is alleged to have merely used the proceeds of crime generated by another.

Mr. Vikram Chaudhri, Senior Advocate, assisted by Ms. Hargun Sandhu, Advocate, for the petitioner.

Mr. Zoheb Hossain, Special Counsel, assisted by Mr. Lokesh Narang, Senior Panel Counsel, for the respondent.

Title: Sukhpal Khaira v. ED 

Citation: 2025 LiveLaw (PH) 420

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