No coercive action against grandson in money laundering probe linked to deceased grandmother: Karnataka HC to ED

Additional Solicitor General Aravind Kamath argued that proceeds of crime would have to be investigated even if the sole accused has expired. He said, “The money laundering is all about proceeds of crime and it is money generated out of a criminal activity, there is no denial of criminal activity having been committed, the passing away of an accused would not extinguish the crime or the proceeds of crime.”

Justice Nagaprasanna orally observed, “If there is no crime, then how can you proceed to the proceeds of crime?”

Senior Advocate Sandesh J Chouta submitted, “Now we are turning the entire PMLA Act upside down. If the crime itself gets wiped out on the death of grandmother, how can PMLA case continue? In criminal law, as soon as the death of the sole accused takes place, the crime gets wiped out; you are presumed to be innocent. This is fundamental in criminal law.”

Following which, the court said, “This would require an answer.” In its order, it said, “List the matter on March 3; it is an understanding that the matter would be finally heard.”

The court said it would examine the issue of whether money laundering proceedings can continue against relatives of an accused when the case stood abated against the sole accused in the predicate offence.

It was alleged that the grandmother, Sarwan Kumari, had secured monetary compensation to the tune of Rs 16 crore from the Karnataka Industrial Areas Development Board (KIADB) by providing documents that were not genuine.

Six years after Kumari’s death, ED initiated criminal proceedings in 2023 against Gupta and his parents.