Seller can't be booked under PMLA if buyer's money is tainted: Madras High Court

CHENNAI: The Madras high court has held that a property seller cannot be expected to know the source of money of the buyer and therefore cannot be booked for money laundering under the Prevention of Money Laundering Act (PMLA).

Quashing the cases filed against two persons - a seller of land and a borrower - in a special court for PMLA cases, a division bench comprising justices PN Prakash and G Chandrasekharan said that if the provisions of PMLA are interpreted in such a manner, no one would escape prosecution for unknowingly accepting money gained through illegal means.

The case pertains to money laundering cases registered under PMLA section 3 r/w 4 against AK Sudevan, who owns ten grounds of land at Mudichur, and R Mahesh, manager of a lab attached to a private hospital in Chennai.

Kamalakannan, who was arrested by Central Crime Branch (CCB) of Chennai city police for swindling crores of rupees from the hospital he worked, had given Rs 2 lakh as advance for buying the land from Sudevan, while Mahesh had borrowed Rs 50,000 from Kamalakkannan for his marriage. Both had claimed that they did not know the source of the money and hence should not be prosecuted for money laundering.

The enforcement directorate had booked them under PMLA following the FIR registered by CCB.
The bench said that Sudevan cannot be prosecuted for money laundering as the deal did not go through and he had handed back Rs 1 lakh to the ED when he was booked.

"The question is, how would Sudevan know that Rs 2 lakh that was given by Kamalakannan as advance is tainted money and that he should not sell his property to Kamalakannan. If the provisions of PMLA are so interpreted, no seller of a property, be it moveable or immovable, can be saved from a prosecution under PMLA, if the buyer turns out to be an offender of a scheduled offence," the bench said.

In the case of Mahesh, the court said he cannot be made as a principal offender or an abettor under the PMLA for borrowing money for his marriage and quashed the cases.