Discharge Impermissible Where Charge-Sheet Raises Grave Suspicion in PMLA Proceedings: Gujarat High Court

The Gujarat High Court has held that the discharge impermissible where charge-sheet raises grave suspicion in proceedings under Prevention of Money Laundering Act, 2002 (PMLA). The bench of Justice P. M. Raval, while upholding the order of the Special PMLA Court, ruled that no perversity or legal infirmity could be found in the trial court’s refusal to discharge the applicant, observing that the scope of interference in revision against an order on discharge is extremely limited. The case has its genesis in a complaint lodged by the State Bank of India (SBI) before the Central Bureau of Investigation (CBI), alleging a large-scale fraud involving unauthorised discounting of a Letter of Credit (LC) and diversion of funds amounting to ₹8.44 crore. The CBI registered an FIR in January 2010 against senior bank officials and private individuals for offences under Sections 420, 467, 468, 471 and 120B of the IPC, along with offences under the Prevention of Corruption Act, 1988. These offences being “scheduled offences” under the PMLA, the Enforcement Directorate (ED) initiated parallel proceedings for money laundering. Following investigation, the ED filed a complaint alleging that the proceeds of crime generated from the bank fraud were layered and laundered through multiple accounts, including fictitious entities. According to the prosecution, a senior SBI officer misused his official position to discount an LC of over ₹12 crore on the basis of forged shipping and trade documents, even though the branch was not authorised to do so. The investigation revealed that fake and altered bills of lading, invoices, and acceptance letters were used to justify LC discounting. Funds were credited to accounts of a private construction company and subsequently diverted through RTGS transfers, blank cheques, and cash payments. Several fictitious accounts were allegedly opened to siphon off money and clear previous liabilities. The bank ultimately suffered a wrongful loss of ₹8.44 crore, while corresponding gains accrued to the accused. The applicant had sought discharge from the PMLA proceedings, contending that there was no knowledge or mens rea regarding the proceeds of crime. The amounts received were linked to a legitimate land transaction. Statements recorded under Section 50 of the PMLA did not establish “layering”. The trial court failed to provide an opportunity as contemplated under Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). The Special PMLA Court rejected the discharge application in September 2025, holding that the materials on record disclosed strong suspicion of involvement in laundering proceeds of crime. While dismissing the revision application, the High Court made several significant observations at the stage of discharge or framing of charge, the court can only examine materials forming part of the charge-sheet, and defence documents cannot ordinarily be relied upon. The applicant’s explanation regarding receipt and utilisation of funds was not corroborated by statements of other accused, particularly the alleged beneficiary of the land deal. The contention based on Section 223 of BNSS was rejected, as cognizance had been taken in 2015, much before the BNSS came into force in July 2024. Relying on recent Supreme Court judgments, the Court reiterated that an accused need not be named in the scheduled offence to be prosecuted under the PMLA, if their role in handling proceeds of crime is prima facie established. The Court emphasised that “grave suspicion is sufficient to proceed to trial”, and meticulous examination of evidence is impermissible at the discharge stage. Case Details Case Title: Satyanarayan Tarachand Jaju@ Jajoo Versus State Of Gujarat & Anr. Case No.: R/Criminal Revision Application (Against Order Passed By Subordinate Court) No. 2168 Of 2025 Date: 19/01/2026 Counsel For Petitioner: Akash A Singh Counsel For Respondent: Rajesh K Kanani Click Here To Read Order Read More: Filing of Prosecution Complaint Within 60 Days Defeats Default Bail Claim Under PMLA: Karnataka HC

Discharge Impermissible Where Charge-Sheet Raises Grave Suspicion in PMLA Proceedings: Gujarat High Court

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Discharge Impermissible Where Charge-Sheet Raises Grave Suspicion in PMLA Proceedings: Gujarat High Court

Membership Required

Latest articles

Reversal Of CENVAT Credit Along With Interest Amounts To Non-Availment Of Credit: CESTAT

Exemption Interpretation Not Customs Broker’s Responsibility: CESTAT Quashes Licence Revocation

GST General Penalty For Delayed Annual Return Not Sustainable When Late Fee Already Been Paid: Madras HC

CBIC Promotes 9 Officers to Joint Commissioner Grade in IRS

More like this

Reversal Of CENVAT Credit Along With Interest Amounts To Non-Availment Of Credit: CESTAT

Exemption Interpretation Not Customs Broker’s Responsibility: CESTAT Quashes Licence Revocation

GST General Penalty For Delayed Annual Return Not Sustainable When Late Fee Already Been Paid: Madras HC

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