Framing Charge under Sections 3/4 PMLA: Why Role Attribution Must Be Transaction-Specific

PMLA • Section 3 • Section 4 • Special Court • Framing of Charge

A PMLA charge should not stop at saying that a “group”, “company”, “promoter family” or “associated entities” laundered money. The charge-stage record should permit an accused-specific answer to five questions: which proceeds of crime, which transaction, which date, which Section 3 process or activity, and what did this particular accused do?

Research and professional guidance by

Legally researched and updated: 16 August 2026

Direct Answer: What Must Be Transaction-Specific Before a PMLA Charge Is Framed?

A PMLA Special Court does not decide final guilt at framing of charge. It nevertheless has to examine whether the legally permissible prosecution record provides sufficient ground for presuming that the particular accused committed the alleged offence.

For a Section 3 offence punishable under Section 4, a disciplined charge analysis should identify:

1. the alleged proceeds of crime;
2. the exact property, amount, account or asset;
3. the date or relevant period;
4. the transaction or dealing relied upon;
5. the particular accused;
6. the Section 3 process or activity attributed to that accused;
7. the form of participation—attempt, knowing assistance, knowing participation or actual involvement;
8. the document, statement, banking material or digital evidence supporting the allegation.

This can be reduced to one formula:

DATE
+
PROPERTY
+
ACCOUNT
+
TRANSACTION
+
ACCUSED
+
SECTION 3 ACTIVITY
+
SUPPORTING MATERIAL
=
ACCUSED-SPECIFIC
CHARGE THEORY

First Legal Correction: Section 3 Creates the Offence; Section 4 Prescribes the Punishment

The commonly used expression “charge under Sections 3 and 4 PMLA” should be understood accurately.

Section 3 defines the offence of money-laundering.

Section 4 provides the punishment for committing that offence.

Accordingly, the legally precise description is ordinarily:

Offence under Section 3 punishable under Section 4 of the Prevention of Money-Laundering Act, 2002.

Section 4 presently provides rigorous imprisonment for not less than three years and up to seven years, together with fine; the maximum can extend to ten years where the proceeds relate to specified offences in paragraph 2 of Part A of the Schedule.

The Supreme Court's “Three Ps”: Person, Process and Product

One of the clearest ways to analyse a PMLA charge comes from the Supreme Court's discussion of Section 3 in Y. Balaji v. Karthik Desari.

Section 3 can be examined through three elements:

1. PERSON

• directly or indirectly attempts to indulge;
• knowingly assists;
• knowingly is a party;
• is actually involved.

2. PROCESS OR ACTIVITY

• concealment;
• possession;
• acquisition;
• use;
• projecting as untainted;
• claiming as untainted.

3. PRODUCT

The property representing or constituting the alleged proceeds of crime.

This gives a highly practical charge formula:

WHO?
        ↓
DID WHAT?
        ↓
WITH WHICH PoC?

Why “The Group Laundered the Money” Is Not the End of the Charge Inquiry

A prosecution complaint may legitimately narrate a collective commercial structure.

It may refer to:

• a corporate group;
• promoters;
• subsidiaries;
• sister concerns;
• common shareholders;
• common directors;
• multiple bank accounts;
• related parties.

But criminal charge is ultimately accused-specific.

Therefore the Court should move from:

“THE GROUP DID X”

to:

ACCUSED A
→
WHAT TRANSACTION?

ACCUSED B
→
WHAT TRANSACTION?

ACCUSED C
→
WHAT TRANSACTION?

ACCUSED D
→
WHAT TRANSACTION?

The Five-Coordinate Transaction Test

Every major alleged laundering event should be reducible to five factual coordinates:

1. Date
2. Asset / amount
3. Account / property
4. Transaction
5. Accused

If one cannot identify these coordinates from the complaint and relied material, the allegation may be too collective or abstract for meaningful accused-specific analysis.

Build a Transaction ID for Every Alleged Laundering Event

Field	Example
Transaction ID	T-04
Date	12.06.2024
Amount	₹75,00,000
Source account	Company X
Destination	Company Y
Alleged PoC	₹75 lakh or identified portion
Accused	Accused No. 6
Alleged activity	Use / knowing assistance
Authority	Payment instruction / mandate?
Supporting material	Email / bank record / statement?

The same exercise should be repeated for every transaction materially relied upon against the accused.

Before Attribution: What Property Is Actually Proceeds of Crime?

Role attribution cannot logically be done in the abstract.

First identify the alleged product:

SCHEDULED CRIMINAL ACTIVITY
        ↓
PROPERTY DERIVED
OR OBTAINED
        ↓
PROCEEDS OF CRIME
        ↓
TRANSACTION
        ↓
SECTION 3 ACTIVITY

A bank transfer may be real.

But if the prosecution has not sufficiently connected the transferred property with alleged proceeds of crime, the mere movement of money does not answer the Section 3 question.

Not Every Property Associated with a Scheduled Offence Is Automatically PoC

The distinction matters at charge because otherwise ordinary assets and ordinary commercial transactions can become incorporated into the laundering theory merely by proximity.

The prosecution theory should explain how the property was derived or obtained directly or indirectly as a result of the relevant criminal activity.

Therefore:

PROPERTY ASSOCIATED
WITH THE ACCUSED
≠
AUTOMATIC PoC

PROPERTY USED
IN A BUSINESS
≠
AUTOMATIC PoC

LARGE BANK CREDIT
≠
AUTOMATIC PoC

Test Concealment Separately

If ED alleges concealment, ask:

• what property was concealed?
• what was its alleged criminal source?
• when did concealment occur?
• what concealment act is attributed to this accused?
• was ownership hidden?
• was a nominee used?
• was the location concealed?
• was a transaction description fabricated?

A person does not become responsible for concealment merely because he or she happens to be a director in an entity through which the alleged property passed.

Test Possession Separately: Who Had Dominion and Control?

Possession requires careful factual treatment.

For bank accounts and financial assets, ask:

• who was the account holder?
• who was the authorised signatory?
• who could initiate payment?
• who possessed credentials or tokens?
• who gave instructions?
• who exercised actual dominion or control?

A company's account cannot automatically be treated as being personally possessed by every director, shareholder, accountant or employee connected with the company.

Test Acquisition Separately

Where acquisition is alleged:

• what property was acquired?
• on what date?
• in whose name?
• who paid the consideration?
• which source account was used?
• who approved the purchase?
• who became legal or beneficial owner?

The central question is not merely whether property was acquired somewhere within the group.

It is:

What acquisition is attributed to this accused?

Test “Use” Separately

Use can be factually different from possession or acquisition.

A transaction matrix should identify:

• the PoC allegedly used;
• the purpose for which it was used;
• who authorised that use;
• who received the benefit;
• what documentary material records the decision.

Do not silently convert:

money moved through a company

into:

every officer of the company used the money.

Test Projecting as Untainted Separately

Where projection is specifically alleged, identify the representation.

For example:

• loan shown as genuine?
• sale consideration?
• share capital?
• consultancy income?
• business revenue?
• property purchase from allegedly lawful source?

Then ask:

• who prepared the representation?
• who signed it?
• who authorised it?
• who knew the alleged true source?
• what material connects the accused personally?

Test Claiming as Untainted Separately

Claiming can involve an assertion that property is lawfully held or lawfully sourced.

Identify:

• the exact claim;
• the person who made it;
• the document or statement containing it;
• the proceeding in which it was made;
• the property to which it relates.

Do not attribute another person's representation to an accused merely because both belong to the same family or corporate group.

The Six-Process Charge Matrix

Section 3 Process	Transaction-Specific Question
Concealment	What did this accused conceal and how?
Possession	What PoC was under this accused's dominion/control?
Acquisition	What did this accused acquire and when?
Use	What PoC did this accused use and for what purpose?
Projecting	What untainted representation did this accused make or assist?
Claiming	What lawful-source/ownership claim is personally attributable?

Do Not Require Projection in Every Case

An important defence error is to treat “projecting as untainted” as a mandatory additional element in every prosecution.

The current Section 3 Explanation recognises one or more of the six processes or activities.

Therefore the stronger charge-stage argument is not:

“ED has not proved projection, therefore no Section 3 offence can ever exist.”

It is:

“Identify the particular Section 3 process ED actually alleges against this accused and show the material supporting it.”

Knowing Assistance Must Be Connected to a Particular Transaction or Process

Where ED alleges that an accused “knowingly assisted”, identify:

• the person assisted;
• the transaction assisted;
• the PoC involved;
• the assistance actually provided;
• what material supports knowledge.

A useful matrix is:

ACCUSED
        ↓
WHAT ASSISTANCE?
        ↓
TO WHOM?
        ↓
IN WHICH TRANSACTION?
        ↓
INVOLVING WHICH PoC?
        ↓
WHAT SHOWS KNOWLEDGE?

Directorship Does Not Automatically Answer Knowledge

A director may have:

• formal statutory status;
• limited operational responsibility;
• no banking authority;
• no participation in the relevant transaction;
• no access to the relevant financial records.

Another director may have:

• payment authority;
• transaction approval;
• communications with counterparties;
• beneficial control;
• direct economic benefit.

A transaction-specific charge analysis should not flatten those materially different positions into one collective allegation.

Common Shareholding ≠ Automatic Transaction Control

Common shareholding may be relevant background evidence.

But the charge analysis should separately examine:

• voting control;
• board control;
• bank mandate;
• transaction approval;
• beneficial ownership;
• actual communication;
• flow of economic benefit.

Shareholding and transaction control are not automatically identical concepts.

Parent, Subsidiary and Sister Concern: Follow the Legal Entity and the Transaction

Suppose:

PARENT CO.
      ↓
SUBSIDIARY A
      ↓
SISTER CONCERN B
      ↓
VENDOR C

The corporate relationship may explain why ED investigates the chain.

But for criminal attribution ask:

• which entity held the PoC?
• which entity transferred it?
• who authorised the transfer?
• which accused controlled the relevant entity?
• what Section 3 activity arose at that stage?

Section 70: Do Not Confuse Company Liability with Direct Section 3 Liability

Where the alleged offence involves a company, Section 70 may become important.

The prosecution may seek to rely upon:

• the person's responsibility for conduct of company business;
• consent;
• connivance;
• attributable neglect.

The defence should therefore create two separate columns:

Direct Section 3 Case	Section 70 Case
What laundering process did the accused personally undertake?	Was the person in charge/responsible for company business?
What PoC?	Relevant period?
What transaction?	Consent/connivance/neglect alleged?
What knowledge/participation?	What documents support statutory corporate responsibility?

Authorised Signatory ≠ Author of Every Transaction

A person may be authorised to sign:

• cheques;
• bank forms;
• statutory returns;
• contracts;
• accounting documents.

The charge analysis should identify:

• what was signed;
• when;
• under whose instruction;
• whether the accused knew the source and purpose;
• whether the signature actually caused the impugned transaction.

Accounting Entry ≠ Automatic Knowing Assistance

For an accountant, finance employee or auditor, distinguish:

• mechanical recording;
• professional advice;
• transaction approval;
• fabrication;
• knowledge of falsity;
• concealment instructions.

The prosecution may ultimately prove culpable participation.

But the charge should rest upon the factual material attributed to that person rather than the mere existence of an accounting designation.

The Bank-Account-Control Matrix

Control Question	Material
Account holder	Bank KYC
Authorised signatory	Mandate
Maker	Net-banking audit trail
Checker	Approval record
Beneficial controller	Communication / corporate record
Transaction instruction	Email / message / bank document
Economic beneficiary	Subsequent fund/property trail

This analysis becomes particularly important where the prosecution alleges possession, use or knowing assistance.

The Manish Sisodia Lesson: Specific Involvement in the Particular Transfer Matters

In the Supreme Court's 2023 PMLA analysis concerning Manish Sisodia, the Court examined an alleged transfer of ₹45 crore and observed a prima facie lack of clarity because a specific allegation concerning his direct or indirect involvement in that transfer was missing.

That does not create a universal rule that every transaction requires the same type of evidence.

It does demonstrate the importance of asking:

What exactly connects this accused with this alleged transfer?

Section 50 Statements: Attribute the Statement to the Transaction

A prosecution complaint may rely on dozens of Section 50 statements.

For each accused and transaction identify:

Issue	Question
Speaker	Who gave the statement?
Transaction	Which specific transaction is discussed?
Knowledge	Personal knowledge or information from another?
Accused	What act is attributed to the accused?
Corroboration	Bank/document/digital support?

A general statement that “the group was controlled by A's family” is analytically different from a statement that “A instructed payment T-07 on 12 June from Account X to Account Y.”

Digital Evidence Must Also Be Transaction-Mapped

Where the prosecution relies upon WhatsApp, email, spreadsheets, Tally, ERP or device extraction, map each digital item to:

• date;
• sender;
• recipient;
• account/device;
• transaction;
• PoC;
• accused;
• Section 3 activity.

A large digital extraction can create volume without necessarily creating accused-specific attribution.

“Name in Spreadsheet” Is Not the End of the Inquiry

Ask:

• who created the spreadsheet?
• when?
• what does the column mean?
• does the name refer to this accused?
• does a corresponding bank transaction exist?
• does the accused have control over that transaction?
• is there corroboration?

At framing charge, the Court cannot conduct a complete forensic trial, but obvious attribution gaps in the prosecution's own record remain relevant to whether a real factual foundation exists.

Separate the Fund-Flow Chart from the Accused-Role Chart

ED may prepare a fund-flow chart:

ACCOUNT A
↓
ACCOUNT B
↓
ACCOUNT C
↓
PROPERTY D

The defence should prepare a separate role chart:

ACCOUNT A
CONTROLLED BY?
____________

TRANSFER A→B
AUTHORISED BY?
____________

ACCOUNT B
CONTROLLED BY?
____________

TRANSFER B→C
AUTHORISED BY?
____________

PROPERTY D
ACQUIRED BY?
____________

The two charts answer different questions.

“Layering” Must Be Broken into Actual Transactions

The word layering can describe a multi-stage financial theory.

At charge, break it into:

T-01
A → B

T-02
B → C

T-03
C → D

T-04
D → PROPERTY

For every transaction identify:

• date;
• amount;
• account;
• controller;
• purpose;
• accused;
• Section 3 process.

One Tainted Transaction Does Not Automatically Attribute Every Other Transaction to Every Accused

A commercial relationship may contain dozens or hundreds of transactions.

If the prosecution identifies one allegedly tainted transaction, the charge-stage analysis should still determine which further transactions are relied upon and why.

This becomes especially important where:

• parties had genuine pre-existing business;
• lawful and disputed payments are mixed;
• multiple group entities transact routinely;
• different directors control different periods;
• different officers perform different functions.

Chronology: Was the Accused Even in the Relevant Position on the Transaction Date?

Prepare:

Date	Event
01.01.2024	A resigns as director
10.03.2024	Alleged PoC generated
15.03.2024	Company receives funds
20.03.2024	Alleged layering transfer

If the prosecution's own corporate records establish the timeline, a collective description such as “the directors caused the transfer” may require accused-specific scrutiny.

PoC Must Exist Before a Person Can Deal with That Property as PoC

The Supreme Court has explained that the relevant money-laundering process can occur only after the property has been derived or obtained from the criminal activity.

Therefore compare:

DATE PoC GENERATED

VERSUS

DATE ACCUSED
ALLEGEDLY CONCEALED /
POSSESSED /
ACQUIRED /
USED /
PROJECTED /
CLAIMED IT.

A chronology that reverses that sequence requires careful examination of the prosecution's actual theory.

Group-Company Status Is Evidence of Relationship—not Automatic Evidence of Criminal Role

The following may establish corporate relationship:

• common address;
• common promoter;
• common shareholder;
• common director;
• inter-company loan;
• common auditor;
• shared employees.

But Section 3 asks a further question:

How was this person involved in a process or activity connected with the particular proceeds of crime?

Use the Prosecution's Own Record to Individualise the Accused

At charge, one of the strongest methods is:

ED SAYS:

A CONTROLLED
COMPANY X.

ED'S OWN BANK RECORD:

ONLY B OPERATED
THE ACCOUNT.

ED SAYS:

A AUTHORISED
TRANSFER T-06.

ED'S OWN EMAIL:

INSTRUCTION CAME
FROM C.

ED SAYS:

ALL DIRECTORS
KNEW THE SOURCE.

ED'S OWN SECTION 50 MATERIAL:

ROLES WERE DIFFERENT.

This is different from asking the Court to conduct a complete defence trial.

Sarla Gupta: Know What Record the Court Can Ordinarily Use at Charge

In a PMLA prosecution, the discharge/charge exercise should ordinarily be structured around:

• the prosecution complaint;
• documents produced with it;
• supplementary complaint(s);
• documents produced therewith.

The accused also has rights concerning identification/listing of un-relied material as recognised by the Supreme Court.

But:

ACCESS TO
UN-RELIED MATERIAL

≠

AUTOMATIC RIGHT
TO CONVERT ALL OF IT
INTO CHARGE-STAGE
DEFENCE EVIDENCE

Favourable Material Already Inside ED's Record Is Different

Suppose ED itself files:

• the bank mandate;
• the complete Section 50 statement;
• the company master data;
• the email chain;
• the transaction ledger.

If those documents contain material qualifying the prosecution allegation, the Court is still examining the prosecution record.

The charge opposition should therefore identify:

WHAT ED'S OWN DOCUMENT ACTUALLY SAYS.

The Charge Stage Is Not a Trial—but It Is Not a Collective Presumption Exercise

At framing charge:

The prosecution does not need to establish guilt beyond reasonable doubt.

The defence cannot ordinarily demand a complete evaluation of every competing version.

But the Court should still identify whether the material creates grave or strong suspicion concerning the offence against the particular accused.

The central distinction is:

STRONG CASE AGAINST
THE TRANSACTION

DOES NOT AUTOMATICALLY EQUAL

STRONG CASE AGAINST
EVERY PERSON CONNECTED
WITH THE TRANSACTION.

AAA v. Linda Sema: Why Accused-by-Accused Evaluation Matters

The Supreme Court's July 2026 decision in AAA v. Linda Sema, though not a PMLA case, is useful for the general framing-charge methodology.

The Court applied the grave-suspicion standard and differentiated between individual respondents according to the material relating to each.

That approach is especially relevant where a PMLA complaint contains:

• 15 accused;
• 10 companies;
• hundreds of transactions;
• common directors;
• different operational roles.

The Accused-by-Accused Charge Sheet

Issue	Accused A	Accused B	Accused C
Relevant PoC	?	?	?
Transaction	?	?	?
Account	?	?	?
Section 3 activity	?	?	?
Authority/control	?	?	?
Knowledge	?	?	?
Key RUD	?	?	?
Section 70 basis	?	?	?

A 200-Page Complaint May Still Contain Only Two Paragraphs against One Accused

The charge analysis should not be influenced merely by the total page count.

Ask:

• how many paragraphs concern this accused?
• how many transactions?
• how many relied documents?
• what is the individual allegation?
• does the conclusion simply incorporate allegations against others?

Evidence volume and accused-specific evidentiary strength are not necessarily the same thing.

Draft Charge-Opposition Ground: Collective Group Allegation

“The prosecution complaint repeatedly attributes the alleged laundering process to the ‘group’, ‘promoters’ and ‘associated entities’ collectively. However, insofar as the applicant is concerned, the complaint does not identify the particular transaction, property, account or process/activity under Section 3 personally attributable to him/her, nor does the material produced with the complaint disclose the accused-specific factual bridge by which the collective group narrative is converted into an individual criminal allegation.”

Draft Ground: No Transaction-Specific Section 3 Attribution

“The complaint identifies a sequence of transfers between Companies X, Y and Z, but does not identify which transfer the applicant authorised, controlled, received, concealed, possessed, acquired or used, or in respect of which transaction the applicant allegedly projected or claimed proceeds of crime as untainted. The allegation therefore remains entity-level rather than accused-and-transaction-specific.”

Draft Ground: Directorship Used as Substitute for Evidence

“The applicant's designation as a director is relied upon as the principal basis for attribution. The prosecution material does not identify any payment instruction, bank mandate, board decision, digital communication, beneficial receipt or other transaction-specific material showing the applicant's direct or indirect involvement in the particular Section 3 process alleged.”

Draft Ground: Knowing Assistance Has No Identified Knowledge Material

“To the extent the prosecution relies upon the statutory expression ‘knowingly assists’, the complaint identifies neither the particular assistance allegedly rendered by the applicant nor the material capable of supporting an inference that the applicant knew the relevant property represented proceeds of crime. Mere employment, association or designation does not itself identify the factual basis of the pleaded knowledge.”

Draft Ground: Possession without Dominion or Control

“The prosecution characterises the applicant as being in possession of the alleged proceeds of crime because the funds were held in an account of the concerned company. The documents produced with the complaint must therefore be examined to identify whether the applicant had actual or constructive dominion and control over that account/property at the relevant time rather than treating corporate association as personal possession.”

Draft Ground: Fund-Flow Chart Does Not Establish the Last Arrow

“The fund-flow chart may prima facie depict movement from Account A to Account B and thereafter to Account C. The material, however, does not identify the applicant as the maker, approver, controller, beneficiary or knowing participant in the impugned transfer. The financial trail and the accused-specific criminal attribution are analytically distinct.”

The Complete Framing-Charge Checklist

□ SECTION 3 OFFENCE IDENTIFIED?

□ SECTION 4 PUNISHMENT CORRECTLY REFERRED?

□ SCHEDULED CRIMINAL ACTIVITY?

□ SPECIFIC PoC?

□ PoC AMOUNT?

□ PoC PROPERTY?

□ DATE PoC GENERATED?

□ TRANSACTION ID?

□ SOURCE ACCOUNT?

□ DESTINATION ACCOUNT?

□ TRANSACTION DATE?

□ COUNTERPARTY?

□ THIS ACCUSED?

□ DIRECT OR INDIRECT ATTEMPT?

□ KNOWING ASSISTANCE?

□ KNOWING PARTY?

□ ACTUAL INVOLVEMENT?

□ CONCEALMENT?

□ POSSESSION?

□ ACQUISITION?

□ USE?

□ PROJECTING?

□ CLAIMING?

□ ACCOUNT CONTROL?

□ DOMINION?

□ PAYMENT AUTHORITY?

□ BANK MANDATE?

□ BOARD AUTHORITY?

□ EMAIL?

□ WHATSAPP?

□ SECTION 50 STATEMENT?

□ DIGITAL RECORD?

□ BENEFICIAL RECEIPT?

□ ECONOMIC BENEFIT?

□ KNOWLEDGE MATERIAL?

□ GROUP STATUS ONLY?

□ COMMON DIRECTORSHIP ONLY?

□ SHAREHOLDING ONLY?

□ FAMILY RELATIONSHIP ONLY?

□ EMPLOYMENT ONLY?

□ SIGNATURE ONLY?

□ SECTION 70 RELIED UPON?

□ IN CHARGE / RESPONSIBLE?

□ CONSENT?

□ CONNIVANCE?

□ NEGLECT?

□ TRANSACTION CHRONOLOGY?

□ ACCUSED'S TENURE ON TRANSACTION DATE?

□ PROSECUTION RECORD CONTRADICTION?

□ SUPPLEMENTARY COMPLAINT CHECKED?

□ GRAVE / STRONG SUSPICION AGAINST THIS ACCUSED?

Related Delhi legal guides

PMLA proceedings in Delhi · Enforcement Directorate matters · Rouse Avenue PMLA Special Court

Official starting points

Prevention of Money-laundering Act, 2002 — India Code · Directorate of Enforcement — official website

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