PMLA proceedings require an operative scheduled offence and proceeds of crime; ECIR action cannot continue when predicate cases are quashed or stayed.

Proceedings under the Prevention of Money-laundering Act depend on an operative scheduled offence and the existence of criminal activity and proceeds of crime as jurisdictional facts. Where one predicate offence had been quashed and the remaining connected cases were stayed, the Court held that continuation of ECIR-based action and summons lacked the necessary jurisdictional foundation for the time being. It further stated that no money-laundering proceeding can survive against a person where the underlying criminal case has been quashed. Relief was granted and further action was restrained until the connected criminal proceedings attained finality.

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Issues: (i) Whether the Enforcement Directorate could continue proceedings under the Prevention of Money-laundering Act, 2002 when one connected scheduled offence had been quashed and the remaining connected criminal cases were stayed. (ii) Whether the existence of a scheduled offence, criminal activity, and proceeds of crime constituted jurisdictional facts necessary to sustain the impugned summons and ECIR-based proceedings.

Issue (i): Whether the Enforcement Directorate could continue proceedings under the Prevention of Money-laundering Act, 2002 when one connected scheduled offence had been quashed and the remaining connected criminal cases were stayed.

Analysis: The proceedings under the money-laundering law were founded on the three criminal cases that formed the predicate offences. One of those cases had already been quashed, and the remaining two were under orders of stay. The Court treated the scheduled offence as the foundational basis for action under the money-laundering law and held that, during the subsistence of the stay orders, the respondent could not proceed further on the same foundation. The Court also held that where the underlying criminal case itself has been quashed, no offence of money-laundering can survive against the person concerned.

Conclusion: The impugned proceedings could not be continued and the petitioners were entitled to relief.

Issue (ii): Whether the existence of a scheduled offence, criminal activity, and proceeds of crime constituted jurisdictional facts necessary to sustain the impugned summons and ECIR-based proceedings.

Analysis: The Court applied the principle that jurisdiction depends on the existence of jurisdictional facts. It held that a predicate or scheduled offence, criminal activity, and proceeds of crime are necessary to trigger proceedings under the Prevention of Money-laundering Act, 2002. In the absence of an operative scheduled offence, and where the connected proceedings were either quashed or stayed, the jurisdictional foundation for proceeding on the ECIR and issuing summons was held to be lacking for the time being. The Court therefore refrained from permitting further action until the connected proceedings attained finality.

Conclusion: The jurisdictional basis for the impugned summons and continuation of the PMLA proceedings was not available at that stage.

Final Conclusion: The writ petitions were allowed and the respondent was restrained from proceeding further under the impugned ECIR until the connected criminal proceedings reached finality.

Ratio Decidendi: Proceedings under the Prevention of Money-laundering Act, 2002 depend on an operative scheduled offence and the existence of proceeds of crime, and they cannot be pursued when the predicate offence is quashed or remains under subsisting stay.

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