Money laundering prosecution depends on the scheduled offence, and the High Court quashed the sequencing order.

Money laundering under the Prevention of Money Laundering Act was treated as dependent on the existence of proceeds of crime arising from a scheduled offence, rather than as a wholly independent prosecution. Applying Vijay Madanlal Choudhary, the Telangana HC noted that proceedings under the Act may be procedurally separate, but the scheduled offence remains decisive for the sustainability of the laundering case. Section 44 was understood to require the same Special Court to deal with both matters to avoid conflicting verdicts, without converting them into a joint trial. The earlier view that the laundering case could proceed ahead of the predicate offence was held no longer good law, and the order directing such sequencing was quashed.

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Issues: Whether the offence under the Prevention of Money Laundering Act, 2002 can be treated as wholly independent so as to proceed ahead of the scheduled offence, and whether the order directing the money-laundering case to precede the predicate-offence trial was legally sustainable.

Analysis: Section 3 of the Prevention of Money Laundering Act, 2002 was examined in the context of the definition of "proceeds of crime" in Section 2(1)(u). The Court applied the principle that the offence of money laundering is dependent upon the existence of proceeds of crime arising from criminal activity relating to a scheduled offence. The decision of the Supreme Court in Vijay Madanlal Choudhary was treated as binding and was understood to mean that, while proceedings under the Act may be independent in procedure, the existence and outcome of the scheduled offence have a decisive bearing on the sustainability of a money-laundering prosecution. Section 44 was read as requiring the same Special Court to deal with both matters so as to avoid conflicting verdicts, while not converting the two trials into a joint trial. The earlier view that the money-laundering case could proceed as a standalone prosecution ahead of the scheduled offence was held to be no longer good law in light of the Supreme Court ruling.

Conclusion: The order directing the money-laundering case to precede the scheduled-offence trial was quashed, and the petition was allowed.

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