Money laundering proceedings cannot continue after acquittal from predicate offence under Section 307 and organ transplantation laws

Delhi HC held that money laundering proceedings under PMLA require involvement in activities connected with proceeds of crime and projection of such property as untainted. The court ruled that acquittal of accused from predicate offence under IPC Section 307 and Transplantation of Human Organs Act in illegal kidney transplantation case, along with quashing of criminal proceedings, necessitates cessation of attachment proceedings. Following precedents, the court determined that PMLA proceedings cannot exist independently without scheduled offence. Since trial court acquitted one accused and HC quashed proceedings against another, attachment proceedings were unsustainable as appellants could not be involved in proceeds of crime activities. Appeal disposed.

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Issues Involved:
1. Acquittal of the accused from the predicate offence and its impact on attachment proceedings.
2. Involvement of appellants not accused in the FIR.
3. Quashing of ECIR and consequential proceedings.

Summary:

Issue 1: Acquittal of the accused from the predicate offence and its impact on attachment proceedings

The appellants challenged the common order dated 09.03.2015 by the Appellate Tribunal, PMLA, which dismissed their appeals against the confirmation of the provisional attachment order (PAO) dated 09.09.2010. The primary issue was whether the acquittal of the accused, Jeevan Kumar, from the predicate offence and the quashing of criminal proceedings against Rajiv Channa would lead to the cessation of the attachment proceedings. The court noted that the essential preconditions for an offence of money laundering under Section 3 of PMLA, 2002, include involvement in any process connected with the proceeds of crime and projecting it as untainted property. Since Jeevan Kumar was acquitted of the scheduled offence, there could be no action for money laundering against the appellants. The court referred to the Supreme Court's decision in Vijay Madanlal Choudhary, which held that if the person is acquitted of the scheduled offence, there can be no offence of money laundering against him or anyone claiming such property. Consequently, the attachment proceedings were found unsustainable.

Issue 2: Involvement of appellants not accused in the FIR

The appellants Rajiv Channa and M/S N.R. Merchant Pvt. Ltd. were not accused in the FIR registered by the CBI. The court held that since the appellants were not involved in the generation of the alleged proceeds of crime or the scheduled offence, the attachment of their properties was unjustifiable. The court emphasized that the proceeds of crime must be directly or indirectly derived from criminal activity relating to a scheduled offence, which was not the case here.

Issue 3: Quashing of ECIR and consequential proceedings

The court also addressed the quashing of the ECIR bearing no. ECIR/07/DZ/2008 and all consequential proceedings arising therefrom. The court noted that the ECIR and the charge framed against Rajiv Channa were quashed by a previous judgment dated 15.01.2024. The court reiterated that once the foundation of the scheduled offence is removed, the consequential proceedings, including attachment, must also fall. The court rejected the respondent's argument to defer the adjudication of the present case due to a pending issue before the Supreme Court, citing that the High Courts must proceed based on the law as it stands.

Conclusion:

The judgment and final order dated 09.03.2015 by the Appellate Tribunal, the confirmation order dated 04.02.2011, and the PAO dated 09.09.2010 were set aside. The court allowed the appeals and quashed the attachment proceedings, concluding that the appellants could not be said to be involved in any activity connected with the proceeds of crime.

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