Money-laundering prosecution cannot survive final acquittal in the predicate offence under PMLA

An offence under Section 3 of the Prevention of Money Laundering Act is dependent on a scheduled offence and alleged proceeds of crime arising from it. Where the predicate offence has ended in final acquittal, discharge, or quashing, the basis for continuing money-laundering proceedings disappears, and prosecution cannot rest on a mere assumption that the scheduled offence exists. The court applied this principle to hold that the charge and proceedings could not survive after the underlying criminal case had concluded in favour of the accused, and the petitions were allowed with the PMLA proceedings quashed as an abuse of process.

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Issues: Whether proceedings for offences under the Prevention of Money Laundering Act, 2002 could continue after the accused stood finally acquitted of the predicate offences forming the basis of the alleged proceeds of crime.

Analysis: The complaint and the charge framed under the Prevention of Money Laundering Act, 2002 were founded entirely on the existence of a scheduled offence and the alleged proceeds derived from it. The later decision of the Supreme Court in Vijay Madanlal Choudhary was treated as settling the law that the offence under Section 3 is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence, and that the authorities cannot prosecute a person on the mere assumption that such scheduled offence exists. The Court further relied on the Supreme Court's clarification that if the person is finally discharged, acquitted, or the criminal case is quashed, there can be no offence of money-laundering against that person or against anyone claiming property linked through that person to the scheduled offence.

Conclusion: The proceedings could not be sustained after the final acquittal in the predicate offence, and the challenge to the charge and the prosecution under the Act succeeded in favour of the petitioners.

Final Conclusion: The criminal petitions were allowed and the proceedings under the Act arising from the linked predicate offences were quashed as an abuse of process.

Ratio Decidendi: An offence under Section 3 of the Prevention of Money Laundering Act, 2002 cannot survive where the foundational scheduled offence has ended in final acquittal, discharge, or quashing by a competent court.

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