PMLA prosecution cannot survive after quashing of the scheduled offence; ECIR and connected proceedings were quashed.

Where the scheduled offence had already been quashed and no proceeds of crime were shown to survive, the foundation for a PMLA prosecution fell away because money-laundering liability is contingent on property derived from criminal activity relating to a subsisting scheduled offence. On that footing, the Court held that the ECIR and all connected proceedings could not be sustained and that continuation would amount to abuse of process. The HC therefore exercised inherent jurisdiction to quash the ECIR and the proceedings arising from it, treating the PMLA action as incapable of surviving independently once the predicate offence had ceased to exist.

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Issues: (i) Whether quashing of the scheduled offence automatically extinguished the basis for the PMLA proceedings and the alleged offence of money laundering. (ii) Whether the ECIR and all proceedings arising therefrom were liable to be quashed in exercise of inherent powers.

Issue (i): Whether quashing of the scheduled offence automatically extinguished the basis for the PMLA proceedings and the alleged offence of money laundering.

Analysis: The alleged offence under the Prevention of Money Laundering Act is dependent on the existence of a scheduled offence and on property derived or obtained as proceeds of crime from criminal activity relating to that offence. Once the scheduled offence had already been quashed, there remained no subsisting criminal activity capable of generating proceeds of crime for the purpose of the PMLA. In the absence of a surviving scheduled offence, the foundation of the money-laundering allegation could not stand independently.

Conclusion: The answer was in the affirmative and the PMLA proceeding could not survive once the scheduled offence had been quashed.

Issue (ii): Whether the ECIR and all proceedings arising therefrom were liable to be quashed in exercise of inherent powers.

Analysis: Since the appellate forum had already found that no proceeds of crime were shown to arise from the earlier case and the scheduled offence itself no longer existed, continuation of the ECIR and the connected complaint would serve no legal purpose. The Court treated the continuation of the proceedings as an abuse of process and held that inherent jurisdiction could be invoked to prevent such continuation.

Conclusion: The ECIR and all proceedings arising therefrom were quashed.

Final Conclusion: The Court held that where the scheduled offence has been quashed and no proceeds of crime survive, the connected PMLA prosecution cannot continue and must be set aside.

Ratio Decidendi: A PMLA prosecution cannot be sustained in the absence of a surviving scheduled offence, because the offence of money laundering is contingent upon property derived from criminal activity relating to such offence.

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