Court quashes prosecution under Money Laundering Act, directs release of property

The court allowed the Criminal Original Petition, quashing the prosecution against the petitioner under Sections 3 and 4 of the Prevention of Money Laundering Act. It directed the trial court to release the attached property and refund the deposit, emphasizing the petitioners' innocence as bona fide purchasers unaware of the property's criminal origins. The decision was based on the lack of evidence linking the petitioners to money laundering activities and the improper attachment of the property by the Enforcement Directorate.

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Issues Involved:
1. Quashing of the order dated 14.07.2022 in Crl.M.P.No.9157 of 2022 in S.C.No.74 of 2017.
2. Provisional attachment of property under the Prevention of Money Laundering Act, 2002 (PMLA).
3. Innocent purchaser defense under PMLA.
4. Compliance with Section 8(7) of PMLA.
5. Release of property from attachment and refund of deposit.

Issue-Wise
Detailed Analysis:

1. Quashing of the Order Dated 14.07.2022:
The petition sought to quash the order dated 14.07.2022 in Crl.M.P.No.9157 of 2022 in S.C.No.74 of 2017. The court reiterated the facts and history of the case, noting that the petitioners had purchased a property from Dhanalakshmi Sridhar, who acquired it from her father Sridhar, a known criminal. The Enforcement Directorate (ED) had attached the property, claiming it was acquired through proceeds of crime. The court emphasized that the petitioner was not aware of the criminal origins of the property and was a bona fide purchaser.

2. Provisional Attachment of Property Under PMLA:
The ED provisionally attached the property under Section 5 of PMLA, suspecting it to be proceeds of crime. The attachment was confirmed by the adjudicating authority but later set aside by the appellate tribunal, which found the petitioners to be bona fide purchasers. The tribunal's decision was challenged, but the High Court upheld the tribunal's findings, noting that the petitioners had no involvement in money laundering.

3. Innocent Purchaser Defense Under PMLA:
The court examined whether the petitioner could be prosecuted under Sections 3 and 4 of PMLA. It highlighted that for a prosecution under these sections, the prosecution must show that the accused knowingly engaged in activities connected with proceeds of crime and projected it as untainted property. The court found no evidence that the petitioner was aware of the criminal origins of the property or that they projected it as untainted. The court noted that the petitioner had made payments through RTGS to Kumari, Dhanalakshmi's mother, which were reflected in the sale deed, thus establishing the bona fides of the transaction.

4. Compliance with Section 8(7) of PMLA:
The court considered the applicability of Section 8(7) of PMLA, which allows for the release of property if the trial cannot be conducted for reasons such as the death of the accused. The court noted that Sridhar, the principal accused, was deceased, and the trial had not progressed since 2017. The court referenced a previous Division Bench ruling that Section 8(7) is a standalone provision and can be invoked during the trial's pendency if it is not progressing.

5. Release of Property from Attachment and Refund of Deposit:
Given the quashing of the prosecution against the petitioner and the lack of progress in the trial, the court directed the trial court to release the attached property and refund the Rs.10,00,000/- deposit made by the petitioners. The court emphasized that the Enforcement Directorate had not appealed the quashing of the prosecution, further supporting the petitioners' claim for the release of the property.

Conclusion:
The court allowed the Criminal Original Petition, quashing the prosecution against the petitioner under Sections 3 and 4 of PMLA. It directed the trial court to release the attached property and refund the deposit, reiterating that the petitioners were bona fide purchasers with no involvement in money laundering activities. The court's decision was based on the lack of evidence showing the petitioner's knowledge of the property's criminal origins and the improper attachment of the property by the Enforcement Directorate.

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