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Issues: Whether the provisional attachment order under Section 5(1) of the Prevention of Money Laundering Act, 2002 could survive after the scheduled offence and connected PMLA proceedings had been closed and the petitioner and related accused had been discharged.
Analysis: The attachment originated from an FIR constituting the scheduled offence. The relevant criminal proceedings were subsequently closed, the closure report was accepted, and the petitioner company as well as the connected accused were discharged in the PMLA matter. The governing principle, as applied from the Supreme Court's decision in Vijay Madanlal Choudhary, is that the offence of money-laundering is dependent on the existence of criminal activity relating to a scheduled offence and the corresponding proceeds of crime. Where the person concerned is finally discharged or acquitted of the scheduled offence, or the scheduled offence itself no longer survives, the foundation for continuing action under the PMLA falls away. On that basis, the Court also followed later Supreme Court and Delhi High Court decisions applying the same rule to provisional attachment and continuation of PMLA proceedings.
Conclusion: The provisional attachment could not be sustained and was liable to be quashed, with the attached properties directed to be released.
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