Money laundering proceedings cannot continue after acquittal in the predicate offence because linked property stops being proceeds of crime.

Proceedings under the Prevention of Money Laundering Act cannot continue where the person has been finally acquitted of the predicate scheduled offence. The Act depends on property being derived from criminal activity relating to a scheduled offence, so once acquittal removes the underlying offence, the linked property no longer qualifies as proceeds of crime. On that basis, continued action under the Act, including cognizance and summons based on the same predicate offences, is unsustainable and liable to be quashed.

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Issues: Whether proceedings under the Prevention of Money Laundering Act, 2002 could continue after the petitioner had been acquitted in the predicate offences on which the enforcement case was based.

Analysis: Liability under the Act depends on property being derived or obtained, directly or indirectly, from criminal activity relating to a scheduled offence. The definition of "proceeds of crime" and the offence of money laundering require an underlying scheduled offence, even though the offence under the Act is otherwise independent in its operation. Once the person concerned has been finally absolved by acquittal in the predicate offences, the property linked to those offences cannot be treated as proceeds of crime for continuing action under the Act.

Conclusion: The proceedings under the Act could not be sustained after the petitioner's acquittal in the predicate offences, and the order taking cognizance and issuing summons was liable to be quashed in favour of the petitioner.

Ratio Decidendi: Where the person concerned is finally acquitted of the scheduled offence, action for money laundering in relation to property linked to that offence cannot continue because such property no longer qualifies as proceeds of crime.

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