2024 (1) TMI 831 - HC - Money Laundering

Money laundering prosecution cannot continue when accused acquitted in predicate offence under PMLA Section 3

Jeevan Kumar Versus Dy. Director Directorate of Enforcement

Delhi HC held that money laundering prosecution cannot continue when accused is acquitted/discharged in predicate offence. Following SC precedent in Vijay ... Money Laundering - predicate offence - if in case an accused is acquitted/discharged in a predicate offence, in that eventuality, whether the prosecution initiated by the respondent/ED can be allowed to be continued or is liable to be quashed? - HELD THAT:- The issue was considered by the Supreme Court in case of Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] and it was observed that The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. A Coordinate Bench of this Court in case of Nayati Healthcare [2023 (10) TMI 822 - DELHI HIGH COURT] has also considered the issue whether the prosecution initiated by the respondent/ED can be continued in a case where the accused has already been acquitted/discharged for the predicate offence where it was held that Considering that the FIR has been quashed by this court and that it has not been challenged till date, there can be no offence of money laundering under section 3 of the PMLA against the petitioners. The complaint filed by the respondent/ED and the consequential proceedings cannot survive. Considering that the co-accused Dr. Jeevan Kumar has been acquitted by the trial court vide judgment dated 22.03.2013 and that the said judgment has not been challenged till date, there can be no offence of money laundering under section 3 of PMLA against the petitioner - Petition disposed off. Issues involved:The petition filed under section 482 Cr.P.C. seeks to quash a complaint under the Prevention of Money Laundering Act, 2002 (PMLA) along with consequential proceedings. The main issue is whether the prosecution initiated by the respondent/ED can be allowed to continue if an accused is acquitted in a predicate offence.Summary of Judgment:Issue 1: Quashing of ComplaintThe complaint filed by the ED was challenged on the grounds that one of the co-accused had been acquitted in the predicate offence. The petitioner argued that the complaint was not maintainable in such circumstances, citing relevant judgments. The CGSC for the respondent/ED contended that the issue of proceedings under PMLA upon acquittal/discharge was pending before the Supreme Court. The court considered legal precedents including Vijay Madanlal Choudhary and Harish Fabiani, which emphasized that if the accused is acquitted of the scheduled offence, there can be no offence of money laundering against them. The court ultimately quashed the complaint and all consequential proceedings, as the FIR had been quashed and not challenged, leading to no offence of money laundering against the petitioners.Issue 2: Legal PrecedentsThe court referred to various judgments such as Vijay Madanlal Choudhary, Harish Fabiani, and Nayati Healthcare, which highlighted that the prosecution under PMLA cannot be sustained if the accused is acquitted in the predicate offence. The legal position was further reinforced by the dismissal of SLPs by the Supreme Court and judgments from other High Courts, indicating that the offence of money laundering is dependent on the illegal gain of property as a result of criminal activity related to a scheduled offence.Issue 3: Disposal of PetitionIn light of the legal position established by previous judgments and considering the acquittal of the co-accused in the predicate offence, the court allowed the petition and quashed the ECIR and consequential proceedings. The respondent/ED was given the liberty to initiate proceedings for the revival of the complaint based on altered circumstances or the final decision of the Supreme Court in a related matter. The petition and pending applications were disposed of accordingly.