Money-laundering proceedings fail when final acquittal in the predicate offence removes the proceeds-of-crime foundation.

Proceedings under the Prevention of Money Laundering Act cannot survive where the scheduled predicate offence has ended in final acquittal or discharge, because the money-laundering charge depends on the existence of proceeds of crime arising from that offence. The court applied the settled interpretation of Section 3 and held that a linked prosecution cannot rest on a mere notional assumption of the scheduled offence. As the petitioners' PMLA case was entirely derivative of the predicate offence and that acquittal had attained finality, the proceedings were liable to be quashed.

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Issues: Whether proceedings under the Prevention of Money Laundering Act, 2002 could continue after the petitioners were acquitted of the predicate offence and that acquittal had attained finality.

Analysis: The decision turns on the settled interpretation of Section 3 of the Prevention of Money Laundering Act, 2002. The offence of money-laundering depends on the existence of proceeds of crime arising from a scheduled offence, and the connected proceedings cannot be sustained on a mere notional assumption of such offence. Where the person concerned is finally acquitted or discharged in the scheduled offence, the foundation for prosecuting the linked money-laundering case falls away. On the admitted facts, the petitioners' prosecution under the Prevention of Money Laundering Act was entirely derivative of the predicate offence, and the acquittal in that offence had become final.

Conclusion: The proceedings under the Prevention of Money Laundering Act, 2002 could not be continued against the petitioners and were liable to be quashed.

Ratio Decidendi: Money-laundering proceedings cannot survive once the accused is finally acquitted or discharged in the predicate scheduled offence that supplies the alleged proceeds of crime.

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