Money-laundering proceedings fail when the scheduled offence is quashed, removing the foundation for the ECIR.

Money-laundering proceedings under the Prevention of Money Laundering Act, 2002 cannot survive where the predicate scheduled offence has been quashed by a court of competent jurisdiction. The governing principle applied is that the offence under Section 3 is dependent on the existence of a live scheduled offence, so once the underlying criminal case no longer survives, the foundation for the ECIR and related prosecution is removed. On that basis, the Madras HC held that the ECIR proceedings against the petitioner could not be sustained and quashed them.

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Issues: Whether ECIR proceedings under the Prevention of Money Laundering Act, 2002 could survive after the proceedings in the predicate offence were quashed by the Supreme Court.

Analysis: The proceedings under the Prevention of Money Laundering Act, 2002 were challenged on the ground that the underlying criminal case forming the basis of the ECIR had already been quashed by the Supreme Court. The governing principle applied was that the offence of money-laundering under Section 3 of the Prevention of Money Laundering Act, 2002 is dependent on the existence of a scheduled offence and the authorities cannot sustain prosecution on the basis of a predicate offence that no longer survives. Once the criminal case relating to the scheduled offence stands quashed by a court of competent jurisdiction, the foundation for continuing the money-laundering proceedings is removed.

Conclusion: The ECIR proceedings could not be sustained against the petitioner and were quashed.

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