Money laundering proceedings require a subsisting scheduled offence; absent a predicate offence, ECIR and complaint cannot stand.

Money laundering proceedings under the Prevention of Money Laundering Act cannot be sustained without a subsisting scheduled offence and an identifiable predicate basis for proceeds of crime. The record showed that the police challan proceeded only under the Mines and Minerals (Development and Regulation) Act, while the Indian Penal Code offences were not carried forward, and the PMLA complaint had been filed before that process was complete. In the absence of an operative predicate offence, the ECIR, prosecution complaint and summoning order were liable to be quashed, though fresh action could be taken if a future or altered charge brought the matter within a scheduled offence.

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Issues: Whether the ECIR, prosecution complaint and summoning order under the Prevention of Money Laundering Act, 2002 could be sustained in the absence of a subsisting scheduled offence or predicate offence, and whether the petitioner was entitled to quashing of the consequential proceedings.

Analysis: The admitted record showed that the police investigation culminated in a challan only under the Mines and Minerals (Development and Regulation) Act, 1957, while the offences under the Indian Penal Code were not carried forward in the challan. The complaint under the Prevention of Money Laundering Act, 2002 was filed before the completion of that process. In these circumstances, there was no operative scheduled offence supporting the allegation of money laundering, and the foundational requirement of a predicate offence and proceeds of crime was not made out. The concession of the respondent side reinforced the absence of a sustainable basis for continuing the PMLA proceedings at that stage.

Conclusion: The ECIR, prosecution complaint and summoning order were liable to be quashed, and the petition succeeded. The Enforcement Directorate was left free to act afresh only if a future charge or altered charge brought the matter within a scheduled offence under the PMLA.

Final Conclusion: The proceedings under the Prevention of Money Laundering Act, 2002 could not continue on the existing factual matrix, and the petitioner obtained quashing of the impugned enforcement proceedings.

Ratio Decidendi: Prosecution for money laundering cannot be sustained unless it rests on a subsisting scheduled offence and an identifiable predicate basis for proceeds of crime.

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