Money-laundering prosecution fails where predicate offences end in discharge and no proceeds of crime survive.

Money-laundering under the Prevention of Money Laundering Act, 2002 cannot be sustained without property constituting proceeds of crime derived from a subsisting scheduled offence. Because the predicate cases had ended in discharge, no prima facie offence survived in the underlying criminal matters, and the attachment orders had also been set aside, the Court treated the foundation of the PMLA complaint as extinguished. On that basis, it held that the prosecution could not continue and that the accused applicants were entitled to discharge at the charge stage.

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Issues: Whether the accused applicants were entitled to discharge under Section 227 of the Code of Criminal Procedure, 1973 in the absence of a subsisting predicate offence and identifiable proceeds of crime for the alleged offence of money laundering.

Analysis: The complaint under the Prevention of Money Laundering Act, 2002 was founded on the predicate offences arising from the two underlying criminal cases. The discharge orders in those predicate cases had held that the prosecution had not made out a prima facie case and, on that basis, no offence was found to have been committed. The Court treated those findings as meaning that no proceeds of crime had been generated from the scheduled offences. Relying on the statutory scheme of Sections 2(u), 3 and 4 of the Prevention of Money Laundering Act, 2002 and the principle that money-laundering is dependent on property derived or obtained as a result of criminal activity relating to a scheduled offence, the Court held that in the absence of subsisting predicate offences and proceeds of crime, the prosecution under the Act could not survive. The Court also noted that the attachment orders had been set aside and that the discharge orders in the predicate offences had attained finality.

Conclusion: The accused applicants were entitled to discharge and no charge could be framed against them for the alleged offence under the Prevention of Money Laundering Act, 2002.

Final Conclusion: The proceedings were terminated at the stage of charge, and all applicants stood discharged from the money-laundering case.

Ratio Decidendi: Money-laundering under the Prevention of Money Laundering Act, 2002 cannot be sustained unless there exists property constituting proceeds of crime derived or obtained from a subsisting scheduled offence; where the accused stand finally discharged in the predicate offence and no proceeds of crime survive, prosecution under the Act fails.

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