New Delhi, Feb 3 (PTI) The Supreme Court on Tuesday agreed to examine the larger legal question affecting the prosecution done by the Enforcement Directorate in hundreds of cases across the country, whether the acquittal of a person in a criminal case will mean an accused cannot be tried for the offence of money-laundering.

With the ED complaining that police of different states adopt a lax approach where predicate offence involves "high and mighty" and their acquittal in such cases was resulting in a lack of prosecution under the Prevention of Money Laundering Act (PMLA), the top court said it appears that the ED has been "completely shut out".

A predicate offence (or scheduled offence) under the PMLA is the offence which generates "proceeds of crime", a prerequisite for initiating a probe by the ED.

"A lot of knots need to be untied," said a bench of Justices M M Sundresh and N Kotiswar Singh which expressed its doubt over the finding of Vijay Madanlal Choudhary verdict of 2022 that upheld the powers of the ED to arrest, search and conduct seizure.

The bench said it is difficult to reconcile with the finding that if the predicate offence is quashed, the money laundering case will fall flat.

"Why does the ED case depend on the predicate offence? Every case has its own facts and they cannot be dependent on each other.

"ED is not before the court to defend the predicate offence. We cannot fathom this. These are serious economic offences," the bench observed.

Additional Solicitor General S V Raju, appearing for the ED, said that the 2022 verdict was interpreted by several persons in different ways and pointed to the hardship they are facing in the prosecution of money laundering cases.

Justice Sundresh referred to Pavana Dibbur versus the Directorate of Enforcement verdict of 2023 and said the finding in the decision that for the offence of money laundering, it is not necessary that the accused must also be an accused in the scheduled offence, is also doubtful and the court will examine this verdict also.

The bench, which gave several illustrations, said that the acquittal or discharge of an accused in a predicate offence does not mean the crime has not happened.

"If the hands of ED are tied up as has been held up in the 2022 verdict, then how will they prosecute in the money laundering case? It will defeat the very object of the enactment. We are dealing with these kinds of cases day in and day out. It has opened the floodgates," the top court said.

The bench is hearing a number of petitions where the accused have been seeking their release in money laundering cases on the ground that they have been acquitted in predicate or scheduled offence and hence, there were no proceeds of crime.

"If this happens, the entire proceedings of the ED will go into the dustbin once there is acquittal in a predicate offence," the bench said, adding that it will examine the legal question and look into the validity of the finding arrived at in the 2022 and 2023 verdicts.

The top court said it will hear the parties in April to examine the larger question.

"If required, we will refer it to a larger three-judge bench as the 2022 decision was of a three-judge bench," the top court said while questioning Raju as to why the ED has still not filed a review of the 2022 verdict in the Vijay Madanlal Choudhary case.

Raju replied that by and large the 2022 verdict was in the agency's favour and that is the reason a number of review petitions were filed by different parties and are still pending before the apex court. PTI MNL MNL KSS KSS

Money-laundering prosecutions may be examined for whether prior acquittal in predicate offences bars ED trials. The Supreme Court will examine whether an acquittal or quashing of a scheduled (predicate) offence necessarily prevents prosecution under the Prevention of Money Laundering Act by determining if such acquittal negates the existence of proceeds of crime and thereby disables the Enforcement Directorate from pursuing independent money laundering proceedings.