2022 (9) TMI 1492 - HC - Money Laundering

Money Laundering - the Settlement Commissioner completed the work that was assigned to him and submitted a report to this court, based on which, the prosecution in C.C. No. 3876 of 2009 was quashed by this Court - HELD THAT - Reliance placed in the case of 2022 (7) TMI 1316 - SUPREME COURT , where it was held that The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. In view of the aforesaid categorical pronouncement of the Supreme Court, the quash petition deserves to be allowed since the prosecution of the accused in the predicate offence has already been quashed by this court - petition allowed.

Summary

Issues:
1. Quashing of criminal proceedings in C.C. No. 07 of 2018.
2. Interpretation of legal provisions related to money laundering offenses.

Analysis:
1. The case involved a petition seeking to quash proceedings in C.C. No. 07 of 2018 before the Special Court under the Prevention of Money Laundering Act, 2002. The background of the case included multiple FIRs against a company, which led to investigations and subsequent charge sheets. A Settlement Commissioner was appointed to oversee the disbursement of amounts due to customers. Based on the Settlement Commissioner's report, the prosecution in C.C. No. 3876 of 2009 was quashed earlier. The petitioners challenged the prosecution in C.C. No. 07 of 2018, citing the previous quashing of proceedings as a basis for their petition.

2. The petitioners relied on a Supreme Court judgment regarding the offense of money laundering under the Prevention of Money Laundering Act, emphasizing that the offense is dependent on illegal gain of property as a result of criminal activity related to a scheduled offense. The petitioners argued that if a person is discharged or acquitted of the scheduled offense, there can be no offense of money laundering against them. In light of this legal interpretation, the petitioners contended that since the prosecution in the predicate offense had been quashed, the present prosecution in C.C. No. 07 of 2018 should also be quashed.

In conclusion, the High Court allowed the petition to quash the prosecution in C.C. No. 07 of 2018, considering the previous quashing of proceedings in a related case and the legal principles governing money laundering offenses as interpreted by the Supreme Court. The judgment highlighted the importance of legal procedures and the need for consistency in addressing criminal proceedings related to financial offenses.