2024 (1) TMI 1283 - HC - Money Laundering

Money Laundering - predicate offence - Continuation of prosecution - if in case an accused is acquitted/discharged in a predicate offence in that eventuality whether the prosecution initiated by the respondent/ED can be allowed to be continued or is liable to be quashed? - HELD THAT - The issue was considered by the Supreme Court in case of Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT and it was observed 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. A Coordinate Bench of this Court in case of Nayati Healthcare 2023 (10) TMI 822 - DELHI HIGH COURT has also considered the issue whether the prosecution initiated by the respondent/ED can be continued in a case where the accused has already been acquitted/discharged for the predicate offence and it was held that the present complaint filed by the ED and the proceedings arising therefrom cannot survive. Considering that the FIR has been quashed by this court and that it has not been challenged till date there can be no offence of money laundering under section 3 of the PMLA against the petitioners. The complaint filed by the respondent/ED and the consequential proceedings cannot survive. Considering that the co-accused Dr. Jeevan Kumar has been acquitted by the trial court vide judgment dated 22.03.2013 and that the said judgment has not been challenged till date there can be no offence of money laundering under section 3 of PMLA against the petitioner. Accordingly the ECIR bearing no. ECIR/7/DZ/2008 is quashed along with all consequential proceedings arising therefrom stated to be pending before the concerned court. Petition disposed off.

Summary

Issues involved:
The judgment involves the consideration of whether the prosecution initiated by the respondent/ED can be allowed to continue or is liable to be quashed if an accused is acquitted/discharged in a predicate offence.

Details of the judgment:

1. The petitioner filed a petition u/s 482 Cr.P.C. seeking to quash a complaint filed by the respondent/Directorate of Enforcement (ED) for the offence u/s 3 of the Prevention of Money Laundering Act, 2002 (PMLA) arising out of ECIR. The complaint was based on an allegation of illegal kidney transplantation activities involving the petitioner and others.

2. The investigation of the FIR related to the predicate offence was conducted by the CBI, and the trial court acquitted one of the co-accused, Dr. Jeevan Kumar, of all charges. The trial court's judgment has attained finality.

3. The petitioner argued that since Dr. Jeevan Kumar has been acquitted, the complaint by the ED is not maintainable. The petitioner relied on various judgments, including those of the Supreme Court and the High Court, to support this contention.

4. The respondent/ED contended that the complaint cannot be quashed merely because one co-accused has been acquitted in the predicate offence. The respondent cited a pending issue before the Supreme Court regarding the continuation of proceedings under PMLA upon acquittal/discharge of the accused in a scheduled offence.

5. The Supreme Court and the High Court have held that if an accused is acquitted or discharged in a scheduled offence, there can be no offence of money laundering against them. The authorities under PMLA cannot prosecute a person on the assumption of a scheduled offence unless it is registered or pending inquiry/trial. The legal position indicates that the complaint and proceedings cannot survive in such cases.

6. The judgment highlighted that the FIR related to the predicate offence was quashed, and since it has not been challenged, there can be no offence of money laundering against the petitioners. Consequently, the ECIR and all consequential proceedings were quashed.

7. The respondent/ED was given the liberty to initiate proceedings for the revival of the complaint and consequential proceedings based on altered circumstances or the final decision of the Supreme Court in a related case.

8. The petition, along with pending applications, was disposed of in view of the legal position established by the Supreme Court and various High Court judgments on the issue.