2023 (9) TMI 725 - HC - Money Laundering

Money Laundering - predicate offence or not - no crime proceeds were generated in favour of the venture company - allegation against this petitioner is that he helped Mantena Srinivas Raju, but, the case against said Mantena Srinivas Raju in ECIR was also quashed by this Court - HELD THAT - It cannot be disputed that the person who is not charged under the predicate offence cannot be investigated into under the Prevention of Money-Laundering Act, 2002. Any person dealing with the proceeds of crime in any manner whatsoever comes within the purview of the offence punishable under Section 3 of the Prevention of Money-Laundering Act, 2002. The Honourable Supreme Court while cancelling the bail of this petitioner has not referred to Vijay Madanlal Choudhary s case 2022 (7) TMI 1316 - SUPREME COURT - It was concluded by the 3-Judge Bench of the Honourable Supreme Court in Vijay Madanlal Chudhary s case, that if a person is finally discharged or acquitted of a scheduled offence or the criminal case, is quashed by the court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him. As already discussed, the petitioner is being investigated for taking benefits from Mantena Srinivas. The said person was acquitted of the predicate offence and the proceedings against him in the present ECIR were also quashed on the ground that there were no criminal proceeds. In the said circumstances when there are no criminal proceeds , following the law as laid down by the Honourable Supreme Court in Vijay Madanlal Choudary s case this Court deems it appropriate to quash the proceedings against the petitioner. Petition allowed.

Issues involved:
The petitioner questioned the continuation of investigation against him by the Enforcement Directorate based on a case filed by the Economic Offences Wing for various offences. The main contention was that the predicate offence resulted in acquittal, and no appeal was filed by the State challenging the acquittal.

Summary:

Issue 1: Predicate offence resulted in acquittal
The petitioner argued that since the main accused in the predicate offence was acquitted and no crime proceeds were generated, the proceedings under the Prevention of Money-Laundering Act cannot continue. Citing previous judgments, the petitioner sought to quash the proceedings against him.

Issue 2: Legal position on quashing proceedings
The petitioner relied on the legal position established by the Supreme Court in various cases, emphasizing that if a person is discharged or acquitted of a scheduled offence, there can be no offence of money laundering against them. The petitioner contended that since there were no criminal proceeds involved, the proceedings against him should be quashed.

Issue 3: Enforcement Directorate's argument
The Enforcement Directorate argued that it is not necessary for a person to be accused in the predicate offence to initiate proceedings under the ED Act. They highlighted that the Supreme Court set aside the petitioner's anticipatory bail, indicating the seriousness of the allegations against him.

Issue 4: Interpretation of legal provisions
The Enforcement Directorate relied on specific provisions of the Prevention of Money-Laundering Act and emphasized the importance of investigating any person dealing with proceeds of crime. They argued that quashing proceedings based on acquittal in the predicate offence would not be justified.

Issue 5: Application of legal precedents
Both parties referred to previous judgments by the Supreme Court to support their arguments. The petitioner emphasized the need to follow the legal principles laid down by the higher courts, while the Enforcement Directorate highlighted the importance of investigating potential money laundering activities.

Conclusion:
Considering the legal principles established by the Supreme Court regarding acquittal in the predicate offence and the absence of criminal proceeds, the Court deemed it appropriate to quash the proceedings against the petitioner. The Criminal Petition was allowed, and the investigation by the Enforcement Directorate was quashed.

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