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2023 (10) TMI 822 - HC - Money LaunderingMoney Laundering - predicate offence - matter amicably settled between the petitioner and the complainant and No Dues Certificate was issued in favor of the petitioner - embezzlement and misappropriation of loan amount which had been disbursed by Yes Bank towards the development of a hospital in Gurugram - non-payment of salaries - reduction of equity shareholding of the complainant - falsification of accounts. HELD THAT - The Telangana High Court in Manturi Shashi Kumar 2023 (4) TMI 1199 - TELANGANA HIGH COURT has also quashed a complaint under Section 3 of the PMLA on the grounds of the accused being discharged/acquitted of the scheduled offence. In view of the aforesaid legal position, 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. Petition allowed.
Issues involved:
The quashing of a complaint filed under the Prevention of Money Laundering Act, 2002 (PMLA) based on the settlement of a FIR for predicate offenses. Summary: Issue 1: Quashing of the complaint filed by the Directorate of Enforcement (ED) under PMLA 1. The petitioners sought the quashing of a complaint filed by the Directorate of Enforcement (ED) under Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA) based on a FIR for predicate offenses. 2. The FIR alleged embezzlement of a loan amount by the petitioners from Yes Bank for a hospital project, non-payment of salaries, reduction of equity shareholding, and falsification of accounts. The FIR was settled amicably, leading to its quashing by the court. 3. The court noted that the FIR quashing order had not been challenged and had attained finality, leading to a stay of investigation granted in favor of the petitioners. 4. The petitioners argued that since the FIR for predicate offenses was quashed, the ED's complaint under PMLA was not maintainable, citing relevant judgments from the Supreme Court and High Courts. 5. The ED contended that despite the FIR quashing, the PMLA complaint should stand, referring to a pending Supreme Court case on the survival of PMLA proceedings post-acquittal/discharge in scheduled offenses. Judicial Analysis: 6. The Supreme Court's observations in previous cases emphasized that the offense under PMLA is dependent on illegal gain from criminal activity related to a scheduled offense, and if the accused is discharged/acquitted of the scheduled offense, there can be no offense of money laundering against them. 7. In line with these principles, the Calcutta High Court and Telangana High Court quashed ED complaints under PMLA when the FIR for predicate offenses was settled or quashed, with the Supreme Court dismissing ED's SLP against such judgments. 8. The ED's SLP against a similar judgment by the Madras High Court was withdrawn as the FIR for the predicate offense had been quashed. 9. The legal position established by these judgments indicated that in cases where the FIR for predicate offenses is quashed or settled, the PMLA complaint and subsequent proceedings cannot survive, leading to the quashing of the present complaint and related proceedings against the petitioners. 10. Consequently, the petition was allowed, and the ECIR and related proceedings were quashed, along with the Look Out Circular issued against the petitioners. Conclusion: The court allowed the petition seeking the quashing of the complaint filed by the Directorate of Enforcement (ED) under the Prevention of Money Laundering Act, 2002 (PMLA) based on the settlement of a FIR for predicate offenses. The legal position established through relevant judgments indicated that in such cases, the PMLA complaint and proceedings cannot survive, leading to the quashing of the complaint and associated actions against the petitioners.
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