2023 (1) TMI 1467 - HC - Money Laundering

Money Laundering - seeking quashment of summons issued to the petitioner - proceedings under the Prevention of Money Laundering Act 2002 (PMLA) can continue after an accused has been acquitted of the predicate offence or not - HELD THAT - The Apex Court in the case of VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. 2022 (7) TMI 1316 - SUPREME COURT (LB) has clearly held that on three circumstances the proceedings under the Prevention of Money Laundering Act 2002 cannot continue; one being quashment of the proceedings in 482; the acquittal of the accused in predicate offence that is offences under the Indian Penal Code or Prevention of Corruption Act 1988 as the case would be and the other; discharge of accused in those proceedings. In the case at hand the petitioner is acquitted of the offences alleged against him under the Prevention of Corruption Act 1988 in Spl.C.C.No.189/2013 and the said acquittal in terms of the order of the concerned Court dated 23.12.2022. Conclusion - In the light of the acquittal of the petitioner in the aforesaid offence the proceedings under the Prevention of Money Laundering Act 2002 cannot continue. The proceedings in ECIR No.BGZO/05/2015 Summons/2790 dated 21.12.2018 stands quashed - petition allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) can continue after an accused has been acquitted of the predicate offence.
• Interpretation of Section 3 of the PMLA regarding its application to proceeds of crime and the continuation of proceedings post-acquittal in predicate offences.
• The validity and scope of the summons issued to the petitioner under the PMLA in light of the acquittal in predicate offences.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Continuation of PMLA Proceedings Post-Acquittal

• Relevant Legal Framework and Precedents: The judgment heavily relies on the Supreme Court's decision in Vijay Madanlal Choudhary & Ors. v. Union of India & Ors, which clarified that proceedings under the PMLA cannot continue if the accused is acquitted of the predicate offence.
• Court's Interpretation and Reasoning: The court interpreted Section 3 of the PMLA, emphasizing that the offence of money laundering is dependent on the illegal gain of property from a scheduled offence. If the predicate offence is quashed or the accused is acquitted, the money laundering charge cannot stand.
• Key Evidence and Findings: The petitioner was acquitted of offences under the Prevention of Corruption Act, 1988, which formed the basis of the money laundering charges. The court found that continuing the PMLA proceedings would be an abuse of the process of law.
• Application of Law to Facts: The court applied the Supreme Court's interpretation of Section 3, concluding that since the petitioner was acquitted of the predicate offence, the proceedings under PMLA must be quashed.
• Treatment of Competing Arguments: The respondent's argument that the issue had become final was rejected based on the Supreme Court's clear position in Vijay Madanlal Choudhary.
• Conclusions: The court concluded that the proceedings under the PMLA against the petitioner could not continue due to the acquittal in the predicate offence.

3. SIGNIFICANT HOLDINGS

• Verbatim Quotes of Crucial Legal Reasoning: "The Apex Court holds that the authorities under the Act cannot prosecute any person on notional basis or on the assumption that the 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."
• Core Principles Established: The judgment reinforces that the PMLA proceedings are contingent upon the existence and continuation of proceedings related to the predicate offence. If the predicate offence is quashed or results in acquittal, the PMLA proceedings cannot persist.
• Final Determinations on Each Issue: The court determined that the summons and proceedings against the petitioner under the PMLA were invalid due to the acquittal in the predicate offence, thereby quashing the proceedings.

The judgment underscores the importance of the linkage between predicate offences and money laundering charges under the PMLA, aligning with the Supreme Court's interpretation to prevent misuse of the legal process.