2024 (4) TMI 37 - HC - Money Laundering

Validity of ECIR proceedings- money laundering - Predicate offence - criminal conspiracy in the commission of offence relating to allotment of housing plots under Government Discretionary Quota - HELD THAT - The impugned ECIR proceedings has been recorded against the petitioner showing him as a suspected person, based on the complaint which culminated into C.C.No.14 of 2019, which was quashed by the above referred order. Though a detailed counter has been filed, the averments may not have relevance in view of the admitted fact that the proceedings in the predicate offence has been quashed and in view of the settled position of law. This Court has, in similar cases, expressed its view that the proceedings under the PMLA 2002 cannot proceed further, once the FIR/Final Report relating to the predicate offence is quashed. The law is well settled by the larger Bench of the Hon'ble Supreme Court in the case of VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. 2022 (7) TMI 1316 - SUPREME COURT wherein it was held that 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. This Court is of the view that in view of the quashing of the proceedings against the petitioner in the predicate offence, the impugned proceedings cannot be sustained. Hence, the Criminal Original Petition stands allowed.

Summary

Issues involved: Quashing of ECIR proceedings under PMLA, 2002 based on a quashed FIR and final report.

Summary:

Issue 1: Quashing of ECIR proceedings based on quashed FIR and final report
The petitioner sought to quash the ECIR proceedings against him, which stemmed from an FIR registered in Crime No.7 of 2011, leading to a final report in C.C.No.14 of 2019, which was already quashed by the court. The respondent argued that under the Prevention of Money Laundering Act, 2002 (PMLA, 2002), a person can be prosecuted even if not accused in the predicate offence. However, the court observed that the allotment made in favor of the petitioner was never canceled, and the petitioner's request to surrender the allotment was declined. The court referred to previous judgments and held that once the FIR/Final Report related to the predicate offence is quashed, the proceedings under PMLA 2002 cannot proceed further. Citing the ruling in Vijay Madanlal Choudhary and Others v. Union of India and Others, the court concluded that if a person is discharged/acquitted of the scheduled offence or the criminal case against him is quashed, there can be no offence of money-laundering against him. Therefore, the court allowed the Criminal Original Petition and quashed the ECIR proceedings against the petitioner in ECIR No.CEZO-I/35/2020 dated 22.06.2020.