2024 (7) TMI 1406 - HC - Money Laundering

Money Laundering - predicate offence - involvement of an illegal racket of kidney transplantation and committed various offences including the offence punishable under section 307 IPC and the offences punishable under sections 18/19/20 of TOHO Act which are scheduled offences under PMLA. 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 above 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 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. 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.' 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, where 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.' Thus, the present 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 impugned order is set aside qua the petitioner along with all consequential proceedings arising therefrom stated to be pending before the concerned court. Petition disposed off.

Summary

Issues:
1. Whether the prosecution initiated by the respondent/ED can be allowed to continue if an accused is acquitted/discharged in a predicate offence.

Detailed Analysis:

Issue 1:
The main issue in this case is whether the prosecution initiated by the respondent/ED can be allowed to continue if an accused is acquitted or discharged in a predicate offence. The petitioner challenged the impugned order on charge dated 24.04.2012, where the petitioner was charged under section 4 of The Prevention of Money Laundering Act, 2002 (PMLA). The petitioner argued that since the co-accused Dr. Jeevan Kumar had been acquitted by the trial court, the present complaint filed by the ED is not maintainable. The petitioner relied on various judgments, including the Supreme Court's decision in Vijay Madanlal Choudhary V Union of India, which emphasized that if a person is acquitted of the scheduled offence, there can be no offence of money laundering against them.

The respondent/ED, on the other hand, argued that the issue of whether proceedings under PMLA would survive upon the acquittal/discharge of the accused in a scheduled offence is pending before the Supreme Court. The respondent relied on a Supreme Court order in Directorate of Enforcement V Gagan Deep Singh to support their argument that the present petition should be adjourned until the Supreme Court decides on this issue.

The High Court considered various judgments, including Vijay Madanlal Choudhary and Harish Fabiani, which highlighted that the PMLA authorities cannot prosecute a person on the assumption of a scheduled offence unless it is proven through a criminal complaint or pending inquiry. The court also referred to the Nayati Healthcare case, where it was held that if the FIR of the predicate offence is quashed, the proceedings under PMLA cannot stand alone. Additionally, the court cited the Telangana High Court's decision in Manturi Shashi Kumar, which stated that if a person is acquitted of the scheduled offence, there can be no offence of money laundering against them.

Ultimately, the High Court ruled in favor of the petitioner, stating that since the co-accused had been acquitted and the judgment had not been challenged, there can be no offence of money laundering under PMLA against the petitioner. The impugned order was set aside, and all consequential proceedings against the petitioner were quashed. The respondent/ED was given the liberty to initiate appropriate proceedings if circumstances change or based on the final decision of the Supreme Court in the pending case.

In conclusion, the High Court held that the prosecution initiated by the respondent/ED cannot be allowed to continue if an accused is acquitted or discharged in a predicate offence, as there can be no offence of money laundering against the acquitted individual.