2024 (8) TMI 156 - HC - Money Laundering

Money Laundering - predicate offence - Seeking for quashing of the ECIR proceedings - stand-alone nature of PMLA offence - even if a person is not an accused in the predicate offence, whether he/she could still be prosecuted for an offence under the PMLA, 2002? - HELD THAT - It is seen from the record that the petitioner, who is shown as 2nd accused in C.C.No.14 of 2019, had filed S.L.P. (Criminal) No(s).13304 of 2023 before the Hon'ble Supreme Court, challenging the dismissal of her quash petition. The Hon'ble Supreme Court had quashed the proceedings against the petitioner by an order dated 23.04.2024. The allegation in the said case is that A1 to A7 have entered into a criminal conspiracy in the commission of offence relating to allotment of housing plots under Government Discretionary Quota; that A1 and A2 were allotted lands under the said quota; that the petitioner, even before the sale deed was executed in her favour, had handed over the possession of the plot to A5 and entered into a joint venture agreement with A5 and unjustly enriched herself. 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 and Others v. Union of India and Others 2022 (7) TMI 1316 - SUPREME COURT , wherein, it is ruled ' 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.' This Court is of the view that in view of the fact that the proceedings against the petitioner/A2 in the predicate offence, has been quashed by the Hon'ble Supreme Court, the impugned proceedings cannot be sustained. Hence, the Criminal Original Petition stands allowed.

Summary

Issues:
1. Quashing of ECIR proceedings against the petitioner/A2.
2. Interpretation of the relationship between the predicate offence and the offence under the Prevention of Money Laundering Act, 2002 (PMLA, 2002).

Detailed Analysis:

Issue 1: Quashing of ECIR proceedings against the petitioner/A2
The petitioner/A2 sought the quashing of the ECIR proceedings against her, stemming from an FIR registered in Crime No.7 of 2011. The petitioner had filed a quash petition which was later quashed by the Hon'ble Supreme Court in S.L.P. (Criminal) No(s).13304 of 2023. The allegation against the petitioner/A2 was related to a criminal conspiracy involving allotment of housing plots and unjust enrichment. The Hon'ble Supreme Court quashed the proceedings against the petitioner/A2, citing similarities with another accused whose case had been quashed by the High Court. The Court noted that the proceedings against the petitioner/A2 in CC No.14 of 2019 were quashed, and therefore, the impugned ECIR proceedings could not be sustained. Consequently, the Criminal Original Petition was allowed, and the ECIR proceedings were quashed for the petitioner/A2.

Issue 2: Interpretation of the relationship between the predicate offence and the offence under the PMLA, 2002
The Special Public Prosecutor argued that the offence under the PMLA, 2002 is a stand-alone offence, independent of the predicate offence. It was contended that even if a person is not an accused in the predicate offence, they could still be prosecuted under the PMLA, 2002. However, the Court referred to a previous judgment by a larger Bench of the Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary and Others v. Union of India and Others. The Court highlighted that the offence of money laundering under the PMLA, 2002 is dependent on the illegal gain of property resulting from criminal activity related to a scheduled offence. It was emphasized that if a person is discharged or acquitted of the scheduled offence, there can be no offence of money laundering against them. Therefore, the Court concluded that once the proceedings in the predicate offence are quashed, the proceedings under the PMLA, 2002 cannot be sustained. This interpretation guided the decision to quash the ECIR proceedings against the petitioner/A2 in the present case.

In conclusion, the judgment by the Madras High Court involved the quashing of ECIR proceedings against the petitioner/A2 based on the quashing of proceedings in the predicate offence by the Hon'ble Supreme Court. The Court also clarified the relationship between the predicate offence and the offence under the PMLA, 2002, emphasizing that the quashing of the predicate offence proceedings would render the money laundering proceedings unsustainable.