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2022 (11) TMI 1280 - HC - Money LaunderingInterpretation of statute - whether quashing of a regular case of scheduled offence shall automatically quashed the subsequent case registered under the provisions of PMLA Act? - money laundering - proceeds of crime - HELD THAT - This court is a view that the pendency of PMLA case cannot be sustained at this juncture. Moreover, Hon ble Appellate Tribunal PMLA is of specific finding that no proceeds of crime of the PMLA case has arisen from the regular case No. RCBSK2009E0008. The said regular case has already been quashed by this court. Thus, at the situation there is no proceeds of crime by virtue of order of quashing of the regular case. The quashing of FIR of regular case automatically created a situation that the offences, stated and alleged in the FIR has no existence; thus the Scheduled Offence has also no existence after quashing of the FIR. When there is no Scheduled Offence , the proceeding initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone. The instant criminal revisional application has merit to entertain and it is allowed.
Issues Involved:
1. Whether the quashing of a regular case of "scheduled offence" automatically quashes the subsequent case registered under the provisions of the PMLA Act. 2. Validity of provisional attachment orders under the PMLA. 3. Impact of settlement with the bank on the criminal proceedings. 4. Applicability of inherent powers under Section 482 Cr.P.C. to quash PMLA proceedings. Detailed Analysis: 1. Quashing of Regular Case and its Impact on PMLA Case: The primary issue was whether the quashing of a regular case involving a "scheduled offence" under IPC and the Prevention of Corruption Act would automatically nullify the subsequent case registered under the PMLA Act. The court noted that the regular case registered by the CBI was quashed by the High Court. The petitioners argued that since the scheduled offence was quashed, the existence of any "proceeds of crime" under the PMLA does not arise, and thus, the subsequent PMLA proceedings should also be quashed. The court referenced the Supreme Court's decision in Vijay Madanlal Chowdhury & Ors. vs. Union of India and Ors., which held that if the person is finally discharged/acquitted of the scheduled offence, there can be no offence of money laundering against him. 2. Validity of Provisional Attachment Orders: The Enforcement Directorate had passed provisional attachment orders under Section 5 of the PMLA, attaching properties worth Rs. 10.82 Crores. The Adjudicating Authority confirmed these orders, but the Appellate Tribunal PMLA set them aside, stating that the properties were acquired before the alleged criminal activities and thus were not "proceeds of crime." The court upheld this view, noting that the properties could not be attached under the PMLA as they were not derived from the alleged proceeds of crime. 3. Impact of Settlement with the Bank on Criminal Proceedings: The petitioners had settled with the Union Bank of India, agreeing to pay Rs. 6 Crores as full and final settlement. This settlement was recorded by the Debt Recovery Tribunal (DRT). The petitioners argued that this settlement negated the existence of any scheduled offence. The court acknowledged the settlement but emphasized that the criminal activities could not be wiped out merely by settling the dues with the bank. However, since the scheduled offence itself was quashed, the PMLA proceedings could not stand independently. 4. Applicability of Inherent Powers under Section 482 Cr.P.C.: The court considered whether it should exercise its inherent powers under Section 482 Cr.P.C. to quash the PMLA proceedings. The Enforcement Directorate argued against this, citing the Supreme Court's directive that High Courts should not quash FIRs/charge sheets in economic offences. However, the court found that in the present case, the quashing of the scheduled offence rendered the PMLA proceedings unsustainable. The court invoked its inherent powers to quash the ECIR case registered by the Enforcement Directorate and all proceedings arising from it, including the M.L. case pending before the City Sessions Court, Calcutta. Conclusion: The court concluded that the quashing of the scheduled offence automatically nullified the subsequent PMLA proceedings, as there were no "proceeds of crime" without the scheduled offence. The court invoked its inherent powers to quash the ECIR case and all related proceedings, emphasizing that continuing the PMLA case would be an abuse of the court's process. The judgment ensured that all connected applications and orders of stay were also vacated.
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