2023 (9) TMI 1379 - HC - Money Laundering

Seeking a direction to the respondent to close / drop the proceedings against the petitioner - money laundering - Predicate offence - HELD THAT - It is clear that in the case on hand, there is closure of predicate offence and there is no disputation or contestation that this closure of predicate offence has attained finality and has been given legal quietus. As regards THE DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT VERSUS EMTA COAL LIMITED ORS. ETC. 2023 (7) TMI 885 - SC ORDER , we remind ourselves of the principle as laid down in KUNHAYAMMED AND OTHERS VERSUS STATE OF KERALA AND ANOTHER 2000 (7) TMI 67 - SUPREME COURT to say that Hon'ble Supreme Court has declined to interfere with the Delhi High Court order which vide paragraph 16 specifically deals with the stand alone offence argument but the Hon'ble Supreme Court has put in a caveat and the caveat is recording of statement of learned Additional Solicitor General that in the event of any further action in respect of the predicate offence liberty has to be preserved for the Enforcement Directorate for reviving the proceedings. To be noted, this is captured in the third paragraph of the 06.07.2023 order of Hon'ble Supreme Court - this caveat will apply to the case on hand also and therefore when we accede to the prayer in the captioned WP it will clearly be with a similar caveat. The prayer of the writ petitioner answered in the affirmative.

Summary

Issues Involved:
1. Whether the proceedings under the Prevention of Money-Laundering Act, 2002 (PMLA) can continue after the closure of the predicate offence.
2. Interpretation and application of the principles laid down in Vijay Madanlal Choudhary case.

Summary of Judgment:

Issue 1: Continuation of PMLA Proceedings Post Predicate Offence Closure
The petitioner sought a direction to close proceedings against them under the Enforcement Case Information Report (ECIR) linked to an FIR which had been closed by the jurisdictional Metropolitan Magistrate Court. The petitioner argued that, according to the Supreme Court's ruling in Vijay Madanlal Choudhary, authorities under PMLA cannot prosecute if the predicate offence has been closed. The court noted the closure of the predicate offence and its finality, emphasizing that there can be no money laundering offence without an active predicate offence. This was supported by precedents such as S. Jagathrakshakan and Harish Fabiani cases, which reiterated that PMLA proceedings cannot survive the closure of the predicate offence.

Issue 2: Application of Vijay Madanlal Choudhary Principles
The court referenced the Supreme Court's decision in Vijay Madanlal Choudhary, particularly paragraph 467(v)(d), which states that money laundering charges cannot proceed if the predicate offence is closed or the accused is acquitted. The court also cited relevant case laws, including Emta Coal, where similar issues were addressed, and the Supreme Court's order affirmed that PMLA proceedings cannot continue post-closure of the predicate offence unless further action is taken on the predicate offence.

Final Order:
The court disposed of the writ petition, ruling in favor of the petitioner and directing the closure of PMLA proceedings. However, it included a caveat that if any further action is taken regarding the predicate offence, the Enforcement Directorate retains the right to revive the proceedings under PMLA. This decision aligns with the Supreme Court's stance in Emta Coal's case. There was no order as to costs.