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2024 (6) TMI 774 - HC - Money LaunderingIssues Involved: 1. Quashment of proceedings under the Prevention of Money Laundering Act, 2002 (PMLA). 2. Validity of attachment orders under the PMLA. 3. Impact of quashing the predicate offence on PMLA proceedings. Summary: The petitioners challenged an order dated 22.12.2021 passed by the second respondent u/s PMLA, following the registration of an Enforcement Case Information Report (ECIR) against them. The proceedings against the petitioners began with the registration of a crime by the Lokayukta for offences punishable u/s 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988 in Crime No. 54/2012. The wife's discharge application was initially rejected but later allowed in Crl. R.P. No. 814/2015, quashing the proceedings against her, which became final. The husband's proceedings were quashed by the High Court in W.P. No. 736/2018, a decision challenged by the Lokayukta before the Apex Court in S.L.P. No. 11870/2023. The Apex Court issued notice but did not grant an interim stay. The petitioners, along with others, filed Crl. P. No. 6130/2017 challenging the proceedings initiated against them u/s 3 and 4 of the PMLA. A co-ordinate Bench of the High Court quashed the proceedings against all accused in the ECIR on the basis that the predicate offence had been quashed. The present petition seeks the quashment of an attachment order passed by the Enforcement Directorate u/s PMLA, arguing that the predicate offence and proceedings u/s 3 and 4 of the PMLA are no longer valid, thus these proceedings cannot continue. The Court noted that the predicate offence under the Prevention of Corruption Act was closed by orders in 2016 and 2023, and there was no interim stay from the Apex Court. Consequently, the offences u/s 3 and 4 of PMLA were also quashed. The Apex Court in Vijay Madanlal Choudhary and Others vs. Union of India and Others 2022 SCC Online SC 929 held that if the predicate offence is quashed, the proceedings under PMLA would automatically vanish. The Court concluded that without the predicate offence, there is no offence under PMLA, and thus the attachment orders must also be quashed. The argument that proceedings should not be quashed in case the Apex Court allows the Lokayukta to continue was rejected. However, the Enforcement Directorate retains the liberty to resume proceedings if the Apex Court restores the predicate offence. ORDER: i) The writ petition is allowed. ii) The order dated 22.12.2021 passed by the Adjudicating Authority u/s PMLA stands quashed. iii) If the Apex Court sets aside the High Court's order, all proceedings under PMLA against the petitioners will be restored automatically.
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