2024 (8) TMI 667 - AT - FEMA

Appellants discharged from the predicate offence - orders to retain incriminating documents/digital evidences/material/Indian currency recovered/seized vide Panchnamas from the office premises of the appellants - HELD THAT - We have considered the rival submissions and find that pursuant to the order of the learned Magistrate in reference to predicate offence and subsequent order passed by Special Court to discharge the appellants even from the offence of money laundering under the Act of 2002, the order of provisional attachment and its confirmation cannot survive. Our view is supported by the judgment of the Apex Court in the case of Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT In the light of the aforesaid, the impugned orders are set aside and the appeals are allowed.

Summary

Issues:
Challenge to the order of the Adjudicating Authority confirming retention of incriminating documents and evidence.
Interference in the impugned orders based on discharge from predicate offence.
Validity of proceedings under the Prevention of Money Laundering Act, 2002 after discharge from scheduled offence.
Survival of provisional attachment order and its confirmation.

Detailed Analysis:
The appeal before the Appellate Tribunal challenged the order of the Adjudicating Authority confirming the retention of incriminating documents and digital evidence seized from the appellants' office premises. The appellants had been discharged from the predicate offence, with the closure report submitted before the learned Magistrate leading to no issuance of process. Subsequently, the Special Court discharged the appellants, stating that when the predicate offence ceases to exist, proceedings under the Prevention of Money Laundering Act, 2002 cannot continue. The appellants sought interference in the impugned orders based on this development (paragraph 2).

The appellants relied on the judgment of the Apex Court in a specific case to support their argument that once an accused is discharged from the scheduled offence or acquitted, proceedings under the Prevention of Money Laundering Act, 2002 cannot persist (paragraph 3). The respondent, however, contested this prayer, acknowledging that cognizance for the predicate offence was not taken by the learned Magistrate after the closure report. The respondent argued that the order of the Special Court discharging the appellants could be challenged further, and the provisional attachment order and its confirmation could not survive if the impugned orders were set aside (paragraph 4).

After considering the submissions, the Appellate Tribunal found that due to the orders of the learned Magistrate and the Special Court discharging the appellants from the predicate offence and money laundering offence under the Act of 2002, the provisional attachment order and its confirmation could not stand. The Tribunal's decision was supported by the Apex Court's judgment cited by the appellants (paragraph 5). Consequently, the impugned orders were set aside, and the appeals were allowed, granting the respondents the liberty to seek recall or revival of the appeal if the predicate agency or Enforcement Directorate succeeded in challenging the orders of the Learned Magistrate or the Special Court for the discharge of the appellants (paragraph 6).