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TMI Blog2024 (6) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... d there is no interim order of stay is granted - The Apex Court holds that in the event the predicate offence would get obliterated by a competent court of law either by discharge, quashment or acquittal, the proceedings under the PMLA would automatically vanish. The order dated 22.12.2021 passed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002, stands quashed - Petition allowed. - HON'BLE MR JUSTICE M. NAGAPRASANNA For the Petitioners (By Sri. Sandesh J. Chouta, Senior Adv. For Smt. Maneesha Kongovi, Advocate) For the Respondents (By Sri. Madhukar Deshpande, Adv. For R1; ORDER The petitioners are before this Court calling in question an order dated 22.12.2021 passed by the second respondent under the provisions of the Prevention of the Money Laundering Act, 2002 (for short PMLA ), pursuant to registration of an Enforcement Case Information Report (for short ECIR ) against the petitioners - the husband and the wife. The proceedings against the husband and the wife commenced by registration of a crime by the Lokayukta for offence punishable under Section 13 (1) (e) read with Section 13 (2) of the Prevention of Corruption Act, 1988 in Crime No. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred seeking quashment of a attachment order passed by the Enforcement Directorate under the PMLA on the ground that the predicate offence is no more, the proceedings under Sections 3 and 4 are no more and therefore, these proceedings cannot be continued. 6. Learned Senior counsel would reiterate the submissions and the facts that are narrated hereinabove. 7. The issue now lies in a narrow compass. The proceedings in the predicate offence i.e., the offence under the Prevention of Corruption Act come to be closed by two orders. One against the wife in the year 2016 and against the petitioner in the year 2023, as observed hereinabove. The proceedings are challenged by the lokayuktha before the Apex Court and there is no interim order of stay is granted. 8. On the strength of the predicate offence being quashed, Sections 3 and 4 of PMLA offences are also quashed against the petitioners. The Apex Court, in the case of Vijay Madanlal Choudhary and Others vs. Union of India and Others 2022 SCC Online SC 929 has held as follows: 467. In light of the above analysis, we now proceed to summarise our conclusion on seminal points in issue in the following terms: (i) The question as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. 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. (vi) Section 5 of the 2002 Act is constitutionally valid. It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards as delineated by us hereinabove are effective meas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Singh; and other observations suggestive of doubting the perception of Parliament in regard to the seriousness of the offence of money-laundering, including about it posing serious threat to the sovereignty and integrity of the country. (c) The provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness. (d) As regards the prayer for grant of bail, irrespective of the nature of proceedings, including those under Section 438 of the 1973 Code or even upon invoking the jurisdiction of Constitutional Courts, the underlying principles and rigours of Section 45 may apply. (xiv) The beneficial provision of Section 436A of the 1973 Code could be invoked by the accused arrested for offence punishable under the 2002 Act. (xv)(a) The process envisaged by Section 50 of the 2002 Act is in the nature of an inquiry against the proceeds of crime and is not investigation in strict sense of the term for initiating prosecution; and the Authorities under the 2002 Act (referred to in Section 48), a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e event the predicate offence would get obliterated by a competent court of law either by discharge, quashment or acquittal, the proceedings under the PMLA would automatically vanish. 9. If the finding of the Apex Court is that the offence under the PMLA would automatically vanish, as there is no predicate offence, there is no offence under the PMLA. If the foundation goes, the superstructure would undoubtedly tumble down. What is remaining is, what is between the foundation and the superstructure i.e., the attachment orders, thus the attachment orders would necessarily tumble down, in the light of the entire proceedings under PMLA already quashed. 10. The submission of the learned counsel for respondent No. 1 that these proceedings need not be quashed, as in the event, the Apex Court would permit the lokayukta to continue the proceedings, all these proceedings would revive, holds no water. 11. Owing to a circumstance that is yet to come about, this Court would not hold its hands to quash the proceedings that are challenged in the case at hand, more so in the light of every other order being in favour of the petitioners. If any further proceedings are permitted to be continued, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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