The Delhi High Court has recently held that proceedings under the Prevention of Money Laundering Act cannot be sustained once the accused have been acquitted in the predicate offence.
Justice Vikas Mahajan was hearing a petition filed by the Directorate of Enforcement against an order dated October 9, 2023 passed by the Special Judge (PC Act) (CBI) Rouse Avenue Courts Complex, New Delhi whereby the respondents were discharged for the offences alleged in the complaint filed by the Directorate of Enforcement.
Case Background
In the predicate offence i.e. FIR No. 21/2017, the chargesheet was filed by the police on December 30, 2017 before the learned Chief Judicial Magistrate, Jamshedpur. The charges were framed in the said case and after the trial, the learned Chief Judicial Magistrate, Jamshedpur in his judgment dated August 14, 2023 acquitted both the accused under Sections 419/420/467/468/471 IPC read with Section 120B IPC.
Thereafter, the respondent accused filed an application before the Special Court under Section 227 read with Section 239 CrPC seeking discharge from the offence of money laundering.
The Special Judge in an order dated October 9, 2023 discharged the respondents from the offence of money laundering under Section 3 of the PMLA alleged in the complaint filed by the petitioner/ED, observing that the said offence was invoked against the respondents/accused on the basis of scheduled offence and once they have been acquitted by the concerned court in the scheduled offence, the criminal proceedings initiated under the PMLA cannot be continued as there can be no money consideration when scheduled offence has not been committed by the respondents/accused.
ED’s Appeal
During the pendency of the criminal proceedings under the PMLA, ED had attached some bank accounts and immovable properties of the respondents. In a provisional attachment order dated February 2, 2018, immovable properties and bank accounts mentioned in the complaint were attached and bank accounts mentioned in the supplementary complaint were also attached.
After the discharge of present respondents from the offence of money laundering under the PMLA, the learned Special Judge subsequently passed order dated November 7, 2023 releasing all the immovable properties and ordering to defreeze/release all the bank accounts.
Originally, when the present petition was filed, no appeal had been preferred by the State of Jharkhand against the judgment of acquittal in the predicate offence. The submission was made by the learned counsel for the ED that the State of Jharkhand is in the process of preferring an appeal to challenge the said acquittal, therefore, the operation of the aforesaid order dated November 7, 2023 of the Special Judge directing release of attached immovable properties and bank accounts, be stayed, otherwise, the present petition will be rendered infructuous.
Judgment
Court noted that two important questions that arise in this case are whether the proceedings under the PMLA could be continued despite the acquittal of the respondents in the scheduled offence and whether the properties attached by the petitioner/ED on the premise that the same are proceeds of crime could be released notwithstanding the pendency of appeal preferred against the order of acquittal in the scheduled offence.
The controversy articulated in the above noted two questions is no more res integra. The Supreme Court with reference to the relevant provisions of PMLA in Vijay Madanlal Choudhry vs Union Of India has observed –
“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.”
Thereafter, the High Court referred to the Supreme Court’s judgment in Nik Nish Retail Ltd. & Anr. vs. Assistant Director, Enforcement Directorate, Govt. of India & Ors. In the said judgment, the Apex court referred to the decision in Vijay Madanlal Choudhry and further noted-
“Appropriate proceedings can be always filed by the concerned parties for challenging the order by which predicate offence was quashed. If the said order is set aside and the case is revived, it will be always open for the petitioner to revive the proceedings under the Prevention of Money Laundering Act, 2002.”
Finally, Justice Mahajan noted-
“There is also no substance in the submission of the learned counsel for the petitioner/ED that an appeal preferred against the order of acquittal is a continuation of the proceedings before the Trial Court, inasmuch as it is trite law that in the context of criminal proceedings, the trial concludes when the same results in acquittal, though in the case of conviction the trial is concluded against the convicted accused with the imposition of sentence.
The upshot of above discussion is that no proceedings under the PMLA could be sustained after the acquittal of the respondents in the predicate offence.”
Thus, the petition was dismissed.
Author: Nitish Kashyap
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