Delhi HC: PMLA Proceedings stayed as FIR Quashed for Scheduled Offences

LI Network

Published on: November 26, 2023 at 12:42 IST

The Delhi High Court has ruled that proceedings under the Prevention of Money Laundering Act (PMLA) cannot persist in relation to ‘scheduled offences’ in FIRs that have been ‘quashed.’

This decision came in response to a petition under Article 226 of the Constitution, coupled with Section 482 of the Code of Criminal Procedure, 1973 (CrPC), seeking the cessation of PMLA proceedings.

Justice Amit Sharma, presiding over a Single Bench, emphasized, “…the principle that can be culled out is that a ‘scheduled offence,’ after an FIR has been quashed, cannot exist, and therefore, if there is no ‘scheduled offence,’ there can be no offence of money laundering with respect to the same.”

The court specifically noted that there could be no prosecution under the PMLA concerning the ‘scheduled offences’ outlined in the first two quashed FIRs, namely FIR No. 16/2018 and FIR No. 49/2021 registered at PS EOW.

The court’s decision underscored that even in an FIR being investigated by local police involving multiple complainants, compounding with some of them would not serve as grounds for quashing the FIR.

Senior Advocate Sandeep Sethi represented the petitioner, while Senior Panel Counsel Amit Tiwari and Special Counsel Zoheb Hossain represented the respondents.

In the case under consideration, two FIRs were filed under Sections 420, 406, and 120B of the Indian Penal Code, 1860 (IPC), against individuals, including the petitioner. Both FIRs arose from similar circumstances, where complainants alleged non-receipt of promised flats despite payments made in 2006-07.

The accused individuals, including the petitioner, settled disputes with the complainants amicably during the respective trials.

Subsequently, the department conducted a search and seizure under the Prevention of Money Laundering Act, 2002, leading to an application for retention of seized records.

The court clarified that the penalties imposed on the banks are rooted in deficiencies in regulatory compliance and do not impact the validity of any transactions or agreements made with their customers.

This move underscores the central bank’s commitment to upholding banking norms and ensuring adherence to regulatory frameworks within the financial sector.

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