SC: Prosecution Cannot Proceed Under PMLA If Accused is Discharged from Scheduled Offence

Money Laundering Law Insider

Sakina Tashrifwala

Published on: November 8, 2022 at 18:32 IST

Supreme Court reaffirmed the Prevention of Money-Laundering Act prosecution cannot proceed if the accused is absolved of the scheduled offence.

When granting a writ petition submitted by one Indrani Patnaik and others, the court made this observation.

They argued that because they had been exonerated in the criminal case, their trial for the scheduled offence had already concluded.

They argued that as a result, the PMLA proceedings likewise could not go forward.

The prosecuting agency may have disputed the abovementioned order, the Additional Solicitor General said, but he has not yet received any additional instructions.

“According to the record as it stands right now, the petitioners are exonerated of the claimed scheduled offence, hence under the law as pronounced by this Court, there is no possibility of them being charged with obtaining property illegally in connection with the alleged scheduled offence.”

“Given this circumstance, we do not see any justification for allowing the PMLA proceedings against the petitioners to continue,” Justices Dinesh Maheshwari and Sudhanshu Dhulia’s panel stated as much.

The bench cited the subsequent findings in the recent ruling in Vijay Madanlal Choudhary vs. Union of India:

“The unauthorised acquisition of property as a result of criminal behaviour connected to a scheduled offence constitutes the offence under Section 3 of the 2002 Act. The crime of money laundering is related to the procedure or conduct associated with such property.”

“According to the 2002 Act, the authorities are prohibited from prosecuting anyone based solely on the supposition that a scheduled offence has been committed unless the offence has been reported to the local police and is currently the subject of an investigation or trial, including a criminal complaint before the appropriate tribunal.”

“There can be no money-laundering offence brought against the person or anyone claiming that the property in question was linked to the specified scheduled offence through him if the person is ultimately cleared/acquitted of the scheduled offence or the criminal case brought against him is dismissed by the court with jurisdiction over the matter.”

However, the court left it up to the Enforcement Directorate to ask for a resumption of these proceedings if the petitioners’ discharge decision is overturned or otherwise altered and there is a good reason to do so under the PMLA.

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