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DELHI HIGH COURT
Vikas Mahajan, J.
Directorate of Enforcement – Petitioner
versus
Akhilesh Singh and Ors. – Respondents
Crl.Rev.P. 1199 of 2023 & Crl.M.A. 34025 of 2023
Decided on 30.4.2024
Prevention of Money Laundering Act, 2002 – Sections 3 and 4 – Criminal Procedure Code, 1973 – Section 239 – Offence of money laundering – Discharge from criminal case – Acquittal of respondents in scheduled offence – Scheduled offence and proceeds of crime generated therefrom is the very foundation for offence of Money Laundering – Once a person is discharged or acquitted from scheduled offence, very foundation gets knocked out and charge of Money Laundering will not survive as there will be no proceeds of crime – Concomitantly, properties attached under PMLA cannot legally be treated as proceeds of crime or be viewed as property derived or obtained from criminal activity – Till judgment of acquittal in predicate offence is reversed in appeal, all effects of acquittal will continue to operate and mere filing of appeal against acquittal in a predicate offence would not mean that respondents will continue to suffer rigours of criminal proceedings or attachment under PMLA – No proceedings under PMLA could be sustained after acquittal of respondents in predicate offence – Petition dismissed. (Paras 28, 29, 32 and 33)
Result: Petition dismissed.
Certainly. Based on the provided legal document, the key points are as follows:
The order of discharge or acquittal in the predicate offence (scheduled offence) fundamentally impacts the proceedings under the Prevention of Money Laundering Act (PMLA). Once a person is discharged or acquitted from the scheduled offence, the basis for the offence of money laundering, which depends on proceeds derived from that offence, is nullified. Consequently, the charges under PMLA cannot be sustained as there are no proceeds of crime (!) (!) .
The properties attached under the PMLA cannot be legally regarded as proceeds of crime or as property obtained from criminal activity once the predicate offence has been acquitted or quashed. The attached properties are in law only in custody of the law and should be released if the accused is acquitted or discharged in the predicate offence, unless the acquittal is reversed in an appeal (!) (!) .
The proceedings under the PMLA are directly dependent on the existence of a predicate offence and the existence of proceeds of crime. If the predicate offence is finally acquitted or quashed, the offence of money laundering cannot be continued, and the attached properties must be released in accordance with the relevant provisions of the PMLA (!) (!) .
The finality of an acquittal in the predicate offence is crucial. An acquittal only attains finality after it is upheld by higher courts and not merely at the initial trial stage. Pending appeals against the acquittal do not justify continued proceedings under the PMLA or retention of attached properties, as the foundation for such proceedings is effectively removed upon acquittal (!) (!) .
The legal framework and judicial principles establish that once the predicate offence is quashed or the accused is discharged, the properties linked to the offence cannot be treated as proceeds of crime. The law mandates the release of such properties unless the acquittal is set aside in an appellate process (!) (!) .
In the case where an appeal against the acquittal is pending, the attached properties should be released, as the foundation for their continued attachment no longer exists unless the appellate court reverses the acquittal. The law supports the release of properties following acquittal, and only a final reversal of that acquittal can justify continuing the proceedings or retention of properties (!) .
The proceedings under the PMLA are not independent but are contingent upon the status of the predicate offence. The law clearly states that if the predicate offence is not established or is quashed, the proceedings under PMLA cannot be sustained, and the attached properties must be released (!) .
The order of the court discharging the respondents from the offences under the PMLA was justified, given the acquittal in the predicate offence. The subsequent release of attached properties was also in accordance with legal provisions, and there is no legal infirmity in these orders (!) .
The pendency of an appeal against the acquittal does not automatically prolong or sustain proceedings under the PMLA or justify retaining attached properties. The foundation for attachment is absent once acquittal is final, and the law mandates their release unless the acquittal is overturned (!) (!) .
The petition challenging the discharge and release orders was dismissed, reaffirming that the proceedings under the PMLA cannot continue after the acquittal in the predicate offence, and the attached properties must be released (!) .
These points collectively emphasize that the foundation for proceedings under the PMLA is the existence of a predicate offence and proceeds of crime. Once the predicate offence is acquitted or quashed, the proceedings and attached assets must be terminated and released, unless the acquittal is reversed in appeal.
JUDGMENT
Vikas Mahajan, J.—The present petition has been filed against the impugned order dated 09.10.2023 passed by the learned Special Judge (PC Act) (CBI)-10, Rouse Avenue Courts Complex, New Delhi in CT Case 30/2019 arising out of RC: ECIR/06/HIU/2017 under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (in short ‘PMLA’), whereby the respondents were discharged for the offences alleged in the complaint filed by the petitioner/Directorate of Enforcement (in short ‘ED’).
2. The facts in brief giving rise to the present petition are that the Jharkhand police had registered FIR No.21/2017 against the respondent nos.1 and 2 under Sections 419/420/467/468/471 IPC read with Section 120B IPC at PS Birsanagar, Jamshedpur (Jharkhand).
3. All the offences invoked in the said FIR are scheduled offences under the PMLA and based on the same, a criminal case under Sections 3 and 4 of the PMLA was initiated by the petitioner/ED on 05.05.2017 bearing ECIR No.06/HIU/2017, against the respondent nos.1 and 2. However, later on, the petitioner/ED filed supplementary complaint dated 31.08.2021, whereby the respondent no.3 namely, Amit Kumar Singh was also arraigned as an accused.
4. In the predicate offence i.e. FIR No. 21/2017, the chargesheet was filed by the police on 30.12.2017 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 vide his judgment dated 14.08.2023 acquitted both the accused under Sections 419/420/467/468/471 IPC read with Section 120B IPC.
5. Sequel to above, the respondents herein, who had been arraigned as an accused in the criminal case under the PMLA, filed an application before the Special Court under Section 227 read with Section 239 CrPC seeking discharge from the offence of money laundering.
6. The learned Special Judge vide impugned order dated 09.10.2023 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. The operative part of the order dated 09.10.2023 reads as under:
“11. Thus it is clear from the observations of Hon’ble Supreme Court in the aforesaid judgment that the offence under Section 3 of The Prevention of Money Laundering Act, 2002 depend upon illegal gain of property as a result of criminal activity relating to a scheduled offence and once the accused is acquitted by the concerned court in the scheduled offence, the matter before special Court cannot be continued as there can be no offence of Money Laundering when scheduled offence has not been committed by accused persons. 12. Thus, in view of the above, the application filed by accused persons is allowed. Accused Akhilesh Singh, Garima Singh and Amit Kumar Singh are liable to be discharged. The accused namely Akhilesh Singh, Garima Singh and Amit Kumar Singh are discharged for the offences alleged in the complaint filed by Enforcement Directorate.”
7. During the pendency of the criminal proceedings under the PMLA, the competent authority had attached some bank accounts and immovable properties. Vide provisional attachment order dated 02.02.2018, immovable properties and bank accounts mentioned in para 2.18 of the complaint were attached and vide provisional order dated 12.08.2021 bank accounts mentioned in para 3.2 of the supplementary complaint were also attached. The Adjudicating Authority had confirmed the attachment in respect of the aforesaid properties and bank accounts in terms of Section 8(3) of the PMLA vide order dated 11.07.2018.
8. After the dis
Discharge from offence of money laundering – Once a person is discharged or acquitted from scheduled offence, very foundation gets knocked out and charge of Money Laundering will not survive as there....
The central legal point established in the judgment is that if an accused is acquitted in a predicate offence, there can be no offence of money laundering against them, and the proceedings initiated ....
Proceedings under the Prevention of Money Laundering Act are independent and can be based on continuing laundering activities, regardless of the scheduled offence's date of commission.
Money-laundering is a continuing offence, so long as tainted property is enjoyed, possessed, orprojected as untainted.
The Prevention of Money Laundering Act proceedings are independent of the predicate offence and must proceed without delay, reflecting the urgency in addressing economic crimes.
The trial under the Prevention of Money Laundering Act is independent of any pending trial for the predicate offence, as affirmed by the court.
Section 3 is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence.
The offence of money laundering is independent of the scheduled offence trials, and the trial under PMLA continues irrespective of pending proceedings related to scheduled offences.
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