1. Petitioners facing prosecution under the Prevention of Money-laundering Act, 2002, following their discharge from the underlying scheduled offence. (Para 2 )
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2022 Supreme(SC) 1886
SUPREME COURT OF INDIA
Dinesh Maheshwari, Sudhanshu Dhulia, JJ.
Indrani Patnaik – Appellant
Versus
Enforcement Directorate – Respondent
Writ Petition (Civil) No. 368 of 2021
Decided On : 03-11-2022
Important Points
The main legal point established is that if a 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.
Subject
Criminal Law - Money Laundering
Act Referred
Headnote
ORDER - Prosecution under PMLA - Sec. 3 of the 2002 Act - [Sec. 3 of the 2002 Act] - The court referred to the consequence of failure of prosecution for the scheduled offence and highlighted that the offence under Sec. 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It emphasized that the authorities under the 2002 Act cannot prosecute any person on a notional basis or on the assumption that a scheduled offence has been committed, unless it is registered with the jurisdictional police and/or pending enquiry/trial 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.
Fact of the Case:
The petitioners were discharged from the scheduled offence, and the prosecution under the Prevention of Money-laundering Act, 2022 (PMLA) was based on the scheduled offence.
Finding of the Court:
The court found that in view of the law declared by the Supreme Court, there could arise no question of prosecuting the petitioners for illegal gain of property as a result of the criminal activity relating to the alleged scheduled offence.
Issues: Prosecution under PMLA in relation to the scheduled offence for which the petitioners have already been discharged.
Ratio Decidendi: The court held that in the given state of facts and the law declared by the Supreme Court, there cannot be any prosecution for the alleged offence of money-laundering in relation to the scheduled offence for which the petitioners have already been discharged.
Final Decision: The petition was allowed, and the proceedings under PMLA were quashed, with the reservation of liberty for the respondents to seek revival of the proceedings if the order discharging the petitioners is annulled or varied.
Legal Category Hierarchy
Advocates Appeared:
Maninder Singh, Advocate, Nandini Gore, Advocate, Naveen Kumar, Advocate, Sonia Nigam, Advocate, Karanveer Singh Anand, Advocate, Yash Dubey, Advocate, Nitesh Bhandari, Advocate, Prabhat Kumar Rai, Advocate, Prabhas Bajaj, Advocate, Zoheb Hussain, Advocate, Kanu Aggarwal, Advocate, Sughosh Subramamyam, Advocate, Preeti Rani, Advocate, Shantanu Sharma, Advocate, Sairica S.Raju, Advocate, Mukesh Kumar Maroria, Advocate, Kirti Renu Mishra, Advocate, Apurva Upmanyu, Advocate
Maninder Singh, Advocate, Nandini Gore, Advocate, Naveen Kumar, Advocate, Sonia Nigam, Advocate, Karanveer Singh Anand, Advocate, Yash Dubey, Advocate, Nitesh Bhandari, Advocate, Prabhat Kumar Rai, Advocate, Prabhas Bajaj, Advocate, Zoheb Hussain, Advocate, Kanu Aggarwal, Advocate, Sughosh Subramamyam, Advocate, Preeti Rani, Advocate, Shantanu Sharma, Advocate, Sairica S.Raju, Advocate, Mukesh Kumar Maroria, Advocate, Kirti Renu Mishra, Advocate, Apurva Upmanyu, Advocate
Table of Contents
2. Petitioners argue that discharge from the scheduled offence precludes money laundering prosecution; respondents do not dispute the discharge but reserve the right to verify if it was challenged. (Para 2 , 3 )
3. The court found that as the petitioners stand discharged of the scheduled offence, they cannot be prosecuted for illegal gain resulting from that specific criminal activity. (Para 3 , 4 )
4. Prosecution for money laundering under the Prevention of Money-laundering Act, 2002, cannot be sustained if the accused is discharged or acquitted of the scheduled offence. (Para 1 , 3 )
5. Petition allowed and proceedings under the Prevention of Money-laundering Act, 2002, quashed, with liberty reserved for revival if the discharge order is annulled or varied. (Para 5 )
6. Does the discharge of an accused in a scheduled offence affect money laundering proceedings?
Yes. Because money laundering is dependent on illegal gain from a scheduled offence, if the person is finally discharged or acquitted of the scheduled offence, there can be no offence of money laundering against them. (Para 1 , 3 )
7. Can authorities prosecute for money laundering based on the assumption that a scheduled offence was committed?
No. Authorities cannot prosecute on a notional basis or assumption; the scheduled offence must be registered with the jurisdictional police or be pending enquiry, trial, or criminal complaint. (Para 1 )
ORDER
1. Learned senior counsel for the petitioners has referred to the Judgment delivered by this Court in the case of Vijay Madanlal Choudhary and Ors. v. Union of India and Ors.decided on 27/7/2022, wherein the consequence of failure of prosecution for the scheduled offence has been provided in the following terms;-
"187. ... .....(d) The offence under Sec. 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 Signature Not Verified him."
2. Learned senior counsel has submitted that in the present case, prosecution of the petitioners in relation to the scheduled offence, on which the proceedings under the Prevention of Money-laundering Act, 2022 (PMLA) were based, have already come to an end with the petitioners having been discharged from V.G.R. Case No. 59 of 2009(T.R. Case No. 80 of 2011) by the order dtd. 27/11/2020, as passed by the High Court of Orissa in Criminal Revision No. 831 of 2018. Learned counsel would submit that in the given state of facts and the law declared by this Court, there cannot be any prosecution for the alleged offence of money-laundering in relation to the said offence for which, the petitioners have already been discharged.
3. Learned Additional Solicitor General appearing for the respondents though has not disputed the order dtd. 27/11/2020 passed by the High Court, discharging the petitioners from the scheduled offence but has submitted that he has not received further instructions as to whether the prosecuting agency has challenged the said order or not. The record as it stands today, the petitioners stand discharged of the scheduled offence and therefore, in view of the law declared by this Court, there could arise no question of they being prosecuted for illegal gain of property as a result of the criminal activity relating to the alleged scheduled offence.
4. That being the position, we find no reason to allow the proceedings against the petitioners under PMLA to proceed further.
5. However, taking note of the submissions made by the learned Additional Solicitor General and in the interest of justice, we reserve the liberty for the respondents in seeking revival of these proceedings if the order discharging the petitioners is annulled or in any manner varied, and if there be any legitimate ground to proceed under PMLA. Subject to the observations and liberty foregoing, this petition is allowed while quashing the proceeding in Complaint Case No. 05 of 2020 dtd. 10/1/2020 pending in the Court of Sessions Court, Khurdha at Bhubaneswar cum Special Court under the Prevention of Money-laundering Act, 2002. All pending applications also stand disposed of.
O R D E R
This petition is allowed in terms of the signed order. All pending applications also stand disposed of.
