Properties Attached Under PMLA To Be Released After Acquittal Or Discharge In Scheduled Offence: Delhi High Court

The Delhi High Court has ruled that once a person is discharged or acquitted from the scheduled offence, the properties attached under the PMLA cannot legally be treated as proceeds of crime or be viewed as property derived or obtained from criminal activity.

“A perusal of Section 8(6) of the PMLA makes amply clear that if an accused under the PMLA is discharged / acquitted, the learned Special Judge under Section 8(6) has no option but to pass an order releasing the properties attached under the PMLA,” Justice Vikas Mahajan said.

Observing that the scheduled offence and the proceeds of crime generated therefrom is the very foundation for the offence of money laundering, the court said:

“Once a person is discharged or acquitted from the scheduled offence, the very foundation gets knocked out and the charge of Money Laundering will not survive as there will be no proceeds of crime.”

It added: “Concomitantly, the properties attached under the PMLA cannot legally be treated as proceeds of crime or be viewed as property derived or obtained from criminal activity.”

Relying on the Supreme Court judgment in Assistant Director Enforcement Directorate v. M/s Nik Nish Retail Ltd. & Ors., the court said that if the judgment of acquittal in predicate offence is reversed in an appeal, it will be always open for ED to revive the proceedings under the PMLA.

“In other words, till the judgment of acquittal predicate offence is reversed in an appeal, all the effects of acquittal will continue to operate and mere filing of an appeal against acquittal in a predicate offence would not mean that the respondents (persons) will continue to suffer the rigors of criminal proceedings or attachment under the PMLA,” the court said.

Justice Mahajan made the observations while dismissing a plea moved by ED against a trial court order discharging various individuals in a money laundering case.

After the discharge, the trial court directed release of all the immovable properties attached by ED and ordered to defreeze or release all the bank accounts.

Dismissing ED's plea, the court rejected the argument of the central probe agency that an appeal against the order of acquittal is a continuation of the proceedings before the Trial Court.

The court said that 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.

“…no proceedings under the PMLA could be sustained after the acquittal of the respondent nos.1 and 2 in the predicate offence. Accordingly, the learned Special Judge vide order dated 09.10.2023 has rightly discharged the respondents herein from the offences under the PMLA. Likewise, there is no infirmity in the order dated 07.11.2023 whereby the attached movable and immovable properties were directed to be released by the learned Special Judge,” the court said.

Counsel for Petitioner: Mr. Anurag Jain, Special Counsel for ED

Counsel for Respondents: Mr. M.A. Niyazi, Ms. l Anamika Ghai Niyazi, Ms. Kirti Bhardwaj, Ms. Nehmat Sethi and Mr. Arquam Ali, Advocates

Title: DIRECTORATE OF ENFORCEMENT v. AKHILESH SINGH & ORS.

Citation: 2024 LiveLaw (Del) 545

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