PMLA Prosecution Cannot Continue If Accused Is Discharged From The Scheduled Offence: Supreme Court

The Supreme Court reiterated that the prosecution under the Prevention of Money-Laundering Act cannot continue if the accused is discharged from the scheduled offence.

The court observed thus while allowing a writ petition filed by one Indrani Patnaik and others. They contended that their prosecution in relation to the scheduled offence had already come to an end as they were discharged from the criminal case. They contended that consequentially, the PMLA proceedings also could not continue.

The Additional Solicitor General on the other hand, 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. That being the position, we find no reason to allow the proceedings against the petitioners under PMLA to proceed further.", the bench of Justices Dinesh Maheshwari and Sudhanshu Dhulia said.

The bench relied on the following observations made in the recent judgment in Vijay Madanlal Choudhary vs Union of India 2022 LiveLaw (SC) 633: 

"The offence under Section 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 him."

The court however reserved liberty to Enforcement Directorate 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.

Case details

Indrani Patnaik vs Enforcement Directorate | 2022 LiveLaw (SC) 920 | WP(C) 368 OF 2021 | 3 November 2022 | Justices Dinesh Maheshwari and Sudhanshu Dhulia

Headnotes

Prevention of Money-Laundering Act, 2002 ; Section 3 - When the accused stand discharged of the scheduled offence, 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.

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