On Thursday, a Supreme Court division bench comprised of Justices Dinesh Maheshwari and Sudhanshu Dhulia ruled that if the accused is discharged from the Scheduled Offence, the prosecution under the Prevention of Money Laundering Act cannot continue. The Court further observed, “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.”

Mr. Maninder Singh, Senior Advocate, appearing on behalf of the petitioner, relied on the judgement delivered by the Supreme Court in Vijay Madanlal Choudhary & Ors. v. Union of India & Ors., where it was held that “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.”

In response, the Additional Solicitor General appearing on behalf of the respondent stated that he has not received any further instructions regarding whether or not the prosecuting agency has challenged the said order.

Taking into account the submissions of both parties, the court granted the Enforcement Directorate the right to seek the revival of these proceedings if the order discharging the petitioners is annulled or modified in any way and if there is any legitimate ground to proceed under the PMLA.

Case Details:-

WP(C) 368 OF 2021

Indrani Patnaik vs Enforcement Directorate

Read the Complete order/Judgment on the following link:-

https://main.sci.gov.in/supremecourt/2021/7421/7421_2021_8_16_39444_Order_03-Nov-2022.pdf