The Delhi High Court recently dismissed an appeal filed by the Enforcement Directorate against a trial court's decision to discharge accused persons of PMLA charges after they were acquitted of scheduled offences under the Indian Penal Code. The High Court noted that as per previous Supreme Court orders, the scheduled offence and proceeds generated from it form the very basis for a money laundering charge. If a person is acquitted of the scheduled offence, the foundation of the offence is removed and the money laundering charge cannot survive. Consequently, attached properties cannot legally be treated as proceeds of crime.
The Delhi High Court recently ruled that properties attached in money laundering cases cannot be considered "proceeds of crime" under the Prevention of Money Laundering Act (PMLA) if the person has been acquitted or discharged of the related scheduled offence.
The court made these observations while dismissing an appeal filed by the Enforcement Directorate (ED) against a trial court's decision to discharge accused persons of PMLA charges after they were acquitted of scheduled offences under the Indian Penal Code (IPC). Following the discharge, the trial court also released all immovable properties and ordered the unfreezing of bank accounts.
Section 8(6) of PMLA clearly states the trial court must release attached properties if the accused is discharged or acquitted.
The High Court noted that as per previous orders from the Supreme Court, the scheduled offence and proceeds generated from it form the very basis for a money laundering charge. If a person is acquitted of the scheduled offence, the foundation of the offence is removed and the money laundering charge cannot survive. Consequently, attached properties cannot legally be treated as proceeds of crime.
The judge also added that an acquittal order remains effective until reversed, and a mere appeal against acquittal does not mean the accused continues to face legal proceedings or property attachment under PMLA.
The court also rejected the ED's argument that an appeal continued the trial court proceedings. The judge further explained that in criminal cases, a trial concludes when it results in an acquittal, while in cases of conviction, the trial ends with the imposition of a sentence against the accused.
The court's ruling reaffirms the principle that an individual cannot be subjected to a money laundering investigation or have their properties attached under PMLA if they have been acquitted of the predicate offence. This provides significant relief to individuals who may have been falsely implicated in money laundering cases to harass them through attachment of properties. The ED will now need to thoroughly investigate and conclusively prove the scheduled offence before invoking PMLA charges or seeking attachment of properties.
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