No Property Attachment Under PMLA After Acquittal in Scheduled Offense, Rules Delhi High Court

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 opined.

The Delhi High Court has held that no proceedings under the Prevention of Money Laundering Act (PMLA), including attachment of properties, can continue after the accused is acquitted in the predicate offence even if an appeal against it is pending.

The court, in a decision released on Wednesday, stated that mere filing of the appeal against the acquittal in the predicate offence would not mean that the accused would continue to suffer the rigours of criminal proceedings or attachment under the PMLA.

The court's order was passed on an appeal by the Enforcement Directorate (ED) against a trial court's decision to discharge the accused persons of charges under PMLA after they were acquitted of the scheduled offences under the Indian Penal Code.

After the discharge, the trial court also released all the immovable properties and ordered the de-freezing of all the bank accounts of the accused persons.

Justice Vikas Mahajan rejected the investigating agency's contention that since the appeal against the acquittal is pending before the high court concerned, there is no finality and, therefore, the attached properties cannot be released.

Holding that the trial court rightly discharged the accused persons after acquittal in the scheduled offence, the judge said the scheduled offence and the proceeds of the crime generated through it are the foundation for the offence of money laundering and once that very foundation gets ''knocked out'', the charge of money laundering will not survive.

''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... 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,'' the court said in its order passed on April 30.

''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 will continue to suffer the rigours of criminal proceedings or attachment under the PMLA,'' stated the court.

The court further stated that there was no substance in the ED's submission that an appeal was a continuation of the proceedings before the trial court, emphasising that the trial concludes when it results in acquittal.

''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 opined.

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