When There Is No 'Scheduled Offence,' Proceedings Under PMLA Cannot Stand Alone- Calcutta High Court

Justice Subhendu Samanta observed, "The quashing of FIR of regular case automatically created a situation that the offences, stated and alleged in the FIR has no existence; thus the "Scheduled Offence" has also no existence after quashing of the FIR. When there is no "Scheduled Offence", the proceeding initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone."

A regular case was registered by CBI for offences punishable under Sections 120B, 420, and 409 IPC read with Section 13 of the Prevention of Corruption Act. On the basis of the said FIR, another case was registered by the Enforcement Directorate under the provisions of the PMLA Act, 2002.

The regular case registered by CBI was quashed by the High Court.

The issue dealt with by the Court was –

Whether quashing of a regular case of "scheduled offence" shall automatically quashed the subsequent case registered under the provisions of PMLA Act.

The Petitioners had prayed for the quashing of the subsequent case registered under the provisions of PMLA Act before the High Court.

The Court placed reliance on the judgment of the Apex Court in the case of Vijay Madanlal Chowdhury & Ors. Vs. Union of India and Ors., where the Bench had observed that if the person is finally discharged /acquitted of the scheduled offence or the criminal case registered against him is quashed by the Court of the competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to the stated scheduled offence through him.

The Court held that offence under PMLA cannot stand alone by virtue of the provisions of law laid down in the statute itself as well as by the dictu laid by the Apex Court in Vijay Madanlal (supra).

The Bench thus observed, "The Hon'ble Supreme Court in Vijay Madanlal Chowdhury has correctly pointed out that the offence U/s 3 of 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence."

"On the basis of the above discussion made by the Hon'ble Apex Court and Hon'ble High Courts. This court is a view that the pendency of PMLA case cannot be sustained at this juncture. Moreover, Hon'ble Appellate Tribunal PMLA is of specific finding that no proceeds of crime of the PMLA case has arisen from the regular case No. RCBSK2009E0008. The said regular case has already been quashed by this court. Thus, at the situation there is no proceeds of crime by virtue of order of quashing of the regular case," the Court held.

The Court thus quashed the case initiated under PMLA and allowed the criminal revisional application.

Cause Title - M/s Nik Nish Retail Ltd. & Anr. v. Assistant Director, Enforcement Directorate, Govt. of India & Ors.

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