Mere Filing Of Appeal Against Acquittal/Discharge In Predicate Offence Will Not Affect Release Of Properties Attached Under PMLA: Delhi HC

A petition was filed challenging the order passed by the Special Judge (PC Act, CBI) where it discharged the respondents for the offences under Sections 419, 420, 467, 468, 471 read with Section 120B of the Indian Penal Code, 1860.

The Bench of Justice Vikas Mahajan observed, “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. Incidentally, the order of the Hon’ble Supreme Court passed in M/s Nik Nish Retail Ltd. (supra) leave no manner of doubt that if the judgment of acquittal in predicate offence is reversed in an appeal, it will be always open for the petitioner/ED to revive the proceedings under the PMLA. 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 rigors of criminal proceedings or attachment under the PMLA.”

Special Counsel Anurag Jain appeared for the Petitioner whereas Advocate M.A. Niyazi appeared for the Respondents.

All of the offences are scheduled offences under the PMLA and therefore, a criminal case under Sections 3 and 5 of the PMLA was initiated by the Enforcement Directorate. During the pendency of proceedings under PMLA, the competent authority had attached bank accounts and immovable properties. After the discharge of the Respondents, the Special Judge passed an order to release all properties.

The Court also held that “There is also no substance in the submission of the learned counsel for the petitioner/ED that an appeal preferred against the order of acquittal is a continuation of the proceedings before the Trial Court, inasmuch as it is trite law that in the context of criminal proceedings, the trial concludes when the same results in acquittal, though in the case of conviction the trial is concluded against the convicted accused with the imposition of sentence.”

The Court discussed two moot questions, first, whether the proceedings under the PMLA could be continued despite the acquittal of the respondents in the scheduled offence and, second, whether the properties attached by the petitioner/ED on the premise that the same are proceeds of crime could be released notwithstanding the pendency of appeal preferred against the order of acquittal in the scheduled offence.

The Court reiterated the landmark judgment of Vijay Madanlal Choudhary v. UOI (2022 SC), and said, “The position thus, emerging from the aforesaid decisions is that the scheduled offence and the proceeds of crime generated therefrom is the very foundation for the offence of Money Laundering. Once a person is discharged or acquitted from the scheduled offence, the very foundation gets knocked out and the charge of Money Laundering will not survive as there will be no proceeds of crime. 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.”

The Court said that the special judge had rightly discharged the respondents herein from the offences under the PMLA and there is no infirmity in the order whereby the attached movable and immovable properties were directed to be released by the special judge.

Accordingly, the Court dismissed the petition.

Cause Title: Directorate of Enforcement v. Akhilesh Singh & Ors. (Neutral Citation:2024:DHC:3399)

Appearances:

Petitioner: Special Counsel Anurag Jain and EO Deepak Kumar

Respondents: Advocates M.A. Niyazi, Anamika Ghai Niyazi, Kirti Bhardwaj, Nehmat Sethi and Arquam Ali.

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