PMLA Case Can't Be Erased Merely Because Predicate Offence Was Quashed On Basis Of Compromise: Delhi High Court
The Delhi High Court has held that a money laundering prosecution under the Prevention of Money Laundering Act (PMLA) can survive even after the predicate offence is quashed on the basis of a compromise, observing that such a settlement does not amount to a judicial finding that the scheduled offence never occurred.
Justice Purushaindra Kumar Kaurav made the observation while dismissing a bail application filed by an accused in a money laundering network allegedly linked to fraudulent investment applications and forex transactions.
The Court held that where a predicate offence is quashed on merits with a judicial finding that the offence never occurred, the foundation of the PMLA case would disappear since there could be no proceeds of crime. However, the position is different where the predicate offence is quashed merely on the basis of a compromise.
“Where the predicate offence gets quashed on the basis of a compromise/agreement there is no finding rendered on the existence of the proceeds of crime. The proceedings get scuttled before a judicial mind could get applied on the existence of the predicate offence. In such a case, a conclusion, simpliciter, cannot be reached that no proceeds of crime were ever generated,” the Court observed.
It further cautioned that accepting the contrary position would allow accused persons to defeat money laundering proceedings by settling the original criminal case with the complainant.
“But for this, all PMLA proceedings could get frustrated by clever money launderers settling their cases with the complainants in the original predicate offence,” the Court remarked.
It further held that the quashing of the predicate offence could, at best, operate qua the individual complainant.
“The investigation by the ED concerning the money-laundering offence i.e., the operations undertaken on the property derived or obtained from criminal activity relatable to the scheduled offence, lies on a broader plane than the inquiry undertaken by the police qua the specific grievance of the complainant,” it added.
The Court also noted that the ED had subsequently incorporated 24 additional FIRs into the ECIR, alleging connections with entities including Xindai Technologies and Betench Networks and the larger conspiracy under investigation.
The Court rejected the argument that the FIRs could not affect the applicant merely because they did not name him. It noted that even the original FIR did not name him and that it was the ED's investigation which allegedly revealed his role.
Accordingly, the Court held that the PMLA proceedings survived and rejected the bail application.
Appearance: Mr. Vikas Pahwa, Sr. Adv. with Mr. Shadman Ahmed Siddiqui, Mr. Ankit Batra, Mr. Kunal Sheoran, Ms. Anushka Srivastava, Ms. Akshara Pareek, Ms. Anuradha, Mr. Muhammed Razik, Ms. Aamani Golay, Ms. Shreya Chauhan and Mr. Vaibhav Prasad Singh, Advs. for Petitioner; Mr. Zoheb Hossain, Sr. Adv. with Mr. Vivek Gurnani, Panel Counsel and Mr. Pranjal Tripathi, Mr. Kanishk Maurya, Advs. for Respondent
Case title: Rohit Vij v. ED
Case no.: BAIL APPLN. 4461/2025