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Quashing Regular Case Of "Scheduled Offence" Will Automatically Quash Subsequent Case Registered Under PMLA: Calcutta High Court

1 Dec 2022 4:30 AM GMT
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The Calcutta High Court on Monday held that once a regular case of "scheduled offence" is quashed, any subsequent case registered under Prevention of Money Laundering Act will also automatically stand quashed.

The observation was made while hearing a criminal revision application against PMLA proceedings. A criminal complaint was registered against the instant applicants under Sections 120B/420/409 IPC read with Section 13 of PMLA on the basis whereof the Enforcement Director, the respondent no. 1 herein, initiated investigation under provisions of PMLA. The said investigation eventually culminated into proceedings before the PMLA Appellate Tribunal whereby the Appellate Tribunal set aside an earlier order of attachment of property on the basis of its finding that the properties sought to be attached were not purchased from alleged "proceeds of crime" and that the allegation of money laundering against the instant applicants were unsustainable for the purpose of attachment under PMLA.

As regards the parallel criminal proceeding arising out of an FIR instituted under Sections 420/120B IPC read with S. 13 of PMLA, being a "scheduled offence" within the meaning of PMLA which were pending before the Metropolitan Magistrate CBI Court at Calcutta, the said proceeding was quashed by the Court vide a judgment and order of August 2, 2018. Petitioners accordingly contended that the subsequent proceedings instituted under PMLA and pending before the City Sessions Court could not survive independently on account of the negation of the scheduled offence.

The Single Judge Bench of Justice Subhendu Samanta, in deciding the question of whether any subsequently registered PMLA case can survive independently consequent to the quashment of a prior regular case involving a "scheduled offence", held:

"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 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.

Thus, the question answered in affirmative."

The Court, in arriving at its decision, extensively relied on the decision of the Supreme Court in Vijay Mandalay Chowdhury & Ors. v. Union of India & Ors., as cited by the counsels for the petitioners, on the position of law that an offence of money laundering under Section 3 of PMLA is "dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence". Therefore, it was held that if a person was discharged/acquitted of the scheduled offence or the criminal case against him was quashed by the Court of competent jurisdiction, there could not be an offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.

Accordingly, the Court in exercise of its inherent powers under Section 482 CrPC, quashed the PMLA case pending before the City Sessions Court and the FIR instituted in connection therewith.

Case: M/s Nik Nish Retail Ltd. & Anr. v. Assistant Director, Enforcement Directorate, Govt. of India & Ors., CRR No. 2752 of 2018

Date: 28.11.2022

Citation: 2022 LiveLaw (Cal) 348

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