No PMLA property attachment following a planned offense conviction: Delhi High Court

The Delhi High Court has ruled that, even in cases where an appeal against the accused’s acquittal in the predicate offence is still pending, no actions taken under the Prevention of Money Laundering Act (PMLA), including the attachment of properties, may proceed after the accused is found not guilty.

In a ruling made public on Wednesday, the court declared that the accused would not be subjected to the hardships of criminal procedures or attachment under the PMLA simply by submitting an appeal against the predicate offence’s acquittal.

The Enforcement Directorate (ED) appealed a trial court’s judgment to absolve the accused of PMLA charges following their acquittal of the scheduled offenses under the Indian Penal Code, and the court’s ruling resulted from that decision.

Following the discharge, the trial court ordered the de-freezing of all the accused parties’ bank accounts and released all of their real estate.

The investigating agency claimed that there was no finality and that the attached properties could not be freed because the appeal against the acquittal was still pending before the relevant high court. However, Justice Vikas Mahajan rejected this argument.

According to the judge, who held that the trial court had properly released the accused following their acquittal in the scheduled offense, the scheduled offense and the money obtained from it serve as the basis for the money laundering offense, and if that basis is “knocked out,” the money laundering charge will be dropped.

Consequently, it is illegal to regard the properties attached under the PMLA as proceeds of crime or as having been acquired via illegal means. The court stated in its ruling dated April 30 that “a review of Section 8(6) of the PMLA makes abundantly clear that the learned Special Judge under Section 8(6) has no choice but to pass an order releasing the properties attached under the PMLA if an accused under the PMLA is discharged/acquitted.”

“In terms of 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 a challenge against acquittal in a predicate offence would not mean that respondents will continue to suffer the rigours of criminal proceedings or attachment under the PMLA,” stated the court.
The court emphasized that the trial ends when an acquittal occurs, saying that the ED’s argument that an appeal is merely an extension of the proceedings before the trial court was without merit.

“After respondent nos. 1 and 2 were found not guilty of the predicate offence, no PMLA proceedings could be continued. In light of this, the learned Special Judge has appropriately released the respondents from their PMLA offenses through an order dated October 9, 2023.

“Also, there is no defect in the order dated 07.11.2023 whereby the attached movable and immovable assets were directed to be released by the learned Special Judge,” the court stated.