A recent decision by a single judge bench of the Delhi High Court on April 30, 2024, has clarified that property attached under the Prevention of Money Laundering Act, 2002 (PMLA) must be released, once an acquittal is granted for the predicate offence.
Brief facts and background
The Jharkhand police had registered an FIR against Akhilesh Singh and others (“Respondents”) under sections of the Indian Penal Code (IPC) which also constituted scheduled offences under PMLA. Following their acquittal by the Chief Judicial Magistrate in the IPC case, the Respondents applied for discharge from money laundering charges under the Prevention of Corruption Act, 1988 (PCA).
The special PCA court subsequently discharged the Respondents, stating that without a conviction for the predicate offence, PMLA proceedings could not continue. The state challenged this discharge order and also appealed the initial acquittal.
The State argued that appeals against acquittal should allow for the continued seizure of assets under PMLA, arguing they represent a continuation of criminal proceedings. Conversely, the Respondents asserted that an acquittal strengthens the presumption of innocence, requiring the immediate release of attached assets under Section 8(6) of PMLA.
Court's decision and our analysis:
The Delhi High Court referred to the Supreme Court's decision in Vijay Madanlal vs. Union of India (2022), which established that acquitted individuals are not linked to crime proceeds. The court reaffirmed that property attached under PMLA cannot be retained after acquittal, emphasizing that appeal processes do not extend the trial.
Additionally, the court cited the case law of M/s Nik Nish Retail to highlight that any reversal of an acquittal on appeal could lead to the revival of PMLA proceedings by the Enforcement Directorate.
By dismissing the State's petition, the Delhi High Court upheld that the initial discharge order conforms to legal principles. This decision empasizes the need to release assets attached under PMLA promptly upon acquittal or discharge from related criminal charges, ensuring adherence to principles of justice and the presumption of innocence.
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