Parvathi Kollur & Anr v. State by Directorate of Enforcement

FACTS

• The appellants, Parvathi Kollur & Anr (wife and son) of the accused No. 1, challenged the Karnataka High Court's decision to set aside their discharge for the offence under Section 3 of the Prevention of Money-Laundering Act (PMLA), 2002.

• The accused No. 1 (the husband/father) was a Deputy Revenue Officer, initially accused by Lokayukta Police of amassing assets disproportionate to his known income under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption (PC) Act, 1988 (the scheduled offence).

• The Directorate of Enforcement (ED) registered a case against the accused No. 1 and the appellants under the PMLA.

• Subsequently, the Special Judge (Lokayukta) acquitted the accused No. 1 of the offences under the PC Act, finding the prosecution's evidence insufficient.

• The appellants then sought discharge in the PMLA case. The Trial Court allowed their application, stating that the occurrence of scheduled offences was the basic condition for giving rise to "proceeds of crime."

ISSUES

1. Whether the High Court was right in setting aside the discharge order, maintaining that the complaint and material prima facie made out sufficient ground for proceeding against the appellants for offences under the PMLA, 2002.

JUDGEMENT

• The apex court ruled that the appeal succeeds and is allowed, setting aside the impugned judgment and order of the High Court and restoring the Trial Court's discharge order.

• The appellants were effectively discharged from the PMLA offences.

OBSERVATION

• It was observed that the view taken by the Trial Court was justified and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence.

COMMENTARIES

• The judgment of the Hon’ble Apex Court (Vijay Madanlal Choudhary) which dealt with the validity of the PMLA, has categorically held that when a person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by a Court of competent jurisdiction, then, there can be no offence of money-laundering against that person. This ratio was followed in Parvathi Kollur.

• The Hon’ble Apex Court held that the prosecution under PMLA, 2002 is not possible after the accused is acquitted in relation to the scheduled offence or is not charge-sheeted in the scheduled offence.