Opinion | Predicate Offence & Money Laundering: The Fate Of Prosecution

Opinion | Predicate Offence & Money Laundering: The Fate Of Prosecution The offence of money laundering is intrinsically dependent upon the existence and establishment of a scheduled offence Share Your Feedback Choose News18 on Google The Prevention of Money Laundering Act, 2002 (PMLA) was introduced as a measure to prevent the laundering of the proceeds that flow from certain criminal activities, specified in the Act itself and described as “scheduled offences", commonly termed as predicate offence. Laundering is closely linked to the existence of these predicate offences. The Act envisages a cohesive and harmonious trial framework for the offence of money laundering and its foundational “predicate" or “scheduled" offence. Section 44 of the PMLA contemplates that the trial of scheduled offences under the Act and the trial of the offence under PMLA section 3 should be tried by the same Special Court established under section 43 of the PMLA Act. The judicial pronouncements have repeatedly acknowledged this intrinsic linkage, recognising that while a prosecution under the PMLA is legally distinct, it is nevertheless inextricably connected to the fate of the predicate offence. Recommended Stories While the statute speaks in the language of convergence and coordination, the lived reality of criminal procedure pulls in the opposite direction. Until structural and procedural reforms are undertaken to truly synchronise the trials of predicate offences and PMLA cases, the purpose behind the mandate of the offences being tried in the same special Court remains more theoretical than real, an intent honoured in form, but defeated in execution. The offence of Money laundering, as defined under the PMLA, is not a standalone crime. It survives only so long as the scheduled offence survives. The Courts have acknowledged that once an accused is discharged or acquitted of the predicate offence, the PMLA prosecution loses its legal footing. Yet, in practice, the law often tells a different story, one where money laundering trials persist even after the foundation offence has collapsed, transforming what was meant to be a linked prosecution into a self-sustaining ordeal. In Vijay Madanlal Choudhary v. Union of India, the Supreme Court has clarified that the Enforcement Directorate’s jurisdiction is triggered only when a scheduled offence subsists. Where the predicate offence is quashed, or the accused is discharged or acquitted, the very foundation for alleging the existence of “proceeds of crime" disappears. The recent decision by the High Court of Jammu & Kashmir in Niket Kansal v. Union of India indicates a different judicial approach. In the said case, the petitioner had been discharged in the predicate NDPS cases and sought quashing of the ECIR and consequential PMLA proceedings. The Jammu & Kashmir High Court declined to adopt a mechanical approach and took a distinguished approach, holding that discharge in the predicate case does not ipso facto invalidate the ECIR. The order dated 22.05.2025 passed by the Jammu and Kashmir High Court has been challenged before the Hon’ble Supreme Court by the Accused, wherein notice has been issued, and directions have been passed granting...

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