Punjab & Haryana High Court: Closure Report in Predicate Offense Ends Related PMLA Complaint

The Punjab and Haryana High Court recently addressed the relationship between closure reports in predicate offenses and complaints filed under the Prevention of Money Laundering Act, 2002 (PMLA). Justice Anoop Chitkara highlighted that when a closure report is filed in the predicate offense, any related complaint by the Enforcement Directorate (ED) under the PMLA would also be closed.

Explaining this connection, Justice Chitkara stated, "The proceedings under PMLA are always subservient and secondary to the primary proceedings under some principal criminal offense, which is termed the predicate offense."

He further illustrated this analogy, stating, "a wall is required, and only then can it be plastered and in the absence of the wall, the plaster cannot be applied, and if the wall is broken, the plaster would automatically break off because it cannot stand on its own. The predicate offense is that wall only on which the plaster of the scheduled offense of PMLA can be applied."

The Court clarified that for any prosecution under a scheduled offense under PMLA, a predicate offense is essential. If the predicate offense results in a closure report or acquittal, the related PMLA proceedings would also be concluded.

The case stemmed from a plea by Chetan Gupta and Ashwajit Singh to quash an Enforcement Case Information Report (ECIR) and associated proceedings under Section 482 of the CrPC. They argued that since a closure report had been filed in the predicate offense, the ED's continued summons were unjustified.

Senior advocate for the petitioners argued that the offense under PMLA is intertwined with the predicate offense, and the ED's proceedings have no independent existence. Therefore, their continuation after the closure report was unwarranted.

The Court agreed, stating, "There is no legal bar that restricts the powers of this Court under section 482 CrPC by ignoring the prayers to quash ECIR but to consider the remaining prayers to quash the complaint as well as all subsequent proceedings."

The Court cited the Supreme Court's decision in Pavana Dibbur v. The Directorate of Enforcement, which held that if proceedings for the scheduled offense conclude in acquittal or discharge, the scheduled offense ceases to exist, and consequently, no one can be prosecuted under PMLA.

Additionally, the Court referred to the Delhi High Court's ruling in Rajiv Channa v. Union of India, reiterating that the removal of the predicate offense also nullifies PMLA proceedings.

The Court clarified the difference between an ECIR and an FIR, highlighting that while an FIR is mandatory under CrPC, an ECIR is an internal document of the ED. However, the quashing of an ECIR would not serve any purpose if the related complaint and proceedings were not also addressed.

The Court ordered the closure of the ED's complaint and associated proceedings in light of the closure report filed in the predicate offense.