No Money Laundering If Predicate Offence Falls: Delhi HC Stays PMLA Charges Against Karti Chidambaram Pending Scheduled Offence Outcome
Isabella Mariam
The Delhi High Court, Single Bench of Justice Ravinder Dudeja, directed the deferment of arguments on charge in a money laundering case initiated under the Prevention of Money Laundering Act, 2002 (PMLA). The directive was issued in a petition seeking to stay the framing of charges under PMLA until the conclusion of proceedings in the scheduled offence. The court recorded that the issue requires consideration and restrained the Special Judge from proceeding with arguments on charge until further orders.
The petitions were filed by Karti P. Chidambaram seeking a stay on framing of charges under the PMLA in proceedings arising out of ECIR/51/DLZO-II/2021. The petitioner, through Senior Advocate Mr. Siddharth Luthra, submitted that the predicate offence case has not reached the stage of consideration of charge. He argued that proceeding with the PMLA case before finalisation of the predicate offence would be contrary to the statutory framework of the PMLA and judicial precedent.
The petition referred to the decision of the Supreme Court in Vijay Madanlal Choudhary vs. Union of India, (2023) 12 SCC 1, which stated that the offence under Section 3 of the PMLA is contingent upon the illegal gain of property as a result of criminal activity relating to a scheduled offence. It was argued that in the absence of a confirmed scheduled offence and proven generation of proceeds of crime, the offence of money laundering cannot subsist.
The petitioner also cited Prakash Industries Ltd. vs. Union of India, 2023 SCC Online Del 336, decided by the Delhi High Court, which supported the requirement of a scheduled offence to sustain a money laundering charge.
On the contrary, the Directorate of Enforcement, represented by Special Counsel Mr. Zoheb Hossain, relied on an interim order dated April 4, 2025, passed by the Supreme Court in S. Martin vs. Directorate of Enforcement (SLP (Crl) No. 4768/2024). The order permitted continuation of trials in both scheduled offence and PMLA cases, with the caveat that no judgment shall be pronounced.
The petitioner countered that the interim order in S. Martin does not conclusively address the issue at hand, as it pertained to an application for abeyance till disposal of the scheduled offence trial, whereas the present case concerns deferment of charge framing in the PMLA proceedings. He argued that such interim orders hold no precedential value and referred to Kapila Hingorani (1) vs. State of Bihar, (2003) 6 SCC 1, wherein the Supreme Court held that interim orders are not authoritative precedents.
The judgment also recorded the observations from Niyati Healthcare and Research NCR (P) Ltd. vs. Union of India Ministry of Home Affairs, 2023 SCC Online Del 7301. In that case, the Delhi High Court held that prosecution under PMLA cannot continue once the accused has been acquitted or discharged in the scheduled offence.
Citing multiple decisions from various High Courts and the Supreme Court, including Nik Nish Retail Ltd. v. Enforcement Directorate (Calcutta High Court), Manturi Shashi Kumar v. Director, Enforcement Directorate (Telangana High Court), and the dismissal of SLPs by the Supreme Court challenging those judgements, the petitioner contended that the existence and survival of a scheduled offence is a foundational requirement for prosecution under the PMLA.
Justice Ravinder Dudeja observed that "the existence of a scheduled offence and proceeds of crime being the property derived or obtained as a result of criminal activity relating to the scheduled offence are sine qua non for not only initiating prosecution under PMLA but also for continuation thereof."
Referring to the Supreme Court’s decision in Vijay Madanlal Choudhary, the court recorded:
"The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money laundering."
The court further cited:
"If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him."
Addressing the scope of interim directions in S. Martin, the court distinguished it from the present matter: "In the present case petitioner is just praying that framing of charge in PMLA case be kept in abeyance till the charges are finalised in the case relating to predicate offence."
Justice Dudeja observed that the framing of charge under PMLA should await the finalisation of charges in the predicate offence: "Prima facie, the discharge of the petitioner in the predicate offence would certainly have bearing on the trial of the PMLA case inasmuch as in case of discharge, there can be no offence of money laundering against him."
The Delhi High Court issued the following interim directives:
"Issue notice. Notice is accepted by Mr. Zoheb Hossain, learned counsel for the ED. Reply be filed within a period of four weeks. List on 29.05.2025. In the meanwhile, learned Special Judge is directed to defer the arguments on charge to a date subsequent to the date fixed by this Court."
Advocates Representing the Parties:
For the Petitioner: Mr. Sidharth Luthra, Senior Advocate with Mr. Arshdeep Singh Khurana, Mr. Akshat Gupta, Mr. Sidak Singh Anand, Mr. Shrey Nautiyal, and Ms. Madhusruthi N.
For the Respondent: Mr. Zoheb Hossain, Special Counsel; Mr. Vivek Gurnani, Panel Counsel; Mr. Kartik Sabharwal; Mr. Pranjal Tripathi; Mr. Kunal Kochhar; Mr. Kanishk Maurya; Mr. Daanish Abbasi
Case Title: Karti P. Chidambaram vs. Directorate of Enforcement
Case Number: CRL.M.C. 2373/2025 & CRL.M.A. 10684/2025 CRL.M.C. 2374/2025 & CRL.M.A. 10686/2025
Bench: Justice Ravinder Dudeja
[Read/Download order]
