Short answer: Generally, no. Money laundering under the PMLA depends on proceeds of crime generated by a scheduled offence. The Supreme Court held in Vijay Madanlal Choudhary (2022) that if a person is finally discharged or acquitted of the scheduled offence, or the criminal case is quashed, there can be no money-laundering action against that person for property linked to it. Courts have applied this to closure reports and acquittals, but a quashing on narrow technical grounds, or a predicate case still alive against others, may not end the PMLA case.
Why the predicate offence matters
Section 3 PMLA punishes dealing with ‘proceeds of crime’, and Section 2(1)(u) defines proceeds of crime as property derived from criminal activity relating to a scheduled offence. The scheduled offence, often called the predicate offence, is investigated by the police, CBI or another agency, not by the ED. The ED cannot presume that a scheduled offence was committed; it depends on that separate case.
In Vijay Madanlal Choudhary v. Union of India (27 July 2022), the Supreme Court held that the offence of money laundering is dependent on the scheduled offence. Where the person is finally absolved by discharge, acquittal or quashing of the scheduled offence case, there can be no PMLA action against him, or persons claiming through him, for property linked to that offence. In Parvathi Kollur v. State (2022), the Supreme Court applied this to end a PMLA prosecution after acquittal in the predicate corruption case.
How courts are applying it
On 19 August 2026, in Virendra Sharma v. Directorate of Enforcement, Justice Anish Dayal of the Delhi High Court held that once the Magistrate accepted the cancellation report in the predicate FIR, the scheduled offence ceased to subsist and the ED could not continue on that ECIR. The Court also set aside an addendum by which the ED had tried to attach an older FIR to the same ECIR, and quashed the consequential proceedings.
In July 2026, a Delhi court dismissed the ED’s complaint in a coal block allocation matter after the special CBI court had acquitted the accused in the predicate case on 27 March 2026. The court reasoned that once the scheduled offence ended in acquittal, the basis for proceeds of crime fell away.
When the PMLA case may survive
Not every end to an FIR ends the ECIR. In Vijayraj Surana v. Assistant Director (September 2024), the Madras High Court held that quashing a predicate FIR on a technical ground, there for want of jurisdiction, does not automatically quash the ECIR, particularly where the predicate case is pending against others or in another forum. In Pavana Dibbur v. Directorate of Enforcement (2023), the Supreme Court held that a charge of criminal conspiracy under Section 120B IPC cannot by itself turn a non-scheduled offence into a scheduled one, which is relevant where the only link to the schedule is a conspiracy charge.
Timing matters too. In the Delhi High Court case, a pending challenge to the closure did not keep the ED’s case alive because the closure had not been stayed, but the Court noted the ED could seek revival if a higher court restored the FIR.
Related questions
Do I have to be an accused in the predicate case for ED to proceed against me?
Not necessarily. The PMLA targets dealing with proceeds of crime, so a person not named in the predicate FIR can still face PMLA action if a scheduled offence exists and the ED alleges that he dealt with its proceeds. What the person can rely on is the status of the predicate case itself.
What happens to attached property when the predicate case ends?
Attachment and confiscation rest on the property being proceeds of crime. Once the predicate case ends in a way that removes that basis, release of the property has to be sought from the authority or court where the attachment proceedings are pending. It does not happen on its own.
Does settling the dispute with the complainant end the PMLA case?
Settlement does not automatically end the PMLA case, but it can affect the predicate case and the calculation of proceeds of crime. In Tulsiani Construction (2026), the Allahabad High Court took into account settled bank loan accounts while quashing PMLA proceedings.
Can the ED add a new FIR to keep an ECIR alive?
Courts are scrutinising this closely. In Virendra Sharma (2026), the Delhi High Court called such an addendum legally unsustainable where the ED had known of the older FIR for years and there was no same-transaction link.
Practical points
- Track every stage of the predicate case: closure report, protest petition, discharge, acquittal, appeal.
- Obtain certified copies of closure, discharge or acquittal orders promptly.
- Check whether the predicate case survives against other accused or in another forum.
- Check how the ED has linked each attached property to the predicate offence.
Sources: LiveLaw Business, 24 Aug 2026; Telangana Today, Jul 2026; LiveLaw, 12 Sep 2024; Vijay Madanlal Choudhary judgment (Supreme Court).
For a confidential discussion on ED/PMLA matters, see ED and PMLA Defence.
General legal information only; not legal advice or solicitation.
