When courts acquit or discharge accused in predicate offences—often collapsing the very foundation of money-laundering prosecutions—the Enforcement Directorate (ED) should not treat such outcomes as the end of the road, Additional Solicitor General (ASG) S V Raju said on Thursday, outlining a strategy that includes fresh probes, legal challenges, and intervention against possible collusion.
The issues outlined by ASG Raju resonate with ongoing high-profile cases, including the alleged irregularities in the Delhi excise policy, where Aam Aadmi Party national convener Arvind Kejriwal is among the accused. The case has seen parallel proceedings in predicate offences and under the Prevention of Money Laundering Act (PMLA), with legal debates centring on how developments in one affect the other.
On February 27, 2026, a Delhi trial court discharged former CM Kejriwal, AAP leader Manish Sisodia, and 21 others in the Delhi excise policy case, citing lack of evidence. However, the Delhi High Court found these findings “prima facie erroneous”, with a CBI challenge scheduled for hearing on May 4, 2026.
Speaking at an ED Day lecture at Bharat Mandapam, ASG Raju framed the problem through a series of scenarios: acquittal of all accused, discharge at the pre-trial stage, and even refusal by courts to take cognisance of a chargesheet. Each, he argued, requires a calibrated response rather than an automatic closure of proceedings under the PMLA.
At the heart of the issue lies a doctrinal tension. “We always say money laundering is a standalone offence… Why does it fall when the predicate offence falls?” Raju asked, before answering it himself: the law, as it stands, ties the offence to the existence of “proceeds of crime,” which in turn depends on a scheduled—or predicate—offence. “It is the umbilical cord,” he said, explaining that without a scheduled offence, “there cannot be money laundering”.
This dependency has led to courts quashing PMLA cases where the underlying offence—such as cheating under Section 420 of the Indian Penal Code— is held not to be made out. “If the court says there is no 420, then there is no money laundering,” he noted. Similarly, a complete acquittal of all accused in the predicate offence typically results in the collapse of the ED case.
However, ASG Raju drew a distinction between acquittal on merits and other forms of judicial closure. If a court finds that the predicate offence exists but acquits the accused for lack of evidence, “then there is a question” whether the money laundering case must necessarily fail, he said, suggesting room for legal evolution.
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‘Push for further probe’
On discharge—where courts drop charges before trial—ASG Raju acknowledged that the “prevalent view today” is that PMLA proceedings do not survive if all accused are discharged. Yet, he argued this should trigger a deeper response: “Look at the discharge, find the reason, go to the agency again.” In such cases, the ED could push for further investigation, especially if the initial probe was deficient.
He extended this logic to closure reports filed by investigating agencies. Citing instances where cases were closed because the accused could not be traced, Raju said such outcomes do not necessarily negate the existence of a predicate offence. “ED should make intervention and challenge the agency for collusion with accused,” he said, adding that the Directorate can supply material for a “second look” and renewed investigation.
On courts refusing to take cognisance of predicate offences—often due to lack of sanction—ASG Raju stressed that such orders are not determinations on the merits of the offence. “Your offence has been whitewashed. You are an aggrieved person,” he said, arguing that the ED can file revision petitions to challenge such refusals.
He also flagged technical barriers such as limitation periods. In offences punishable by up to two years, complaints must be filed within three years, failing which they become time-barred. “Does it mean that the offence itself did not take place?” he asked, again advocating recourse to revision proceedings.
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A more complex hurdle arises in cases of compounding or settlement. Illustrating with a builder accused of cheating homebuyers, Raju said that if the complainant withdraws the case after a settlement, the resulting acquittal can undermine the PMLA case. “So this is a hurdle ED has to deal with,” he said.
ASG Raju’s intervention signals a push within the enforcement establishment to preserve money laundering prosecutions despite setbacks in underlying offences—by leveraging procedural remedies, questioning investigative lapses, and, where necessary, reopening the trail of the alleged “proceeds of crime”.
