Vijay Madanlal Choudhary V/S Union of India in Special Leave Petition Criminal

Dear Client,

Your observations are largely accurate and demonstrate a strong understanding of the legal principles laid down by the Supreme Court in Vijay Madanlal Choudhary v. Union of India (SLP (Criminal) No. 4634 of 2014) and other related judgments on the Prevention of Money Laundering Act, 2002 (PMLA).
Your observation is very much correct. The Supreme Court upheld the constitutional validity of these provisions and affirmed that the powers conferred under them have a reasonable nexus with the object of preventing money laundering. The registration of an FIR is not a prerequisite for initiating proceedings under PMLA. The judgment in Vijay Madanlal Choudhary does not mandate the registration of an FIR as a essential condition for lodging a complaint or initiating action under PMLA.
Moreover, The Delhi High Court’s decision in Vir Bhadra Singh v. Enforcement Directorate, and in P. Chidambaram v. Directorate of Enforcement, the Supreme Court clarified that a scheduled offence is a sine qua non for money laundering, but registration of an FIR is not a prerequisite.

To conclude the explanation I would say that your observations and legal analysis are precise and well-founded since the existence of a scheduled offence is the primary requirement and not an FIR, you may proceed with lodging a complaint with the Directorate of Enforcement (ED) if you have credible evidence or material suggesting the involvement of proceeds of crime. The ED is empowered to act under Sections 17 and 19 without the need for an FIR, provided there is reason to believe that money laundering has occurred.

Dear Client,
The Directorate of Enforcement is a multi-disciplinary organization mandated to investigate offences of money laundering and violations of foreign exchange laws. The statutory functions of the Directorate include the enforcement of PMLA, FEMA & the Fugitive Economic Offenders Act, 2018 (FEOA). ED has been given the responsibility to enforce the provisions of the PMLA by conducting investigations to trace the assets derived from proceeds of crime, to attach the property provisionally and to ensure prosecution of the offenders and confiscation of the property by the Special Court. A "scheduled offence" refers to the criminal activities listed in the Schedule of the PMLA, which include various offences under different criminal laws of the country. The PMLA defines "proceeds of crime" as any property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. Therefore, the existence of a scheduled offence is a prerequisite for establishing the existence of proceeds of crime and, consequently, for prosecuting an offence of money laundering under Section 3 of the PMLA. Therefore, the existence of a scheduled offence is a sine qua non for the invocation of money laundering proceedings under the PMLA. In the case of Ahsan Ahmad Mirza v. Directorate of Enforcement, 2024 SCC OnLine J&K 674, Decided on 14-08-2024] the J & K High Court clarified the moot point Whether the registration of an FIR for a scheduled offence is a sine qua non (essential condition) for prosecuting a money laundering case under the PMLA and relied on the judgment of Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586, held that the commission of a scheduled offence is a prerequisite for prosecuting an offence under the PMLA. The Supreme Court in December last year decided to examine a significant legal question, whether the Enforcement Directorate possessed powers, under the anti-money laundering law, to attach properties if there is no prior FIR for scheduled offences. The central agency, ED, approached the Apex Court challenging an order passed by the Madras High Court, restraining it from taking action against private contractors allegedly involved in illegal sand mining. Referring to a verdict of the apex court, Additional Solicitor General S V Raju, representing the ED, contended that the central agency could seek a direction from a competent court under Cr. PC, if the concerned authority declined to register an FIR in the main scheduled offences. The court noted the ASG has relied upon the first and second provisos of Section 5 of the Prevention of Money Laundering Act. Section 5 of the law empowers the ED to attach properties involved in money laundering cases. Its first provision mandates an FIR for attachment, and the other allows attachment without an FIR if the ED initiates a money laundering probe. The court rescheduled the hearing for the week commencing February 17, 2025. The updated status of the said case is not available as of now. However, you may go through the status of the said case if available online, which can clarify the query raised by you.