Delhi HC: a money-laundering case cannot survive once the FIR for the scheduled offence is quashed

The Delhi High Court quashed an Enforcement Case Information Report (ECIR) registered by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002 (PMLA) against Godrej Properties Ltd. The ECIR rested solely on a May 2024 FIR under Sections 406, 420 and 120-B of the Indian Penal Code, which the company said arose from a commercial dispute with the complainant company, since settled. On 25 August 2026, after the complainant said it would not pursue the matter, the High Court set aside the FIR and all action flowing from it. The Directorate did not dispute that the FIR stood quashed. Justice Mini Pushkarna applied the Supreme Court's decision in Vijay Madanlal Choudhary v. Union of India: only property derived from criminal activity relating to a scheduled offence is "proceeds of crime", and where the person named is finally absolved by discharge, acquittal or quashing of the criminal case, there can be no action for money laundering against that person in relation to property linked to that offence.

Quashing the FIR therefore removed the sole foundation of the ECIR, which had lost its substratum, with no subsisting scheduled offence and no proceeds of crime. The Court added a condition: if the FIR proceedings are revived by any party in future, the Directorate may revive the ECIR. This is a Delhi High Court ruling, binding within Delhi, not a Supreme Court precedent.