MUMBAI, April 26 -- A special court under the Prevention of Money Laundering Act (PMLA) on Saturday accepted the Enforcement Directorate's (ED) closure report in a money-laundering case arising out of an alleged Rs.10-crore corporate fraud, holding that the prosecution cannot survive once the predicate offence itself has ended in compromise and acquittal. The court accepted that no offence of money-laundering was made out and ordered the closure of the Enforcement Case Information Report (ECIR) registered by the ED. The case stemmed from a first information report (FIR) registered on May 14, 2019 at the Khalapur police station alleging cheating, criminal breach of trust, forgery and conspiracy by the Indian directors of Oil Tools International Services Pvt Ltd (OTISPL), a Raigad-based oilfield equipment company promoted by a United States-based investor. The complaint alleged that after initially holding a minority stake in OTISPL, the Indian directors fraudulently altered the shareholding pattern, diluted the foreign promoter's stake from 84.98% to 22%, removed him from directorship, and siphoned funds through shell entities, causing losses running into crores. Based on the FIR, the ED registered an ECIR on February 23, 2021 to probe the alleged laundering of the diverted funds. The agency's case drew on a forensic audit ordered in company law proceedings, which had flagged irregular transfers and misappropriation exceeding Rs.10 crore. The criminal case, however, unravelled at the threshold. While a charge-sheet was filed in October 2020, in January 2022, the jurisdictional magistrate allowed compounding of the scheduled offences after recording a settlement between the complainant company and the accused directors, and acquitted them. Placing this development on record, the ED told the special court that the predicate offence had ended in acquittal, that no properties had been attached under the PMLA, and that no material establishing "proceeds of crime" had surfaced during investigation. Continuing the probe "at the cost of the public exchequer" would not be justified, it said. The court agreed, and held that the continuation of the ECIR was "not maintainable" once the predicate case had ended, and formally accepted the ED's closure report....