2023 (5) TMI 1240 - HC - Money Laundering

Money Laundering - closure of proceedings - petitioner would contend that the B report has been filed in favour of the petitioner by the investigating agency and the concerned court has after hearing the complainant accepted the B report and closed the proceedings. HELD THAT - The issue that has fallen for consideration need not detain this Court for long or delve deep into the matter as the three Judge bench of the Apex Court in the case of VIJAY MADANLAL CHOUDHARY OTHERS VS UNION OF INDIA OTHERS 2022 (7) TMI 1316 - Supreme Court has held In view of special mechanism envisaged by the 2002 Act ECIR cannot be equated with an FIR under the 1973 Code. ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the Authorities referred to in Section 48 to commence inquiry/investigation for initiating civil action of provisional attachment of property being proceeds of crime. The Apex Court in the afore quoted paragraph has clearly held that if the accused in the predicate case gets acquitted on three circumstances (1) by an order of acquittal after full blown trial (2) if the proceedings are quashed by the High Court in exercise of its jurisdiction under Section 482 Cr.PC or (3) if the accused gets discharged of the offences. If these circumstances are met the proceedings in the Enforcement Case Information Report (ECIR) cannot be permitted to be continued. The circumstances narrated by the Apex Court (supra) is not the one that is found in the case at hand. The petitioner is neither acquitted after a full blown trial nor discharged from the array of accused and the proceedings against him are not quashed by this Court in exercise of its jurisdiction under Section 482 of the Cr.P.C. The circumstance in which the petitioner is placed though does not form a part of the Apex Court s finding the effect is the same. The cause is different but the effect is to what the Apex Court has held. The closure of the proceedings on acceptance of B report and such acceptance becoming final would be closure of proceedings akin to a discharge as in both the cases no trial is held. Therefore the petitioner does become entitled to the benefit of the finding of the Apex Court supra and his entitlement leads to obliteration of the proceedings against him as initiated by the Enforcement Directorate - petition allowed.

Summary

Issues Involved:
1. Legitimacy of Enforcement Directorate's summons post-closure of proceedings.
2. Interpretation of "closure of proceedings" under the context of a 'B' report.
3. Applicability of Supreme Court's judgment in VIJAY MADANLAL CHOUDHARY & OTHERS VS UNION OF INDIA & OTHERS.

Summary:

Legitimacy of Enforcement Directorate's Summons Post-Closure of Proceedings:
The petitioner challenged the summons issued by the Enforcement Directorate on 02.02.2023, arguing that the closure of proceedings in the predicate offence (Crime No.64/2015) negates the Directorate's right to initiate further proceedings. The petitioner contended that the acceptance of the 'B' report by the concerned court, which closed the proceedings, should prevent the Directorate from issuing summons.

Interpretation of "Closure of Proceedings" Under the Context of a 'B' Report:
The respondent argued that the acceptance of a 'B' report does not equate to an acquittal after a full trial and thus does not preclude the continuation of proceedings by the Enforcement Directorate. The court examined whether the closure of proceedings based on the acceptance of a 'B' report is akin to an acquittal or discharge, which would affect the legitimacy of the Directorate's actions.

Applicability of Supreme Court's Judgment in VIJAY MADANLAL CHOUDHARY & OTHERS VS UNION OF INDIA & OTHERS:
The court referred to the Supreme Court's judgment, which outlined that proceedings in the Enforcement Case Information Report (ECIR) cannot continue if the accused is acquitted after a full trial, discharged, or if proceedings are quashed by the High Court. The court concluded that the acceptance of a 'B' report and closure of proceedings, although not explicitly covered by the Supreme Court's judgment, has a similar effect to a discharge since no trial is conducted.

Conclusion:
The court determined that the closure of proceedings on acceptance of the 'B' report is akin to a discharge, entitling the petitioner to the benefit of the Supreme Court's findings. Consequently, the court quashed the summons issued by the Enforcement Directorate.

Order:
1. The Criminal Petition is allowed.
2. The summons issued to the petitioner on 02.02.2023 by respondent no.2 stands quashed.