2022 (2) TMI 1396 - HC - Money Laundering

Money Laundering - Predicate offence - Conspiracy for misappropriation of money - misuse of important documents - whether it can be said that there is no cognizable offence disclosed and that no further investigation is necessary and, therefore, the FIR needs to be quashed and/or whether the FIR can be quashed on the premise that it is filed to wreak vendetta and is mala fide? HELD THAT - Once it is revealed in the investigation that a huge sum of cash was withdrawn on vouchers and for a corresponding period, substantial deposits have been made in the personal Accounts of those, who were in charge of the Trust, i.e. Applicant Ashok Gandole and others, the matter requires investigation as during investigation, the source of Rs.7,00,00,000/- would be traced and, therefore, at this stage, it cannot be said that there is nothing to investigate because the Auditor has made a statement before the Enforcement Directorate. As regards the contention that the Respondent No.2 is on the run and is avoiding investigation by the Enforcement Directorate, the learned Senior Advocate for Respondent No.2 submitted that Respondent No.2 has taken exemption from the Enforcement Directorate and thereafter, no summons have been issued by the Enforcement Directorate, and it is entirely incorrect to state that the Respondent No.2 is on the run. Except asserting this orally, nothing further is pointed out to us by the Applicants that Respondent No.2 is avoiding investigating by the Enforcement Directorate. The Enforcement Directorate in the complaint itself has stated that it has not drawn any conclusion regarding the role of Respondent No.2, and further investigation is going on. As regards the facts at hand are concerned, Applicant Ashok Gandole was in-charge of the affairs of the Trust. Other Applicants have been shown as connected with him. The Trust in question conducted various Colleges, which were grant-in-aid, and public money was received. The Investigating Agency has stated that money was siphoned off from the Accounts of the Trust on cash withdrawal. Applicant Ashok Gandole and others are alleged to have deposits in their personal Accounts and have substantial properties. Therefore, at this stage, when the investigation is in progress, and all facts are not before the Court, the Court will have to allow the Police Authorities to carry on the investigation as cognizable offences stand disclosed. Once it is concluded that the FIR discloses cognizable offence and that investigation into this crime is necessary, and no case is made out for exercise of power under Section 482 of the Code, then direction that no coercive steps be taken cannot be continued. The Applicants have a remedy to apply for anticipatory bail under Section 438 of the Code, and if the court is satisfied, the Applicants can be released on anticipatory bail and, therefore, the Applicants are not remediless. To conclude, no case is made out by the Applicants to quash the concerned FIR. Application dismissed.

Summary

Issues Involved:
1. Whether the First Information Report (FIR) No. 389/2020 discloses a cognizable offence warranting further investigation.
2. Whether the FIR should be quashed on the grounds of mala fides and personal vendetta.
3. Whether the FIR should be quashed based on the findings of the Enforcement Directorate under the Prevention of Money Laundering Act, 2002.
4. Whether the delay in lodging the FIR affects its credibility.
5. Whether the interim order of no coercive steps and no filing of charge-sheet should continue.

Detailed Analysis:

Issue 1: Cognizable Offence and Necessity of Investigation
The court emphasized that the inherent powers under Section 482 of the Code of Criminal Procedure do not confer unlimited power to quash the FIR and should be exercised sparingly. The Supreme Court in cases like State of Haryana vs Bhajan Lal and Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra has laid down parameters for quashing an FIR, emphasizing that the court should not delve into the merits of the allegations at the FIR stage and should allow the investigation to proceed if a cognizable offence is disclosed. The court noted that the allegations in the FIR, including the misappropriation of funds and the incident of snatching cash and documents, prima facie disclose a cognizable offence, warranting further investigation.

Issue 2: Mala Fides and Personal Vendetta
The applicants contended that the FIR was lodged out of mala fides and personal vendetta by Respondent No. 2, a Member of Parliament. However, the court held that if a cognizable offence is disclosed, the police authorities have a statutory duty to investigate, and the argument of vendetta becomes irrelevant. The court found that the FIR disclosed cognizable offences, and thus, the investigation should proceed.

Issue 3: Findings of the Enforcement Directorate (ED)
The applicants argued that the findings of the Enforcement Directorate, which allegedly exonerated them and implicated Respondent No. 2, should lead to the quashing of the FIR. The court rejected this argument, stating that the ED's investigation under the Prevention of Money Laundering Act, 2002, operates in a different domain and does not cover the predicate offences mentioned in the FIR. The court emphasized that the ED's findings are not final and cannot form the sole basis for quashing the FIR, which requires independent investigation.

Issue 4: Delay in Lodging the FIR
The applicants argued that the delay in lodging the FIR regarding the incident of 7 July 2019 made the allegations improbable. The court noted that the delay was explained by the constitution of an Enquiry Committee and the threats made by the accused to the office bearers. The court held that the delay did not affect the necessity of investigation, especially given the serious nature of the allegations involving misappropriation of public funds.

Issue 5: Interim Order of No Coercive Steps and No Filing of Charge-Sheet
The court referred to the Supreme Court's guidelines in Neeharika Infrastructure Pvt. Ltd., which caution against routinely granting interim orders of no coercive steps during the pendency of a quashing petition. The court concluded that since the FIR disclosed cognizable offences and further investigation was necessary, the interim order of no coercive steps and no filing of charge-sheet could not be continued. The applicants were advised to seek anticipatory bail under Section 438 of the Code of Criminal Procedure.

Conclusion:
The court dismissed all the applications, holding that the FIR disclosed cognizable offences requiring further investigation. The court also clarified that the observations made were solely for determining the necessity of investigation and did not affect the merits of the case.