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2023 (2) TMI 399 - HC - Money LaunderingMoney Laundering - proceeds of crime - more than 200 accounts were opened in various Banks to collect the scam money and further route the same to utilize it for the personal gains of the scamster/accused - grievance of the petitioner/Enforcement Directorate were to the manner in which the production warrant which was issued on 18.01.2023 by the Learned Special Court was recalled and the accused persons were directed to be set at liberty - HELD THAT - The interpretation of the learned Senior advocate appearing for the opposite parties that ECIR can be registered only after finality is attained in a criminal proceeding is not acceptable to this Court. Taking into account the provisions of Section 19(3) Section 45 (Explanation) Section 46 Section 65 and Section 71 of the PMLA Act 2002 read with paragraph 324 of the judgment of Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT it is held that the foundation finding and conclusion of the order dated 21.01.2023 passed by the Learned Special Judge is bad in law and the same as such is set aside. Application allowed.
Issues Involved:
1. Validity of the recall of the production warrant by the Special CBI Court. 2. Requirement of custody for the accused for further investigation by the Enforcement Directorate. 3. Interpretation of the terms 'custody' and 'arrest' within the context of the Prevention of Money Laundering Act (PMLA). 4. Applicability of the Supreme Court judgment in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors. to the present case. Issue-wise Detailed Analysis: 1. Validity of the Recall of the Production Warrant by the Special CBI Court: The petitioner, Enforcement Directorate (ED), challenged the order dated 21.01.2023, where the Special CBI Court recalled the production warrant issued on 18.01.2023 and directed the release of the accused. The ED argued that once the production warrant was executed, the Special Court had no authority to recall it. The foundation of the said order was based on a misreading of the Supreme Court judgment in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors. The High Court found that the Special Court's order was based on an incorrect interpretation of the Supreme Court judgment and set aside the order dated 21.01.2023. 2. Requirement of Custody for the Accused for Further Investigation by the Enforcement Directorate: The ED emphasized the necessity of custody for the accused to ascertain the trail of proceeds of crime, identify further beneficiaries, determine the role of other suspected persons, and identify properties acquired from the proceeds of crime. The High Court agreed with the ED's submission, emphasizing the importance of custody for thorough investigation under the Prevention of Money Laundering Act, 2002. 3. Interpretation of the Terms 'Custody' and 'Arrest': The ED relied on various judgments to differentiate between 'custody' and 'arrest.' The High Court noted that while 'custody' may amount to an arrest in certain circumstances, the two terms are not synonymous. The Court referred to the Supreme Court judgment in Directorate of Enforcement Vs. Deepak Mahajan & Anr., which clarified that 'custody' and 'arrest' are distinct terms and should not be interpreted as synonymous. The Court also considered the judgment in Deepak Gupta Vs. Enforcement Directorate of India, emphasizing that the meaning of 'custody' must be understood in the context of its use. 4. Applicability of the Supreme Court Judgment in Vijay Madanlal Choudhary & Ors. Vs. Union of India & Ors.: The accused argued that the Special Court's order was based on the Supreme Court judgment in Vijay Madanlal Choudhary, which required finality in criminal proceedings before registering an ECIR. The High Court disagreed, stating that the Special Court misinterpreted the judgment. The Court highlighted that the Supreme Court's judgment did not preclude the registration of an ECIR before the finality of criminal proceedings. The High Court emphasized the comprehensive nature of the PMLA, which allows for inquiry and investigation before filing a formal complaint, and the role of authorities in preventing money laundering activities. Conclusion: The High Court set aside the order dated 21.01.2023 passed by the Special CBI Court, allowing the ED to take the accused into custody for further investigation. The Court clarified the distinction between 'custody' and 'arrest' and the applicability of the Supreme Court judgment in Vijay Madanlal Choudhary. The ED was directed to produce the accused before the Special Court and advance their prayers for custody if required.
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