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2023 (3) TMI 645 - HC - Money LaunderingMoney Laundering - no scheduled offence - whether registration of a scheduled offence is a condition precedent for initiating ED proceeding? - HELD THAT - Admittedly, the respondent No.1 ED had registered the ECIR in question, pursuant to the registration of an FIR i.e. scheduled offence/predicate offence, which predicate offence now stands closed. This Court in the case of State of Maharashtra v/s Bhimrao Vithal Jadhav, 1974 (9) TMI 137 - BOMBAY HIGH COURT had observed that granting of C Summary amounts to an acquittal. Similarly, in Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT , the Apex Court had observed that if a person is discharged or acquitted of a scheduled offence by a competent Court, there can be no offence of money laundering against him. Admittedly there is no scheduled offence as against the petitioner in both the petitions, in view of the closure report filed by the police, which was accepted by the Courts. There being no predicate offence i.e. scheduled offence, the impugned ECIR registered by the respondent No.1 ED will not survive and as such the said ECIR will have to be quashed and set aside. Petition allowed.
Issues Involved:
1. Validity of the ECIR registered by the Directorate of Enforcement (ED) in absence of a scheduled offence. 2. Whether the closure of the predicate offence impacts the continuation of the ECIR. 3. The locus standi of the ED to intervene in the closure report proceedings. Issue-wise Detailed Analysis: 1. Validity of the ECIR registered by the Directorate of Enforcement (ED) in absence of a scheduled offence: The petitioners sought to quash the ECIR registered by the ED, arguing that the absence of a scheduled offence, a condition precedent for initiating ED proceedings, rendered the ECIR invalid. The petitioners relied on judgments including *Harish Fabiani and Others v/s Enforcement Directorate and Others* and *Directorate of Enforcement v/s M/s. Obulapuram Mining Company Pvt. Ltd.*, which supported the necessity of a scheduled offence for ED proceedings. The respondent ED did not dispute the absence of a scheduled offence but suggested the possibility of other cases against the petitioners. 2. Whether the closure of the predicate offence impacts the continuation of the ECIR: The Court reviewed the sequence of events, noting that the original complaint by Akbar Travels against Jet Airways and its directors led to an FIR, which subsequently resulted in the ECIR by the ED. However, the police filed a closure report, deeming the dispute civil in nature, which was accepted by the trial court. The ED's attempts to challenge this closure, including interventions and revisions, were consistently rejected by higher courts, culminating in the Supreme Court dismissing the ED's Special Leave Petition. The Court emphasized that the closure of the FIR by judicial process meant the ECIR could not survive, referencing the Supreme Court's judgment in *Vijay Madanlal Choudhary and Others v/s Union of India and Others*, which stated that without a predicate offence, an ECIR is not maintainable. 3. The locus standi of the ED to intervene in the closure report proceedings: The ED's locus standi to intervene in the closure report proceedings was consistently rejected by the trial court, Sessions Court, and the High Court. The courts held that the ED had no legal standing to contest the closure report, especially when the original complainant was present. This was affirmed by the Supreme Court's dismissal of the ED's appeal. The Court reiterated that granting of 'C' Summary amounts to an acquittal, and without a scheduled offence, there can be no money laundering charges. Conclusion: The Court concluded that with the closure of the predicate offence, the ECIR registered by the ED could not be sustained. The petitions were allowed, and the ECIR was quashed and set aside. The Court relied on established legal principles and precedents to affirm that the absence of a scheduled offence nullifies the basis for money laundering proceedings. The judgment underscores the necessity of a predicate offence for the ED to initiate and continue investigations under the Prevention of Money Laundering Act (PMLA). The petitions were disposed of accordingly, with all concerned parties directed to act on the authenticated copy of the judgment.
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