2024 (3) TMI 132 - HC - Money Laundering

Money Laundering - proceeds of crime - duping investors after having obtained licence to develop a housing project which also had been obtained on submission of forged and fabricated documents - about 3000 investors had been left high and dry and a wrongful loss of around one thousand crores had been caused - furnishing of fake bank guarantees, collaboration agreement, special power of attorney etc. - HELD THAT - It is common knowledge that of late, economic offences, which strike at the very economy of a country have spiralled. Scams running into hundreds and thousands of crores of rupees no longer surprise the common citizen as they seem to have become a norm. Litigation pertaining to these disputes are consuming substantial time of the Courts. Where there is an illegality, the same has to be struck down. At the same time, frivolous and luxury litigation needs to be discouraged. It is for the Courts to separate the grain from the chaff with a view to ensure that whereas the rights of citizens are not harmed, litigation also does not flood the Courts. The first argument that once the operation of the impugned order dated 07.01.2021, passed by the Chief Judicial Magistrate, Gurugram and further proceedings in the consequential FIRs Nos. 10 11 dated 14.01.2021 respectively had been stayed, the ECIR could not have been recorded, is devoid of merit - It has been categorically held by the Hon ble Supreme Court of India in the case of MANIK BHATTACHARYA VERSUS. RAMESH MALIK AND ORS. 2022 (10) TMI 1196 - SUPREME COURT that a restraint order passed in a criminal matter would not affect proceedings under the PMLA especially once the Enforcement Directorate was not a party to the same and also because the offence of money laundering is an independent offence wherein, an accused would have independent remedies in case of violation of the statutory provisions. The second argument that once, vide orders dated 05.07.2023, the Chief Judicial Magistrate, Gurugram had been directed to pass a fresh order on the complaint filed under Section 156 (3) Cr.P.C., the orders dated 07.01.2021 would be deemed to have been set aside and the consequential FIRs would become non-est and would be deemed to have been quashed or set aside is also devoid of merit. The 3rd argument that non-bailable warrants could not have been issued in aid of investigation is also devoid of merit. Firstly, it has come on record that the petitioners had not been cooperating with the respondents and that while they initially appeared in pursuance to the notices issued, they gave evasive answers and now they have not been appearing in pursuance to the summons/notices issued by the respondents. If this argument was to be accepted, an Investigating Agency, be it the jurisdictional police, the Enforcement Directorate, CBI or any other agency would have no remedy if an accused chose not to cooperate with the investigation. It cannot be accepted that an Investigating Agency would be rendered without any remedy. Even otherwise, it is now well settled that an accused can very well be summoned or his presence can be compelled by way of non-bailable warrants by the Court at the instance of the Investigating Agency. As regards the argument that petitioner Dharam Singh Chhoker had never been the director and, therefore, no proceedings could have been issued against them, the same is also devoid of merit. The argument that since Dharam Singh Chhoker was not arraigned as an accused in the complaints submitted by Neeraj Chaudhry, no proceedings could have been issued against him is also devoid of merit - All these issues have been dealt with by the Hon ble Apex Court in the case of PAVANA DIBBUR VERSUS THE DIRECTORATE OF ENFORCEMENT 2023 (12) TMI 49 - SUPREME COURT wherein it was held In a given case, if the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of the scheduled offence are quashed in its entirety, the scheduled offence will not exist, and therefore, no one can be prosecuted for the offence punishable under Section 3 of the PMLA as there will not be any proceeds of crime. A perusal of the aforesaid judgment shows that even if one of the petitioners was not shown to be an accused, he could be prosecuted under the PMLA so long as the scheduled offence exists. The scheduled offence, as already mentioned in the preceding paragraphs, is not only in FIR Nos. 10 11 dated 14.01.2021 but also in other FIRs referred to therein. It is also clear from a perusal of the aforesaid judgment that since there were other FIRs also, proceeds of crime cannot be ruled out and, therefore, it cannot be said that no offence of money laundering can be said to have been committed - The reality would emerge only once the concerned Investigating Agencies conclude the investigation/inquiry. The petitions are devoid of merit and accordingly, the same are dismissed.

Summary

Issues Involved:

1. Quashing of ECIR and consequential proceedings.
2. Quashing of non-bailable warrants.
3. Quashing of summons and subsequent actions.
4. Legality of searches and seizures.
5. Stay on proceedings arising from ECIR.
6. Stay on operation and execution of arrest warrants.

Summary:

1. Quashing of ECIR and Consequential Proceedings:
The petitioners argued that the ECIR should be quashed since the foundational FIRs were stayed and later set aside. The court noted that the ECIR is an internal document and its registration does not require the existence of an FIR. The court emphasized that the offence of money laundering is independent and can be investigated even if the foundational FIRs are stayed. The court referred to the Supreme Court's judgment in Vijay Madanlal Choudhary and others, which clarified that the registration of an ECIR is not contingent upon the existence of an FIR.

2. Quashing of Non-Bailable Warrants:
The petitioners contended that non-bailable warrants could not be issued in aid of investigation. The court held that non-bailable warrants can be issued by a Magistrate under Section 73 Cr.P.C. even during the investigation to ensure the presence of the accused. The court cited the Supreme Court's judgment in State Through CBI Vs. Dawood Ibrahim Kaskar and Others, which confirmed that non-bailable warrants could be issued for appearance before the court, not directly before the investigating agency.

3. Quashing of Summons and Subsequent Actions:
The petitioners sought to quash the summons issued against them. The court observed that the issuance of summons is a procedural step in the investigation and does not constitute a final action against the petitioners. The court held that the petitioners were required to comply with the summons and could not challenge them at this stage.

4. Legality of Searches and Seizures:
The petitioners argued that the searches and seizures conducted by the Enforcement Directorate (ED) were illegal. The court noted that the ED had conducted the searches as part of its investigation into money laundering. The court held that the petitioners had not provided sufficient evidence to prove the illegality of the searches and seizures.

5. Stay on Proceedings Arising from ECIR:
The petitioners requested a stay on all proceedings arising from the ECIR during the pendency of the court's decision. The court declined to grant a blanket stay, emphasizing that the investigation into money laundering must continue to ensure that the proceeds of crime are traced and recovered.

6. Stay on Operation and Execution of Arrest Warrants:
The petitioners sought a stay on the operation and execution of the arrest warrants issued against them. The court held that the issuance of non-bailable warrants was justified due to the petitioners' non-cooperation with the investigation. The court emphasized that the warrants were issued to ensure the petitioners' appearance before the court and that the ED was bound to follow legal procedures upon executing the warrants.

Conclusion:
The court dismissed the petitions, finding them devoid of merit. The court held that the ECIR and the subsequent actions taken by the ED were lawful and necessary for investigating the offence of money laundering. The court emphasized the importance of allowing the investigation to proceed without undue interference.