2024 (3) TMI 695 - HC - Money Laundering

Money laundering - written complaint filed by Bank of Baroda based on EY audit alleging that the company along with others including the petitioner committed bank fraud to the tune of Rs. 57.29 crores - petitioner is aggrieved by continuance of ED investigation conducted by the respondent under Section 120B read with Section 420 IPC, Section 13(2) read with Section 13(1)(d) of Prevention of Corruption Act, 1988 against M/s Technovaa Plastic Industries Private Limited (Company) and others, wherein petitioner is named as accused No. 3 - HELD THAT - The summons issued by ED cannot be quashed merely because the relevant documents required for purpose of investigation or confrontation to the petitioner, have not been specified in the summons. It needs to be kept in perspective that under the scheme of PMLA, 2002 upon identification of existence of property being proceeds of crime, the Competent Authority is to inquire into relevant aspects in relation to such property and take necessary measures in this regard as per provisions of PMLA, 2002. Since ECIR in an internal document created by Department before initiation of prosecution against persons involved with process or activity connected with proceeds of crime, it is not necessary to reveal the evidence collected by the ED at this stage in the summons forwarded to the petitioner. Petitioner is yet to be absolved of scheduled offence by way of discharge, acquittal or quashing and as such protection orders cannot be issued in favour of petitioner ignoring the mandate under Section 45 of PMLA, 2002 for grant of bail. Further the summoning in exercise of statutory powers cannot be stalled merely on mere apprehension that petitioner may be arrested and prosecuted on basis of summons issued after registration of ECIR, in proceedings initiated by ED. In the facts and circumstances, no grounds for interim relief are made out at this stage. It may be clarified that no observations have been made on merits or demerits of the proceedings initiated by Enforcement of Directorate at this stage, and the questions are left open to be considered in the light of investigation by ED. Application disposed off.

Summary

Issues Involved:
The petition involves issues related to the quashing of ED investigation and associated proceedings, the validity of summons issued by the respondent, and the transfer of ED investigation from Ahmedabad to Delhi.

Summary:

Quashing of ED Investigation and Proceedings:
The petitioner sought relief under Article 226 of the Constitution of India and Section 482 of the Code of Criminal Procedure, challenging the continuance of ED investigation based on a complaint by Bank of Baroda. The petitioner argued that the EY Audit, the basis of the investigation, was declared unreliable by the NCLT Ahmedabad, and there was no evidence of "proceeds of crime." The petitioner contended that the investigation was a fishing expedition and arbitrary exercise of power. The petitioner relied on legal precedents to support the quashing of the investigation.

Validity of Summons:
The petitioner raised concerns about the vagueness of the summons dated 22.02.2024, as it did not specify if the petitioner was summoned as a witness or a suspect, nor did it detail the documents to be investigated. The petitioner argued that the summons lacked clarity, making it a fishing expedition. The petitioner sought relief from coercive steps pending the disposal of the petition.

Transfer of Investigation:
The petitioner objected to the transfer of the ED investigation from Ahmedabad to Delhi, alleging that the transfer was arbitrary and should be set aside. The petitioner argued that the transfer was not justified and sought relief from any coercive steps during the pendency of the petition.

Court's Decision:
The court dismissed the application, stating that no grounds for interim relief were established at that stage. The court clarified that no observations were made on the merits of the ED proceedings, leaving the questions open for consideration in light of the ongoing investigation. The application was disposed of, with the case listed for a future date.

Conclusion:
The court rejected the petitioner's plea to quash the ED investigation and associated proceedings, citing insufficient grounds for interim relief. The court emphasized that the validity of the summons and the transfer of the investigation would be considered in the context of the ongoing ED inquiry.