2024 (9) TMI 466 - HC - Money Laundering

Seeking quashment of FIR - powers of the authorities to summon - Jurisdiction of the respondents from invoking any provision of PMLA against the petitioner. HELD THAT - The offence has not been wiped off in entirety in respect of the scheduled offence. The hands of the competent authority under the PMLA cannot be tied. In the event of considering the relief as such sought for in the present Writ Petition, the very objectives of the PMLA will be defeated. The statutory powers conferred on the competent authorities under the PMLA cannot be curtailed or the petitioner is entitled to seek any order in the nature of an injunction restraining the authorities from issuing summon/notice for the purpose of conducting enquiry or to investigate the offence of money laundering under the PMLA. Mere quashment of the F.I.R in respect of the petitioner alone in predicate offence would not wipe off the offence of money laundering and still the authorities are empowered to conduct further investigation, if required, or to trace out proceeds of crime under Section 2(1)(u) of the PMLA. The very objective of the PMLA to prevent money laundering and to provide power for confiscation of property cannot be taken away by issuing a Writ of Mandamus to forbear the authorities from summoning any person under the PMLA. Such an omnibus direction if issued would undoubtedly defeat the very purpose and objective of the PMLA. The present Writ Petition has been filed mainly on the ground that the victims have received money and filed affidavits stating that they have received the money paid by them to the accused or to the institution. Based on the affidavit, the High Court quashed the proceedings in compliance with the directions issued by the Hon'ble Supreme Court of India. Mere repayment of money involved in a crime would not wash away the offence of money laundering under the PMLA, if any committed - The authority of Law conferred under the PMLA to the competent authorities cannot be taken away by issuing a Writ of Mandamus. There are no reasons to consider the relief as such sought for in the Writ Petition since such prayer is not entertainable in law. Hence, the Writ Petition is dismissed.

Summary

Issues Involved:
1. Quashment of FIR under the Prevention of Money Laundering Act (PMLA).
2. Jurisdiction of Enforcement Directorate post-FIR quashment.
3. Powers of competent authorities under PMLA to summon and investigate.

Detailed Analysis:

1. Quashment of FIR under the Prevention of Money Laundering Act (PMLA):
The petitioner sought to forbear the respondents from summoning or investigating him and his family under the PMLA, as the FIR in Crime No.143 of 2016 had been quashed concerning the petitioner. The Supreme Court directed that the High Court should quash the proceedings arising out of the FIR concerning the petitioner upon the filing of affidavits by claimants stating no objection. The High Court complied, and the FIR was quashed against the petitioner alone. The petitioner argued that since the scheduled offence was quashed, no PMLA proceedings could be instituted against him.

2. Jurisdiction of Enforcement Directorate post-FIR quashment:
The respondents opposed the petition, stating that while the FIR was quashed for the petitioner concerning the scheduled offence, the Enforcement Directorate could still proceed under the PMLA if additional materials were available against other accused or any person involved in an offence under Section 3 of PMLA. The quashment of the FIR did not grant the petitioner absolute exoneration from appearing before the competent authority under the PMLA.

3. Powers of competent authorities under PMLA to summon and investigate:
The court noted that the competent authority under the PMLA retains the power to investigate and summon individuals even after the FIR's quashment. Section 44(1)(d)(ii) of the PMLA allows the inclusion of subsequent complaints for further investigation. Section 50 of the PMLA grants the Director and other officials powers akin to those of a civil court, including summoning persons, enforcing attendance, and compelling the production of records. The statutory powers under the PMLA cannot be curtailed, and the petitioner cannot seek an injunction to restrain the authorities from issuing summons or notices. The objective of the PMLA to prevent money laundering and confiscate property remains intact despite the quashment of the FIR.

The court concluded that the mere repayment of money involved in a crime does not eliminate the offence of money laundering under the PMLA. Authorities are still empowered to conduct investigations and summon individuals. The relief sought by the petitioner was not entertainable in law, and the writ petition was dismissed with no order as to costs.