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TMI Blog2022 (9) TMI 1286X X X X Extracts X X X X X X X X Extracts X X X X ..... th Agarwal, Sr. Advs. with Mr. Dheeraj Nair, Ms. Vishrutyi Sahni, Mr. Abinav Sekhri, Ms. Aishna Jain, Advs. Mr. Mahesh Jethmalani, Sr. Adv. with Mr. Dheeraj Nair, Mr. Hitesh Jain, Ms. Siya Chaudhary, Mr. Subhash Jadhav, Mr. Kapil Sibal, Mr. Rajiv Nayar, Sr. Advs. with Mr. Rishi Agrawala, Mr. Karan Luthra, Mr. Ankit Banati, Mr. Shravan Niranjan, Advs. Mr. Gaurav Mishra, Mr. Jaiyesh Bakshi, Mr. Ravi Tyagi, Mr. Daman Popli, Ms. Mayuri Shukla, Ms. Neetu Devrani, Advs. Respondents Represented by: Mr. S.V. Raju, ASG with Mr. Zoheb Hossain, SPP for ED with Mr. Vivek Gurnani, Adv. with Mr. Rajendra Singh, IO, ED. Mr. Anurag Ahluwalia, CGSC with Mr. Danish Faraz Khan, Adv. for UOI. Mr. Ajay Digpaul, CGSC for UOI with Mr. Kamal R. Digpaul, Ms. Swati Kwatra, Advs. for UOI. Mr. S.V. Raju, ASG Mr. Asheesh Jain, CGSC with Mr. Keshav Mann, Mr. Vedansh Anand, Advs. for R-2/UOI. Mr. Kirtiman Singh, CGSC for UOI with Mr. Waize Ali Noor, Ms. Kunjala Bhardwaj, Mr. Madhav Bajaj, Mr. Yash Upadhyay, Advs. for UOI. Mr. Apoorv Kurup, CGSC with Ms. Nidhi Mittal, Mr. Ojaswa Pathak, Advs. for R-1/UOI. J U D G M E N T ANISH DAYAL, J. 1. These writ petitions were heard together and have sought similar praye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Relief sought by the Petitioners 3. The immediate concern of the petitioners relates to prayers in the nature of para 1 (ii) - (vi), whereby the petitioners are concerned about the continuation of proceedings in relation to the ECIR No. ECIR/07/HIU/2021 ("the said ECIR") issued by the Directorate of Enforcement ("ED") despite the predicate offence registered under FIR No. 129/2021 ("the said FIR") having been quashed by the judgment dated 4th May, 2022 of the High Court of Bombay. The petitioners pray for issue of a writ of certiorari setting aside summons issued by the ED to various petitioners in respect of the said ECIR, the Look Out Circular ("LOC") and any other consequential proceedings emanating out of the said ECIR, and quash the same in view of the predicate offence having been quashed by judgment dated 4th May, 2022 passed by the High Court of Bombay in relation to the said FIR. The thrust of the petitioners' contention is based upon the conclusion of the Hon'ble Supreme Court in Vijay Madanlal Choudhary (supra) in para 467 (v)(d) which reads as under: "(v)(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer can still invoke power of issuing order of provisional attachment and contemporaneously send information to the jurisdictional police about the commission of scheduled offence and generation of property as a result of criminal activity relating to a scheduled offence, which is being made subject matter of provisional attachment." Therefore, even though there may not be any scheduled offence registered, the ED can still move for provisional attachment and therefore the said ECIR may not be quashed. iii) Since the prayer in the writ petitions seeking declaration regarding unconstitutionality of various provisions of the PMLA does not survive due to Vijay Madanlal Choudhary (supra), the basis of these writ petitions being before the Division Bench of this Court also gets eroded and therefore these writ petitions be transferred to a single bench of this Court. iv) Since the ED has filed a Special Leave Petition vide Diary No. 26629 of 2022 on 25th August, 2022 before the Hon'ble Supreme Court which is yet to be adjudicated by the Hon'ble Supreme Court, in light of accepted principles (inter alia per D.K. Trivedi & Sons & Ors Vs. State of Gujarat & Ors., 1986 Supp SCC 20) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities in case of any disclosure by the ED to them regarding contravention by the petitioners. To rebut this contention, the petitioners submitted that Section 66 cannot provide an infinite, open ended opportunity to the respondents to sustain the ECIR merely on a possibility of finding some information. viii) Reliance was also placed on State of Bihar & Anr. Vs. P.P Sharma, IAS, & Anr., 1992 Supp (1) 222 at para 23 to contend that even if, as per the petitioners, there were mala fides of the informant/complainant which led to the registration of the said FIR it should not impact investigation by the Investigating Officer. ix) Reliance was also placed on Municipal Corporation of Delhi Vs. Ram Kishan Rohtagi & Ors., (1983) 1 SCC 1 where the FIR was quashed against some of the accused. The Hon'ble Supreme Court in para 19 held that if the prosecution can at any stage produce evidence which satisfies the court that the other accused or those who have not been arrayed as accused against whom proceedings have been quashed, have also committed the offence, the court can take cognizance against them and try them along with the other accused. Submissions in Rejoinder by the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. Ashutosh Vijay Kamble before the Hon'ble Court of Judicial Magistrate First Class, Wada, Dist. Palghar and order dated 7th April, 2021 in Complaint No. 105/2021 under Section 156(3) of Cr.P.C. for registration of FIR. * Para 7 (ii), (iii) of the ECIR elaborate on the nature of the offences which were alleged in the FIR against the accused inter alia for siphoning of huge amount of public money and buying shares in an illegal manner at inflated rates and claiming losses in such companies. * Para 7 (iv) of the ECIR specifically states that the Section 120B, 420, 467, 471 of IPC under which the FIR has been registered falls under paragraph 1 of Part A of the scheduled offences under the Scheduled to PMLA. * Para 8 of the ECIR is prefaced as "on the basis of the above, prime facie case of money laundering u/s 3 punishable u/s 4 of PMLA, 2002 appears to have been made out." vi) Judgement/order dated 4th May, 2022 of the High Court of Bombay at para 38 has categorically stated that powers under Section 482 of the Cr.P.C. were exercised to allow prayer clause 'a' in the writ petitions before the court, and a perusal of the prayer clause 'a' in the two writ petitions before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y would have initiated action against the Petitioner treating him either as defaulter or would have initiated proceedings by taking recourse to SARFEAST Act." xi) Support was also taken of the observations of the Hon'ble Supreme Court in para 467 (v) (d) of Vijay Madanlal Choudhary (supra) that there cannot be mere "notional basis" or "assumption that scheduled offence has been committed". Therefore, submission by the respondents that there could be an offence still subsisting would not be correct or acceptable. xii) Reference was also drawn to the reply filed by the respondent No. 1 in W.P. (CRL) No. 440/2022 from para 6 to 9 where the respondent No. 1 has categorically stated that it was on the basis of the said FIR that the ECIR had been premised. Para 9 of the said reply states that "the sections under which the FIR was registered are Scheduled Offence under the PMLA and thus the Subject ECIR was recorded." xiii) It was vehemently contended that the PMLA authority cannot file a predicate offence and at best it could only disclose any circumstances which came to their knowledge to the appropriate authority which in its own wisdom and as per applicable law may proceed to fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lodgment of the complaint against the Petitioners and continuity of the proceedings, is an abuse of process of law. Thus, these are the fit cases for exercising inherent powers of this Court under Section 482 of Code of Criminal Procedure, 1973 to secure the ends of justice. Accordingly, both Writ Petitions are allowed in terms of prayer clause 'a'. Rule made absolute." (emphasis supplied) 13. It is therefore incontrovertibly clear from a bare perusal of the judgement/order of the High Court of Bombay read in conjunction with prayer clause 'a' extracted above from both the Writ Petitions before the Court, that both the order dated 7th April, 2021 passed by Judicial Magistrate in O.M.A. No. 105 of 2021 and FIR No. 129/2021 dated 13th April, 2021 in P.S. Wada stood quashed in toto. This Court finds no merit in the argument by the Respondents that the quashing was qua the petitioners before the High Court of Bombay and not the other accused in the said FIR. The quashing of the FIR and order of the Judicial Magistrate preceding its registration was complete and not conditional, partial or truncated in any manner. Nothing in the said judgement/order of the High Court of Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i 1299/2022 8. Sunil Girdharilal Mittal 1316/2022 9. Avi Aggarwal 1316/2022 10. Honest Shelters Private Limited 1316/2022 11. Rajiv Gandhi 1350/2022 It is noted that this Court vide order dated 14th March, 2022 had allowed CRL.M.A. 4803/2022 filed by Sameer Gehlaut, petitioner No. 3 in W.P. (CRL) 443/2022, deleting his name from the array of parties, on the ground that he was not an accused in the FIR. 16. As per the petitioners, the above named persons are various employees of Indiabulls Housing Finance Limited and related companies and have been roped in by the respondents in the said ECIR without there being any underlying predicate offence registered against them. In light of the conclusion and finding of the Hon'ble Supreme Court in Vijay Madanlal Choudhary (supra) this Court finds no reason for the said ECIR to be sustained against them, without there being any evidence of a predicate offence or an FIR against them which is in existence or is legally alive. 17. In all these cases therefore, both of the employees against whom no complaint was ever filed for the scheduled offences and those against whom it was filed and has been quashed subsequently by a Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause "proceeds of crime", as it obtains as of now." (emphasis supplied) 20. The Hon'ble Supreme Court has been clear and categorical in its reasoning as evident from the para extracted above. The undeniable sequitur of the above reasoning is that firstly, authorities under the PMLA cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed; secondly, the scheduled offence must be registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum; thirdly, in the event there is already a registered scheduled offence but the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te proceeding before that Court. Suffice it to say, at this stage nothing has been brought to the attention of this Court of any existing or surviving complaint/inquiry or an FIR against the petitioners before this Court for any of the offences as provided in the Schedule of PMLA. In any event it is clarified that the relief sought in this petition relating to the particular ECIR no. ECIR/07/HIU/2021 which was specifically predicated upon FIR no. 129/2021, in light of the conclusions arrived at in Vijay Madanlal Choudhary (supra) by the Hon'ble Supreme Court, cannot survive. 23. Mr. Zoheb Hossain, advocate for the ED, towards the end of the hearing before this Court and just prior to this Court reserving judgment, made a submission that one of the writ petitions before this Court, the one filed by Shri Atul Chordia, was part of a Transfer Petition (Criminal) No. 245/2022 filed before the Hon'ble Supreme Court and was tagged along with the batch of matters in which the leading matter was Vijay Madanlal Choudhary & Ors Vs .Union of India & Ors., SLP (CRL.) 4634 of 2014. According to the counsel for ED, the transfer petition was disposed of by the Hon'ble Supreme Court on 9th Septemb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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