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TMI Blog2024 (9) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... rson who knowingly assists or knowingly is a party or is actually involved in any process or activity connected shall also be liable. Explanation (i) further explains the position. Explanation (ii) to Section 3 of the 2002 Act provides that the process or activity connected with the proceeds of crime is a continuing activity and it continues till the time a person is directly or indirectly enjoying the proceeds of crime. While defining the expression proceeds of crime , it has been provided that any property derived or obtained directly or indirectly by any person as a result of criminal activity relating to the said property shall constitute the proceeds of crime. Where the property is taken or held outside the country, then the property equivalent in value held within the country or abroad shall be included in such proceeds. In the explanation attached to the definition, it has been added that if the property is directly or indirectly derived or obtained as a result of any criminal activity related to the scheduled offence, the same shall also be included in the proceeds of crime. According to Explanation II to Section 44 of the 2002 Act, any subsequent complaint should be incorp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal case(s) against any person or entity as contemplated under Section 2 (1) (s) of the Prevention of Money Laundering Act, 2002 as any such act would tantamount to blatant illegality, arbitrariness and thus unconstitutional; II) Set aside and quash the impugned communication dated 14.12.2023 (Annexure P-16) issued by Respondent No. 2, whereby, a questionnaire has been sent to various customers of the petitioner company in a veiled and circuitous attempt to virtually prompt, compel, coerce, force, browbeat, overawe and pressurize them to lodge criminal cases against the company, as such a communication has no legal sanctity under the Act and the same cannot qualify the test of fairness or equity either. 1.2 The various FIRs were registered against the companies established by the IREO Fund in India. Keeping in view certain facts, the Enforcement Case Information Report (ECIR) No. GNZO/10/2021 dated 15.06.2021 was registered by the Enforcement Directorate (ED) and the prosecution complaint was filed by the ED before the Special Court against Lalit Goyal, the petitioner company and five other companies. A Provisional Attachment Order (PAO) attaching various properties as well as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gathered, the involvement of the petitioner, the Directors, the former Directors, the key managerial persons of the IREO Group of companies transpired as the above said key position holders have been involved/played a major role in the criminal activities of cheating and defrauding the customers/investors of the IREO Group of Companies and the IREO Private Limited. The petitioner company on the pretext of purchase of land, plots, booking of flats diverted the funds of the investors and also fudged of the books of accounts so as to siphon off the buyers money; while concealing the vital information. They also gave false assurance to prospective customers of possessing the necessary permissions to sell and develop the colonies wherein the money against the bookings was pocketed and misappropriated. 1.6 A prosecution complaint under Section 44 and 45 of the 2002 Act for the commission of offence of money laundering is pending before the Special Court at the stage of framing of the charges. Further, during the course of investigation, it was revealed that in addition to the identified proceeds of crime i.e. ₹1,376/- crores, the IREO Group further diverted its funds of more tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found to be a civil dispute. It is submitted that the ED was entitled to share information with the jurisdictional police. In this case, the jurisdictional Police Station is EOW, Gurgaon, which has refused to register FIR. It is submitted that all the seven projects are located in the area of Gurugram. vii) The communication dated 14.12.2023 is not on the format of notice as prescribed under Section 50 of the 2002 Act. It has been submitted that the ED has exceeded its jurisdiction by sending such communication. Hence the same is liable to be quashed. Heavy reliance has been placed on the judgment passed by the Supreme Court in Vijay Madan Lal Chaudhary and Others v. Union of India and Others (2022) SCConline SC 729. The petitioner has also relied upon the following judgments/orders passed by the Supreme Court from time to time:- Sr.No. Case Title and Citation 1. Pankaj Bansal v. Union of India and Others 2023 SCC Online SC 1244 2. Harish Fabiani v. Directorate of Enforcement 2022 SCC Online DEL 3121 Delhi High Court 3. Prakash Industries Ltd. v. Union of India and Others 2023 SCC Online DEL 3336 Delhi High Court 4. V.P. Nandkumar v. Enforcement Directorate 2023 SCC Online KER 684 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023 Decided on 03.07.2023 25. S. Revanna and Another v. Directorate of Enforcement Criminal Revision Petition No. 1010 of 2021 Decided on 25.0.2023 26. Directorate of Enforcement v. M/s S. Revanna and Another SLP (Criminal) Diary No. 24029/2023 Decided on 14.07.2023 27. Pavana Dibbur v. Directorate of Enforcement Criminal Appeal No. 2779 of 2023 Decided on 29.11.2023 28. Rajinder Singh Chadha v. Union of India W.P. (Crl.) No. 562/2023 Decided on 24.11.2023 29. Anjaneya Hanumanthaiah v. Union of India Criminal Appeal No. 1391 of 2024 Decided on 05.03.2024 30. Ram Ludhra v. Directorate of Enforcement Criminal Appeal No. 382 of 2024 Decided on 22.01.2024 31. Yash Tuteja and Another v. Union of India and Others Writ Petition (Criminal) No. 153 of 2023 Decided on 08.04.2024 (Supreme Court) 32. Rajiv Channa v. Union of India Misc. Appeal (PMLA) No. 13/2024 Decided on 08.04.2024 (Delhi High Court) 33. Nayati Healthcare and Research Private Limited and Others v. Union of India and Another W.P. (Crl.) No. 2871/2022 Decided on 11.10.2023 (Delhi High Court) 34. Directorate of Enforcement v. Akhilesh Singh and Others Criminal Revision Petition No. 1119/2023 Decided on 30.04.2024 (Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also referred to the auditors report to show that as on 31.03.2011, advance for purchase of development rights have been shown at ₹6,771,001,709/- whereas advance from the customers has been shown as ₹3,807,985,666/- and the complaints received from the customers/investors were forwarded to the EOW, Delhi, which resulted in the registration of FIR. 3. Analaysis and Evaluation of the submissions of the learned counsels representing the parties. 3.1 This Court has considered the submissions of the learned counsel representing the parties while analyzing, evaluating and appreciating the respective contentions. 3.2 The relevant provisions of the 2002 Act are reproduced as under for better comprehension and context:- 2. Definitions. 2(1)(a) to (n) XXXX XXXX XXXX XXX (na) investigation includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence. (o) XXXX XXXX XXXX XXXX XX (p) money-laundering has the meaning assigned to it in section 3. (q) to (t) XXXX XXXX XXXX XXXX (u) proceeds of crime means any property derived or obtained, directly or indirectly, by any pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that section shall be triable by the Special Court constituted for the area in which the offence has been committed:- Provided that the Special Court, trying a scheduled offence before the commencement of this Act, shall continue to try such scheduled offence; or (b) a Special Court may, upon a complaint made by an authority authorised in this behalf under this Act take cognizance of offence under section 3, without the accused being committed to it for trial. Provided that after conclusion of investigation, if no offence of money laundering is made out requiring filing of such complaint, the said authority shall submit a closure report before the Special Court; or (c) if the court which has taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money-laundering under sub-clause (b), it shall, on an application by the authority authorised to file a complaint under this Act, commit the case relating to the scheduled offence to the Special Court and the Special Court shall, on receipt of such case proceed to deal with it from the stage at which it is committed. (d) a Special Court while trying the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (4) Every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). (5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not (a) impound any records without recording his reasons for so doing; or (b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Joint Director. XXXX XXXX XXXX XXXX XXXX 66. Disclosure of information. ( 1)The Director or any other authority specified by him by a general or special order in this behalf may furnish or cause to be furnished to (i) any officer, authority or body performing any functions under any law r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed directly or indirectly by any person as a result of criminal activity relating to the said property shall constitute the proceeds of crime. Where the property is taken or held outside the country, then the property equivalent in value held within the country or abroad shall be included in such proceeds. In the explanation attached to the definition, it has been added that if the property is directly or indirectly derived or obtained as a result of any criminal activity related to the scheduled offence, the same shall also be included in the proceeds of crime. 3.4 Explanation (ii) to Section 44 (1) of the 2002 Act provides that the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence, for which the complaint has already been filed, whether named in the original complaint or not. 3.5 Section 50 of the 2002 Act enlists the powers of authorities regarding summons, production of documents and to give evidence. 3.6 Section 66(2) of the 2002 Act enables the Director or other authority specified by a general/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FIR in the scheduled offence is not sine qua non for initiating the proceedings under the 2002 Act. Section 66 of the 2002 Act is not dependent on the predicate offence as explained by the Supreme Court in Pavana Dibbur v. Directorate of Enforcement 2023 SCC Online SC 1586. 3.9 After having made the elaborate submissions, Mr. Puneet Bali, Senior Advocate, representing the petitioner, submitted that he is not praying for quashing of ECIR in this writ petition. In the considered opinion of this Bench, after having made elaborate submissions, it was not appropriate for the learned counsel to make such submission. 3.10 The investigation of crime is exclusive domain of the Investigating Agency similar to the powers of police in the cases that are governed by the provisions of Code of Criminal Procedure, 1973 (hereinafter referred to as Cr.P.C. ). It is evident that the word investigation has been defined in Section 2 (na) of the 2002 Act which has already been extracted in para 3.2 of this judgment. It includes all the proceedings under this Act conducted by the Director or by an authority authorized by the Central Government for the collection of evidence. Section 50 of the 2002 Act en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of an express prohibition, it would not be appropriate to hold that the subsequently registered FIR cannot be included in the existing ECIR. Second Explanation to Section 44 of the 2002 Act specifically provides for inclusion of subsequent complaint. Similarly, the argument of the learned senior counsels that the ED cannot solicit information from the allottees lacks any substance because Section 50 of the 2002 Act enables the Director to collect information and material to locate the proceeds of crime. 3.14 Moreover, the Supreme Court in para 467 of Vijay Madan Lal Chaudhary s case (supra) has held that the expression investigation is not limited to the offence under the Act. It is interchangeable with the inquiry to be undertaken by the Authorities. The expression proceedings occurring in Clause (na) of Section 2(1) of the 2002 Act is contextual and is required to be given expansive meaning to include inquiry. Hence, the ED has power to solicit information from the allottees, who as promised, have not been delivered possession of the plots/flats. 3.15 As far as the argument regarding refusal to register FIR by the EOW, Gurugram, is concerned, it is not conclusive. From the read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in public interest. Sub Section 2 of Section 66 of the 2002 Act is also confined to sharing information if the Director or any other authority is of the opinion that the provisions of any other law for the time being in force are contravened; on the basis of information and the material in his possession. In the opinion of the Court, the aforesaid provision has a laudable object; as it enables exchange of information between the various public authorities who are in the field of law enforcement, collection of tax, duty or cess or prevention of illicit traffic in the narcotics and psychotropic substances. 3.18 Similarly, the prayer made under Clause (b) of (II) has no substance because by sending the questionnaire the Director or any other authority has not compelled or coerced or browbeaten the allottees/investors to file a complaint, but at the most, it has only asked question No. 9 in the questionnaire about the wish or plan to file any such complaint. The questions posed to the allottees in the questionnaire are only to collect information with an ultimate object to find the proceeds of crime relating to a scheduled offence. 3.19 With respect to prayer (III), it would be noted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operties under Section 5 even though no proceedings relating to the predicate offence may have been initiated by the competent agencies functioning under the Statute and in terms of which the scheduled offence stands created? b) Whether the ED would be recognized to have jurisdiction to enforce the measures? The measures contemplated under Section 5 of the 2002 solely upon being of the opinion that the material gathered in the course of investigation inquiry evidences the commission of predicate offence? The matter was decided with respect to the aforesaid questions. 3.23 In V.P. Nandkumar s case (supra), Parvathi Kollur s case (supra), Indira Patnaik s case (supra), M/s V.G.N Developers Pvt. Ltd. s case (Supra) M .Nagarajan s case (supra), Selvi Pushpam Appala Naidu s case (supra), Indiabulls Housing Finance Limited s case (supra), M/s Nik Nish Retail Limited s case (supra), the proceedings under the 2002 Act were quashed as the foundational scheduled offence ceased to exist by virtue of the Court s order. There was no further registration of fresh FIR. 3.24 Similarly, in Dependra Kumar Panda s case (supra), Emta Coal Limited s case (supra), Muktanand Agro Farming Pvt. Ltd. s case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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