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TMI Blog2024 (4) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... ashed the FIR, which would automatically cancel all subsequent proceedings. Since ECIR is not a condition precedent for starting an investigation or inquiry/inquiry by the Enforcement Directorate and is only an internal record of the department, its quashing would serve no purpose whatsoever. The proceedings under PMLA are always subservient and secondary to the primary proceedings under some principal criminal offense, which is termed the predicate offense. If the violations of the main criminal penal provisions are mentioned in the PMLA schedules, only then the Enforcement Directorate can inquire into such scheduled penal offenses against the persons who have laundered the money, including or excluding the persons named as accused in the primary offense - for any prosecution under scheduled offense, the requirement of a predicate offense is the sine qua non. The Enforcement Directorate has no jurisdiction to enter the foray without any primary penal offense. Further, if the predicate offense results in the filing of a closure report or the accused is discharged by the concerned Court or results in acquittal, then it would imply that the wall has broken, and with it will also go t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directorate of Enforcement for an offence under Section 3 read with Section 4 of Prevention of Money Laundering Act, 2002 ('PMLA') and all consequential proceedings arising therefrom including: - i) Show Cause Notice dated 05.08.2020 (Annexure P-25) purportedly issued under Section 63(3) PMLA for alleged violation of Section 63(2)(c) thereof. ii) Summon(s) dated 13.08.2020 15.10.2020 (Annexure P- 27 and P-29) purportedly issued under Section 50(2) and (3) of PMLA; iii) Communication dated 09.11.2020 (Annexure P-31) issued by the Respondent No. 1 ED informing the petitioner that the respondent No. 1 ED has decided to pass an order under Section 63 of the PMLA. 3. I have heard counsel for the parties and have gone through the record. The submissions, counter submissions, and their analysis are being answered para-wise. 4. Petitioner s stand is being taken from following sub paras of para No. 3 of the petition which reads as follows: - (3.1) FIR No. 5 dated 23.03.2007 was registered by Respondent No. 3 Vigilance Bureau, Ludhiana under Section 409, 420, 465, 467, 471, 201, 120-B of IPC and Section 7, 8, 9, 13(1) (c), 13(1)(d) read with Section 13(2) and 14 of the Prevention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .08.2020 given by the Petitioner to Show Cause Notice dated 05.08.2020. Vide the impugned Communication dated 09.11.2020, the Respondent ED has categorically stated that it has been decided to pass an order in the matter asked the Petitioner to appear/cause appearance through authorised representative before the Assistant Director (the Respondent) on 24.11.2020 or 25.11.2020 at 12:00 PM for personal hearing. Respondent ED has also specified that this would be last and final opportunity given to the Petitioner to cause appearance before it for personal hearing failing which further proceedings shall be ex-parte . Copy of impugned Communication bearing F. No. ECIR/JLZO/01/2013/AD(GS)/3317 dated 09.11.2020 is annexed as ANNEXURE P-31 . 6. Aggrieved by the action of the Enforcement Directorate not to close the proceedings and to continue summoning him, the petitioner had come up before this Court under Section 482 CrPC mainly because, as per the scheme of PMLA, the offense under Section 3 of PMLA is interlinked, intertwined, and interwoven with the scheduled offense and therefore, the offense or investigations under PMLA have no independent existence. The occurrence of a scheduled offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the continuation of investigations serving of summons/communication under Section 50 or 63 is untenable grossly violative of the petitioner's fundamental rights under Articles 14, 19, and 21 of the Constitution. The ECIR, the subsequent show cause notice dated 05.08.2020, summons dated 13.08.2020 and 15.10.2020, and communication dated 09.11.2020, and any/all such similar notices/summons issued by the Respondent have been rendered illegal, absent jurisdiction, as nullity in law and hence liable to be quashed by this Hon'ble Court. 9. The Enforcement Directorate s stand is that there can be no objection to proceedings initiated strictly in terms of the provisions of PMLA. The petitioner is only trying to escape from the clutches of Law, and due to his malafide intention, he had not cooperated at all with the Enforcement Directorate by not appearing before it as provided by the PMLA. The petitioner must give his statements and documents to the Enforcement Directorate to show his innocence first to avoid further proceedings under the Prevention of Money Laundering Act, 2002. However, the petitioner has consistently failed to do so. Several summons have been sent to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not only against the very purpose and scheme of enactment of PMLA but is also legally unsustainable given the express provisions of the PMLA. If the petitioner's legal proposition is accepted, it would amount to a strike of Section 44 (d) (i) of the PMLA without its legality having been examined in detail by this Hon'ble Court. It is relevant to mention here that the vires of Section 44 (d) (i) can only be challenged in a civil writ petition under Article 226 of the Constitution of India and not in a petition under Section 482 of Cr. P.C. It is submitted that Section 44 of the PMLA encompasses the provisions for offenses that Special Courts can try. Section 44(1)(b) of the PMLA talks about submitting a 'Closure Report' upon conclusion of the investigation. It states that if no offense of money laundering can be determined after investigation, the Authority shall submit a Closure Report' before the Special Court. It assists in closing cases where the investigation was completed, and no offense was found. 12. An analysis of the submissions noted above, the application of the provisions of PMLA, and its scope in the light of the judicial precedents would lead to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;] Ins. by Act 23 of 2019, s. 192 (w.e.f. 1-8-2019). 17. [S. 4 PMLA]. Punishment for money-laundering. Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine *** The words which may extend to five lakh rupees omitted by Act 2 of 2013, s. 4 (w.e.f. 15-2-2013).: Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words which may extend to seven years , the words which may extend to ten years had been substituted. 18. [S. 2(y) PMLA]. scheduled offence means (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or (iii) the offences specified under Part C of the Schedule. 19. It would be appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dhanraj Kochar and others v. Director Directorate of Enforcement and others, 2022 SCC OnLine Mad 8794, observed as under: - [9]. It is to be borne in mind that an ECIR is not registered under the Code of Criminal Procedure and it is not akin to an FIR, which is registered under Section 154 CrPC and sent to the jurisdictional Magistrate in terms of Section 157 CrPC. [14]. Thus, viewed from any angle, the registration of an ECIR by the officers of the Enforcement Directorate, cannot be a subject matter of judicial review under Section 482 CrPC. 22. Similarly, in Jitendra Nath Patnaik v. Enforcement Directorate Bhubaneswar, CRLMC No. 2891 of 2023, Orissa High Court observed as under: - .. [9]. As can be seen, the ECIR is an internal document created by the Department before initiating penal action or prosecution against the person involved with process or activity connected with the proceeds of crime. In other words, registration of ECIR is not akin to launching of prosecution, which can only be done by way of lodging a complaint under Section 44 of the PML Act. Thus, a document or an act, which is administrative in nature, cannot partake the nature of criminal prosecution so as to at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not come in the way of entertaining the instant petition under Section 482 Cr.P.C. keeping in view the amplitude of the powers conferred upon this Court, however, it cannot be overemphasized that the powers of this Court are not unbridled and can be exercised under Section 482 Cr.P.C. only to give effect to any order under the Cr.P.C.; or to prevent abuse of the process of any Court; or to secure the ends of justice in relation to a criminal proceeding. Since the ECIR is not a statutory document under the Cr.P.C. and thus, cannot be equated to initiation of any criminal proceeding, aforementioned argument advanced by the learned senior counsel cannot be accepted as it would result in this Court exceeding its jurisdiction under Section 482 Cr.P.C. 24. A perusal of the judgments passed by a Division Bench of Madras High Court in N. Dhanraj Kochar, 2022 SCC Online Mad 8794; and by Orissa High Court in Jitendra Nath Patnaik v. Enforcement Directorate Bhubaneswar, CRLMC No. 2891 of 2023; and by this Court in Pawan Insaa v. Directorate of Enforcement, 2024:PHHC:049512, clearly points out that in these cases quashing of ECIR was sought, whereas in the present case, the petitioner is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the existence of proceeds of crime is the existence of a scheduled offence. Therefore, in the absence of the scheduled offence, as held in the decision mentioned above of this Court, there cannot be any proceeds of crime within the meaning of clause (u) of sub- Section (1) of Section 2 of the PMLA. If there are no proceeds of crime, the offence under Section 3 of the PMLA is not made out. The reason is that existence of the proceeds of crime is a condition precedent for the applicability of Section 3 of the PMLA. [6]. The only mode by which the cognizance of the offence under Section 3, punishable under Section 4 of the PMLA, can be taken by the Special Court is upon a complaint filed by the Authority authorized on this behalf. Section 46 of PMLA provides that the provisions of the Cr.PC (including the provisions as to bails or bonds) shall apply to proceedings before a Special Court and for the purposes of the Cr.PC provisions, the Special Court shall be deemed to be a Court of Sessions. However, sub-section (1) of Section 46 starts with the words save as otherwise provided in this Act. Considering the provisions of Section 46(1) of the PMLA, save as otherwise provided in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, all the contentions in that regard are left open to be decided in appropriate proceedings. 28. In Indrani Patnail and another v/s Enforcement Directorate and others, Writ Petition (Civil) No. 368 of 2021, the Hon ble Supreme Court holds as under: - [4]. The record as it stands today, the petitioners stand discharged of the scheduled offence and therefore, in view of the law declared by this Court, there could arise no question of they being prosecuted for illegal gain of property as a result of the criminal activity relating to the alleged scheduled offence. [5]. That being the position, we find no reason to allow the proceedings against the petitioners under PMLA to proceed further. [6]. However, taking note of the submissions made by the learned Additional Solicitor General and in the interest of justice, we reserve the liberty for the respondents in seeking revival of these proceedings if the order discharging the petitioners is annulled or in any manner varied, and if there be any legitimate ground to proceed under PMLA. [7]. Subject to the observations and liberty foregoing, this petition is allowed while quashing the proceeding in Complaint Case No. 05 of 2020 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi High Court observed, [40]. A sequitur of the abovementioned judicial pronouncements would make it sufficiently clear that since the appellant-Jeevan Kumar has already been acquitted of the scheduled offence, there can be no action for money-laundering against the other appellants in relation to the property linked to the stated scheduled offence. An inference can plausibly be drawn from the legal maxim sublato fundamento cadit opus which means that upon removal of the foundation, the work collapses. Thus, the plain and literal interpretation of Section 2(1)(u) read with Section 3 of PMLA, 2002 which has been enunciated in Vijay Madanlal Choudhary (supra) and reiterated by the Hon ble Supreme Court in Pavana Dibbur (supra) and by this Court in Prakash Industries (supra), suggests that if the elementary foundation i.e., the scheduled offence is itself removed, consequential proceedings emanating therefrom shall also fall. 33. In the light of the judicial precedents referred to above, coupled with the given facts, this court reasons as follows: 34. The full form of ECIR is the Enforcement Case Information Report, and the full form of the FIR is the First Information Report. The dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be plastered and in the absence of the wall, the plaster cannot be applied, and if the wall is broken, the plaster would automatically break off because it cannot stand on its own. The predicate offense is that wall only on which the plaster of the scheduled offense of PMLA can be applied. No wall no plaster. Similarly, for any prosecution under scheduled offense, the requirement of a predicate offense is the sine qua non. The Enforcement Directorate has no jurisdiction to enter the foray without any primary penal offense. Further, if the predicate offense results in the filing of a closure report or the accused is discharged by the concerned Court or results in acquittal, then it would imply that the wall has broken, and with it will also go the plaster if it has been put on it. 36. It would be relevant to extract Section 65 of PMLA Act which reads as follows:- 65. Code of Criminal Procedure, 1973 to apply.- The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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