2025 (7) TMI 222 - HC - Money Laundering

Maintainability of petition - Locus standi of petitioner to file petition - Money Laundering - proceeds of crime - large-scale financial fraud involving the illegal diversion of Rs. 600 crores of public money through a shell company to Mauritius-based accounts - ED s failure to properly investigate and attach assets in the IREO Group s money laundering case - Invocation of extraordinary writ jurisdiction of this Court under Article 226 of the Constitution. Whether Petitioner has locus standi to file the present writ petition? - HELD THAT - In the conspectus of the facts emerging in the present writ petition(s) it is not in dispute that the Petitioner neither qualifies as a homebuyer nor is otherwise directly or indirectly affected by the alleged acts of corporate mismanagement and misappropriation of funds purportedly committed by Respondent No. 6 and its key managerial personnel. Consequently the Petitioner does not fall within the category of person aggrieved so as to be entitled to invoke the extraordinary writ jurisdiction of this Court under Article 226 of the Constitution. It is settled law that only conceivable basis on which writ petitions may be filed by a party who is not a person aggrieved is on the anvil of Public Interest Litigation. However in view of the admitted fact that the petitions have not been instituted in accordance with the provisions of the Delhi High Court (Public Interest Litigation) Rules 2010 the captioned writ petitions are not Public Interest Litigations and therefore Petitioner lacks the requisite locus standi to maintain the present writ petitions. The Supreme Court in the judgement of All India Institute of Medical Sciences Employees Union (Regd.) v. Union of India 1996 (10) TMI 534 - SUPREME COURT specifically observed that a writ petition seeking registration of a criminal complaint without the writ petitioner first availing the remedies available under the applicable law is not maintainable. In the facts of the present case the Petitioner is not seeking registration of a criminal complaint or initiation of criminal proceedings in the first instance. Rather the prayer is for a court-monitored investigation which is a qualitatively distinct remedy and is governed by different considerations in law - the issue is decided against the Petitioner. Whether the present writ petition seeking similar relief as to court monitored investigation are maintainable? - HELD THAT - It is a settled principle of law that judicial supervision over investigation is to be exercised only in the rarest of rare cases and where such oversight becomes imperative in the interest of justice. In the judgement of Dukhishyam Benupani v. Arun Kumar Bajoria 1997 (11) TMI 428 - SUPREME COURT the Supreme Court held that as long as investigation does not suffer from any vires of law that the Court should not entrust itself the task of monitoring the same. The Petitioner has been unable to rebut the aforesaid submission of the ED qua lack of jurisdiction vis- -vis the allegations of wrongful diversion of the loans availed from the banks. The Petitioner has thus failed to make out a case of inaction by the ED - The facts placed on record reveal that ED is pursuing the investigation at the instance of the homebuyers and the same is being monitored by the learned Special Court (PMLA) Panchkula. The Petitioner has not alleged any inaction by the ED qua the complaint of the home buyers. The ED has also placed on record facts showing that appropriate attachment orders for the identified proceeds of crime already stand issued. The Court is of the considered opinion that no case for a further Court-monitored investigation or issuance of directions for further attachment in these proceedings by ED has been made out by the Petitioner - Issue is decided against the petitioner. Suppression of the other proceedings in the writ petition as well as mis-representation of material facts including Court orders - HELD THAT - The conduct of the Petitioner in failing to disclose the filing and pendency of the earlier writ petitions the deliberate misrepresentation of the contents of the orders passed by this Court and the false assertion with respect to being a financial investor in the IREO Projects evidence that the Petitioner has approached this Court with unclean hands. The writ proceedings are decided on the basis of pleadings supported by affidavits affirming the truthfulness of the contents set out therein. The Petitioner has made false declarations contrary to record exhibiting no fear for violating the process of Courts with an intent to mislead the Court. The Petitioner is an Advocate by profession and is therefore aware about the legal processes and the obligation of the party/petitioner of deposing truthfully while filing affidavits. All the writ petitions filed by the Petitioner are dismissed on the grounds of lack of locus standi and non-maintainability.

Summary

The legal judgment involves multiple writ petitions filed by the same Petitioner under Article 226 of the Constitution of India, seeking directions to various statutory authorities including the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), Reserve Bank of India (RBI), and others, for investigation and attachment of alleged proceeds of crime related to the IREO Group of Companies and its key managerial personnel. The Court primarily considered the maintainability of these writ petitions and the locus standi of the Petitioner in seeking the reliefs.

Issues Presented and Considered:

(i) Whether the Petitioner has locus standi to file the present writ petitions under Article 226 of the Constitution;

(ii) Whether the writ petitions seeking directions for court-monitored investigation and attachment of alleged proceeds of crime are maintainable;

(iii) Whether the Petitioner's failure to disclose pendency of earlier writ petitions and misrepresentation of material facts including Court orders affect the maintainability and merits of the petitions;

(iv) The scope of judicial intervention in ongoing investigations conducted by statutory agencies such as the ED and CBI;

(v) Whether the Petitioner's claims of being a homebuyer and aggrieved party are true and relevant to locus standi.

Issue-wise Detailed Analysis:

Issue (i): Locus Standi of the Petitioner

The Court referred to settled legal principles established by the Supreme Court in Jasbhai Motibhai Desai v. Roshan Kumar and Ayaaubkhan Noorkhan Pathan v. State of Maharashtra, emphasizing that ordinarily only a person aggrieved, i.e., one having a personal or individual legal right or interest, has locus standi to invoke writ jurisdiction under Article 226. Exceptions exist for certain writs like habeas corpus or in genuine public interest litigation (PIL) cases, but even then, courts exercise strict vigilance to prevent misuse by interlopers or meddlesome bystanders.

In the present case, the Petitioner admitted not being a homebuyer or having invested any money in IREO group projects, thereby lacking direct personal interest or legal injury. The petitions were not filed as PILs in accordance with the Delhi High Court (Public Interest Litigation) Rules, 2010, and thus could not be treated as public interest litigations. The Court held that the Petitioner's reliance on the principle that any person can set criminal law in motion (as per A.R. Antulay v. R.S. Nayak) was misplaced, since that principle applies to filing complaints before competent authorities, not to seeking court-monitored investigations through writ petitions.

The Court noted that criminal law proceedings had already been initiated by the ED, including registration of an Enforcement Case Information Report (ECIR), filing of prosecution complaints, and cognizance taken by the Special Court (PMLA). Hence, the Petitioner lacked locus standi to maintain the writ petitions seeking court-monitored investigation.

Issue (ii): Maintainability of Writ Petitions Seeking Court-Monitored Investigation

The Court examined the principle that judicial supervision over investigation is an extraordinary remedy to be exercised only in rare and compelling circumstances where investigation suffers from mala fide, abuse of process, or non-compliance with legal provisions. Reliance was placed on Supreme Court precedents including Dukhishyam Benupani v. Arun Kumar Bajoria, P. Chidambaram v. Directorate of Enforcement, and Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra.

These judgments emphasize that investigation is the exclusive domain of the investigating agency and courts should not interfere unless there is demonstrable abuse or violation of law. The Court found that the ED had registered ECIR against the IREO group and its directors, filed prosecution complaints, and obtained attachment orders for proceeds of crime amounting to Rs. 1,376 crores. Further investigation and prosecution were ongoing under the supervision of the Special Court (PMLA).

The Petitioner's claim that proceeds of crime amounted to Rs. 4,246 crores and that a significant portion remained unattached was not substantiated by evidence. The ED explained that certain loan diversion allegations were outside its jurisdiction as no predicate offence had been registered by lending banks, and hence those transactions could not be investigated under the PMLA.

The Court concluded that the Petitioner failed to show any inaction or mala fide on part of the ED or other agencies that would justify court-monitored investigation or further directions for attachment. Thus, the writ petitions seeking such reliefs were held not maintainable.

Issue (iii): Suppression of Pendency of Earlier Writ Petitions and Misrepresentation

The Court noted that the Petitioner had filed five writ petitions on substantially identical facts and reliefs, but failed to disclose the pendency of earlier petitions in successive filings, making false declarations of non-filing. The Petitioner also misrepresented orders passed by this Court in pleadings and falsely claimed to be a homebuyer aggrieved by the Respondents, despite admitting no financial investment in the projects.

The Court observed that such conduct amounted to approaching the Court with unclean hands, violating the duty of truthful disclosure in judicial proceedings. The Petitioner, being an Advocate, was expected to be aware of the legal obligation to disclose material facts and pendency of related proceedings. The Court found that these acts of suppression and misrepresentation further militated against the maintainability of the petitions.

Issue (iv): Scope of Judicial Intervention in Investigation

The Court reiterated that investigation into cognizable offences is vested exclusively with the investigating agencies under the Code of Criminal Procedure, and courts should not interfere with the manner, mode, or progress of investigation except in rare cases involving mala fide or abuse of power. The Court should not usurp the function of the investigating agency, as such interference would impede the normal course of investigation and prosecution.

Since the ED's investigation was ongoing, prosecution complaints had been filed, and attachment orders issued, the Court found no justification to interfere or to direct court-monitored investigation.

Issue (v): Petitioner's Claim to be a Homebuyer and Aggrieved Person

The Court found that the Petitioner had falsely claimed to be a homebuyer and directly affected party in some writ petitions to establish locus standi. However, the Petitioner admitted not having invested any amount in the IREO projects. The Court held that this false claim was made deliberately to circumvent maintainability objections and was a serious abuse of the judicial process.

Significant Holdings:

"In the conspectus of the facts emerging in the present writ petition(s), it is not in dispute that the Petitioner neither qualifies as a homebuyer nor is otherwise directly or indirectly affected by the alleged acts of corporate mismanagement and misappropriation of funds purportedly committed by Respondent No. 6 and its key managerial personnel. Consequently, the Petitioner does not fall within the category of person aggrieved so as to be entitled to invoke the extraordinary writ jurisdiction of this Court under Article 226 of the Constitution."

"The Petitioner's reliance on the judgment of the Supreme Court in A.R. Antulay to maintain these writ petitions for a Court monitored investigation, in the considered opinion of this Court is misconceived... the said principle of law was set out in the said judgment in the context of filing and maintaining complaints before the competent authority and not a writ petition."

"Judicial supervision over investigation is to be exercised only in the rarest of rare cases and where such oversight becomes imperative in the interest of justice... It is not the function of the court to monitor the investigation process so long as the investigation does not violate any provision of law."

"The Petitioner has approached this Court with unclean hands by failing to disclose the pendency of earlier writ petitions, deliberately misrepresenting the contents of the orders passed by this Court and making false declarations with respect to being a financial investor in the IREO Projects."

"All the writ petitions filed by the Petitioner are dismissed on the grounds of lack of locus standi and non-maintainability."

"A cost of Rs. 25,000/- for each petition is imposed upon the Petitioner for knowingly concealing the pendency of other petitions, making a false declaration of non-filing, and misrepresenting the contents of the previous orders passed by this Court."

Core Principles Established:

- Only a person aggrieved with a personal or individual legal right or interest ordinarily has locus standi to invoke writ jurisdiction under Article 226; strangers cannot file writ petitions unless under genuine PILs filed in accordance with procedural rules.

- Judicial intervention in ongoing investigations by statutory agencies is exceptional and warranted only upon clear demonstration of mala fide, abuse of power, or non-compliance with legal provisions.

- Petitioner's obligation to disclose pendency of related proceedings and material facts in successive writ petitions is mandatory; failure to do so and making false declarations constitute abuse of process and unclean hands.

- The principle that any person may set criminal law in motion applies to filing complaints before competent authorities, not to seeking court-monitored investigation through writ petitions.

- Courts must respect the exclusive domain of investigating agencies and avoid usurping their functions unless exceptional circumstances arise.

Final Determinations:

The Court dismissed all writ petitions filed by the Petitioner on grounds of lack of locus standi and non-maintainability. The Petitioner's claims of being a homebuyer and aggrieved party were rejected as false. The Court declined to interfere with the ongoing investigation by the ED and other agencies, holding that the investigation was proceeding lawfully and under judicial supervision of the Special Court (PMLA). The Petitioner was imposed costs for deliberate concealment and misrepresentation. The Court emphasized adherence to procedural propriety and cautioned against misuse of writ jurisdiction and judicial process.