TMI Blog2023 (1) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... MENT VERSUS M/S OBULAPURAM MINING COMPANY PVT LTD [ 2023 (1) TMI 682 - SC ORDER] , closure report had been accepted by the Trial Court qua the predicate offence. The Supreme Court was again of the view that proceedings under PMLA will not survive and the Court proceeded to quash the ECIR. In the facts of the present case, the Trial Court, in the complaint case which was pending before it, has clearly come to a conclusion that the closure report deserves to be accepted and no criminality is ascertainable as the documents in respect thereof were not available - the impugned attachment orders dated 14th February, 2022 and 20th June, 2022 as also the ECIRs are quashed. Petition allowed. - W.P.(C) 3821/2022 and CM APPL. 11325/2022, 37473/2022,W.P.(C) 12437/2022 and CM APPL. 37384/2022,W.P.(C) 14530/2022 and CM APPL. 44427/2022 - - - Dated:- 10-1-2023 - JUSTICE PRATHIBA M. SINGH Petitioners Through: Mr. Abhimanyu Bhandari, Ms. Kartika Sharma Ms. Vanshita Gupta, Advocates (M-9811666704) Mr. Siddharth Aggarwal, Sr. Advocate with Mr. Krishna Datta Multani, Mr. Parangat Pandey, Ms. Arshiya Ghosh Mr. Shaunak Dutta, Advocates (M-9999997189) Respondent Through: Mr. Anupa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered against the various parties on the basis of the FIR, on the ground that it showed commission of scheduled offences under the PMLA. 7. Investigation was conducted by the CBI in the FIR and the CBI filed closure report no. 2/2021 dated 8th January, 2021 in the said matter before the Trial Court, which was trying the offences under the said FIR. The said closure report was considered by the Trial Court which, after hearing the parties, accepted the closure report vide order dated 25th July, 2022. The relevant portions of the said order are set out herein below: 10.15 From the abovementioned facts and circumstances, it is concluded that during the course of investigation, no evidence could be gathered to prove prima-facie commission of offence u/s 120 B r/w 420 IPC r/w 13(2) r/w 13(1) (d) of the PC Act, 1988 against officials of West Bengal Power Development Corporation Ltd, West Bengal State Electricity Board, M/s Eastern Mineral Trading Agency, M/s Bengal EMTA Coal Mines Ltd, its directors, unknown public servant(s) or any other person(s). 11. Hence, this Closure Report has been filed. OPINION OF THE COURT 12. I have heard Sh. V.K. Sharma, Ld. ALA f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant period as the same were issued much later and thus no fault can be found in the said exercise. 18. This court concurs with the conclusion of the Investigating Officer. 19. In view of the above discussion, the closure report is hereby accepted. File be consigned to Record Room. 8. In the meantime, the Enforcement Directorate, in view of the FIR which was filed and the ECIRs, has passed the impugned provisional attachment orders dated 14th February, 2022 and 20th June, 2022 under section 5 of the PMLA attaching various properties and assets belonging to the Petitioners. The said provisional attachment orders are under challenge in the present cases. 9. At the time when W.P.(C) 3821/2021 was filed, the CBI having filed the closure report, the proceedings pursuant to the attachment order dated 14th February, 2022 were stayed by this Court on 7th March, 2022. The said order reads as under: CM APPL. 11326/2022 (for exemption) Allowed, subject to all just exceptions. The application shall stand disposed of. W.P.(C) 3821/2022 CM APPL. 11325/2022 Notice shall issue to the respondent. Since Mr. Mahajan, learned CGSC represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of 23.01.2023 shall stand cancelled. 11. In W.P.(C) 14530/2022, a statement was made by ED on 18th October, 2022 that it has no objection to the Petitioner being granted the permission to operate the bank account which formed the subject matter of the provisional attachment orders dated 14th February, 2022, and 20th June, 2022, subject to the condition that they shall maintain a balance at all time which was standing on the date of freezing. 12. The submission today on behalf of the Petitioners is that in view of the recent decisions of the Supreme Court and this Court, the provisional attachment orders in question would no longer survive as the Petitioners have been discharged in the scheduled/ predicate offence. It is submitted by ld. Counsels that a closure report filed by the CBI has been accepted by the Trial Court in respect of the predicate offence and no criminal charges are now pending against the Petitioners. Hence, the Petitioners pray for quashing of provisional attachment orders impugned before the Court. 13. To substantiate their arguments Mr. Aggarwal, ld. Senior Counsel and Mr. Bhandari, ld. Counsels appearing for the Petitioners, have heavily relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en a single case where a separate complaint has been registered under the PMLA by the ED without a predicate offence having existed, the ld. Counsel submits that this could be the first case. 17. It is further submitted by Mr. Sharma, ld. Counsel that the Trial Court while passing the order accepting the closure report has not arrived at a conclusion that there was no criminality involved in the conduct of the Petitioners and hence the Court ought not to quash the attachment orders. 18. This Court has heard ld. Sr. Counsel, ld. Counsels for the parties and considered the matters. In Vijay Madanlal Choudhary (supra), the Supreme Court has in categorical terms held that for the existence of proceeds of crime under Section 2(1)(u) of the PMLA, the existence of a criminal complaint pending enquiry and/or trial would be necessary. Further, if the person in question has been finally discharged or acquitted of the scheduled/predicate offence, there can be no offence of money laundering against the said person. The relevant paragraphs of the judgment in Vijay Madanlal Choudhary (supra) are set out below: 281. The next question is: whether the offence under Section 3 is a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would, thus, be expected to and, also in a given case, justified in acting with utmost speed to ensure that the proceeds of crime/property is available for being proceeded with appropriately under the 2002 Act so as not to frustrate any proceedings envisaged by the 2002 Act. In case the scheduled offence is not already registered by the jurisdictional police or complaint filed before the Magistrate, it is open to the authorised officer to still proceed under Section 5 of the 2002 Act whilst contemporaneously sending information to the jurisdictional police under Section 66(2) of the 2002 Act for registering FIR in respect of cognizable offence or report regarding non-cognizable offence and if the jurisdictional police fails to respond appropriately to such information, the authorised officer under the 2002 Act can take recourse to appropriate remedy, as may be permissible in law to ensure that the culprits do not go unpunished and the proceeds of crime are secured and dealt with as per the dispensation provided for in the 2002 Act. Suffice it to observe that the amendment effected in 2015 in the second proviso has reasonable nexus with the object sought to be achieved by the 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia on the basis of decisions of this Court in Divisional Forest Officer v. G.V. Sudhakar Rao , Biswanath Bhattacharya , Yogendra Kumar Jaiswal v. State of Bihar , will be of no avail in the context of the scheme of attachment, confiscation and vesting of proceeds of crime in the Central Government provided for in the 2002 Act. xxx xxx xxx 467. In light of the above analysis, we now proceed to summarise out conclusion on seminal points in issue in the following terms: xxx xxx xxx (d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise at all and in any case, proceedings if initiated under the Act would be wholly without jurisdiction or authority. The Court notes that the issue of whether proceedings under the Act would survive even after the acquittal of a person in proceedings relating to the predicate offence was duly answered by a learned Judge of the Court in Rajiv Chanana v. Dy. Director, Directorate of Enforcement. The relevant paragraphs are extracted hereinbelow:- 18. The suggestion of the learned ASG that an attachment order under Section 5 of the PMLA would survive an acquittal of the concerned person for the alleged crime, is unsustainable. It was argued by the learned ASG that acquittal of the person after trial of a scheduled office would not release the order of attachment under PMLA till the trial for an offence under Section 3 of the PMLA is completed. This contention is based on an erroneous assumption that a trial for an offence of money laundering under the PMLA would survive. One is hard pressed to imagine how a trial for an offence of money laundering can continue where the fundamental basis - the commission of a schedule offence - in this case offence under Section 307 IP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the Petitioner is also relevant wherein the Court in no ambiguous terms has reiterated that closure of the proceedings under the PMLA is the natural consequence of the acquittal/discharge in the predicate offence. The relevant portion of the said judgment reads as under: The result of the discussion aforesaid is that the view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence. In view of the above, this appeal succeeds and is allowed. The impugned judgment and order dated 17.12.2020 is set aside and the order dated 04.01.2019 as passed by the Trial Court, allowing discharge application of the appellants, is restored 22. A perusal of the orders passed in Parvathi Kollur (supra) as also in the other three judgments referred above leaves no matter of doubt in the mind of the Court that if there is an acquittal/ discharge or a closure report has been filed in the predicate offence, the ECIR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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