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TMI Blog2023 (4) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers Credit loan basis by keeping the forex position open. On account of the rupee fluctuation, lowering the value of the rupee, the petitioner was liable to pay additional 5% margin money in accordance with the MOU. According to MMTC, the company suffered a loss to the tune of Rs.220 Crores. CBI in its charge sheet alleged that this petitioner entered into criminal conspiracy with public servants of MMTC and received gold. 4. Having heard the arguments at the stage of admission on 20.01.2023 my findings were: "10. Even according to the investigation done by the CBI and also the case projected by ED, the outstanding liability of the petitioner's company stood at Rs.181.39 Crores due to the forex exchange fluctuation and the rupee value crashing by 27% and on account of such fluctuation, the alleged liability arose. However, the said liability under such circumstances was accepted by this petitioner and MMTC company in accordance with the MOU. 11. The core question that arises for consideration and not discussed earlier in the Criminal Petition No.5196 of 2019 is with regard to the outstanding claim by MMTC, whether such outstanding falls within the definition of 'proceeds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate regarding the maintainability of the quash petition. Since Criminal Petition No.5196 of 2019 filed by petitioner for similar prayer was dismissed and there being no changed circumstances, the second Criminal Petition cannot be maintained. 8. Sri A.R.M.Sundaresan, learned Senior Counsel submitted that the quash petition itself is not maintainable as an ECIR is not an FIR, for which reason, this Court under Section 482 of Cr.P.C cannot quash the ECIR. He relied on the judgments of Hon'ble Supreme Court in the case of Simrikhia v. Dolley Mukherjee and Chhabi Mukherjee and another (1990) 2 Supreme Court Cases 437, wherein it was held that inherent jurisdiction of the High Court cannot be invoked to override the powers of review under Section 362 of Cr.P.C. Learned Senior Counsel argued that the present petition which is the second quash petition on the very same grounds cannot be maintained for the reason of prohibition under Section 362 of Cr.P.C. He also relied on the judgment of Madras High Court in the case of S.Madan Kumar v. K.Arjunan 2006 (1) MWN(Cr.)1(DCC)., wherein it is held that a person cannot approach the High Court in installments seeking remedy in the very s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o proceeds of crime. The said aspect whether the outstanding as projected by the Enforcement Directorate falls within the definition of 'Proceeds of Crime' or not was not determined in the earlier order. Accordingly, the petition is maintainable. 12. The other ground raised by the learned Senior Counsel for ED is that an ECIR cannot be quashed since it is not an FIR registered under Section 154 of Cr.P.C. 13. The Hon'ble Supreme Court has dealt with the inherent powers of the High Court under Section 482 of Cr.P.C in respect of nature, scope and circumstances under which the power can be exercised. The Hon'ble Supreme Court in the State of Harayana v. Bhajanlal reported in (1992) SUPP 1 page 335 observed at paragraph 60 as follows: ".......But if a police officer transgresses the circumscribed limits and improperly and illegally exercises his investigatory powers in breach of any statutory provision causing serious prejudice to the personal liberty and also property of a citizen, then the court on being approached by the person aggrieved for the redress of any grievance, has to consider the nature and extent of the redress of any grievance, has to consider the nature and extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 3 of the Act, a person has to be actually involved in any process or activity connected with 'Proceeds of Crime'. 'Proceeds of Crime' is defined under Section 2(1)(u) of the said Act, which is extracted hereunder: "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property; or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad." 16. It is specifically stated that any property derived or obtained by any person as a result of criminal activity relating to a scheduled offence would amount to 'Proceeds of Crime'. 17. Criminal activity is not defined under the Act. However, any act, which is done intentionally, prohibited by law or an act which is made punishable under law can be said to have committed a crime. It involves Mens rea, which means a guilty mental state and lack of which would negate a crime. Mens rea is an essential element of every offence. Exclude Mens rea and person cannot be mulcted with criminal liability. 18. Penal liability is indicated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y involved in any process or activity connected with the [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money laundering." In the present case there is no property which is derived consequent to any criminal activity. The question of proceeds of crime being concealed or being in possession or the question of acquiring the such property, does not arise. As argued by the learned Senior Counsel for the Enforcement Directorate, if every commercial business or loan transaction, where an outstanding would arise in the normal course of business falls within the definition of 'Proceeds of Crime', it would have disastrous consequences. It would bring into its fold, every civil dispute. It is not the intention of the legislature to get every civil dispute or commercial transaction to be prosecuted under the Act of 2002. Specifically in the scheme of the enactment there should be such property derived or obtained directly or indirectly as a result of criminal activity relating to the scheduled offence. Unless the basic ingredient of criminal activity is satisfied, the question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after nearly 10 years of registration of ECIR stating that they are trying to find out whether any offence is made out or not, valuable time and resources of ED are wasted. No doubt, as argued by the learned Additional Solicitor General of India, relying on the judgment in the case of Neeharika Infrastructure Pvt. Ltd., v. State of Maharashtra and others (2021) LL SC 211 that investigation into crimes is the prerogative of the police officer and the Court should be cautious and circumspect to interfere invoking the jurisdiction under the inherent powers at the stage of investigation. The Hon'ble Supreme Court in Vijay Madanlal Choudhary and others v. Union of India and others 2022 SCC OnLine 929 at paragraphs 283 and 284 held as follows: "283. Even though, the 2002 Act is a complete Code in itself, it is only in respect of matters connected with offence of money-laundering, and for that, existence of proceeds of crime within the meaning of Section 2(1)(u) of the Act is quintessential. Absent existence of proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot step in or initiate any prosecution. 284. IN other words, the Authority under the 2002 Act, is to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or indirectly as a result of such criminal activity to be tried and prosecuted under Section 3 of the Act. In the present case, no such property is derived or obtained either directly or indirectly by the petitioner herein either involving in criminal activity or handling any such property derived as a result of criminal activity. The question of concealing or being in possession or acquiring such property does not arise. The amount accrued as discussed earlier is on account of dollar- rupee fluctuation and it cannot in any manner be held that the petitioner had derived or obtained any property. Though, it was agreed that differential amount of rupee dollar fluctuation would be paid, at most it can be termed as an outstanding which can be recovered in a civil suit and by no stretch of imagination can it be called as 'Proceeds of Crime" or the outstanding amount can be called as 'property' as defined under Section 2(1)(v) of the Act. 29. Viewed from any angle, when there is no criminal activity nor any property which is derived as a consequence of criminal activity, I am of the firm opinion that the proceedings in ECIR/05/HYZO/2014 cannot be permitted to continue. 30. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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