TMI Blog2024 (3) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly approached this Court by invoking the jurisdiction of this Court under Section 226 of the Constitution read with Section 482 of the Cr.P.C. for challenging the aforesaid actions. The question whether the High Court of Punjab and Haryana has jurisdiction to entertain the challenge to the proceedings initiated by the respondent against the petitioner and co-accused will have to be determined by that Court. It would not be appropriate for this Court to render any opinion on this issue in the present proceedings - Merely because grounds of challenge raised before this Court are identical to the grounds of challenge raised by the petitioner in the petition filed by him before the High Court of Punjab and Haryana, does not disentitle him from invoking the jurisdiction of this Court. The preliminary objection of the learned DSGI to the maintainability of this petition, prima facie, appears to be untenable. Though offences under PMLA are stand alone offences, yet their origin is the Scheduled offences. Once the Scheduled offence ceases to exist or is extinguished, an accused cannot be proceeded against in respect of offences under PMLA. It is for this reason that the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enforcement Directorate) ORDER CM No. 648/2024 1. The petitioner has called in question the action taken by the respondent that has led to his arrest in a case arising out of Enforcement Case Information Report (ECIR) bearing No. ECIR/JMSZO/02/2023 dated 31.03.2023 registered by the respondent. Challenge has also been thrown to Arrest Memo dated 06.02.2024, Arrest Order dated 06.02.2024 and Remand Order dated 07.02.2024 passed by the learned Special Judge, (PMLA) Jammu, whereby the petitioner has been remanded to custody of the respondent. In this regard, the petitioner has invoked the jurisdiction of this Court under Article 226 of the Constitution of India read with section 482 of the Code of Criminal Procedure (Cr.P.C.). By way of interim relief, the petitioner has sought his release from the custody of the respondent. 2. It appears that on 11.02.2020, the State Bank of India, the Consortium Leader of the Banks from which M/s Bharat Paper Limited (hereinafter to be referred as the BPL), of which the petitioner was one of the directors, had obtained loan, filed a complaint before the Central Bureau of Investigation(CBI) against the BPL and its four directors including the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belonging to the BPL and its directors are located, whereupon seizure of cash and other items was effected. During the investigation, the respondent issued summons to the petitioner, pursuant whereto, the petitioner and the co-accused approached the High Court of Punjab and Haryana by way of another petition under Section 482 Cr.P.C. whereby investigation in relation to offences under PMLA arising out of ECIR dated 31.03.2023 have been challenged. The petitioner and the co-accused have also challenged summons issued to them by the respondent in exercise of their powers under Section 50 of the Prevention of Money Laundering Act, 2002. The said petition is stated to be pending before the High Court of Punjab and Haryana. 7. While all this was going on, the petitioner pursuant to the summons issued by the respondent, put in his appearance before the respondent on 06.02.2024 but he was arrested on the same day at about 9.40 PM. The petitioner was produced before the Special Judge (designated under PMLA), Jammu on 07.02.2024 and vide impugned Remand Order dated 07.02.2024 passed by the said court on the same date, he was remanded to custody by the said respondent. This has led the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to undertake investigation in respect of the said offences. It has been contended that unless an accused is discharged, acquitted or the FIR lodged against him in respect of predicate offence is quashed, the proceedings under PMLA would continue to operate. It has been further contended that in the instant case, all the statutory requirements as postulated in Section 19 of the PMLA, 2002 have been adhered to by the respondent, while effecting arrest of the petitioner inasmuch as grounds of arrest have been furnished to him. He has further contended the impugned order passed by the learned Special Judge, PMLA is also in accordance with law. 11. Before coming to the merits of the case, it would be apt to deal with the preliminary objection raised by the learned DSGI about the maintainability of the present writ petition. 12. It is an admitted fact that the petitioner has invoked the jurisdiction of the High Court of Punjab and Haryana for challenging the proceedings initiated against him under PMLA and he has also challenged the summons issued by the respondent against him. In the instant case, the petitioner has challenged the action of the respondent leading to his arrest as also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of an order of stay means that the operation of the impugned order is stayed or stands stalled as if the impugned order does not exist. Therefore, to bring the parties to the proceedings from taking further action in relation to the subject matter pending the final adjudication, stay order is granted in the interest of both parties. During the currency of stay order, if any proceedings are permitted to go on and in the meanwhile, if any damage has been caused to the reputation or the goodwill of the parties, the same cannot be compensated. Whereas if the Department waits for the final outcome of the proceedings, no prejudice would be caused to them. In all these cases, the admitted case of the respondent Department is that the ECIR has been initiated based on the three First Information Reports in Crime Nos. 441 of 2015, 298 of 2017, 344 of 2018, which culminated in the proceedings in C.C. No. 24 of 2021, C.C. No. 19 of 2020 and C.C. No. 25 of 2021 respectively and the proceedings in C.C. No. 25 of 2021 culminating from Crime No. 344 of 2018 have been quashed. The calendar cases arising out of the other two First Information Reports have been stayed. As stated supra, since the EC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been wiped out. Till it is quashed by a competent Court or the person is discharged or acquitted, the offence continues to be alive and the respondent has the authority to proceed under the Act. 25. Let us see what is the jurisdictional fact to be taken into account by a Court before assuming jurisdiction over a particular matter. The Hon'ble Supreme Court explaining the above facts in Arun Kumar and others v. Union of India and others, (2007) 1 SCC 732, has held as follows:- 74. A jurisdictional fact is a fact which must exist before a court, tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional fact is one on existence or non-existence of which depends jurisdiction of a court, a tribunal or an authority. It is the fact upon which an administrative agency's power to act depends. If the jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Till the First Information Report is quashed, the scheduled offence continues to be alive. 29. In our view, the grant of stay of any particular proceedings would amount to eclipsing the proceedings initiated. An order of stay is interim in nature pending the final proceedings. The Hon'ble Apex Court in State of Haryana and others v. Bhajan Lal and others, 1992 Supp (1) SCC 335, in paragraph-5 stated thus: Everyone whether individually or collectively is unquestionably under the supremacy of law. Whoever he may be, however high he is, he is under the law. No matter how powerful he is and how rich he may be. 30. Therefore, the Apex Court has given the guidelines to be followed by the Courts while exercising the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code that where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not constitute any offence or make out a case against the accused, based on which, when the orders of stay are granted, the parties to the proceedings bound by the rule of law, should abide by the orders of stay. In this bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d supra . Therefore, the respondent is hereby refrained from proceeding any further pursuant to the impugned proceedings in ECIR/MDSZO/21/2021, till the disposal of the Criminal Revision Case No. 224 of 2021, Criminal Original Petition No. 15122 of 2021 and the SLP (Crl) Diary No. 9957 of 2022 (SLP (Crl) No. 3841 of 2022). 15. The aforesaid ratio laid down by the High Court of Madras has been relied upon by a Single Judge of High Court of Karnataka in the case of Mantri Developers Pvt. Ltd. and others vs Directorate of Enforcement and another, (Writ petition No. 20713/2022 decided on 14.12.2022). In the said case, a crime case relating to offences punishable under Sections 406, 415, 417, 420 read with Section 34 of IPC was challenged before the High Court in a writ petition and the investigation was stayed by the High Court. Thereafter, Enforcement Directorate registered an Enforcement Case Information Report (ECIR) pursuant whereto a show cause notice was issued to the petitioner therein calling upon him to appear before the Investigating Officer. The petitioner therein challenged the proceedings relating to ECIR as also the provisional attachment order by way of a writ petition b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. In these circumstances the offence alleged under the provisions of the PMLA cannot be sustained and cannot be permitted to be continued. Therefore, if the allegations in the predicate offences are considered to be the flesh, the offences under the PMLA is the blood. Therefore, if the predicate offence is not permitted to move forward, the impugned proceedings cannot. It would have been altogether different circumstance, if the petitioners were all acquitted of the offences under the IPC or any other predicate offence to which the offence under the PMLA is linked. The situation in the case at hand is not with regard to acquittal, however, the proceedings are stayed. Therefore, they are eclipsed and not extinguished. The Apex Court does not deal with a circumstance as to what should happen in a case, where it is eclipsed. The Apex Court only dealt with a situation where there is extinguishment of predicate offences. Therefore, it is necessary to consider taking cue from the findings of the Apex Court as to whether attachment order should be permitted to be confirmed or otherwise. 15. It cannot be disputed, that at a later point in time if the petitioners are acquitted, no proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of Enforcement from proceeding under PMLA. A similar view has been taken by the Telangana High Court in Sukesh Gupta s case(supra). Both these cases have been decided prior to the decision of three Judge Bench judgment of the Supreme Court in Vijay Mandanlal Choudhary s case(supra), wherein, as already stated, it has been clearly laid down that if a person is finally discharged/acquitted of the scheduled offence or the proceedings against him are quashed, there can be no offence of money laundering against him. The effect of this conclusion of the Supreme Court was obviously not under discussion and debate before either the High Court of Madras or before the High Court of Telangana in the aforesaid two cases as these cases were decided prior to the judgment(supra) of the Supreme Court. On the other hand, the aforesaid ratio laid down by the Supreme Court in Vijay Mandanlal Choudhary s case(supra) has been taken note of by the Division Bench of the High Court of Madras in the case of B. Shanmugam s case (supra) and by the Karnataka High Court in Mantri Developers Pvt. Ltd. s case (supra). 20. For the reason that in the judgments relied upon by the learned DSGI, the position of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such, he is remanded to custody of the Enforcement Directorate. The learned Judge has not even recorded a finding as to whether or not she has perused the grounds of arrest so as to ascertain whether the ED had recorded reasons to believe that the petitioner was guilty of an offence under PMLA and whether or not there was proper compliance with the mandate of Section 19 of the PMLA. 24. In view of this, this Court is of prima facie view that the impugned order dated 07.02.2024 passed by the learned Special Judge, PMLA smacks of non application of mind. 25. For all what has been discussed hereinbefore, the petitioner has been able to carve out a case for grant of interim relief. Accordingly, the petitioner is directed to be released from custody in the subject ECIR, provided he fulfils the following conditions: (i) He shall furnish bail bond with two sureties in the amount of Rs. 1.00 lac each to the satisfaction of the Special Judge designated under PMLA, Jammu. (ii) He shall cooperate with the respondent during investigation of the case and he shall not hamper or tamper with the evidence. (iii) He shall deposit his passport with Assistant Director, Enforcement Directorate Jammu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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