9911796707
TMI Blog2024 (4) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... 88 1. All these petitions, CRM-M No. 39214 of 2020, CRM-M No. 30807 of 2021 and CRM-M No. 30808 of 2021 are being disposed of by this common order. 2. Aggrieved by registration of ECIR captioned above under 'The Prevention of Money-Laundering Act, 2002' [PMLA], based on a predicate offence, which now stands closed, the petitioner has come up before this Court under Section 482 CrPC mainly with the following prayer: - "(a) Quash ECIR No. JLZO/01/2013 registered by the Respondent No. 1 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 couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the respondent ED. Therefore, the proceedings initiated against the petitioner under the PMLA were rendered non-est." 5. The petitioner's grievance is that despite such closure, the Enforcement Directorate continued to call the petitioner, and it would be relevant to refer to para 3.25 of the petition, which reads as follows: - "(3.25) Petitioner is now in receipt of impugned communication F. No. ECIR/JLZO/01/2013/AD (GS)/3317 dated 09.11.2020 issued by the Respondent ED rejecting the detailed reply dated 20.08.2020 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/JLZ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of the independent continuation of an investigation by the ED will not arise. Given the scheme and objects of the PMLA, the absence of a scheduled offense renders non-existent and without foundation both "proceeds of crime," hence the very offense of money laundering. Therefore, the very applicability and operation of the PMLA, which depends upon a scheduled offense, or the predicate offense as mentioned, would also be non-est where the accused has been discharged from the predicate/scheduled offense. In such circumstances, 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 ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition filed under section 482 of Cr. P.C. is not permissible for the reliefs as claimed in the petition. The ends of justice would be better served if the process under PMLA were allowed to be completed. The entire thrust of the argument, as mentioned in detail in the rejoinder filed by the petitioner, is that once there is an acquittal in the scheduled offense, that ipso facto would entail the closure /quashing of all the proceedings initiated under the Prevention of Money Laundering Act, 2002. Such a general proposition of Law is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such property 1 Subs. by Act 2 of 2013, s. 3, for "proceeds of crime and projecting" (w.e.f. 15-2-2013). 2 Ins. by Act 23 of 2019, s. 193 (w.e.f. 1-8-2019). [or where such property is taken or held outside the country, then the property equivalent in value held within the country] Ins. by Act 20 of 2015, s. 145 (w.e.f. 14-5-2015). [or abroad] Ins. by Act 13 of 2018, s. 208 (w.e.f. 19-4-2018).; [Explanation. -For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also 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-l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith proceeds of crime. Thus, ECIR is not a statutory document, nor there is any provision in 2002 Act requiring Authority referred to in Section 48 to record ECIR or to furnish copy thereof to the accused unlike Section 154 of the 1973 Code. The fact that such ECIR has not been recorded, does not come in the way of the authorities referred to in Section 48 of the 2002 Act to commence inquiry/investigation for initiating civil action of attachment of property being proceeds of crime by following prescribed procedure in that regard. 21. After that a Division Bench of Madras High Court in N. 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. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly concurs with the contentions made by the learned counsel for the respondent-ED that the ECIR is an internal administrative document of the ED. Consequently, in the considered opinion of this Court, since the ECIR precedes the stage of criminal prosecution and proceedings, it thus falls outside the purview of the inherent jurisdiction conferred upon this Court by Section 482 of the Cr.P.C. Therefore, the prayer of the petitioner for quashing of the ECIR under Section 482 of the Cr.P.C. cannot be entertained. [8]. Though the learned senior counsel for the petitioner has emphatically argued that mere technicalities should 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 27. In Yash Tuteja v. Union of India, 2024 INSC 301 [Writ Petition (Criminal) No. 153 of 2023, decided on 08.04.2024], the Hon'ble Supreme Court holds as under: - "[4]. ...In paragraph 15 of the decision in the case of Pavana Dibbur, this Court held that: "The condition precedent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as the petitioner (Arun Pati Tripathi) in Writ Petition (Crl.) No. 216/2023 is concerned, is hereby quashed. The Writ Petition is, accordingly, allowed; (iv) There will be no order as to costs; and (v) Pending applications, including those seeking implement, are disposed of accordingly. [10]. At this stage, the learned ASG stated that, based on another First Information Report, which, according to him, involves a scheduled offence, criminal proceedings under the PMLA are likely to be initiated against the petitioners. It is not necessary for us to go into the issue of the legality and validity of the proceedings that are likely to be initiated at this stage. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the FIR has no existence; thus the "Scheduled Offence" has also no existence after quashing of the FIR. When there is no "Scheduled Offence", the proceeding initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone. 31. In Debendra Kumar Panda v. Union of India and Others, CRLMC No. 3059 of 2019, Orissa High Court observed, [12]. ...In the plain language, if the foundation does not exist, how the edifice can survive. In other words, when the predicate offence fails, the foundation having been demolished, the superstructure is to fall and crumble. 32. In Rajiv Channa v. Union of India, Misc Appeal (PMLA) 13 of 2023, decided on 08 April 2024, a Division Bench of Delhi 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 founda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the inquiry/investigation which would have unparalleled bearing on the accused mental health. 35. 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. The following example will clear the concepts. Let's take an example of a wall and its plaster. First, a wall is required, and only then can it 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are not inclined to interfere with the impugned order and, therefore, the special leave petition is dismissed. However, we clarify that in case the appeal preferred in the predicate offence is allowed and the respondents are convicted, the petitioner would be entitled to seek revival of the proceedings in question. 41. Given the above, the proceedings initiated by the ED against the petitioners of the petitions mentioned above arising out of the ECIR detailed in para No. 2 are closed, with the liberty to revive, in the following terms. This flexibility allows for the potential reversal of an acquittal of the predicate offense, enabling the Enforcement Directorate to file a fresh complaint. The delay in filing such a complaint is deemed to be excluded, considering the time consumed in a reversal of such a decision. The Directorate of Enforcement may also seek a review/recall of this order if any review petition pending before the Hon'ble Supreme Court is allowed, changing the legal basis affecting this order. It is further clarified that in such a situation, the present order closing the proceedings shall become redundant and inconsequential given Section 362 r/w 482 CrPC provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
