2023 (3) TMI 386 - HC - Money Laundering

Court dismisses petition challenging search & seizure, citing lack of jurisdiction & failure to establish illegality.

The High Court dismissed the writ petition challenging the search and seizure by the Enforcement Directorate, citing lack of jurisdiction to interfere ... Territorial Jurisdiction - FIR is registered in Mumbai and properties seized were all forwarded to the Adjudicating Authority in Delhi - predicate Offence - Search and Seizure - Constitutional Validity of search conducted under Section 17 of the Prevention of Money Laundering Act - HELD THAT:- The Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary and others vs. Union of India and others [[2022 (7) TMI 1316 - SUPREME COURT]] has held that once the predicate offence is ended in discharge or acquittal, the proceedings initiated by the ED cannot be proceeded. Of course, there is no second thought in the decision rendered by the Hon'ble Supreme Court and the Co-ordinate Bench of this Court. However, in this case the main objection by the learned Special counsel for respondent is that the FIR in predicate offence and FIR in ED case were all registered at Mumbai and the properties seized were all forwarded to the Adjudicating Authority at Delhi and this Court cannot quash or stay the proceedings which has no territorial jurisdiction. The judgment of the Madras High Court in S. Ilanahai vs. The State of Maharashtra [2015 (1) TMI 1487 - MADRAS HIGH COURT] and the Delhi High Court in Sayed Mohd. Masood vs.Union of India and Another [[2014 (3) TMI 300 - DELHI HIGH COURT]] were categorically held that when the FIR is registered in some other State, merely the petitioner-accused staying in Karnataka State and bank account is operating at Karnataka, this Court cannot take the cognizance and quash or stay the criminal proceedings in favour of the petitioner. The decision rendered by the Madras High Court as well as the Delhi High Court is agreed upon that this Court has no jurisdiction to entertain the petition and pass any order against the respondent-ED when the case was registered at Mumbai and properties were seized and forwarded to the Adjudicating Authority at Delhi. Therefore, the only option available to the petitioner is to approach the Mumbai Court having territorial jurisdiction and also an alternative and efficacy remedy available before the Adjudicating Authority at Delhi. Therefore, this Court cannot interfere and pass any order with the action taken by the respondent-ED in the case registered at Mumbai. Petition dismissed. Issues:1. Jurisdiction of the High Court to entertain a petition challenging search and seizure by the Enforcement Directorate.2. Legality of search and seizure conducted under the Prevention of Money Laundering Act.3. Effect of stay on predicate offence by the Supreme Court on proceedings under the PML Act.Analysis:Issue 1: Jurisdiction of the High CourtThe petitioner-company filed a writ petition under Articles 226 and 227 of the Constitution seeking relief from the FIR and search and seizure conducted by the Enforcement Directorate (ED). The petitioner argued that the freezing of accounts caused significant financial loss, impacting operations such as salary payments, tax obligations, and other expenditures. The ED contended that the petitioner should approach the Bombay High Court or the Adjudicating Authority in Delhi for relief, as the properties seized were forwarded to the Adjudicating Authority in Delhi. The High Court held that it lacked jurisdiction to interfere with actions taken by the ED in Mumbai when the properties were seized and forwarded to Delhi. The court emphasized the importance of territorial jurisdiction in such matters and dismissed the petition.Issue 2: Legality of Search and SeizureThe petitioner challenged the legality of the search and seizure conducted by the ED under Section 17 of the Prevention of Money Laundering Act. The petitioner argued that the search was illegal as the predicate offence had been stayed by the Supreme Court. The ED objected, stating that the Adjudicating Authority had seized the matter, and the petitioner should seek relief from the appropriate courts. The court noted the petitioner's contention that the seized materials could not be held for more than 30 days and should be defreezed. However, the court held that the petitioner failed to establish the illegality of the search and seizure and dismissed the petition.Issue 3: Effect of Stay on Predicate OffenceThe petitioner relied on judgments indicating that when a predicate offence is stayed by the Supreme Court, proceedings under the PML Act should also be stayed. The court acknowledged the stay on the predicate offence by the Supreme Court and cited relevant judgments supporting the petitioner's argument. However, the court emphasized that the FIRs were registered in Mumbai, and the properties were forwarded to the Adjudicating Authority in Delhi. The court concluded that the petitioner should seek relief from the courts with the appropriate territorial jurisdiction and dismissed the petition for lacking merit.In conclusion, the High Court dismissed the writ petition, emphasizing the importance of territorial jurisdiction and the availability of alternative remedies for the petitioner to challenge the search and seizure conducted by the Enforcement Directorate.