2022 (4) TMI 1670 - HC - Money Laundering

Rule 61 requires written complaint by authorised officer for cognizance under Mineral Rules; FIR quashed against valid licensee.

The HC held that under Rule 61 of the Bihar Mineral Rules, 2019 and the applicable precedent, cognizance for offences under the Rules requires a written ... Money Laundering - institution of FIR - requirement of cognizance only upon a written complaint by a competent/authorised officer - Rule 61 of the Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019 - HELD THAT:- Taking into consideration the ratio of the judgment in the case of Mithilesh Kumar Singh [2019 (8) TMI 1936 - PATNA HIGH COURT] read with Rule 61 of the Bihar Mineral Rules, 2019, no FIR could be instituted rather complaint in writing will have to be made by the competent officer or Deputy Director of Mines, Additional Director of Mines or Director of Mines or any other officer empowered by the Government. It is also not in dispute that the petitioner was a valid licensee and the allegation against the petitioner is not of having removed the stock without issuing challan. Thus in view of the facts of the case there being no doubt about the legal position that no FIR could have been instituted in view of Rule 61 of the Bihar Mineral Rules, 2019 together with the ratio of the judgment in the case of Mithilesh Kumar Singh, the writ petition is allowed and the FIR being Dehri Town (Dalmiyanagar O.P.) P.S. Case no. 407 of 2021 is hereby quashed. Application allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether a First Information Report (FIR) can be registered and cognizance taken by police for alleged offences under the Bihar Mineral (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019 (the Rules) and allied provisions, when Rule 61 requires cognizance only upon a written complaint by specified competent officers. 2. Whether offences under the Indian Penal Code (IPC) such as theft (Section 379), criminal breach of trust (Section 406) and cheating (Section 420) can be prosecuted by police in circumstances where a licensee allegedly excavated minerals in excess of permitted quantities, as distinct from clandestine extraction by unauthorized persons. 3. Whether continuing criminal prosecution in circumstances falling under the statutory cognizance bar under the MMDR Act / Rules would amount to an abuse of the process of the court. 4. Whether civil liability arising from excess mining is adjudicated or affected by quashing a criminal FIR under the statutory scheme. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity of FIR where the statutory scheme requires cognizance only upon written complaint by specified officers (Legal framework) Legal framework: Section 22 of the MMDR Act provides that no court shall take cognizance of offences punishable under the Act or rules made thereunder except upon a complaint in writing by a person authorized by the Central or State Government. Rule 61 of the Bihar Mineral Rules, 2019 mirrors this approach, specifying that no court shall take cognizance except upon a written complaint by the Competent Officer or specified senior mining officers or any other officer empowered by the Government. Precedent Treatment: The Court relied on the ratio in an earlier High Court judgment which applied Section 22 / corresponding rules to hold that an FIR registered by a subordinate official (e.g., a Mines Inspector) was contrary to the statutory bar and therefore invalid. That judgment was applied (followed) as controlling authority for similar facts. Interpretation and reasoning: The Court treated the statutory language as creating an express bar to institution of FIRs by police for offences punishable under the mining statute/rules; instead, initiation must be by a written complaint from an authorized officer. The statutory scheme displaces the ordinary police/FIR route for such regulatory offences to ensure that only competent executive authorities initiate prosecution under the mining law. Ratio vs. Obiter: Ratio - where the statutory provision requires cognizance only upon written complaint by specified authorities, registration of an FIR by police, contrary to that scheme, is impermissible; such FIRs must be quashed. (This is treated as the binding principle applied to the facts.) Conclusion: The FIR was not maintainable because Rule 61 imposed a statutory bar to cognizance except on a written complaint by authorized mining officers; therefore an FIR instituted otherwise is illegal and liable to be quashed. Issue 2: Applicability of IPC offences (theft, breach of trust, cheating) where the accused is a valid licensee versus clandestine extraction by unauthorized persons (Legal framework) Legal framework: IPC Sections addressed include theft (Section 379), criminal breach of trust (Section 406), and cheating (Section 420). The MMDR statutory scheme contains separate offences and penalties for contravention of mining laws. Precedent (Supreme Court authority as applied in the High Court precedent) distinguishes between theft of state minerals by unauthorized persons and regulatory violations by licensees. Precedent Treatment: The Court relied on the Supreme Court's exposition that clandestine extraction by a person without lease/licence, with dishonest intent to remove state property, may constitute theft under Section 378/379 IPC; by contrast, a licensee extracting in excess of permitted quantities violates the MMDR scheme and its rules, and does not necessarily satisfy the mens rea or other ingredients of IPC theft or cheating offences. The High Court precedent followed this distinction. Interpretation and reasoning: The Court analyzed ingredient-based differences: theft requires dishonest removal from the possession of the State; contravention of lease conditions or excess excavation by an otherwise licensed party is a regulatory breach punishable under the MMDR Act (Section 21 etc.) but does not ipso facto establish dishonest intent from the outset to attract Section 379, nor does mere over-extraction demonstrate dishonest entrustment or cheating necessary for Sections 406/420. The informant's knowledge derived from returns does not establish pre-existing mens rea to cheat. Ratio vs. Obiter: Ratio - where the accused is a valid licensee, offences under Sections 379, 406 and 420 IPC will not ordinarily be attracted merely because of excess extraction; absence of mens rea/dishonest intention from the beginning precludes these IPC offences. Obiter - the possibility that an unlicensed clandestine extractor may be prosecuted for theft is recognized as a separate exception (not applied to licensee facts here). Conclusion: Given the petitioner's status as a valid licensee and absence of pleaded/demonstrated dishonest intention, the ingredients of IPC theft, criminal breach of trust or cheating were not made out on the FIR's allegations; criminal prosecution under those Sections was not sustainable on the record before the Court. Issue 3: Abuse of process where prosecutions proceed contrary to express statutory bar (Legal framework) Legal framework: Combined statutory scheme (MMDR Act and Rules) and settled principle that courts will quash criminal proceedings that are barred by statute or amount to an abuse of process. Precedent Treatment: The High Court precedent applied earlier was followed to hold that allowing prosecutions to continue despite the statutory cognizance bar and lack of IPC ingredients would constitute an abuse of process. Interpretation and reasoning: The Court reasoned that continuing a prosecution in the face of the statutory requirement that cognizance can only follow a written complaint by an authorized officer would improperly circumvent the legislative scheme and subject the accused to unwarranted criminal processes. Where the statutory procedure for initiation is not followed and statutory offences under the IPC are not made out, permitting prosecution to continue would be oppressive and abusive of judicial process. Ratio vs. Obiter: Ratio - continuation of criminal prosecution in such circumstances amounts to abuse of process and warrants quashing of the FIR. (Applied directly to quash the FIR.) Conclusion: Permitting the FIR-based prosecution to proceed would be an abuse of process given the statutory bar and absence of IPC ingredients; accordingly, quashing of the FIR is warranted. Issue 4: Effect of quashing criminal proceedings on civil liabilities (Legal framework) Legal framework: Distinction between criminal prosecution and civil remedies for excess mining or regulatory breaches; courts may quash criminal proceedings without prejudicing civil claims. Precedent Treatment: The earlier judgment expressly clarified that quashing of FIRs does not adjudicate civil liability arising from excess mining and observations in criminal proceedings shall have no consequence in civil proceedings; that position was followed. Interpretation and reasoning: The Court refrained from adjudicating civil liability, emphasizing that the quash is limited to criminal process and does not foreclose or influence any civil remedies or liabilities that may be pursued by other parties under relevant laws. Ratio vs. Obiter: Ratio - quashing criminal proceedings under the statutory scheme does not decide or bar civil claims relating to excess mining; such civil proceedings remain open. (Directly applied.) Conclusion: The quashing of the FIR does not affect or adjudicate civil liability; any civil proceedings remain unaffected by this order. Final Disposition The Court allowed the petition and quashed the FIR because it was instituted in breach of the statutory requirement that cognizance for offences under the mining statute/rules be taken only upon a written complaint by authorized mining officers, and because the factual matrix did not disclose the necessary ingredients of IPC offences (theft, breach of trust, cheating) against a licensee; civil liability questions were expressly left open.