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Issues: (i) whether the Directorate of Enforcement was entitled to invoke the inherent jurisdiction under Section 482 to challenge the order accepting the closure report in the predicate offence; and (ii) whether the closure report and its acceptance could stand when the materials indicated a fabricated ante-dated sale agreement and the existence of proceeds of crime affecting the pending PMLA proceedings.
Issue (i): whether the Directorate of Enforcement was entitled to invoke the inherent jurisdiction under Section 482 to challenge the order accepting the closure report in the predicate offence.
Analysis: The proceedings under the PMLA were already founded on identified proceeds of crime and on a prosecution complaint based on the scheduled offence. The closure of the predicate offence, if allowed to stand, would directly impact the continuation of the PMLA case and the securing or confiscation of proceeds of crime. Section 482 preserves the High Court's inherent power to prevent abuse of process and to secure the ends of justice, and the provision is not confined only to a complainant or victim when the applicant is demonstrably concerned with the subject matter and the legality of the impugned order. The Directorate of Enforcement, having traced the proceeds of crime and being prosecuting agency under the PMLA, was held to have sufficient locus to move the High Court.
Conclusion: The petition was maintainable and the Directorate of Enforcement was entitled to seek interference.
Issue (ii): whether the closure report and its acceptance could stand when the materials indicated a fabricated ante-dated sale agreement and the existence of proceeds of crime affecting the pending PMLA proceedings.
Analysis: The materials showed that the stamp paper used for the alleged sale agreement was issued and sold after the stated date of the document, and the earlier investigation had already treated the agreement as fabricated and intended to project tainted cash as untainted. The Court held that ante-dating in the given factual matrix amounted to creation of a false document attracting the ingredients of forgery offences, and that the earlier restoration of the predicate case and the prior findings on prima facie material could not be ignored. The closure report was characterised as mechanical and inconsistent with the record, and its acceptance was found to have resulted in miscarriage of justice. The Court held that the existence of proceedings under the PMLA and the identified proceeds of crime warranted that the predicate offence not be buried by an unsustainable closure.
Conclusion: The closure report and the order accepting it were unsustainable and liable to be set aside.
Final Conclusion: The impugned acceptance of the closure report was quashed, and the predicate offence was left to continue in accordance with law so that the PMLA proceedings were not defeated by the closure.
Ratio Decidendi: Where proceeds of crime have already been traced and a predicate offence closure would frustrate the statutory scheme of the PMLA, the High Court may invoke its inherent jurisdiction at the instance of the Enforcement Directorate to set aside a mechanically accepted closure report that is found to be contrary to the record and productive of miscarriage of justice.
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