PMLA inquiry can proceed without prior FIR; ECIR is non-statutory and income-tax settlement immunity does not bar action.

Under the Prevention of Money Laundering Act, 2002, an ECIR is only an internal, non-statutory record and its quashing is not maintainable as an independent remedy. Summons under Section 50 may issue as part of inquiry machinery to collect evidence and information about proceeds of crime, even without a prior FIR or complaint for a scheduled offence, and the recipient does not become an accused merely because of summons. Civil action such as inquiry and attachment may also proceed on information indicating proceeds of crime before formal registration of the scheduled offence, though prosecution for money laundering requires the existence of a scheduled offence. Immunity granted in Income-tax settlement proceedings does not bar proceedings under the PMLA.

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Issues: (i) Whether the ECIR registered by the Enforcement Directorate was amenable to quashing; (ii) whether summons issued under Section 50 of the Prevention of Money Laundering Act, 2002 could be issued in the absence of a prior FIR or complaint in respect of a scheduled offence; (iii) whether civil action under Sections 5 and 50 of the Prevention of Money Laundering Act, 2002 required prior registration of a scheduled offence; and (iv) whether immunity granted in settlement proceedings under the Income-tax Act, 1961 barred proceedings under the Prevention of Money Laundering Act, 2002.

Issue: Whether the ECIR registered by the Enforcement Directorate was amenable to quashing.

Analysis: The ECIR was held to be only an internal, non-statutory document of the Enforcement Directorate. The statutory scheme of the Prevention of Money Laundering Act, 2002 does not require registration of an ECIR, and non-registration of such a document does not impede inquiry, attachment, or other civil action under the Act. Since ECIR is not a statutory prerequisite and has no independent legal status akin to an FIR, a prayer to quash it was held to be misconceived.

Conclusion: The ECIR could not be quashed.

Issue: Whether summons issued under Section 50 of the Prevention of Money Laundering Act, 2002 could be issued in the absence of a prior FIR or complaint in respect of a scheduled offence.

Analysis: Section 50 powers were treated as part of the inquiry machinery under the Act, meant for collection of evidence and information concerning proceeds of crime. The summons stage was held not to be prosecution and the recipient of summons does not assume the status of an accused merely by reason of such summons. The absence of a prior FIR or complaint involving a scheduled offence was therefore not a bar to issuing summons.

Conclusion: Prior registration of a scheduled offence was not required for summons under Section 50.

Issue: Whether civil action under Sections 5 and 50 of the Prevention of Money Laundering Act, 2002 required prior registration of a scheduled offence.

Analysis: The Court reiterated the distinction between the civil and penal limbs of the Act. Civil action for attachment, inquiry, and collection of evidence may commence on the basis of information indicating proceeds of crime, even before a scheduled offence is formally registered. By contrast, prosecution for the offence of money laundering requires the foundational existence of a scheduled offence. The non-registration of a scheduled offence or the failure to act on information under Section 66(2) did not invalidate civil action already initiated by the Enforcement Directorate.

Conclusion: Prior registration of a scheduled offence was not necessary for civil action under the Act.

Issue: Whether immunity granted in settlement proceedings under the Income-tax Act, 1961 barred proceedings under the Prevention of Money Laundering Act, 2002.

Analysis: The immunity contemplated by Section 245H of the Income-tax Act, 1961 was held to operate only within that enactment and, by its own terms, does not extend to offences under the Indian Penal Code or other Central enactments. The settlement proceedings under the Income-tax Act addressed tax disclosure and related consequences, whereas proceedings under the Prevention of Money Laundering Act, 2002 concern proceeds of crime and a distinct statutory regime. The settlement order therefore did not preclude inquiry under the money-laundering .

Conclusion: The settlement immunity did not bar proceedings under the Prevention of Money Laundering Act, 2002.

Final Conclusion: The appeal failed. The writ petition was rightly rejected, and the Enforcement Directorate was held entitled to continue the inquiry and issue summons notwithstanding the absence of a prior FIR or complaint at that stage.

Ratio Decidendi: Under the Prevention of Money Laundering Act, 2002, inquiry, summons, and provisional civil action may proceed on information indicating proceeds of crime without prior registration of a scheduled offence, while prosecution for money laundering requires the foundational existence of such a scheduled offence; an ECIR is only an internal, non-statutory record and its quashing is not maintainable as an independent remedy.

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