TaxTMI 
TaxTMI 
2024 (9) TMI 320
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....al Choudhary Versus Union of India & Others 2022 SCC OnLine SC 929" Read down and/or Read into Sub-Section (2) of Section 66 Prevention of Money Laundering Act, 2002 and hold that:- a) The only power conferred under Sub-Section 2 of Section 66 to the "Director or any other authority specified by him" is confined to "share the information with the concerned agency for necessary action" in the event of forming opinion "on the basis of information or material in his possession that the provisions of any other law for the time being in force are contravened" and nothing beyond; b) No power or authority vests with the "Director or any other authority specified by him" to prompt, compel, coerce, force, browbeat or pressurize any private individual to lodge criminal case(s) against any person or entity as contemplated under Section 2 (1) (s) of the Prevention of Money Laundering Act, 2002 as any such act would tantamount to blatant illegality, arbitrariness and thus unconstitutional; II) Set aside and quash the impugned communication dated 14.12.2023 (Annexure P-16) issued by Respondent No. 2, whereby, a questionnaire has been sent to various customers of the pe....
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....rned? Yes or No. (viii) If no, is any FIR / Complaint has been filed before any forum? If yes, then it's details thereof. (ix) If not filed, then do you wish or plan to file such complaint with respect to your booking with IREO Group?" 1.4 The petitioner has immediately filed the present writ petition. On the basis of the information gathered/complaints received, the Joint Director, ED, shared information under Section 66 (2) of the 2002 Act with the Special Commissioner of Police, Economic Offences Wing, Police Station Mandir Marg Complex, New Delhi, leading to the registration of FIR No. 14, dated 12.03.2024, which is pending investigation. 1.5 The ED, in its reply, has stated that the information was sought from the customers of seven incomplete projects of the petitioner company in order to collect material information. On the basis of the material gathered, the involvement of the petitioner, the Directors, the former Directors, the key managerial persons of the IREO Group of companies transpired as the above said key position holders have been involved/played a major role in the criminal activities of cheating and defrauding the customers/investors ....
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.... FIRs, which no more exist. Hence, the ECIR is required to be quashed. ii) The ED is not repository of the powers which are beyond the Statute. They submit that under Section 66 of the 2002 Act, the ED is only entitled to share information which is in their possession with the concerned agency for necessary action. Hence, the ED has no power to register the FIR. iii) An attempt to overreach the Statute has been made by the ED as the 2002 Act does not provide for sending questionnaire. iv) It is not permissible to add new FIRs in the ECIR. It is contended that the new FIR may result in registering of new ECIR but it could not be added in the previous ECIR. v) The ED is not authorized to solicit information from the allottees and hence, it cannot act as a Judge, Jury and Executioner itself. vi) A similar information sent to the EOW, Gurgaon, has not been accepted by the police as it was found to be a civil dispute. It is submitted that the ED was entitled to share information with the jurisdictional police. In this case, the jurisdictional Police Station is EOW, Gurgaon, which has refused to register FIR. It is submitted that all the seven....
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....;Directorate of Enforcement v. Emta Coal Limited and Others SLP (Civil) 15235/2023 Decided on 06.07.2023 17. Muktanand Agro Farming Pvt. Ltd. v. Adjudicating Authority and Others W.P.(C) No. 11474 of 2022 Decided on 16.02.2023 18. Directorate of Enforcement v. Muktanand Agro Farming Pvt. Ltd. and Others SLP (Civil) Diary No. 24848/2023 Decided on 25.08.2023 19. Omkar Realtors & Developers Pvt. Ltd. v. Adjudicating Authority and Others W.P.(C) No. 11473 of 2022 Decided on 16.02.2023 20. Directorate of Enforcement v. Omkar Realtors & Developers Pvt. Ltd. and Others SLP (Civil) Diary No. 23799/2023 Decided on 04.08.2023 21. Pratap Singh Tiwari and Another v. Directorate of Enforcement CRLP No. 1928/2022 Decided on 07.09.2022 22. Directorate of Enforcement v. M/s Pratap Singh Tiwari and Another SLP (Civil) Diary No. 19609/2023 Decided on 05.07.2023 23. Sri Jayanand Narasannavar and Another v. Directorate of Enforcement CRLP No. 9685/2022 Decided on 25.09.2023 24. Directorate of Enforcement v. M/s Sri Jayanand Narasannavar and Another SLP (Criminal) Diary No. 13442/2023 Decided on 03.07.2023 25. S. Revanna and Another v. Directorate ....
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.... on the judgment passed in V. Senthil Balaji v. The State represented by Deputy Director and Others (2024) 3 SCC 51 and submits that the judgment passed in Vijay Madan Lal Chaudhary's case (supra) has also been explained in the said judgment. The Special Court has also refused either to close or drop the proceedings vide two orders passed on 17.07.2024. FIR No. 195 of 2018, out of the original 32 FIRs, is still pending. Neither Section 50 nor Section 66 of the 2002 Act provides that registration of an ECIR is a prerequisite to collect/gather information. The learned counsel submits that Section 66 of the 2002 Act is not dependent on predicate offence and that the communication (Annexure P16) was sent only to ascertain the whereabouts of proceeds of crime while seeking information. While relying upon the judgment passed in Rajinder Singh Chadha (supra), he submitted that a subsequently registered FIR can be included in an ECIR registered previously. He further submitted that on the careful examination of the audited annual financial status of the petitioner company, it is revealed that huge funds have been routed by the IREO Group to M3M Group of companies apart from nine shell enti....
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....cess or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. Explanation.-For the removal of doubts, it is hereby clarified that,- (i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:- (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. XXXX XXXX....
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....been filed, whether named in the original complaint or not. (2) Nothing contained in this section shall be deemed to affect the special powers of the High Court regarding bail under section 439 of the Code of Criminal Procedure, 1973 (2 of 1974) and the High Court may exercise such powers including the power under clause (b) of sub-section (1) of that section as if the reference to Magistrate in that section includes also a reference to a Special Court designated under section 43." XXXX XXXX XXXX XXXX XXXX 50. Powers of authorities regarding summons, production of documents and to give evidence, etc.-(1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:- (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a reporting entity and examining him on oath; (c) compelling the production of records; (d) receiving evidence on affidavits; (e) issuing commissions for examination of witnesses and documents; a....
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.... the other authority, so specified by him, be necessary for the purpose of the officer, authority or body specified in clause (i) or clause (ii) to perform his or its functions under that law. (2) If the Director or other authority specified under sub-section (1) is of the opinion, on the basis of information or material in his possession, that the provisions of any other law for the time being in force are contravened, then the Director or such other authority shall share the information with the concerned agency for necessary action." 3.3 It is evident that Section 3 of the 2002 Act defines the offence of money laundering and it is not narrowly focused. The proceeds of crime is a pivotal ingredient constituting the offence of money laundering. Section 3 of the 2002 Act has been explained elaborately in Vijay Madan Lal Chaudhary's case (supra). It is evident that the definition of the offence of 'money laundering' is wide and expansive. It makes liable not only the person who directly or indirectly indulges with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property, but even the pers....
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....nior counsels that ECIR was registered on the basis of 32 FIRs which stand closed or quashed. Hence, the predicate offences have ceased to exist and as a result, ECIR shall be quashed. They submitted that the proceedings cannot continue in view of the interpretation of law by the Supreme Court in Vijay Madan Lal Chaudhary's case (supra). 3.8 In the considered opinion of this Bench, this argument of the learned counsels suffer from a fundamental flaw. It is evident that out of 32 FIRs, one remains open. According to Explanation II to Section 44 of the 2002 Act, any subsequent complaint should be incorporated into the pending complaint for further investigation to gather additional evidence against any accused, as reflected in the statutory language. The legislative intent in cases involving multiple FIRs is thus quite clear. Consequently, it can be concluded that even if all FIRs except one have been resolved through compromise or other means, the investigation under the same ECIR will continue. This is because Explanation II to Section 44 of the 2002 Act mandates that subsequent complaints be considered part of the original complaint by the Special Court. Moreover, sine qua non ....
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....SCC 52, the Supreme Court held that it is not the function of the Court to monitor the investigation process as long as the investigation does not transgress any provision of law. The questions and manner of asking such questions to likely victims of crime should be left to the Investigating Agency. The ED has the enabling power to search for proceeds of crime in scheduled offence. In order to collect information and related material, the ED has the powers as enlisted in Section 50. The questionnaire as sent to the customers of incomplete projects of the petitioner company is an attempt in that direction. After collecting the information, the same has been shared with EOW, Delhi, which has already registered an FIR. This FIR has been challenged in a pending petition before the Delhi High Court. Hence, there is no substance in the arguments of the learned counsel that the ED has transgressed its powers or overreached the Statute. 3.12 It would be noted here that once the ECIR has been filed in the Special Court, Explanation (ii) of Section 44 (1) of the 2002 Act does enable the Special Court to include any subsequent complaint in respect of further investigation. Moreover, if the....
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....ding the proceeds of crime outside India in the form of buying the shares back, resumption and purchase of shares etc. have also been found. In these circumstances, at this stage, it is not appropriate for this Court to interfere particularly when the petition against the FIR registered in Delhi is pending before the Delhi High Court. 3.16 The last submission of the learned senior counsels representing the petitioner is insubstantial because the manner of investigation and the questions which required to be posed in order to get information is the exclusive domain of the Investigating Agency and the Courts are not expected to interfere in general. 3.17 Though the petitioner in the writ petition, in its first prayer, prays for reading down or reading into Section 66 of the 2002 Act, however, during the course of arguments, the attention of the Bench has not been drawn to the requirement of reading down the aforesaid provision. The doctrine of reading down a statutory provision may be resorted only to avoid holding the provision as unconstitutional or arbitrary. The aforementioned provision is not ambiguous, hence, the Court does not find it appropriate to avoid its literal int....
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....uish between the ratio decidendi and obiter dicta. A decision is only an authority for what it actually decides. The essence in a decision is its ratio. Only law culled out from a judgment is alone declaration for law. 3.21 The Supreme Court in Rajbir Singh Dalal v. Chaudhary Devi Lal University, Sirsa and Others (2008) 9 SCC 284 held that a decision of the Court cannot be treated as Euclid's formula and read and understood mechanically. A decision must be considered on the facts of the matter at hand. The distinction between the ratio decidendi and obiter dicta is well defined. The Supreme Court, in Vijay Madan Lal Chaudhary's case (supra), has examined the validity of certain provisions of the 2002 Act and also interpreted them, while commenting on the procedure followed by the ED while inquiring into or investigating the offence under the 2002 Act. After detailed deliberation, the conclusions were summarized in para 467 of the Vijay Madan Lal Chaudhary's case (supra). The judgment is required to be read in that context. The learned counsel admits that the validity of Section 66 of the 2002 Act was neither challenged nor addressed or dealt with by the Supreme Court. Simila....
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....s or the accused have been acquitted or discharged in the predicate offence. 3.25 The judgment passed in Rajinder Singh Chadha's case (supra) in fact supports the case of ED. In the said case, ECIR was registered on the basis of two FIRs which were either allowed to be compounded or quashed by the Courts. However, in the meantime, third FIR was registered disclosing scheduled offence. The same was included in the ECIR. It was held that in such circumstances, ECIR cannot be quashed and the investigation can continue on the basis of the third FIR. However, it was declared that ECIR will not relate to the first two FIRs. 3.26 The judgment passed by the Supreme Court in Arvind Kejriwal's case (supra) is in the context of the ED's power of arrest under Section 19 of the 2002 Act. The Supreme Court has, in para 84 of Arvind Kejriwal's case (supra), referred three legal questions for consideration by the Larger Bench while granting interim bail to the petitioner. Hence, the observations made in the aforesaid judgment are in terms of Section 19 of the 2002 Act. Consequently, the same is not applicable to the facts of the present case. 3.27 This aspect can be examined from another ....