TaxTMI 
TaxTMI 
2024 (4) TMI 1179
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.... 120-B IPC and 7, 8,9, 13(1) (c), 13(1) (d) r/w 13(2) and 14 of PC Act, 1988 1. All these petitions, CRM-M No. 39214 of 2020, CRM-M No. 30807 of 2021 and CRM-M No. 30808 of 2021 are being disposed of by this common order. 2. Aggrieved by registration of ECIR captioned above under 'The Prevention of Money-Laundering Act, 2002' [PMLA], based on a predicate offence, which now stands closed, the petitioner has come up before this Court under Section 482 CrPC mainly with the following prayer: - "(a) Quash ECIR No. JLZO/01/2013 registered by the Respondent No. 1 Directorate of Enforcement for an offence under Section 3 read with Section 4 of Prevention of Money Laundering Act, 2002 ('PMLA') and all consequential proceedings arising therefrom including: - i) Show Cause Notice dated 05.08.2020 (Annexure P-25) purportedly issued under Section 63(3) PMLA for alleged violation of Section 63(2)(c) thereof. ii) Summon(s) dated 13.08.2020 & 15.10.2020 (Annexure P- 27 and P-29) purportedly issued under Section 50(2) and (3) of PMLA; iii) Communication dated 09.11.2020 (Annexure P-31) issued by the Respondent No. 1 ED informing the petitioner that ....
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....titioner etc. had been discharged in the scheduled offence alleged to have been committed by him, on the basis of which the ECIR in question was registered by the respondent ED. Therefore, the proceedings initiated against the petitioner under the PMLA were rendered non-est." 5. The petitioner's grievance is that despite such closure, the Enforcement Directorate continued to call the petitioner, and it would be relevant to refer to para 3.25 of the petition, which reads as follows: - "(3.25) Petitioner is now in receipt of impugned communication F. No. ECIR/JLZO/01/2013/AD (GS)/3317 dated 09.11.2020 issued by the Respondent ED rejecting the detailed reply dated 20.08.2020 given by the Petitioner to Show Cause Notice dated 05.08.2020. Vide the impugned Communication dated 09.11.2020, the Respondent ED has categorically stated that "it has been decided to pass an order in the matter" asked the Petitioner to appear/cause appearance through authorised representative before the Assistant Director (the Respondent) on 24.11.2020 or 25.11.2020 at 12:00 PM for personal hearing. Respondent ED has also specified that this would be last and final opportunity given to the Petitioner....
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.... be countenanced. Once the principal/predicate offense that falls under the Schedule of PMLA has failed to establish any offense or 'proceeds of crime,' the question of the independent continuation of an investigation by the ED will not arise. Given the scheme and objects of the PMLA, the absence of a scheduled offense renders non-existent and without foundation both "proceeds of crime," hence the very offense of money laundering. Therefore, the very applicability and operation of the PMLA, which depends upon a scheduled offense, or the predicate offense as mentioned, would also be non-est where the accused has been discharged from the predicate/scheduled offense. In such circumstances, the continuation of investigations & serving of summons/communication under Section 50 or 63 is untenable & grossly violative of the petitioner's fundamental rights under Articles 14, 19, and 21 of the Constitution. The ECIR, the subsequent show cause notice dated 05.08.2020, summons dated 13.08.2020 and 15.10.2020, and communication dated 09.11.2020, and any/all such similar notices/summons issued by the Respondent have been rendered illegal, absent jurisdiction, as nullity in law and h....
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....nor legally permissible as the proceedings have been initiated strictly as per the provisions of PMLA. 11. The E.D.'s counsel's further contentions are that the petition filed under section 482 of Cr. P.C. is not permissible for the reliefs as claimed in the petition. The ends of justice would be better served if the process under PMLA were allowed to be completed. The entire thrust of the argument, as mentioned in detail in the rejoinder filed by the petitioner, is that once there is an acquittal in the scheduled offense, that ipso facto would entail the closure /quashing of all the proceedings initiated under the Prevention of Money Laundering Act, 2002. Such a general proposition of Law is not only against the very purpose and scheme of enactment of PMLA but is also legally unsustainable given the express provisions of the PMLA. If the petitioner's legal proposition is accepted, it would amount to a strike of Section 44 (d) (i) of the PMLA without its legality having been examined in detail by this Hon'ble Court. It is relevant to mention here that the vires of Section 44 (d) (i) can only be challenged in a civil writ petition under Article 226 of the Constitu....
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....16. [S. 2(u) PMLA]. "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property 1 Subs. by Act 2 of 2013, s. 3, for "proceeds of crime and projecting" (w.e.f. 15-2-2013). 2 Ins. by Act 23 of 2019, s. 193 (w.e.f. 1-8-2019). [or where such property is taken or held outside the country, then the property equivalent in value held within the country] Ins. by Act 20 of 2015, s. 145 (w.e.f. 14-5-2015). [or abroad] Ins. by Act 13 of 2018, s. 208 (w.e.f. 19-4-2018).; [Explanation. -For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;] Ins. by Act 23 of 2019, s. 192 (w.e.f. 1-8-2019). 17. [S. 4 PMLA]. Punishment for money-laundering. -Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven y....
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....end to five lakh rupees" omitted by Act 2 of 2013, s. 4 (w.e.f. 15-2-2013). ECIR is an internal document created by the department before initiating penal action or prosecution against the person involved with process or activity connected with proceeds of crime. Thus, ECIR is not a statutory document, nor there is any provision in 2002 Act requiring Authority referred to in Section 48 to record ECIR or to furnish copy thereof to the accused unlike Section 154 of the 1973 Code. The fact that such ECIR has not been recorded, does not come in the way of the authorities referred to in Section 48 of the 2002 Act to commence inquiry/investigation for initiating civil action of attachment of property being proceeds of crime by following prescribed procedure in that regard. 21. After that a Division Bench of Madras High Court in N. Dhanraj Kochar and others v. Director Directorate of Enforcement and others, 2022 SCC OnLine Mad 8794, observed as under: - "[9]. ...It is to be borne in mind that an ECIR is not registered under the Code of Criminal Procedure and it is not akin to an FIR, which is registered under Section 154 CrPC and sent to the jurisdictional Magistrate in terms ....
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....f a person. Thus, an ECIR is an administrative document prepared by the officers of the ED. It precedes the commencement of the prosecution against individuals involved in the offence of money laundering, which in turn is governed by special statute i.e. PMLA. [7]. This Court unhesitatingly concurs with the contentions made by the learned counsel for the respondent-ED that the ECIR is an internal administrative document of the ED. Consequently, in the considered opinion of this Court, since the ECIR precedes the stage of criminal prosecution and proceedings, it thus falls outside the purview of the inherent jurisdiction conferred upon this Court by Section 482 of the Cr.P.C. Therefore, the prayer of the petitioner for quashing of the ECIR under Section 482 of the Cr.P.C. cannot be entertained. [8]. Though the learned senior counsel for the petitioner has emphatically argued that mere technicalities should not come in the way of entertaining the instant petition under Section 482 Cr.P.C. keeping in view the amplitude of the powers conferred upon this Court, however, it cannot be overemphasized that the powers of this Court are not unbridled and can be exercised und....
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....d by the learned senior counsel appearing for the appellant on the ground that the appellant was not shown as an accused in the chargesheets filed in the scheduled offences deserves to be rejected." 26. In Parvathi Kollur v. State [2022 SCC OnLine SC 1975] Hon'ble Supreme Court holds: - [9]. The result of the discussion aforesaid is that the view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence. 27. In Yash Tuteja v. Union of India, 2024 INSC 301 [Writ Petition (Criminal) No. 153 of 2023, decided on 08.04.2024], the Hon'ble Supreme Court holds as under: - "[4]. ...In paragraph 15 of the decision in the case of Pavana Dibbur, this Court held that: "The condition precedent for the existence of proceeds of crime is the existence of a scheduled offence." Therefore, in the absence of the scheduled offence, as held in the decision mentioned above of this Court, there cannot ....
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....ss the following order: (i) Writ Petition (Crl.) Nos. 153/2023 and 217/2023 are disposed of; (ii) The complaint based on ECIR/RPZO/11/2022, as far as the second petitioner (Anwar Dhebar) in Writ Petition (Crl.) No. 208/2023 is concerned, is hereby quashed. The Writ Petition is, accordingly, partly allowed; (iii) The complaint based on ECIR/RPZO/11/2022, as far as the petitioner (Arun Pati Tripathi) in Writ Petition (Crl.) No. 216/2023 is concerned, is hereby quashed. The Writ Petition is, accordingly, allowed; (iv) There will be no order as to costs; and (v) Pending applications, including those seeking implement, are disposed of accordingly. [10]. At this stage, the learned ASG stated that, based on another First Information Report, which, according to him, involves a scheduled offence, criminal proceedings under the PMLA are likely to be initiated against the petitioners. It is not necessary for us to go into the issue of the legality and validity of the proceedings that are likely to be initiated at this stage. Therefore, all the contentions in that regard are left open to be decided in appropriate proceedings." 28. In Ind....
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....dicate offence i.e. scheduled offence, the impugned ECIR registered by the respondent No. 1- ED will not survive and as such the said ECIR will have to be quashed and set aside." 30. In Nik Nish Retail Ltd. and another v. Assistant Director, Enforcement Directorate, Govt. of India, 2022 SCC OnLine Cal 4044, Calcutta High Court observed, [34]. The quashing of FIR of regular case automatically created a situation that the offences, stated and alleged in the FIR has no existence; thus the "Scheduled Offence" has also no existence after quashing of the FIR. When there is no "Scheduled Offence", the proceeding initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone. 31. In Debendra Kumar Panda v. Union of India and Others, CRLMC No. 3059 of 2019, Orissa High Court observed, [12]. ...In the plain language, if the foundation does not exist, how the edifice can survive. In other words, when the predicate offence fails, the foundation having been demolished, the superstructure is to fall and crumble. 32. In Rajiv Channa v. Union of India, Misc Appeal (PMLA) 13 of 2023, decided on 08 April 2024, a Division Bench of Delhi High C....
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.... it would give untrammeled arbitrary powers to the Enforcement Directorate to continue and keep pending the inquiry/investigation against the accused under the pretext or disguise that even if an accused has been acquitted in the predicate offense, a decision is yet to be taken regarding the filing of a complaint against acquittal or such appeal is pending, or even when they do not find any evidence against the accused, at that stage, instead of absolving them, they continue to sit over the inquiry/investigation which would have unparalleled bearing on the accused mental health. 35. The proceedings under PMLA are always subservient and secondary to the primary proceedings under some principal criminal offense, which is termed the predicate offense. If the violations of the main criminal penal provisions are mentioned in the PMLA schedules, only then the Enforcement Directorate can inquire into such scheduled penal offenses against the persons who have laundered the money, including or excluding the persons named as accused in the primary offense. The following example will clear the concepts. Let's take an example of a wall and its plaster. First, a wall is required, and onl....