TaxTMI 
TaxTMI 
2024 (9) TMI 934
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.... OF 2023 WITH WRIT PETITION NO. 743 OF 2023 INTERIM APPLICATION NO. 917 OF 2023 WITH INTERIM APPLICATION NO. 918 OF 2023 AND INTERIM APPLICATION ST NO. 15945 OF 2023 IN WRIT PETITION NO. 731 OF 2023 WITH WRIT PETITION NO. 690 OF 2023 WITH INTERIM APPLICATION NO. 2330 OF 2023 AND INTERIM APPLICATION NO. 1118 OF 2023 AND INTERIM APPLICATION NO. 1120 OF 2023 IN WRIT PETITION NO. 690 OF 2023 WITH WRIT PETITION NO. 711 OF 2023 WITH INTERIM APPLICATION NO. 1117 OF 2023 AND INTERIM APPLICATION NO. 1122 OF 2023 IN WRIT PETITION NO. 711 OF 2023 WITH WRIT PETITION NO. 746 OF 2023 WITH INTERIM APPLICATION NO. 1755 OF 2023 AND INTERIM APPLICATION NO. 1753 OF 2023 IN WRIT PETITION NO. 746 OF 2023 WITH WRIT PETITION NO. 1030 OF 2023 WITH INTERIM APPLICATION NO. 1751 OF 2023 AND INTERIM APPLICATION NO. 1750 OF 2023 IN WRIT PETITION NO. 1030 OF 2023 WITH WRIT PETITION NO. 961 OF 2023. For the petitioner in WP No. 612/690/711 of 2023 : Mr. Ravi Kadam, Senior Advocate with Mr. Karan Kadam, Mr. S.R. Phanse and Mr. S.S. Bedekar. For the Petitioner in WP 961/2023 : Mr. Sanjeev Kadam with Mr. Shantanu Phanse. For the petitioner in WP 731/2023, WP 746/2023 and WP 1030/2023 : Mr. Ajay Bhise with ....
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....Section 34 of the IPC. THE BACKGROUND FACTS OF THE ECIR/MBZO-II/10/2021 2. FIR No. 163/2018 was the source for registration of ECIR/MBZO-II/10/2021 and the proceeds of crime, suspected to be raised was Rs. 11.5 crores, GIVING a reason to believe, that an offence of money laundering has been committed. ECIR registered by Assistant Directorate of Enforcement, Mumbai Zonal Office-II, referred to the offence invoking Section 420 and 34 of IPC, and considering that Section 420 IPC, is in paragraph 1 of Part 'A', a scheduled offence under the Schedule to the Prevention of Money Laundering Act, 2002, on recording that prima facie a case for Money Laundering under Section 3 of the Prevention of Money Laundering Act, 2002, punishable under Section 4 of the Act, appears to have been made out, which required investigation by the Directorate of Enforcement, the subject ECIR under the provisions of Prevention of Money Laundering Act, 2002 was registered. 3. In the interregnum, an audit report was submitted by Rajesh Jadhawar, Joint Registrar (Audit), Commissionerate of Sugar, Pune, in terms of Section 81 of the Maharashtra Co-operative Societies Act, as by order dated 14/2/2019, pas....
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.... advance notice shall be given. 6. At this juncture, it is necessary to refer to registration of FIR 806/2019 on 19/7/2019 at the instance of one Dhanraj Aswani, alleging commission of offences punishable under Section 420, 406, 409, 465, 467, 468, 471 r/w Section 34 of IPC with Pimpri Chinchwad police station against the Bank and its officials. The said FIR No.806/2019 was premised on a purported report of investigation conducted by the Bank through Assistant Registrar, Co-operative Bank (Audit), Sugar Commissionerate, Maharashtra State, Pune, Shri Rajesh Jadhawar. The FIR inter alia alleged that there were improprieties in about 104 loans that were disbursed from different branches of the Bank, which were declared Non Performance Account (NPA) as on 31/3/2018 and it was alleged that the loans were granted without appropriate mortgage/ hypothecation and in some cases, without verifying repayment capacity of the borrowers and since the accounts were declared NPA, it had caused heavy financial loss to the Bank depositors and the shareholders. 7. Aggrieved by the registration of this FIR, the Chief Executive Officer of the Bank Mr. Amarjeetsingh Mohindersingh Basi, filed a Crim....
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..... Recording that, even today, the alleged accused persons are owners of the above property and accordingly, they have mortgaged the same with the Bank. The Investigating Officer concluded that informant had filed false complaint against the alleged accused and also attributing imputations to the Officers of Seva Bank, so that he could avoid repayment of loan. He therefore, concluded that no offence has been committed by the alleged accused and therefore, 'C' Summary was filed. The 13th Judicial Magistrate First Class, Pune, by order dated 18/4/2022, accepted the 'C' Summary by recording thus :- "From the registered documents on record, 7/12 extract of the property, statement of officials of Seva Vikas Co-operative Bank, and the documents regarding loan of alleged accused with Seva Vikas Co-operative Bank, it appears that the alleged accused had all the right to mortgage the property with the Bank. Accordingly, the loan had been disbursed to them. There is nothing on record to indicate that the alleged accused persons had any intention to cheat or has cheating the Seva Vikas Co-operative Bank or its shareholders. 11. As far as the Petitioner, Amar Mulchandani is co....
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....priety, be pleased to quash and set aside the said summons dated 07.02.2023 and all and any further summons issued by the Respondents against the present Petitioner in connection with ECIR/MBZO-II/10/2021. c. Issue a writ of certiorari and/or writ in the nature of certiorari and/or any other writ/order/direction calling for records and proceedings of letter/order/permission dated 10.08.2021 issued by the Commissioner of Co-operation and Registrar of Co-operative Societies and after satisfying itself as to its legality, veracity and propriety, be pleased to quash and set aside the same. d. Issue a writ of mandamus and/or writ in the nature of mandamus and/or any other writ/order/direction directing the Respondents herein and their instrumentalities to not take any coercive action against the present Petitioner on the basis of Test Audit Report, Special report and Specific Report dated 06.08.2021 submitted by the Jt. Registrar Audit, Commissionerate of Sugar, to the office of the Commissioner of Co-operation and Registrar of Co-operative Societies." Seven other Petitions are filed by different accused, the details of which are as under:- Writ Petition No. P....
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....registered on 31.03.2021 was FIR no.163/2018 registered with Vimantal Police Station on 17.05.2018. On completion of the investigation, in this FIR, C-summary Closure Report was filed before the 13th Judicial Magistrate, 1st Class, Pune, which was accepted on 18/04/2022. It is, therefore, the contention of Mr. Kadam that as on 18.04.2022 the impugned ECIR ceased to exist and it was, therefore, rendered a dead letter and no further action would have been taken under it. 18. In support of this proposition, he would rely upon the following decisions :- i) Naresh Goyal vs. The Directorate of Enforcement & Anr. Criminal WP No.4037 of 2022. ii) Emta Cola Limited & Ors. vs. The Deputy Director, Directorate of Enforcement WP (C) No. 2821/2022. iii) Harish Fabiani & Ors. Vs Enforcement Directorate & Ors WP (CRL) No.408/2022. iv] Prakash Industries Limited vs. Union of India & Anr. 2023 SCC Online Del 336. He has urged before us that on the curtains being drawn upon FIR No.163/2018 which was the foundation of ECIR/MBZO-II/10/2021, the subsequent subsuming of FIR bearing Nos. 525, 526 and 527 of 2021, registered with Pimpri Chinchwad Police Station on....
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....Rs have invoked Section 420 of the IPC, on perusal of the case of the prosecution reflected from the statement of complainant, it is evident that no allegations of cheating are comprised therein and the allegation is about criminal breach of trust, which is a totally distinct offence. In addition, he submit that the criminal breach of trust is not a scheduled offence under the PMLA and, therefore, the Respondent, cannot rely on FIR nos.525, 526 and 527 of 2021, which has failed to make out an offence under Section 420 of the IPC. It is his further contention that the accusation in the two FIRs is as regards the loan disbursed by Seva Bank to Vinay Arhana and Sagar Suryawanshi and their connected entities and it is alleged that it has been misappropriated and the funds are siphoned off and embezzled. The said FIR contain an accusation that the transactions have been done in an environment of irregularities and ambiguities, and this at the most, according to Mr. Kadam, would make out an offence under Section 406 and 409 of the IPC, but not an offence under Section 420 of the IPC, and in any case, it is his submission that since the petitions for quashing of FIR Nos. 526/2021 and 5....
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....h Pimpri Police Station, as the ECIR even today is squarely based on the scheduled offence and the allegations are reflected in the impugned ECIR of money laundering and on dealing with the proceeds of crime under Section 3 of the PMLA, as there is no connection with the purported loan fraud, forming the subject matter of the subsumed FIRs. Relying upon the decision of this Court in case of Naresh Goyal (supra), Mr. Bhise has urged before us that the existence of the scheduled predicate offence is a prerequisite for an ED investigation and the impugned ECIR is dated 31/03/2021, whereas, the subsumed FIRs are subsequence to the registration of the ECIR, and according to him, after the 'C' summary was excepted, no new complaint came to be lodged. He would place reliance upon the decision of the Apex Court in case of Pavana Dibbur vs. Directorate of Enforcement 2023 SCC Online SSC 1586, in submitting that it is the intention of the legislature which must be assimilated for ascertaining the 'Purpose and Object' or ' Reason and Spirit' prevailing through the statute and the words of a statute are to be read in their entire context and in their grammatical and ordinary sense harmoniou....
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....ZO-II/32/2021 with ECIR/MBZO-II/10/2021. This internal decision is approved on 05/04/2024 and thereafter, handed over to Unit-V(I). 23. With this aforesaid clarification, Mr. Venegavkar has invited our attention to the nature and purpose of the special statute which focuses itself on the seriousness and gravity of an offence of money laundering, which is a different and independent class of offence. He would place reliance upon the decision of this Court in case of Anil Deshmukh vs. Enforcement Directorate 2021 SCC Online Bom 3641, and the observations in Para 18 and 35, highlighting the gravity of the offence of money laundering and the manner in which the special enactment deal with the offences. He would also lay emphasis upon the observations of the Apex Court in case of Vijay Madanlal Chaudhary (supra) to point out to us that the offence of money laundering is an independent offence, which is dependent on existence of proceeds of crime and laundering thereof. According to him, the proceeds of crime may be generated through a scheduled offence committed by anyone, and need not be necessarily the one committed by the petitioner. It is his submission that, test for the offence....
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....h various borrowers of Seva Bank for sanctioning the loans to borrowers without ascertaining their creditworthiness, and subsequently diverting and siphoning off the loan amount. These three FIRs were subsumed in the present ECIR, which was under investigation. 24. Mr. Venegavkar has also submitted that the RBI had also conducted scrutiny of loan accounts of various borrowers of the Seva Bank and reported in its order dated 02/02/2021 as below : "Bank had not ensured regular monitoring of end use of funds in the accounts of borrower. Despite knowing that the proceeds of credit facilities sanctioned to above mentioned persons, were deployed for purpose/activities or creation of assets other than those for which the loan was sanctioned, bank did not take any steps to recover the said loans, charge penal interest etc." It is also pointed out that continuing irregularity in sanction of loans by Amar Mulchandani alongwith the Board of Directors and other Bank Officials, resulted in high NPA, and it diminished the net worth of the Bank. Resultantly, the Reserve Bank of India appointed an Administrator in June, 2021 and finally the license of the bank is also cancelled in O....
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.... this decision, according to Mr. Venegavkar, this Court in the case of Babulal Varma Vs Enforcement Directorate Cri. Application No. 201/21 in Cri.B.A.974/21, had taken a view that the PMLA is a standalone offence, and once the proceedings therein are initiated, then the closure of FIR, compromise between the parties, discharge of an accused, acquittal of an accused, or quashment of scheduled offences will not affect the proceedings under PMLA. However, the Apex Court in the case of Vijay Chaudhary (supra) has contemplated three eventualities, when the proceedings under PMLA would be non-existant i.e. acquittal, discharge of the accused and quashment of the schedule offence. It is also pointed out to us that CR No. 163/2018 was closed on 18/04/2022 when the decision of the Bombay High Court was holding the field, and subsequent thereto, came the decision of the Apex Court in case of Vijay Chaudhary in July, 2022. The alleged scheduled offences being CR Nos. 525, 526 and 527 of 2021 were registered prior to the Judgment of Vijay Chaudhary, and according to Mr.Venegavkar, the existence of proceeds of crime in case of Seva Bank which is the "causal link", between the FIRs that cont....
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....ent of Revenue. 29. On the basis of a complaint filed by a shareholder of Seva Bank, FIR No. 163 of 2018 was registered against Vinay Aranha, and Vivek Aranha of Rosary Education Group, invoking Section 420 r/w Section 32 of IPC, based on an allegation that the accused persons had mortgaged their already sold property with the bank to obtain loans and systemically cheated the bank and its shareholders. Subsequent to this on the basis of multiple complaints regarding malpractices in the bank, Rajesh Jadhawar, Joint Registrar (Audit Cooperation Department), as per the direction of Commissioner of Co-operation Maharashtra State, conducted a test audit of the loan accounts and he reported to the misappropriation to the tune of Rs. 429.57 crore involving 124 NPA loan accounts, which accounted for 92% of the loans of SVB. On the basis of the audit report, he filed 8 complaints, against distinct accused persons, which resulted in registration of 3 FIRs and a table indicating the gist of the accusations along with the accused in these FIRs is reproduced below, which would assist in dealing with the arguments advanced on behalf of the petitioner and the Enforcement Directorate:- Sr....
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....ubsequently, other 3 FIRs mentioned in the above table were subsumed in the said ECIR and the entire loan scam of Seva Bank containing 124 loan accounts for total outstanding of Rs. 429.57 Crore was taken under the purview of investigation under PMLA, 2002. The gist of the allegation in the FIR No.163 of 2018 as well as the 3 subsequent FIRs revolved around the working and functionality of Seva Bank and even in the first FIR No.163 of 2018, one of the account holder/shareholder made a grievance in respect of Rosary Education Group, being disbursed the loan without complying the requisite formalities for grant of loan and in the subsequent FIRs, which are filed subsequent to the audit report of Mr. Rajesh Jadhawar, which divulged misappropriation, alleged that the Board of Directors, including Shri Amar Mulchandani in connivance with other Directors and Borrowers, sanctioned favoured loans to them neglecting their credit worthiness, and the accusations set out that the loan amount was diverted, siphoned off and not utilized for the declared purpose. The report also revealed that the irregularity in the sanctioning of the loans by the Board of Directors/ Bank officials, diminishin....
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....ni, were introduced by Amar Mulchandani as Directors of Seva Bank in order to enjoy majority and he is alleged to have gained complete control over the functioning of the bank, which assisted him in indulging in several malpractices, while sanctioning favoured loans to the ineligible borrowers. He is accused of sanctioning loans without holding any meetings, or consultation of board of directors and his friends and associates were disbursed loans, by merely signing on blank loan applications and these loans were routinely shifted for other purposes. Mr. Amar Mulchandani, along with Mr. Ashok Mulchandani continued to be the director from 2007 to 2020, and within the total span of time that was available, the same modus operandi continued in sanction of loans from the bank without assessing the security value of the Mortgaged property and ever greening of old loans was done to avoid audit objections, expressing them to conceal the true state of affairs of the bank. The ever greening was facilitated by Mr. Amar Mulchandani in connivance with the loan borrower. In return, Amar Mulchandani received kickbacks in form of cash to the extend of 20% of the loan amount and by obtaining sig....
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....y is proved presume that such proceeds of crime are involved in money-laundering. 35. The Prevention of Money Laundering Act, 2002, was enacted to address the issue of money-laundering and for its prevention, by providing for attachment of the proceeds of crime, its adjudication and its confiscation, by setting up the agencies and mechanisms for combating it, as it posed a serious threat to the financial situation of the nation spread across the globe. The validity and interpretation of certain provisions of the Act, 2002, and the procedure followed by the Enforcement Directorate, while enquiring into/investigating the offences under the PMLA, as being violative of the Constitutional mandate was placed before the three Judge Bench of the Apex Court in case of Vijay Mandanlal Chaudhary & Ors vs Union of India and various concerns, as regards the provisions and its implementation came to be answered and a pertinent observation in paragraph no.455 of the decision reads thus: "455. Needless to underscore that the 2002 Act is intended to initiate action in respect of money-laundering activity which necessarily is associated with the property derived or obtained by any person....
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....ional attachment order and direct confiscation, the authorities under the 2002 Act (i.e., Section 48) are expected to make an inquiry and investigate. Incidentally, when sufficient credible information is gathered by the authorities during such inquiry/investigation indicative of involvement of any person in any process or activity connected with the proceeds of crime, it is open to such authorities to file a formal complaint before the Special Court naming the concerned person for offence of money-laundering under Section 3 of this Act. Considering the scheme of the 2002 Act, though the offence of money-laundering is otherwise regarded as cognizable offence (cognizance whereof can be taken only by the authorities referred to in Section 48 of this Act and not by jurisdictional police) and punishable under Section 4 of the 2002 Act, special complaint procedure is prescribed by law. This procedure overrides the procedure prescribed under 1973 Code to deal with other offences (other than money-laundering offences) in the matter of registration of offence and inquiry/investigation thereof. This special procedure must prevail in terms of Section 71 of the 2002 Act and also keeping in mi....
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....proceeds of crime) under this Act by way of civil action (attachment and confiscation), there is no need to formally register an ECIR, unlike registration of an FIR by the jurisdictional police in respect of cognizable offence under the ordinary law. There is force in the stand taken by the ED that 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." 37. In the wake of the distinction drawn, the further question which arose for consideration was, whether it is necessary to furnish the copy of ECIR to the person concerned apprehending arrest,....
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.... 'as a result of' criminal activity relating to a scheduled offence. For being proceeds of crime necessarily the property associated with the scheduled offence must have been derived or obtained, as a result of criminal activity relating to the concerned scheduled offence and in Vijay Madanlal Chaudhary, their Lordships of the Apex Court cautioned that this distinction must be born in mind, while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of 2002 Act, as dealing with the proceeds of crime by any process or activity constitutes offence of money-laundering under Section 3 of the Act. Paragraph No. 252, in case of Vijay Chaudhary offered a infallible test to ascertain, when a property would amount to 'proceeds of crime' "252. Be it noted that the definition clause includes any property derived or obtained "indirectly as well. This would include property derived or obtained from the sale proceeds or in a given case in lieu of or in exchange of the "property" which had been directly derived or obtained as a result of criminal activity relating to a scheduled offence. In the context of Explanation added in 2019 to the d....
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....the said provision. The said proviso reads thus:- 'Provided that after conclusion of investigation, if no offence of money laundering is made out requiring filing of such complaint, the said authority shall submit a closure report before the Special Court. 41. The aforesaid proviso, which has been construed to be an enabling provision permit the authority authorised to file closure report before the Special Court, if no offence of money laundering has been made in the opinion of the investigating officer. In paragraph no. 363, when interpreting the impact of the proviso their Lordships of the Apex Court in case of Vijay Madanlal Chaudhary, made the following observations:- "363. Coming to the proviso inserted in this clause [Section 44 (1) (b)] vide Finance (No. 2) Act, 2019, is, in fact, an enabling provision. It permits the Authority authorised to file a closure report before the Special Court in case it is of the opinion that no offence of money-laundering has been made out, requiring filing of such complaint. This provision is only to dispel the doubt that in the event the person has been arrested by the officer authorised under Section 19 of this Act on th....
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....ure report in a predicate offence i.e. C.R. No.163 of 2018 is filed and accepted, then ECIR/ MBZO-2/10/2021 is a dead letter and a non est and if it is so, then there is no question subsuming subsequent FIRs, in the same. In support of this submission, our attention is drawn to the decision in case of Naresh Goyal vs. Directorate of Enforcement (Criminal Writ Petition No. 4037 of 2022) decided by the Division Bench of this Court, where the argument advanced on behalf of the petitioners in the two Writ Petitions was, that the ECIR registered by Directorate of Enforcement does not survive, in as much as, there is no scheduled offence, which is a condition precedent for initiating ED proceedings as Mr. Shirsat, the learned counsel for ED, did not dispute the fact that there was no scheduled offence pending against either of the petitioners and he also did not dispute that registration of scheduled offence is a condition precedent for initiating ED proceedings. The facts placed before the Division Bench, reveal that a private complaint was filed before the Metropolitan Magistrate, against Jet Airways (India Ltd) and its erstwhile Non-Executive Directors, including both the petitione....
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....on the same by holding that 'C' summary amounts to an acquittal. The facts, involved reveal that the police constable was accosted by the officers and men of Anti-corruption Bureau, and since he was smelling of alcohol, he was sent for medical examination and the chemical analysis showed that the concentration of the alcohol in blood was 0.49 percent. As the officer in-charge of the investigation felt that it was below 0.5, the percentage required to raise a presumption of having drunk, so as to constitute an offence under Section 66 (1) (b) of the Bombay Provision Act, 1949. He made a report to the Judicial Magistrate, claiming 'C' summary, which was granted. The question that was placed before the Court was whether a departmental enquiry need to be undertaken for deciding whether the delinquent is fit to be retained in public service even though he has been acquitted by the Criminal Court. In paragraph no.8, recording that it was not doubted that, "granting 'C' summary was a judicial order and that the granting of the summary amounts to an acquittal of the plaintiff-respondent in the present case, it was held that there is no automatic bar for holding departmental proceedings.....
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....I under Section 13 (1) (e) r/w section 13 (2) of the Prevention of Corruption Act, 1988. On conclusion of investigation, the CBI/ACB filed an application with a prayer to close the proceedings with the following prayer:- "After completion of investigation, it has come to light that the accused cannot be prosecuted. Hence, final report under Section 173 of Cr.P.C. is being filed, which may be accepted." The Special Court on 29/01/2009, recorded as below:- "Reason stated in the report is convincing. Hence the final report is accepted, and the FIR is closed and permitted to retain documents collected during investigation to be used in regular departmental action against A1" 48. The CBI filed Criminal Miscellaneous Petition under Section 173 (8) of Cr.P.C, seeking to reopen and undertake further investigation by stating as below:- '....the prosecution has filed the final report under Section 173 Cr.P.C before this Hon'ble Court on 24.12.2008 with a prayer to close the FIR as a mistake of fact' ' It is humbly submitted that now new evidences emerge to prove the allegation leveled against the above said accused persons and to substantiate the cha....
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....already been closed. (vi) The Special Court thus had no power to grant permission to conduct a further investigation. (vii) The judgment of Vinay Tyagi (supra) had not been brought to the attention of the High Court at the time of deciding Crl. O.P. No. 6371 of 2014." The High Court quashed the entire prosecution on the ground that the Special Court (CBI) had no jurisdiction to grant permission to CBI to conduct further investigation. The contention of an accused that acceptance of a closure report terminate the proceedings finally, so as to bar the investigating agency from carrying out any further investigation in relation to the offence was examined, in light of the submission that an order accepting the closure report under Section 190 (1) (c) of Code of Criminal Procedure is a judicial order, and not an administrative order, as when final report of the police is submitted to the Magistrate and the Magistrate passes an order, either agreeing with the report of the police and finalizing the proceedings; or not agreeing with the police report and holding that the evidence is sufficient to justify the forwarding of the accused to the Magistrate and taking c....
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....l report should be reviewed, recalled or quashed. (iv) Further investigation is merely a continuation of the earlier investigation, hence it cannot be said that the accused are being subjected to investigation twice over. Moreover, investigation cannot be put a par with prosecution and punishment so as to fall within the ambit of Clause (2) of Article 20 of the Constitution. The principle of double jeopardy would, therefore, not be applicable to further investigation. (v) There is nothing in the CrPC to suggest that the court is obliged to hear the accused while considering an application for further investigation under Section 173 (8) of the CrPC." In light of the above conclusion that, it is also held that even after the final report is laid before the Magistrate and accepted, it is permissible for the investigating agency to carry out further investigation and prior to carrying out the investigation under Section 173 (8) of the Code of Criminal Procedure, it is not necessary that the order accepting the final report should be reviewed, recalled or quashed. 51. The decision of the Apex Court is delivered in the background that prayer was made to close the ....
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.... classes of cases: - (a) Those in which it appears from the Police investigation that no offence has been committed. (b) Those in which it appears from the Police investigation that only a non-cognizable offence has been committed. (c) Those in which there are grounds for believing that an offence has been committed, but in which, in the opinion of the officer-in-charge of the Police Station, there are not sufficient grounds to investigate or there is not sufficient evidence to justify sending anyone for trial, or in which the offender is not known or cannot be arrested and sent for trial. In cases referred to the Police by a Magistrate, the final report will be sent direct to the Magistrate. (3) The final report should be written up carefully by the officers-in-charge of the Police Station personally and should be accompanied by all the case papers numbered and indexed methodically. If the accused has been released on bail, the Magistrate should be requested to cancel the bail bond. He should also be requested to pass orders regarding the disposal of property attached, unless any of the articles, e. g., blood stained clothes, are required for....
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....t when summaries are filed as mentioned above, and particularly, as per 'C' summary is concerned which is filed by the concerned police offer as the offence is neither true nor false or if it is of civil nature, we do not find that that the proposition of law laid down by the Apex Court will apply to 'C' summary. Since 'C' summary amounts to acquittal, as in case of Naresh Goyal (supra) we see no reason why the observations of the Apex Court would apply to the present scenario. 54. The principle of law flowing from this decision, according to Mr. Anturkar deserve an extension to the principle in the case of Vijay Madanlal Chaudhary, where it is held that if the person is finally discharged, acquitted of the scheduled offence or the criminal case against him, is quashed by the Court of competent jurisdiction, there can be no offence of money laundering against him or anyone claiming such property being the property linked to the scheduled offence. 55. In Vijay Chaudhary (supra), only three contingencies are contemplated; it being a trite position in law that offence under Section 3 of 2002 Act is dependent on illegal gain of property, as a result of criminal activity relating ....
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....s a one time instantaneous offence and finishes with its concealment or possession or acquisition or use of projecting it as untainted property, or it being claimed as untainted property, was found to be a wrong interpretation and when the Finance Bill 2019 was introduced, justifying the amendments in the 2002 Act, it was categorically recorded that the intention of the legislature had always been that a person will be held guilty of offence of money laundering and will be punished, so long as he is enjoying the 'proceeds of crime' by its concealment or possession or acquisition or use, or projecting the property as untainted property or claiming it as untainted property. 57. The Special Enactment which contemplate attachment of the property involved in money laundering, is premised on the exercise of power by an Officer not below the rank of Deputy Director authorised by the Director, if he has reason to believe on the basis of the material in his possession that any person is in possession of any proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with, in any manner, which may result in frustrating any proceedings relating to confisca....
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....mandate of Article 22 (1) of the Constitution, as held in Vijay Madanlal Choudhary (supra). Since the offence under Section 3 of the Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence, and the existence of a predicate offence, is a sine qua non for prosecution under the 2002 Act, which has been held to be not permissible on notional basis, or on the assumption that the scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending inquiry/trial including by way of a criminal complaint before the competent forum, it is only if the person is finally discharged/acquitted of the scheduled offence, or the criminal case against him is quashed by the court of competent jurisdiction, the predicate offence having come to an end, there can be no offence of money laundering against him or any one claiming such property be linked to the scheduled offence through him. 59. The question whether the subsequent FIR can be subsumed into an existing ECIR also deserve consideration. The term 'subsumption' or 'subsuming' is not defined under the statute, but in the normal parlance, it means ....
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....f money-laundering in relation to the said offence for which, the petitioners have already been discharged. 4. The record as it stands today, the petitioners stand discharged of the scheduled offence and therefore, in view of the law declared by this Court, there could arise no question of they being prosecuted for illegal gain of property as a result of the criminal activity relating to the alleged scheduled offence. 5. That being the position, we find no reason to allow the proceedings against the petitioners under PMLA to proceed further In addition, it is also relevant to note the observation in paragraph no.6, which also deserve a reproduction. 6. However, taking note of the submissions made by the learned Additional Solicitor General and in the interest of justice, we reserve the liberty for the respondents in seeking revival of these proceedings if the order discharging the petitioners is annulled or in any manner varied, and if there be any legitimate ground to proceed under PMLA. 62. A further decision of the Delhi High Court in case of Harish Fabiani & Ors Vs. Enforcement Directorate & Ors 2022 SCC Online Delhi 3121, on which reliance is plac....
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....wing observation is recorded 14. It is therefore incontrovertibly clear from a bare perusal of the judgment/order of the High Court of Bombay read in conjunction with prayer clause 'a' extracted above from both the Writ Petitions before the Court, that both the order dated 7th April, 2021 passed by Judicial Magistrate in O.M.A. No. 105 of 2021 and FIR No. 129/2021 dated 13th April, 2021 in P.S. Wada stood quashed in toto. This Court finds no merit in the argument by the Respondents that the quashing was qua the petitioners before the High Court of Bombay and not the other accused in the said FIR. The quashing of the FIR and order of the Judicial Magistrate preceding its registration was complete and Not conditional, partial, and truncated in any manner. Nothing in the said judgment/order of the High Court of Bombay suggests otherwise. Once the predicate order under section 156(3) Cr.P.C. and the FIR stood quashed there would be no residue left in the matter against the accused as regards the allegations made in the said complaint and crystallized in the FIR. 64. Another pertinent observation is contained in paragraph no. 22 to the following effect 22. T....
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....would not survive. In the case before us, FIR No. 163/2018 registered with Vimantal police station, had invoke an offence punishable under Section 420 r/w Section 34 of the IPC and it necessarily involved a misappropriation on part of the Bank, the complaint being filed by the shareholder to the Bank. 66. ECIR/MBZO-II/10/2021 registered on 31/3/2021 had its source in FIR NO. 163/2018 against Aranhas. The subject ECIR compiled the following facts on carrying out the investigation; A. That, on the same day on 29/12/2014, 1) Mr. Prakash Chandra Vyas 2) 7 Mrs. Jayshree Prakash Chandra Vyas 3) Mrs. Khairunisa Aslam Furniturewala and Aslam Kabrudin Furniturewala gave the property at Lohgaon Survey No. 206/3 which was purchased under Sale Deed No. 9393/14 through registered Live and License Deed Nos. 9395/14 and 9396/14 to 1) Vivek Arana 2) Vivek Arana of Rosary Education Group. B. On 24/04/2018, the Directors of Rosary Global Education, viz 1) Vivek Arana 2) Vinay Arana 3) Miss. Dipti Vivek Arana on behalf of Rosary Education Group, again mortgaged the same property under Mortgage Deed No. 5171/18 registered at Deputy Registrar's Office, Havel No. 18, Pune to ....
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....FIR No. 527/2021 was lodged in regards to 9 loan accounts. It is admitted that FIR No. 806/2019 had some overlapping accounts and based on this C.R, ECIR/MBZO/II/32-2021 was registered. This FIR No. 806/2019 was based on the inspection report and audit report by Auditor Rajesh Jadhawar, which upon quashing of this FIR by the High Court and its revival by the Supreme Court, on 25/7/2023, was merged with ECIR/MBZO/II/10/2021, which was already being investigated by Unit-5(1). The decision of the ED to merge ECIR/ MBZO/II/32/2021 with ECIR/MBZO/II/10/2021, is an internal decision, considering the commonality of the offences which form the substratum of the ECIR/MBZO/II/10/2021. FIR No. 806/2019 registered with Pimpri police station, on invoking Section 406, 420, 409, 465, 467, 467 and 471 r/w Section 34 of IPC against the Board of Directors, as they face the accusation that they had cheated the shareholders of the Bank by acting hand-in-glow with various groups and it was found that the Management, office bearers of the Bank had adopted the same modus operandi which was the basis for registration of ECIR/MBZO/II/10/2021 and Unit-5 was already investigating into it, by arresting ....
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....perty which constitute the offence of money laundering. The provisions of the Act of 2002, cannot be set into motion, and it do not permit prosecution of any person thereunder on notional basis, or on the assumption that a 'scheduled offence' has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including filing of a criminal complaint before the competent forum. The Act of 2002 has merely defined the term 'Proceeds of crime' in the backdrop of a criminal activity relating to a 'scheduled offence' and in Vijay Choudhary (supra), it is distinctly held that an offence under PMLA shall continue, except when the person is discharged or acquitted from the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction and since we are of the opinion that on acceptance of 'C' summary, the FIR comes to an end, but the ECIR continued its existence, as three FIRs were already subsume into it, before it died. Mr.Anturkar, in his words, has submitted that on acceptance of 'C' summary, the proceedings in the FIR No.163 of 2018 are only in state of Coma, but they do not deserve to 'rest in peace', as no....
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....ni & Ors. (supra), Naresh Goyal (supra), Prakash Industries Limited (supra), Parvathi Kollur and Anr. vs. State by Directorate of Enforcement in Criminal Appeal No. 1254/2022, Directorate of Enforcement vs. M/s. Obulapuram Mining Company in Criminal Appeal No.1269/2017 passed by the Hon'ble Supreme Court, Emta Cola Ltd. (supra), M/s. Nik Nish Retail & Anr. vs. Assistant Director, Enforcement Directorate 2022 SCC OnLine Cal 4044, Manturi Shashi Kumar vs. ED 2023 SCC OnLine TS 1098, Arun Kumar and Ors. vs. Union of India and Ors. (2007) 1 SCC 732. The learned Single Judge reproduced the relevant observations from Vijay Choudhary, Naresh Goyal and also the observations of Calcutta High Court in Nik Nish Retail (supra), to the following effect : "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 proceedings initiated under the provisions of Prevention of Money Laundering Act, 2002 cannot stand alone." 71. The Enforcement Directorate opposed the contention, by subm....
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....mpounded/quashed. Dealing with the sequence of events, the learned Judge specifically held as under :- "28. It is pertinent to note that the aforesaid FIRs were registered at the instance of investors who were aggrieved by the non-completion of a project by the company. A perusal of the aforesaid list of dates reflect that although the impugned ECIR was registered initially on the basis of scheduled offences registered vide FIR No.16/2018 dated 24.01.2018 which stood compounded vide order dated 19.11.2019, the second FIR No.49/2021 which was registered on 12.03.2021 was taken on record in the impugned ECIR by the department and the proceedings continued under the same. The department chose not to register a separate ECIR, but took on record the scheduled offences registered vide FIR No.49/2021 in the same ECIR, inter-alia, on the ground that it related to the same transaction and involved the same accused persons. The fact that FIR No.49/2021 was taken on record by the department in the present ECIR despite an order of compounding and acquittal was not challenged by the petitioner. 29. Hon'ble Supreme Court in Vijay Madanlal Choudhary (supra) has held that ther....
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....ire PMLA Act does not even mention the term 'ECIR', that ECIR is an internal departmental document for administrative purposes. In view thereof, as stated hereinbefore, the third FIR in the present case relates to the commission of a 'scheduled offence' in respect of the complainant therein, but for the purposes of an investigation under the PMLA, it would be the part of the same ECIR which related to investigation pertaining to 'proceeds of crime' under the PMLA in the previous FIRs. Needless to state, the Hon'ble Supreme Court, in Vijay Madanlal Choudhary (supra), has categorically held that the offence under PMLA is an independent offence. Since the ECIR has not been equated with an FIR and has been held to be an internal document, there cannot possibly be a restriction to bringing on record on any subsequent 'scheduled offence registered by way of an FIR alleged to have been committed in respect of the same transaction which was the subject matter of such ECIR. 33. The proposition of law laid down in judicial precedents relied upon by learned Senior Counsel for the petitioner is not in dispute. In the said cases, the 'scheduled offen....
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.... FIR no. 55/2023 dated 10/07/2023 would constitute 'scheduled offences' legitimizing the existence of the said ECIR though it was specifically directed that since FIR No.16/2018 and 49/2021 have been compounded and quashed, the Enforcement Directorate cannot initiate or conclude any proceeding, including investigation, in connection with the two FIRs and the proceedings undertaken with respect to the two FIRs, qua the petitioner in ECIR were quashed. 78. With no definition of 'subsumption' or even 'predicate offence' in the Act of 2002, on reading of the observations of the learned Single Judge, in Rajinder Singh Chadha (supra) it can only be observed that ECIR is a genus and it may have different species provided there is a connect between the the genus and the species. As in the present case, we can find the causal link in the subsisting ECIR No. ECIR/MBZO-II/10/2021, which is still alive, and has not become a dead letter, as despite acceptance of 'C' summary, and one of the contingency contemplated in Vijay Choudhary (supra), have been attained, as there is an acquittal in FIR No.163 of 2018, the registration of subsequent FIR Nos. 525, 526 and 527 of 2021, with an proximate ....