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2025 (12) TMI 1470
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....22/2021 dated 28.05.2021 which were initiated by the Enforcement Directorate (in short ED). The said ECIR was registered by the ED pursuant to the FIR bearing no. 246/2019 dated 01.08.2019 at Bhawanipure PS Kolkata and FIR bearing no. 260 of 2019 dated 12.11.2019 registered at PS Beleghata (in short would be referred as Kolkata FIRs). 2. The petitioner at first challenged the continuation of the aforesaid ECIR before this court in CRR 708 of 2023 interalia on the grounds of the same being non-est without jurisdiction since the ECIR was based on the aforesaid two Kolkata FIRs, wherein police had submitted final report on the ground of mistake of facts and such closure report /final report had also been accepted by the concerned Magistrate. 3. During pendency of the aforesaid application being CRR 708 of 2023 before this Court, the ED filed a complaint in terms of section 45(1) (second proviso) of the PMLA before the learned Special Judge, CBI-1 Kolkata resulting in aforesaid ML Case no. 15 of 2023 and vide order dated 21.09.2023, the learned judge was pleased to take cognizance on the said complaint. The petitioner therefore in aforesaid two Applications filed before this Cour....
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....010 Rules tickets of the lotteries owned by the State Government should not be sold at the Prize structure and amount offered as the prize money was notified by the owner/organizer State Government. 17.09.2020 and 25.09.2020 The State of Sikkim as well as the state of Nagaland issued public notices inter alia stating that there was no illegality in the conduct of their respective lotteries 28.05.2021 Based on the aforesaid two Kolkata FIRs, PMLA Case No. ECIR being no. KLZO I/22/2021 was registered by ED Kolkata. 22.12.2021-23.12.2021 Searches were conducted under the provision of section 17 at various premises in which proceeds of crime worth Rs. 2.68 crores were freezed in connection with ECIR/KL20-I/22/2021. 25.12.2021 The First predicate Case FIR case no. 246/2019 in connection with Bhawanipur P.S. was completed and final report in the form of closure of investigation on the ground of mistake of fact was filed. 21.01.2021 ED, Kolkata filed original Application (OA) No. 623/2022 in pursuance of the freezing order dated 23.12.2021 in connection with predicate case for ECIR/KLZO-I/22/2021, 28.01.2022 The second predicate case being FIR no. 260 o....
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....istered at Beliaghata and Bhawanipur PS as the scheduled offence and there was no mention about the CBI charge sheet at Kochi. Thereafter on 25.03.2022, ED authorities filed their rejoinder in OA no. 623 of 2022, wherein their stand was that the aforesaid Kolkata FIRs were the only predicate case/scheduled offence for the Kolkata ECIR and there was no mention of the CBI charge sheet of Kochi, Kerala. 5. On 31.03.2022 a provisional attachment order dated 31.03.2022 was passed by the ED, Kolkata in connection with the ECIR at Kolkata against the petitioner and other 11 entities whereby the total assets to the extent of Rs. 409,92,14,598/- of the petitioner and others where attached. In pursuance of the provisional personal attachment order, Kolkata ED had filed original complaint under section 5(5) of the PMLA being OC No. 1721 of 2022 and learned adjudicating authority had confirmed such provisional attachment order as above, against which petitioners and others preferred an appeal before the Appellate Tribunal. It is only on 29.04.2022, ED for the first time disclosed about the CBI Case at Kochi which is already subject matter of another PMLA proceeding at Kochi. Therefore, said....
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....gued that from the very inception of the Kolkata ECIR the ED had treated the said two FIRs as predicate cases disclosing 'scheduled offences' . Their own repeated pleadings before the adjudicating authority is in support of such contention. However, when ED found that the scheduled offences have been dropped, they conveniently changed their stand to incorporate the CBI charge sheet no. DV-1/ 2014 filed at Kochi as a scheduled offence suppressing that the said charge sheet is already a scheduled offence in a pending PMLA case at Kochi. Dual prosecution/investigation on the self same cause of action is barred under criminal jurisprudence and on the self same set of schedule offence/ predicate case, two separate PMLA proceeding cannot be permitted to continue. Therefore the impugned complaint smacks of mala fide and suffers from suppression of material facts and therefore, the proceedings are liable to be quashed. 11. Mr. Dhiraj Trivedi learned counsel appearing on behalf of the ED argued that the existence of scheduled offence is only required and relevant for the purpose of investigation under the PMLA and not the jurisdiction in which the scheduled offence has been registered. C....
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....being order no. 11/2022 was passed and thereby proceeds of crime worth Rs. 409 crore was attached including the charge sheet of Kochi CBI on 31.03.2022. As per the definition given in section 2 (u) of PMLA, the proceeds of crime are not different for two Kolkata FIRs and charge sheet of CBI, which are all based on the same facts of cheating public at large by illegally selling lottery tickets and claiming prizes in the State of West Bengal. ECIR is internal document of the ED and it is not an impediment for the ED to only investigate the FIRs as were recorded at the time of first initiation of the ECIR and ED are well within its power to incorporate other FIRs/charge sheets after having knowledge of the same subsequently, into the same ECIR. In this context Mr. Trivedi also relied upon para 369 and 370 of Vijay Madan Lal Choudhury case (Supra). 15. In reference to permissibility of clubbing of FIRs/charge sheet, Mr. Trivedi also relied upon a judgment of Delhi High Court in Rajinder Singh Chadha Vs. Union of India reported in 2023 SCC Online Del 7515 and another Division Bench judgment of P&H High Court in Ireo Pvt. Ltd. Vs. Union of India and another reported in 2024 SCC Online....
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....after investigation filed closure report on the ground of mistake of fact in both the cases, which have also been accepted by learned Magistrate. It is EDs specific contention that they have already made prayer for further investigation under section 173(8) Cr.P.C., which are pending for disposal by the concerned Magistrate. In the above backdrop while it is the case of the petitioner that in view of acceptance of final report by the concerned Magistrate, ECIR being no. KCZO/4/2014 does not exists and ML Case no. 15 of 2021 cannot continue as they ceased to exist and cannot survive with the negation of scheduled offence, in view of the ratio laid down in Vijay Madan Lal Choudhury Case (supra). On the contrary contention of ED is that since PMLA offence is a continuing offence and as the FIR registered in Kochi at Kerala is still in existence and since scheduled offence having grave magnitude involving approximately Rs. 10,000/- crores, so relying upon section 66(2) read with section 2(1) (u) of PMLA and also in view of ratio laid down in Vijay Madanlal Choudhury Judgment (Supra), it is obligatory for the jurisdictional police to act upon section 66(2) and since prayer under section....
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....under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of acquittal of the person concerned or being absolved from allegation of criminal activity relating to scheduled offence, and if it is established in the court of law that the crime property in the case concerned has been rightfully owned and possessed by him, such a property by no stretch of imagination can be termed as crime property and ex consequenti proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand, in the trial in connection with the scheduled offence, the court would be obliged to direct return of such property as belonging to him. It would be then paradoxical to still regard such property as proceeds of crime despite such adjudication by a court of competent jurisdiction. It is well within the jurisdiction of the court concerned trying the scheduled offence to pronounce on that matter. 150. Be it noted that the authority of the authorised officer under the 2002 Act to prosecute any person for offence of money laundering gets triggered only if there exist proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act and further it i....
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....e, however, submitted that in the event any further action is taken in respect of the predicate offence, then liberty may be reserved to the petitioner herein to take further steps under the said Act, including reviving these proceedings. The submission of learned ASG is placed on record. The special Leave Petitions are disposed of in light of the aforesaid submission and liberty is accordingly reserved to the petitioner" 25. In Directorate of Enforcement Vs. ObulaPuram Mining Co. pvt. Ltd., Criminal Appeal no. 1269 of 2017 dated 02.12.2022, the Apex Court made the following observation:- Learned Solicitor General fairly states that since the proceedings before this court arise from an order of attachment and there is acquittal in respect of predicate offence, the proceedings really would not survive. In view of the aforesaid, the appeals filed by the adjudicating Authority (PMLA) do not survive and are accordingly disposed of. 26. In Naresh Kumar Kejriwal Vs. Directorate of Enforcement Criminal Appeal no. 1262 of 2023 dated 25th April, 2023, the court made the following observation:- 4. Learned Additional Solicitor General appearing for th....
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....timate ground to proceed under PMLA. Subject to the observations and liberty foregoing, this petition is allowed while quashing the proceeding in Complaint Case No. 05 of 2020 dated 10.01.2020 pending in the Court of Sessions Court, Khurdha at Bhubaneswar cum Special Court under the Prevention of Money-laundering Act, 2002. 30. Therefore from the aforesaid observations made by the Apex Court after Vijay Madanlal Choudhury (supra) Judgment in different cases, it is clear that the Apex Court has not made any distinction as to whether the accused is absolved by way of quashing, discharge, acquittal or closure of the predicate case and so far as the PMLA proceedings are concerned, the effect would be the same i.e. upon negation of the predicate case, the PMLA proceeding will not continue. 31. It is true that in the present context the aforesaid two FIRs are neither quashed nor the accused persons have been discharged. But what has been culled out from the aforesaid decisions is that when the offender of the predicate offence has been discharged or acquitted or the proceeding have been quashed or final report of the proceeding has been accepted, so long such order regarding acquit....
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.... (ii) Dr. Lakhwinder singh V Ed, Himachal HC, Judgment and order dated 03/01/2025, (NC 2025: HHC:591) complaint & ECIR quashed, Para 13 (iii) Chetan Gupta Vs ED, P&H HC, judgment and order dated 29/04/2024 (NC 2024 : PHHC : 057900) ECIR quashed, para 34,35,39,41 (iv) Jeevan Kumar Vs ED, DHC, judgment and order dated 15/01/2024, (NC 2024:DHC:329) complainant quashed, para 12& 13 (v) Narahari D Vs ED, Karnataka HC, judgment and order dated 16/12/2024 (NC 2024 : KHC : 51749). Complaint quashed para4. (vi) Nayati Health care Vs ED, DHC, judgment and order datd 11/10/2023, (NC 2023 : DHC : 7542) ECIR & LOC quashed, para 13& 14. (vii) Nik Nish Retail Vs ED(Kolkata HC), judgment and order dated 28/11/2022 passed in CRR 2752 of 2018: complaint quashed. (viii) Maneesh Parmar (Madras HC) judgment and order dated 27/02/2025 passed in WP Nos. 15465 and 15473 of 2024: ECIR quashed., Para3 (ix) Kapil Mohan Vs Ed, Karnataka HC, judgment and order dated 15/03/2024( NC 2024:KHC: 10880) ECIR & Summons quashed Para 7 & 8 (x) Gurjinder Pal Singh Vs Ed, Chhattisgarh HC, Judgment and order dated 03/02/2025 (NC 2025:CGHC:6050-DB) ....
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.... that all the subsequent acts of freezing, attachment and confirmation have been passed believing the same to be proceeds of crime of aforesaid two FIRs and thereby prayer was also made for confiscation of properties at the end of trial as proceeds of crime of said two FIRs. In this context it also needs to be mentioned that section 5 of PMLA gives the office power to provisionally attach any property in respect of which he has "reason to believe" the same as 'proceeds of crime'. 37. Needless to repeat that the offence of money laundering relates to the proceeds of crime, the genesis of which is a scheduled offence. Accordingly before initiation of any, it would be necessary for the concerned authorities to identify the scheduled crime. Therefore, in cases where the schedule offence is negated with the acceptance of final report on the ground of mistake of fact, the fundamental principle of continuing any proceeding under the PMLA also vanishes, at least so long such acceptance be not set aside. 38. It is true that the term "reason to believe" has not been defined in PMLA but it has been defined in section 26 of Indian Penal Code/Section 2(29) (IPC) of BNS, which defines that....
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....nt admittedly was a licenced stamp vendor and he was found in possession of counterfeit stamps, the explanation of the accused also becomes relevant and important in assessing and appreciating whether he had such knowledge or reason to believe that the stamps were counterfeited. Admittedly he used to purchase stamps from the treasury and all such transactions are duly recorded in the official registers. There is absolutely no material whatsoever to show that the counterfeit stamps were in fact purchased by him from the treasury. A bare allegation by way of an explanation by the accused-appellant that he purchased all the stamps including the counterfeit ones from the treasury appears on the face of it to be false, as he has neither produced registers maintained by him nor did he make even an effort to summon the treasury records. There is no material whatsoever even to probablise such a plea. In these circumstances the only inference that can be drawn is that he had "knowledge" and "reason to believe" that the stamps which he had in his possession and which he was selling or offering to sell, were counterfeit ones. These ingredients of the two provisions of law are fully establishe....
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....ment concerning aforesaid Kolkata FIRs, though the aforesaid Kolkata FIR was lodged before filing of the said application under section 44(1) (c) of PMLA by ED in Kochi Case. Therefore argument raised on behalf of the ED that the basis of Kolkata ECIR was also the basis of charge sheet submitted in the aforesaid Kochi Case does not hold water. The proceeds of crime is confined to two aforesaid Kolkata FIRs is also evident from the affidavit dated 03.06.2021 filed by Deputy Director, ED, Kolkata. There is no reflection that the proceeds of crime of the aforesaid two FIRs is also involved in the Kochi case, in the original application filed by ED in connection with the freezing order, passed in the same ECIR/KLZO/I/22/2021 nor it is reflected in the rejoinder filed in the aforesaid OA case. There is also no reference of Kochi FIR in the original complaint filed in connection with the Kolkata Case being ECIR bearing no. KLZO I/22/2021. 43. Moreover, proceeds of crime as defined in 2(1) (u) has laid emphasis upon the words "as a result of" criminal activity relating to the stated scheduled offence. Therefore to be "proceeds of crime" of the scheduled offence at Kochi, ED must have t....
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....lkata ML Case. It can only have nexus to the Kolkata FIRs and cannot have any nexus with the Kochi CBI Case, which is evident from the available documents in record. 48. Aforesaid materials in record does not support the EDs contention that ECIR bearing no. KLZO I/22/2021 at Kolkata has 3 pillars i.e. two Kolkata FIRS and the other at Kochi CBI charge sheet and such contention has not been substantiated during hearing also. Infact according to the aforesaid Kolkata ECIR, the proceeds of crime as alleged is Rs. 290.86 crores which is relatable to FIR 246/2019 and Rs. 118.36 crores which is relatable to FIR 260 of 2019, in total Rs. 409.22 crores. 49. Learned counsel for ED also strenuously argued that ML Case in Kolkata is sustainable adverting to sharing of information under section 66(2) of the PMLA. Section 66 (2) of PMLA runs as follows:- "(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....
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....n ECIR or a proceeding under the PMLA cannot be triggered merely on that assumption alone, as noticed by the Hon'ble Supreme Court in the para 253 of Vijay Madanlal Choudhary (supra). Section 66(2) which was being pressed by the Respondents for this purpose merely encapsulates the power of the Director or any other authority to disclose/share any information it may have regarding contravention of any other law by a person/entity "for necessary action". The provision itself enables disclosure and sharing of information inter se authorities, however mere disclosure does not crystallize a scheduled offence. It is merely an "assumption" till it precipitates as being "registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum" (per the Hon'ble Supreme Court)." 52. In V.P. Nandakumar Vs. ED (criminal MC 5167 of 2023) Kerala High Court in this context delivered a judgment on 25th August, 2023, and relevant portion of which runs as follows:- "18. Section 66(1) of the PMLA prescribes the obligations of the Enforcement Directorate (ED) to provide or facilitate the provision of act of disclosure in and of itself would not ca....