TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 129
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....f Enforcement (in short, ED) under the Prevention of Money Laundering Act, 2002 (in short, PMLA) in Criminal Writ Petition No. 2254 of 2025. 2. A crime was registered at the Matunga Police Station on 11th November 2023 on the basis of a complaint filed by Vaibhav Jalinder Gawali. In this First Information Report vide FIR No.483 of 2023, the complainant who is a public shareholder of the REL stated that the former directors of the REL, namely, Malvinder Mohan Singh and Shivender Mohan Singh connived with Burman family and M/s. J. M. Financial to take full control of the REL by increasing their shareholdings upto 51%. He made allegations against the former directors of the REL and directors of M/s. M.B. Fin Mart Pvt. Ltd., M/s. Puran Associate Pvt. Ltd., M/s. VIC Enterprises Pvt. Ltd. and M/s. Milky Investment and Trading Company in which Mohit Burman, Vivekchand Burman, Monica Burman, Abhaykumar Agarawal, Anandchand Burman, Mini Burman etc. were directors. It is stated that several Corporate entities held by the Burman group defrauded the shareholders of REL causing unlawful losses to them and attempted to gain control of the REL. The accused persons in a systematic conspiracy wi....
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.... and as a non-Executive Chairperson of the Care Health Insurance Ltd. (in short, CHIL) and Religare Broking Limited (in short, RBL) which are subsidiaries of the REL. The (CHIL) is a subsidiary of the REL which is a core investment company. According to the petitioner, the REL and its subsidiary companies suffered large-scale fraudulent siphoning of funds prior to 2018 and therefore a strong and independent Board of Directors was constituted which appointed a new professional management. She further states that it was detected in course of the inquiries to ascertain reasons for the drastically poor financial condition of the REL that there were wilful defaults by the entities which were related or controlled or associated with the erstwhile promoters and there were investigations by the SFIO and SEBI. The petitioner claims that she played a vital role in reviving the regulatory and financial compliance by the Religare Group and the RFL which had a negative net worth and was on the verge of bankruptcy and successfully negotiated one-time settlement with the banks and other creditors and the REL and its subsidiaries have now reported profits and secured investments from the leading b....
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....v Jalinder Gawali in the FIR No.483 of 2023 did not allege any misconduct on the part of the petitioner, she was not even named by him and she had no role in the mis-management of the company by its erstwhile promoters and investors. The source materials and the allegations by the complainant can at best disclose the commission of an offence under section 182 of the Indian Penal Code and the ingredients of cheating and criminal conspiracy are completely missing. The learned senior counsel for the petitioner submitted that such background facts clearly reflect a pre-meditated action by the ED and altogether a "new case" has been built-in beyond the source materials. 6. In the affidavit-in-reply, it is stated that Vaibhav Jalinder Gawali made a complaint at Matunga Police Station at the instance of the petitioner and made false allegations against the Burman family. To support its case, the ED has stated that in the statements recorded under section 50 of the PMLA some of the witnesses who are independent directors in the REL and CHIL or directors in M/s. J.M. Financial Ltd. and Burman group have supported the allegations of the commission of predicate offence by the petitioner. T....
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....r under section 217. Furthermore, section 212(6) of the Companies Act provides that the offence covered under section 447 shall be cognizable and no Special Court shall take cognizance of any offence except on a complaint in writing made by either the SFIO or any authorised officer of the Central government, notwithstanding anything contained in the Code of Criminal Procedure. Section 436 of the Companies Act deals with the offences triable by a Special Court irrespective of what is provided under the Code of Criminal Procedure. Section 436(1) provides that all the offences specified in section 435(1) shall be triable by the Special Court notwithstanding anything contained in the Code of Criminal Procedure. The learned senior counsel further contended that the special law shall take precedence and prevail over the general laws if there is any kind of conflict between the special law and the general laws. The learned senior counsel referred to "Jeevan Kumar Raut" ["Jeevan Kumar Raut v. Central Bureau of Investigation" (2009) 7 SCC 526.] to fortify his submission that the FIR No. 355 of 2024 and all proceedings arising therefrom are liable to be quashed in view of the well settled pr....
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.... "Ishwarlal Girdharilal Parekh ["Ishwarlal Girdharilal Parekh v. State of Maharashtra" 1968 SCC OnLine SC 47.]" wherein the Hon'ble Supreme Court held that if the act of the accused resulted in inducing the Income Tax Officer to make wrong assessment order, the order of assessment would fall within the meaning of "valuable security" under explanation to section 420 of the Indian Penal Code. 10. In our opinion, the legal conundrum regarding primacy to the special statute is not very difficult to resolve. The decision thereto shall depend on a purposeful reading of the statement of reasons and object, dictionary clauses and incorporation of exclusionary clauses, if any, in the statute. Simply put, a judgment has to be read in its entirety with the context in mind as to what was set out in the judgment. It is well settled that a judgment is required to be read and understood in the context of the facts and statutory provisions referred thereunder. The ratio decidendi in a judgment cannot be inferred just by reading selectively a portion of the judgment. In "Ambika Quarry Works" ["Ambika Quarry Works v. State of Gujarat & Ors" (1987) 1 SCC 213.], the Hon'ble Supreme Court observed t....
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....e submission made on behalf of the petitioner that the FIR No.355 of 2024 is illegal and the police has no jurisdiction to investigate the offences alleged against her. The other judgments referred by the learned senior counsel for the petitioner are also quite distinguishable. We therefore do not propose to deal with all of them separately. There is an allegation of conspiracy to falsely implicate the Burman family and this is not a standalone offence alleged against her. After the investigation, a charge-sheet was laid on 18th August 2025 and by an order dated 18th August 2025 the cognizance of the offence has been taken by the Court concerned. 11. Mr. Amit Anand Tiwari, the learned senior counsel criticized the registration of FIR No.355 of 2024 on the ground that the ED cannot be a complainant. He submitted that section 66 of the PMLA has a different purpose and the ED which is required thereunder to share the materials collected by it with the other government agencies could not have lodged the First Information Report. More specifically, section 66(2) of the PMLA creates a bar and incorporates an exception to the general rule that the Court machinery under the criminal law....
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....formant or simply writes "source information". A crime can be registered and tried in any Court if the act or omission on the part of the accused person is spilled over the jurisdiction of two Courts. Vaibhav Jalinder Gawali is a permanent resident of Matunga. He purchased 500 shares of the REL through Dhani App @ Rs.239 per share on 13th October 2023 and invested Rs. 1,20,930/- in the said Company. He stated that he gathered information from the public domain and financial marketing news channel that the assets and properties of the REL were misused and misappropriated through financial mismanagement and large-scale diversion of public funds. This is the case of the prosecution that the petitioner conspired with Nitin Aggarwal and Nishant Singhal and others to implicate the Burman family in a false criminal case with a view to stop them from taking control of the REL. This is also found that the petitioner derived illegal financial benefits in the form of ESOPs of the CHIL and committed the offence of cheating. The Investigating Officer collected materials against the accused persons and filed a chargesheet on conclusion of the investigation in FIR No.355 of 2024. The learned coun....
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....e materials on record and the mala fide of the informant is rendered of secondary importance where the materials collected by the police passes through the judicial scrutiny and the Special Court takes cognizance of the offence. The criminal prosecution if otherwise justified is not vitiated on account of mala fides or vendetta. The position held by the petitioner was of a high responsibility, imputations against her are grave in nature and this Court should, therefore, be loath in drawing any inference from the incomplete facts brought on record. In "M. Sankarnarayanan" ["M. Sankarnarayanan, IAS v. State of Karnataka & Ors." (1993) 1 SCC 54.], the Hon'ble Supreme Court observed that an inference of mala fide must not be based on a factual matrix which is in the realm of insinuation, surmises or conjecture. An inference of mala fide must be drawn after taking into account the attending circumstances. The presumption under law is in favor of the bona fide action and mere allegation is not enough to prove mala fide. 14. Mr. Amit Anand Tiwari, the learned senior counsel for the petitioner contended that the order taking cognizance dated 18th August 2025 is cryptic and does not disc....
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....t held that the Court concerned had applied its mind while taking cognizance of the offence. In paragraph nos. 15 to 17 of the reported judgment, the Hon'ble Supreme Court has briefly indicated as under :- "15. Coming to the first issue, we have no hesitation to record that the approach of the High Court was totally erroneous. Perusal of the Order taking cognizance dated 13.06.2019 discloses that the Additional Judicial Commissioner has stated that the 'case diary and case record' have been perused, which disclosed a prima facie case made out under Sections 498(A), 406 and 420 of the IPC and Section 3 (1)(g) of the SC/ST Act against the accused including appellants. Further, we find the approach of the Additional Judicial Commissioner correct inasmuch as while taking cognizance, it firstly applied its mind to the materials before it to form an opinion as to whether any offence has been committed and thereafter went into the aspect of identifying the persons who appeared to have committed the offence. Accordingly, the process moves to the next stage; of issuance of summons or warrant, as the case may be, against such persons." 16. In the present case, we find that ....
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.... the evidence led by the complainant in support of the allegations. The Magistrate has been given an undoubted discretion in the matter and the discretion has to be judicially exercised by him. It was further held that : (SCC p. 741, para 5) "5. ... Once the Magistrate has exercised his discretion it is not for the High Court, or even this Court, to substitute its own discretion for that of the Magistrate or to examine the case on merits with a view to find out whether or not the allegations in the complaint, if proved, would ultimately end in conviction of the accused." 17. In Chief Controller of Imports & Exports v. Roshanlal Agarwal [(2003) 4 SCC 139 : 2003 SCC (Cri) 788] this Court, in para 9, held as under : (SCC pp. 145-46) "9. In determining the question whether any process is to be issued or not, what the Magistrate has to be satisfied is whether there is sufficient ground for proceeding and not whether there is sufficient ground for conviction. Whether the evidence is adequate for supporting the conviction, can be determined only at the trial and not at the stage of inquiry. At the stage of issuing the process to the accused, the Magistrate is no....
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.... the country. 19. The offence of money-laundering is attracted where the Court finds prima facie evidence that the accused person indulged himself in any manner whatsoever with the proceeds of crime and it is not necessary that on such date the criminal activity was notified as a scheduled offence. Section 2(1)(u) of the PMLA defines the expression "proceeds of crime" to mean any property derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, including its value. The offence of money-laundering as defined under section 3 of the PMLA requires the involvement of the accused persons in any process or activity connected with the proceeds of crime derived or obtained as a result of the criminal activity relating to or in relation to a scheduled offence. The definition of money-laundering encompasses every possible manner of involvement of the person with the proceeds of crime derived or obtained as a result of that crime. The expression "criminal activity" covers all activities of an accused person concerning the predicate offence and the use of the expression "every attempt" in section 3 signifies its wide scope and ambit. 2....