TaxTMI 
TaxTMI 
2025 (12) TMI 1798
X X X X Extracts X X X X
X X X X Extracts X X X X
....certiorari or any other appropriate writ, order, or direction quashing and setting aside order dated 11.04.2025 passed by learned Special Judge, Anti-Corruption, CBI, Ghaziabad whereby open ended Non-Bailable Warrants have been issued against the petitioner in relation to ECIR/LKZO/14/2021; (ii) Issue a writ of mandamum or any other appropriate writ, order, or direction restraining the respondent, its officers, or any person acting under its authority, from initiating or continuing any coercive actions against the petitioner under the Prevention of Money Laundering Act, 2002, in relation to ECIR/LKZO/14/2021 or related matters; (iii) Issue a writ of certiorari or any other appropriate writ, order, or direction quashing the Enforcement Case Information Report bearing no. ECIR/LKZO/14/2021 registered by the respondent pursuant to FIR No. 353 of 2015 dated 09.06.2015, along with all consequential proceedings, including the raids conducted on 10.04.2025, as being illegal, ultra vires and violative of the petitioner's fundamental right under Article 14, 19 and 21 of the Constitution; (iv) Declare the respondent's action in registering the ECIR and cond....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that multiple FIRs containing identical allegations existed concerning the same project. Bail was also granted to the petitioner with a direction to deposit Rs.50 Crores to demonstrate bona fides and facilitate settlements as a pre-condition. The petitioner complied with the said condition and was released on bail. 9. Ultimately, by order dated 12.05.2022, in the aforesaid writ petition, the Hon'ble Supreme Court consolidated all FIRs (46 as per the record) pertaining to the 'Grand Venice' project into the principal FIR No. 353/2015 and directed that all other charge-sheets and FIRs would stand merged, and the entire matter would proceed only from the principal FIR. 10. Pursuant thereto, the petitioner filed Criminal Misc. Application No. 25724/2022 before this Court, seeking quashing of the proceedings arising out of the principal FIR. By order dated 27.04.2023 in Criminal Misc. Application No. 25724/2022, proceedings in Case No. 1559/2019 (arising out of the said principal FIR) pending before the Court of the Additional Chief Judicial Magistrate-II, Gautam Buddh Nagar were stayed by a learned Single Judge of this Court. 11. While the proceedings in the pre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial Judge, Anti-Corruption, CBI, Ghaziabad, issued Non-Bailable Warrants (hereinafter "NBW") against the petitioner in relation to the same ECIR. 18. On 13.04.2025, the petitioner lodged a complaint at P.S. - Rajouri Garden, New Delhi, alleging misbehaviour with his children during the search, and also issued representations to senior officials of the Directorate of Enforcement. 19. The petitioner thereafter approached the Hon'ble Supreme Court by filing a writ petition under Article 32 challenging the ECIR, the search proceedings, the NBW, and all consequential actions. By order dated 21.04.2025, the Hon'ble Supreme Court permitted the petitioner to withdraw the petition with liberty to approach the High Court of competent jurisdiction. 20. Consequently, the petitioner has filed the present writ petition, before this Court challenging the ECIR, the search and seizure proceedings, the NBWs issued on 11.04.2025, and all coercive steps taken pursuant to the ECIR. The bone of the contentions of the petitioner is that since the predicate offence as against him survives only under Section 406 IPC, which is not a scheduled offence under the PMLA, and the trial of the sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....v. State [2022 SCC On Line SC 1975], wherein the Hon'ble Court reiterated that proceedings under the PMLA cannot survive, where the accused stands discharged or acquitted in the predicate offence or where the predicate offence does not survive in law. Learned counsel submits that the learned Additional Solicitor General in that case accepted this proposition unequivocally. The petitioner submits that the same principle squarely applies in the present case, because the only provision now attracted in the predicate FIR is Section 406 IPC, which is not a scheduled offence. 26. The proceedings in the predicate FIR have been stayed by a learned Single Judge of this Court in Criminal Misc. Application No. 25724/2022 vide order dated 27.04.2023. It is argued that the effect of the stay is that the predicate proceedings remain in a state of suspension, and the ED cannot, in the teeth of such stay, continue to treat the FIR as alive for the purposes of sustaining the ECIR 27. Learned Senior Counsel further relies strongly on Pavana Dibbur v. Enforcement Directorate [2023 SCC OnLine SC 1486] in support of the proposition that the existence of a scheduled offence is the jurisdiction....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dated 06.03.2025 and again on 21.03.2025, where it was stated that personal appearance was not required and that only submission of documents was necessary. 33. The petitioner submits that no notice under Section 41A CrPC has ever been issued to him in connection with the PMLA proceedings. It is further argued that prior to the issuance of the NBWs, no fresh summons under Section 50 PMLA had been issued, and therefore, the NBWs were issued without adherence to the mandatory procedure laid down in Inder Mohan Goswami v. State of Uttarakhand [(2007) 12 SCC 1], where the Hon'ble Supreme Court cautioned against mechanical issuance of NBWs without first issuing summons or bailable warrants. 34. The petitioner submits that he has cooperated with the ED investigation fully, as demonstrated by his appearance on 12.07.2022, submission of documents on 12.07.2022, 14.07.2022, 16.05.2024, and 20.05.2024, and further submission on 22.02.2025 and 21.03.2025. It is stated that the petitioner has, at no point, evaded the process of law. 35. The petitioner further submits that the NBW violates his fundamental rights under Article 21 of the Constitution, as it was issued without any de....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 42. The petitioner submits that the search and seizure operations conducted on 10.04.2025, 11.04.2025, and 12.04.2025 under Section 17 of the PMLA are illegal and vitiated for complete non-compliance with the mandatory statutory conditions. It is urged that the ED neither recorded nor furnished any valid "reason to believe" that the petitioner was in possession of proceeds of crime or records relating to such proceeds. The petitioner submits that the jurisdictional prerequisites under Section 17(1) are mandatory in nature and non-negotiable. 43. It is further submitted that no incriminating material was seized from the petitioner's residence or business premises during the search operations spanning nearly three days. It is specifically pointed out that the only recovery referred to by the respondent relates to a sum of Rs.36,00,000/- allegedly found in a locker in Goa belonging to a company, M/s India Ocean World Pvt. Ltd., with which the petitioner asserts he has no connection. The petitioner submits that this recovery has no bearing upon the petitioner personally and cannot justify the coercive action. 44. The petitioner submits that the entire manner in which the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the separate company, directors, investors is ex facie permissible. Each distinct transaction requires its own ECIR since the schedule offence the set of the accused, such alleged accused of crime are transaction specific. It is vehemently submitted that the artificial or enlargement of one ECIR to cover multiple transactions obliterates the jurisdictional foundation of PMLA confesses distinct streams of alleged criminality and directly violates the ratio in Sagar Maruti Suryavanshi (supra), such overreach is ultra virus the Act, contrary to binding judicial pronouncement and render the ECIR effective and liable to be quashed. F. Submissions regarding violation of supreme court's consolidation order 48. The petitioner submits that by judgment dated 12.05.2022, the Hon'ble Supreme Court consolidated all FIRs relating to the Grand Venice project into FIR No. 353/2015 and held that no parallel or separate FIRs would survive thereafter. The petitioner emphasises that the Hon'ble Supreme Court expressly directed that all proceedings would emanate only from the consolidated FIR. 49. It is submitted that the ED has unlawfully ignored this binding direction and has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....;s consistent cooperation, the stay of the predicate FIR, or the Hon'ble Supreme Court's consolidation directions. 55. It is further submitted that the coercive actions taken by the ED are arbitrary, disproportionate, and designed to circumvent the judicial protections accorded to the petitioner by the Delhi High Court and this Court. J. Submissions on the petitioner's cooperation and bona fides 56. The petitioner submits that he has demonstrated complete bona fides throughout the investigation process. It is pointed out that the petitioner had earlier deposited Rs.50 crores before the Hon'ble Supreme Court during the consolidation proceedings, in compliance with directions. The petitioner asserts that there has never been any attempt on his part to evade the investigation and that the record of correspondences, appearance, and document submissions clearly establishes his cooperation. SUBMISSIONS ON BEHALF OF THE RESPONDENT ED A. ED's submissions regarding maintainability and limited interference at investigation stage 57. Mr. Zoheb Hossain, learned counsel appearing on behalf of the respondent ED vehemently opposed the present petition submitt....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... take advantage of a procedural stay order to defeat the statutory investigation under the PMLA. 64. The ED also refers to the judgment of the Punjab and Haryana High Court in Surjeet Kumar Bansal v. Central Bureau of Investigation [2024 PHHC 045226], where it was held that a stay of the scheduled offence does not automatically translate into a stay of PMLA proceedings. According to the ED, this principle fully applies to the present matter. C. ED's submissions regarding the petitioner's alleged non- cooperation 65. The ED submits that the petitioner has repeatedly failed to join the investigation despite issuance of multiple summons. It is submitted that the petitioner has either not appeared or has avoided personal appearance. 66. While the petitioner may have furnished certain documents, he did not comply with summons requiring personal appearance. Mere filing of replies or sending documents does not amount to cooperation when the ED specifically requires the accused to appear for recording of statements. 67. The ED submits that the petitioner's conduct must be viewed in light of the magnitude of the offences under investigation, involving allegations ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er were lawful, duly authorized, and carried out pursuant to statutory satisfaction recorded by the competent authority. 75. The petitioner's objections regarding "reason to believe" are misconceived because Section 17 PMLA does not require the ED to disclose such reasons to the party searched at the time of search. ED states that the correctness of the search can be examined by the Adjudicating Authority upon filing of the complaint under Section 17(4) PMLA, and therefore, the petitioner has an effective statutory remedy which he has chosen not to pursue. 76. Search results yielded materials relevant to the investigation, including discovery of cash amounting to Rs. 36 lakh, which forms part of the evidence. ED contends that the petitioner cannot pre-judge the evidentiary value of seized items at this stage. F. ED's tabular chart submissions relating to multiple FIRs 77. ED submits that the ECIR was registered on 12.03.2021 on the basis of FIR No. 353/2015, which contained scheduled offences under the PMLA. ED further clarifies that the ECIR was not confined to a single FIR but was expanded by way of two addendums to incorporate all relevant predicate materials....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uled offences at the time of ECIR registration. 83. ED further submits that out of the forty-six FIRs consolidated by the Hon'ble Supreme Court, two FIRs were not added in the ECIR. One because it did not contain any scheduled offence and the other because ED could not obtain a copy. Therefore, the ECIR ultimately reflects forty-four consolidated FIRs and five Mist Avenue FIRs, totaling forty-nine. 84. ED submits that the petitioner's argument that only Section 406 IPC survives after submission of the chargesheet is fundamentally misconceived. ED argues that PMLA jurisdiction arises not at the stage of cognizance but at the time of commission of the scheduled offence and registration of the predicate FIR. Multiple FIRs still contain scheduled offences against the petitioner. ED argues that the Hon'ble Supreme Court order did not quash any FIR. It only directed consolidation and filing of a composite chargesheet. ED submits that consolidation does not amount to quashing, and therefore, the scheduled offences in those other FIRs continue to exist for PMLA purposes. 85. ED, stresses upon the contention that five FIRs relating to the Mist Project are separate crimi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proceeds of crime under the PMLA. 90. Sri Pankaj Kumar Shukla, learned counsel appearing on behalf of the intervener has made submissions on certain legal points, but mainly opted all arguments made by learned counsel appearing on behalf of the ED. REJOINDER SUBMISSIONS ON BEHALF OF THE PETITIONER 91. The petitioner submits that the Hon'ble Supreme Court in Shree Chamundi Mopeds Ltd. (Supra) explained that while the distinction between stay and quashing exists for certain purposes, a stay nevertheless freezes the effect and operation of the order under challenge. The petitioner argues that the respondent cannot rely on this distinction to bypass the stay and continue coercive proceedings. 92. It is contended that the ED's position that an ECIR is beyond judicial review is a misreading of Vijay Madanlal Choudhary (Supra). It is submitted that the said judgment held only that the ED is not required to furnish a copy of the ECIR to the accused, and it did not state that the ECIR is beyond scrutiny when the very initiation of PMLA proceedings suffers from lack of jurisdiction. The petitioner contends that judicial review is available where the ECIR is based on a no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n arose from proceedings under Section 138 of the Negotiable Instruments Act, 1881 where cognizance had already been taken, and the accused had not appeared. 96. The petitioner asserts that in the present case, no complaint has been filed under Section 44 PMLA, and no cognizance exists at all. Therefore, the Special Court lacked jurisdiction to issue NBWs in the first place. It is submitted that where an order is wholly without jurisdiction, the High Court may quash it even if the accused has not physically appeared, because such an order is void ab initio and not a legitimate judicial process. 97. The petitioner reiterates the principle reaffirmed in Satender Kumar Antil v. CBI [(2021) 10 SCC 773], that the graded procedure of summons, then bailable warrant and then non-bailable warrant applies only after cognizance. Therefore, in the absence of cognizance in any PMLA complaint, the issuance of NBWs is non-est and can be interdicted even without the petitioner's presence. 98. The petitioner submits that the ED's claim of non-cooperation or evasion is factually incorrect and contrary to the documentary record. It is stated that the petitioner has, from the very inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nto one principal FIR No. 353/2015, directing that all other FIRs and charge-sheets be treated as statements under Section 161 CrPC. The petitioner submits that the ED has unlawfully relied upon multiple FIRs that no longer survive in law. ANALYSIS AND FINDINGS I. INTRODUCTION TO THE STATUTORY SCHEME 104. This Court has heard learned counsel for the petitioner and the Enforcement Directorate at length and has perused the material placed on record, including the writ petition, the tabular chart filed by the ED, the ED's written submissions, the petitioner's case-law compilations, the petitioner's rebuttal note, and the documents annexed thereto. 105. The primary challenge in the present proceedings is to the ECIR and NBWs issue vide order dated 11.04.2025. 106. Before examining the factual controversies and rival submissions, it is necessary to set out the relevant statutory concepts central to the adjudication i.e., ECIR, scheduled offence, predicate offence, and the scope of judicial review over an ECIR. (A) Section 3 of the PMLA reads thus: "Offence of money-laundering .- Whosoever directly or indirectly attempts to indulge or knowingl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vable or immovable, tangible or intangible. To constitute any property as proceeds of crime, it must be derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. The explanation clarifies that the proceeds of crime include property, not only derived or obtained from 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. Clause (u) also clarifies that even the value of any such property will also be the proceeds of crime. Thus, the existence of "proceeds of crime" is sine qua non for the offence under Section 3 of the PMLA. (C) Clause (x) of sub-Section (1) of Section 2 of the PMLA defines "schedule". Clause (y) thereof defines "scheduled offence", which reads thus: "2. Definition - (1) In this Act, unless the context otherwise requires, ......................... (y) "scheduled offence" means - (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B of the Schedule if the total value involved in such offences is one cr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... officer not below the rank of Deputy Director, shall, immediately after attachment under sub- section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under 3[sub-section (3)] of section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub- section (1) from such enjoyment. Explanation .- For the purposes of this sub-section, "person interested", in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection (1) shall, immediately after search and seizure 3[or upon issuance of a freezing order], forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section. 4[(4) The authority seizing any record or property under sub- section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ocumentary, against any accused person involved in respect of the offence, for which complaint has already been filed, whether named in the original complaint or not.] (2) Nothing contained in this section shall be deemed to affect the special powers of the High Court regarding bail under section 439 of the Code of Criminal Procedure, 1973 (2 of 1974) and the High Court may exercise such powers including the power under clause (b) of sub-section (1) of that section as if the reference to "Magistrate" in that section includes also a reference to a "Special Court" designated under section 43. 50. Powers of authorities regarding summons, production of documents and to give evidence, etc .- (1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely :- (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a 1[reporting entity] and examining him on oath; (c) compelling the production of records; (d) receiving evidence on affidav....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itating the adjudication by the adjudicating authority referred to in Chapter III to adjudicate the matters in issue, including until the filing of the complaint by the authority authorised in that behalf before the Special Courts constituted under Chapter VII PMLA. The expression "proceedings", therefore, need not be given a narrow meaning only to limit it to proceedings before the court or before the adjudicating authority as is contended but must be understood contextually. This is reinforced from the scheme of the Act as it recognises that the statement recorded by the Director in the course of inquiry, to be deemed to be judicial proceedings in terms of Section 50(4) of the 2002 Act. *** 105. The other relevant definition is "proceeds of crime" in Section 2(1)(u) of the 2002 Act. This definition is common to all actions under the Act, namely, attachment, adjudication and confiscation being civil in nature as well as prosecution or criminal action. The original provision prior to amendment vide the Finance Act, 2015 and Finance (No. 2) Act, 2019, took within its sweep any property [mentioned in Section 2(1)(v) PMLA] derived or obtained, directly or indirectly,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has been derived or obtained by any person "as a result of" criminal activity relating to the stated scheduled offence. To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, "as a result of" criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the case (crime) concerned, it may still not be proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violation and yet, will not be regarded as proceeds of crime unless the tax legislation concerned prescribes such violation as an offence and such offence is included in the Schedule to the 2002 Act. For being regarded as proceeds of crime, the property associated with the scheduled offence must have been derived or obtained by a person "as a result of" criminal activity relating to the scheduled offence concerned. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of the definition clause "proceeds of crime", as it obtains as of now. *** Section 3 of the 2002 Act 122. Coming to Section 3 of the 2002 Act, the same defines the offence of money laundering. The expression "money laundering", ordinarily, means the process or activity of placement, layering and finally integrating the tainted property in the formal economy of the country. However, Section 3 has a wider reach. The offence, as defined, captures every process and activity in dealing with the proceeds of crime, directly or indirectly, and not limited to the happening of the final act of integration of tainted property in the formal economy to constitute an act o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 is involved in any process or activity. Not even in a case of existence of undisclosed income and irrespective of its volume, the definition of "proceeds of crime" under Section 2(1)(u) will get attracted, unless the property has been derived or obtained as a result of criminal activity relating to a scheduled off....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... expected to and, also in a given case, justified in acting with utmost speed to ensure that the proceeds of crime/property is available for being proceeded with appropriately under the 2002 Act so as not to frustrate any proceedings envisaged by the 2002 Act. *** 212. The inquiry preceding filing of the complaint by the authorities under the 2002 Act, may have the semblance of an investigation conducted by them. However, it is essentially an inquiry to collect evidence to facilitate the adjudicating authority to decide on the confirmation of provisional attachment order, including to pass order of confiscation, as a result of which, the proceeds of crime would vest in the Central Government in terms of Section 9 of the 2002 Act. In other words, the role of the authorities appointed under Chapter VIII of the 2002 Act is such that they are tasked with dual role of conducting inquiry and collect evidence to facilitate adjudication proceedings before the adjudicating authority in exercise of powers conferred upon them under Chapters III and V of the 2002 Act and also to use the same materials to bolster the allegation against the person concerned by way of a formal c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f crime and inquiry/investigation of offence of money laundering up to filing of the complaint in respect of offence under Section 3 of the 2002 Act is fully governed by the provisions of the 2002 Act itself. To wit, regarding survey, searches, seizures, issuing summons, recording of statements of persons concerned and calling upon production of documents, inquiry/ investigation, arrest of persons involved in the offence of money laundering including bail and attachment, confiscation and vesting of property being proceeds of crime. Indeed, after arrest, the manner of dealing with such offender involved in offence of money laundering would then be governed by the provisions of the 1973 Code - as there are no inconsistent provisions in the 2002 Act in regard to production of the arrested person before the jurisdictional Magistrate within twenty-four hours and also filing of the complaint before the Special Court within the statutory period prescribed in the 1973 Code for filing of police report, if not released on bail before expiry thereof. 369. Suffice it to observe that being a special legislation providing for special mechanism regarding inquiry/investigation of offence ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l in possession of the authority and recording satisfaction of reason to believe that the person is guilty of money laundering offence, if revealed before the inquiry/investigation required to proceed against the property being proceeds of crime including to the person involved in the process or activity connected therewith, may have deleterious impact on the final outcome of the inquiry/investigation. So long as the person has been informed about grounds of his arrest that is sufficient compliance of mandate of Article 22(1) of the Constitution. Moreover, the arrested person before being produced before the Special Court within twenty-four hours or for that purposes of remand on each occasion, the court is free to look into the relevant records made available by the authority about the involvement of the arrested person in the offence of money laundering. In any case, upon filing of the complaint before the statutory period provided in the 1973 Code, after arrest, the person would get all relevant materials forming part of the complaint filed by the authority under Section 44(1)(b) of the 2002 Act before the Special Court. 372. Viewed thus, supply of ECIR in every case to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money laundering. The authorities under the 2002 Act cannot prosecute any person 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 by way of criminal complaint before the competent forum. 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 any one claiming such property being the property linked to stated scheduled offence through him. *** 382.26. In view of special mechanism envisaged by the 2002 Act, ECIR cannot be equated with an FIR under the 1973 Code. ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the authorities referred to in Section 48 to commence inquiry/investigation for initiating "civil action" of "provisional attachment" of property b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nnot proceed in the absence of a subsisting scheduled offence, however, it did not hold that every interim order in the predicate offence stops PMLA investigation. Scope of judicial review over ECIR 113. Courts have repeatedly held that the ECIR generally cannot be quashed, because it does not affect rights or liabilities. Nevertheless, judicial review lies where: (i) the ECIR is demonstrably without jurisdiction; (ii) the allegations do not disclose any scheduled offence, or (iii) where statutory safeguards are violated. 114. This Court therefore approaches the matter by examining only whether the threshold for interference is met, without venturing into factual inquiry reserved for the investigating agency or the Special Court. II. ISSUE OF SEARCH AND SEIZURE UNDER SECTION 17 PMLA 115. The petitioner challenges the search conducted between 10.04.2025 and 12.04.2025 on the ground that there was no "reason to believe." The ED's position is that authorization was duly recorded and the challenge is premature because the petitioner has a statutory remedy before the Adjudicating Authority. 116. This Court, regarding the said issue is inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt has not held that ED investigation is tied only to the predicate FIR. Section 3 PMLA applies wherever there are proceeds of crime relating to any scheduled offence. If multiple FIRs, by multiple complainants allege cheating, forgery, falsification of documents, and criminal conspiracy in different real estate projects, by the same party, they remain distinct scheduled offences for the purposes of PMLA. 122. The tabular chart filed by the ED contains FIR numbers, police stations, and the sections invoked, including Sections 406, 420, 467, 468, 471, and 120-B IPC, all of which are Scheduled Offences (Part A of the Schedule). The petitioner in his rejoinder does not dispute the authenticity of the chart and his objection relates only to the clubbing order. 123. The Hon'ble Supreme Court's consolidation order did not create an immunity from investigation under the PMLA, nor did it collapse distinct offences into non-existence. Consolidation for trial under CrPC is an administrative procedural direction and it does not extinguish the statutory ingredients of each scheduled offence for purposes of Section 3 PMLA. 124. The above stated reasoning of Amitbhai Anilchandra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d on record two addendums; one dated 10.03.2025 adding seven FIRs, and another dated 21.05.2025 adding fourteen FIRs, bringing the total to forty-nine FIRs. The petitioner has not demonstrated that these additional FIRs do not contain scheduled offences. On the contrary, the tabular chart discloses that the added FIRs invoke Sections 406, 420, 467, 468, 471, and 120-B IPC. These sections are part of the Schedule to the PMLA. 130. Therefore, the argument that ECIR cannot be based on FIRs later added is unsustainable. Clubbing under CrPC occurs for administrative consolidation of trial. It does not erase the scheduled offences for purposes of Section 3 PMLA. Nor does it bar ED from investigating proceeds of crime arising from such offences. The ED is not investigating the procedural effect of the Supreme Court's clubbing order, instead it is investigating laundering of proceeds of crime arising from duly registered criminal cases giving rise to schedule offences. 131. The petitioner contends that the so-called "Mist Project" FIRs are unrelated to the Grand Venice FIRs and were erroneously included into the ECIR. The ED's submissions, including the tabular chart and thei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of which the Magistrate may take cognizance of the said offence under Section 190(1)(a) of the Code. After taking cognizance of the offence either upon a police report or upon receiving a complaint of facts, the Magistrate has to proceed with the case as per the procedure prescribed under the Code or under the special procedure, if any, prescribed under the special Acts. Therefore, the word 'investigation' cannot be limited only to police investigation but on the other hand, the said word is with wider connotation and flexible so as to include the investigation carried on by any agency whether he be a police officer or empowered or authorised officer or a person not being a police officer under the direction of a Magistrate to make an investigation vested with the power of investigation." 134. This principle that special-statute investigations are dynamic and not limited to the initial material available can subsequently be applied in PMLA jurisprudence to recognize that an ECIR, being an internal record, may be supplemented or updated by way of addendums as the investigation progresses. The permissibility of addendums thus flows from the broader doctrine in Deepak Mah....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... learned Single Judge of this Court. He contends that once the predicate offence is stayed, ED cannot continue its investigation. 142. At the outset, it becomes necessary to understand the precise legal position that has emerged from the orders passed by the learned Single Judge of this Court and the Hon'ble Supreme Court regarding the predicate offences from which the ECIR has been derived. 143. The admitted position of facts of the present case reveals that on 12.05.2022, the Hon'ble Supreme Court in W.P. (Crl.) No. 242/2019, passed a consolidated order whereby 46 FIRs relating to the Grand Venice project were clubbed into one principal FIR, namely FIR No. 353/2015 dated 09.06.2015, registered at Police Station Kasna, Gautam Buddh Nagar, District Gautam Buddh Nagar, Uttar Pradesh. This consolidation was necessitated by the multiplicity of identical allegations arising from the same transaction, the non-delivery of commercial units and non-payment qua the Grand Venice Mall project. The Hon'ble Supreme Court, while consolidating these FIRs, directed that all proceedings would be governed by the principal FIR and that a composite chargesheet would be filed, if requ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r PMLA proceedings. The predicate scheduled offence must continue to exist and remain operative. While the Hon'ble Supreme Court in the aforesaid judgment did not explicitly address the situation where the predicate offence stands stayed, a state intermediate between continuing vibrancy and final quashing, the logical extension of the principle is that where judicial proceedings in the predicate offence are eclipsed by a stay order, the jurisdictional foundation of the PMLA investigation stands suspended. This proposition has been examined by other High Courts. The High Court of Karnataka in Mantri Developers Pvt. Ltd. v. Directorate of Enforcement [W.P. No. 20713 of 2022], decided on 14.12.2022, applied the principle from Vijay Madanlal Choudhary (Supra) and held that the existence of a scheduled offence is a jurisdictional fact, a condition precedent for the exercise of investigative authority by the ED. In that case, similar facts were present, the predicate criminal proceedings had been stayed, and the PMLA proceedings continued. The Karnataka High Court, relying on the Supreme Hon'ble Supreme Court's pronouncement, held that PMLA investigation must also be stayed w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tted to be continued, till the disposal of the case pending before the competent Court in the predicate offence, where there is an interim order of stay operating. I am in respectful agreement with the order passed by the Division Bench of Madras, but only to the extent of challenge to the impugned proceedings. There is no challenge to the proceedings under the ECIR. What is called in question is the provisional attachment order. In the light of judgments quoted hereinabove, the order passed under sub-section (1) of Section by the Enforcement Directorate cannot be termed to be illegal, however, those proceedings cannot be permitted to be taken to its logical conclusion. 17. There are only three circumstances that the Court would indicate in VIJAY MADANLAL CHOUDARY's case that in the event the accused in the predicate offence is discharged, acquitted or the proceedings against him are quashed in exercise of jurisdiction under Section 482 of the Cr.P.C., it is only then all the proceedings under the Act would become a nullity. That situation has not yet arrived. Therefore, if the proceedings under the predicate offences are eclipsed and not extinguished, the same would b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....VIJAY MADANLAL CHOUDARY (supra), the judgment in J.SEKAR would not become applicable to the facts of the case. The other judgments relied on would also follow suit in the light of the judgment of the Apex Court rendered in the case of VIJAY MADANLAL CHOUDARY (supra). " 148. The principle was also applied by the High Court of Karnataka in C. Umma Reddy v. Directorate of Enforcement decided on 14.12.2022. In that case, the Court examined whether PMLA proceedings could continue where proceedings in the predicate offence stood stayed. The Karnataka High Court held that an order of stay, while not effecting permanent extinguishment, operates to eclipse the proceedings. The Court observed that the effect of an order of stay means that the operation of the impugned order is stayed or stands stalled as if the impugned order does not exist. This holding was grounded in the principle that a scheduled offence, after an FIR has been quashed, cannot exist and therefore, if there is no scheduled offence, there can be no offence of money laundering. 149. The principle and reasoning discussed in the preceding paragraphs may be applied to the present matter, for the reason that the stay order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his principle, rightly understood, operates in the context where the predicate offence subsists and continues to generate proceeds of crime. The principle does not contemplate a scenario where the predicate criminal proceedings themselves are stayed by a competent court. To permit the ECIR to breathe independently while the predicate remains in judicial suspension would amount to circumventing the stay order, a proposition antithetical to the rule of law and the principle of judicial discipline. When a High Court stays proceedings in a predicate offence, the implicit corollary is that all collateral and derivative proceedings must also desist until the stay is lifted or the matter is finally adjudicated. 156. The ED's argument that protective orders in the predicate case cannot bear upon independent PMLA proceedings is misplaced because the protective order is not merely the bail order dated 06.11.2019 granted by the Hon'ble Supreme Court but extends to the comprehensive stay of proceedings granted by the learned Single Judge vide order dated 27.04.2023. This distinguishes the present matter from scenarios where only a protective order or bail condition is in operation. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....allegations under Section 420 IPC were dropped, and cognizance came to be taken only under Section 406 IPC. Section 406 IPC (criminal breach of trust) is not a scheduled offence under the PMLA. This Court notes that while the ECIR was registered before the supplementary chargesheet was filed, and thus technically at the time of ECIR registration there were scheduled offences (Section 420), the current legal position is that cognizance is taken only under a non-scheduled offence. 161. In the interregnum, The ED through addendums dated 10.03.2025 and 21.05.2025, added five other FIRs relating to the Mist Avenue project (Nos. 841/2019, 425/2019, 219/2019, 264/2018, 268/2018). The ED contended that these FIRs, which are not part of the Hon'ble Supreme Court's consolidation order, contain scheduled offences and thus sustain the ECIR. However, this Court must observe that these Mist Avenue FIRs stand on an entirely different footing from the consolidated Grand Venice FIRs. The Hon'ble Supreme Court's consolidation order of 12.05.2022 applied specifically to FIRs relating to the Grand Venice project. The Mist Avenue FIRs, relating to a different project and different in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eedings stand stayed and sub-judice. Thus, any investigative measure or coercive step that is referable to the consolidated Grand Venice FIRs or the principal FIR No. 353/2015 shall be stayed until final adjudication of Criminal Misc. Application No. 25724/2022. 168. Lastly, with regard to the petitioner's contention that no proceeds of crime have been identified, ED states that the investigation is at a nascent stage. Therefore, at this stage, this Court cannot determine whether proceeds of crime exist or not. 169. This Court clarifies that the direction to refrain from investigative measures applies only to those FIRs which form part of the consolidated Grand Venice Project, i.e., those FIRs which were consolidated by the Hon'ble Supreme Court in its order dated 12.05.2022 into the principal FIR No. 353/2015, and qua which proceedings in Case No. 1559/2019 remain stayed by this Court's order dated 27.04.2023. 170. It is relevant to state here that the petitioner has sought quashing of the ECIR. This Court is constrained to decline this prayer, but on narrow and specific grounds that must be clearly articulated. The reasons for non-quashment are: "A. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndependent Mist Avenue FIRs. V. ISSUE OF NON-BAILABLE WARRANT 172. The principles guiding issuance of NBWs have been discussed by the Hon'ble Supreme Court and many High Cours time and again. A court may issue a non-bailable warrant during investigation where summons have been ineffective, or where the presence of the accused is essential for the purposes of investigation. Investigating agency is not barred from approaching the court to compel appearance if the accused is demonstrably evading process. 173. Further, an accused has no vested right to demand that the investigating agency refrain from exercising statutory powers merely because the accused has furnished certain documents. Cooperation is not to be judged only by production of papers but also by timely compliance with summons and facilitating in investigation. 174. The NBW order dated 11.04.2025 has been examined. It records that the petitioner stands for the offence of money laundering and directs arrest. The NBW is open-ended. The petitioner argues that NBWs cannot be issued during investigation without cognizance, and the ED argues that NBWs are justified because the petitioner repeatedly evaded persona....
X X X X Extracts X X X X
X X X X Extracts X X X X
....preme Court in Inder Mohan Goswami (Supra) expounded the legal principles governing issuance of NBWs. The Hon'ble Supreme Court laid down comprehensive guidelines therein, as per which NBWs should be issued to bring a person to court when summons or bailable warrants would be unlikely to have the desired result. This could be when it is reasonable to believe that the person will not voluntarily appear in court or the police authorities are unable to find the person to serve him with a summon or it is considered that the person avoiding the process of court. 181. The Hon'ble Supreme Court emphasized that the purpose of NBWs is to secure the presence of an accused before court and not to punish. The Hon'ble Court further observed that issuance of NBWs should be done carefully and should not become a tool for punishment before conviction. Mechanical issuance of NBWs without consideration of the facts and circumstances is impermissible. 182. The Hon'ble Supreme Court reiterated this principle in Satender Kumar Antil (Supra), wherein it held that NBWs during investigation demand proper justification. The Hon'ble Court observed that in the absent of evasion proo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....facture non- cooperation and justify coercive action. Learned counsel contended that the issuance of NBWs is in violation of the principles laid down in Inder Mohan Goswami (Supra) and Satender Kumar Antil (Supra), and that this Court is empowered to quash or cancel such warrants in writ jurisdiction where jurisdictional defects are apparent. 187. The ED's counsel submitted that the petitioner has been systematically evading investigation, has not appeared despite multiple summons, and that the ED was left with no option but to move for NBWs. Learned counsel further submitted that the fact that some documents were furnished does not constitute cooperation if personal appearance was specifically sought. Learned counsel argued that the petitioner fled during the search operations, which itself is indicative of consciousness of guilt and evasion. 188. This Court, having considered the submissions of both parties, the record, and the applicable legal principles, is of the view that the ED has failed to discharge its burden of demonstrating actual evasion by the petitioner. The chronology of summons and responses shows regular engagement on behalf of the petitioner. Most criti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s in response to summons. B. The investigation has been pending for over four years, and no clear investigative purpose is being served by the issuance of NBWs at this stage. The investigative agency has had ample opportunity to conclude its inquiry. The prolongation of investigation, punctuated by NBWs, frustrates rather than facilitates the investigative process. C. The issuance of NBWs is not justified under the principles laid down in a catena of judgments. The judgments laying down the principle require clear demonstration of evasion or reasonable apprehension thereof, and mechanical issuance of NBWs is impermissible." 193. Accordingly, the NBWs issued on 11.04.2025 are hereby cancelled. The petitioner is directed to join the investigation and cooperate therein upon prior written intimation by the ED. CONCLUSION 194. In view of the foregoing discussions, and upon careful consideration of the rival submissions advanced on behalf of the parties, this Court is of the opinion that the issues arising for adjudication lie within a narrow compass. The petitioner has questioned the very initiation and continuation of proceedings under the PMLA on the ground ....