TaxTMI 
TaxTMI 
2026 (8) TMI 1225
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....97-55598/2025 CM APPL. 65196-65197/2025 CM APPL. 79956/2025 CM APPL. 5050/2026, CM APPL. 5076/2026, W.P.(C)15405/2025, CM. APPL. 63095/2025, CM. APPL. 68405/2025, CM. APPL. 79970/2025 CM.APPL.5055-5057/2026, W.P.(C) 15406/2025, CM. APPL. 63097/2025, CM. APPL.68428/2025, CM APPL. 80061/2025CM APPL. 5058/2026, W.P.(C) 15407/2025CM APPL. 63100/2025, CM APPL. 68424/2025, CM APPL. 80063/2025CM APPL. 5053/2026, W.P.(C) 15408/2025 CM APPL. 63103/2025, CM APPL. 68422/2025, CM APPL. 79977/2025, CM APPL. 5052/2026, W.P.(C) 15886/2025, CM APPL. 64980/2025, CM APPL. 68255/2025, CM APPL. 80171/2025, CM APPL. 5051/2026, W.P.(C) 15909/2025, CM APPL. 65034/2025, CM APPL. 68441/2025, CM APPL. 79960/2025, CM APPL. 5054/2026, W.P.(C) 1021/2026, CM APPL. 4984/2026, CM APPL. 4986/2026, W.P.(C) 1092/2026, CM APPL. 5332-5334/2026. Appearance : For the ED: Mr. Anurag Jain, Special Counsel with Mr. Sagar Singh & Ms. Vaishali Gujjar, Advs. For the Intervenor/complainant: Mr. Vikas Singh, Sr. Advocate, with Mr. Varun Singh, Adv. Ms. Deepeika Kalia, Adv. Ms. Alankriti Dwivedi, Adv. Ms. Somesa Gupta, Adv. Mr. Sudeep Chandra and Ms. Khushi, Adv. For the Petitioner: Mr. N. Hariharan, Sr. Adv. with B.....
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....of the proceedings under the PMLA and the consequential actions undertaken by respondent pursuant to ECIR, including the subsequent inclusion of FIR No. 279/2019 by way of an addendum dated 20th August 2025, after the closure of the original predicate offence basis which the ECIR had originated. A. Factual Background A.1. The Aristo Group of Companies, comprising Aristo Pharmaceuticals, Aristo Laboratories and Mapra Laboratories, was established by Late Dr. Mahendra Prasad, a seven-time Member of Parliament. Petitioners comprise members of the family of Late Dr. Mahendra Prasad as well as Directors and senior management of the Aristo Group of Companies. A.2. Dr. Mahendra Prasad, former Member of Parliament and the Chairman, Managing Director and promoter of M/s Aristo Pharmaceutical Pvt. Ltd. ("Aristo") passed away on 27th November 2021, leaving behind a registered will dated 18th July 2011. A.3. The dramatis personae involved in these petitions are as follows: (i) Dr. Mahendra Prasad was married to Smt. Satula Devi with whom he had three sons namely Rajeev Sharma, Devendra Rai and Ranjeet Sharma. Devendra Rai's second wife was Kanchana Rai (petitioner in W.P.(....
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....s and cheques. The FIR came to be registered against several of the present petitioners and complaints by Rajeev Sharma regarding the "same transaction" were investigated together. A.6. On 28th December 2021, the Respondent registered ECIR No. DLZO-II/72/2021 exclusively on the basis of second FIR, which constituted the sole "scheduled offence" for the purposes of PMLA investigation. A.7. Upon completion of investigation in second FIR, the Economic Offence Wings ["EOW"] filed a Cancellation Report dated 8th December 2022, concluding that no offence was made out. The Investigating Agency relied upon the opinion of the Forensic Science Laboratory, which confirmed that the disputed signatures on the share transfer forms and cheques were genuine. A.8. A Protest Petition against the Cancellation Report was filed on 29^th March 2023 by the legal representatives of Late Smt. Satula Devi. A.9. In the meantime, on 28th June 2023, respondent issued an order under Section 17(1A) of PMLA directing freezing of certain bank accounts. Said action was challenged before this Court in W.P.(C) No. 9799/2023, wherein, by order dated 12th December 2023, this Court stayed the proceedings bef....
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....RAI V. DIRECTORATE OF ENFORCEMENT NEW DELHI & ORS. 9799/2023 Quash ED proceedings [ECIR/DLZO-II/72/2021] along with proceedings emanating from order dt 28.06.2023 under Section 17(1) of PMLA w.e.f to freezing of bank accounts and deposits ARADHYA RAI V. DIRECTORATE OF ENFORCEMENT NEW DELHI & ANR. 15405/2025 Quash Section 17(1) PMLA proceedings including seizures; and Quash ECIR/DLZO-II/72/2021 and inquiry conducted by ED T.R. NARAYANAN V. DIRECTORATE OF ENFORCEMENT NEW DELHI AND ANR 15406/2025 Quash Section 17(1) PMLA proceedings including seizures; and Quash ECIR/DLZO-II/72/2021 and inquiry conducted by ED UMA DEVI V. DIRECTORATE OF ENFORCEMENT AND ANR. 15407/2025 Quash Section 17(1) PMLA proceedings including seizures; and Quash ECIR/DLZO-II/72/2021 and inquiry conducted by ED UMESH SHARMA V. DIRECTORATE OF ENFORCEMENT NEW DELHI AND ANR. 15408/2025 Quash Section 17(1) PMLA proceedings including seizures; and Quash ECIR/DLZO-II/72/2021 and inquiry conducted by ED MUKESH KUMAR V. DIRECTORATE OF ENFORCEMENT NEW DELHI AND ANR. 15886/2025 Quash Section 17(1) PMLA proceedings including seizures; and Quash ECIR/DLZO-II/72/2021 and inqui....
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....s in paragraph 4, filed before this Court on 11th February 2026, wherein it stated that it came to know of the first FIR only in July 2025. C.2. Senior Counsel pointed out to the following documentation, which showed that there was no reason why ED would not have knowledge of the first FIR much earlier : first, the application under Section 156 (3) Cr.P.C. filed by Smt. Satula Devi, particularly in paragraph 6, stated that the first FIR had been registered and that a chargesheet had also been filed against Smt. Uma Devi; second, the second FIR itself, on the basis of which instant ECIR has been registered, clearly stated that the first FIR had been filed and subsequently a chargesheet was filed against Smt. Uma Devi; third, Cancellation Report filed with respect to the second FIR also stated the same; fourth, the counter-affidavit in W.P.(C) 9799/2023 filed on 8th August 2023, also notes that the first FIR had been registered and reflected in charge-sheet. C.3. He therefore contended that it was "beyond doubt" that the knowledge of the first FIR was always with the ED and the statement made in the written submissions therefore, exemplifies mala fide in introducing the addendu....
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....endency of any appellate proceedings, ECIR cannot subsist. C.9. In the issue of addendum dated 20th August 2025 to the ECIR, it was submitted that it was contrary to law. Not only that was made in a malicious and arbitrary manner since first FIR was already in existence at the time of registration of the ECIR and it was not included as a scheduled offence till the closure of second FIR, but, more importantly it had no link or nexus with transactions in the second FIR since no "proceeds of crime" were generated from the first FIR. C.10. Mr. Agarwal, highlighted that there could be a possibility of including another FIR as part of ECIR where the transactions are connected, like in complaints against a real estate builder by homebuyers where settlements with some homebuyers results in closure of FIR whereas subsequent FIRs from other homebuyers may revive the investigation under the ECIR. However, in this case not only was this a case of subsequent FIR but a previous FIR registered six years prior to the ECIR addendum. At the very worst, if it was held that ECIR continues to subsist / can subsist, even after the addendum, there can be no investigation with respect to the second ....
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....ontinue, does not confer any mandate to commence investigation into any predicate offence. In Rajinder Singh Chadha (supra), the connection existed because the matters arose out of the "same transaction". The addendum was accepted because it arose out of the same project, albeit involving different home buyers. C.14. Mr. Agarwal emphasized that merely because this Court has issued notice in the challenge to the closure of the case arising from the second FIR, it cannot imply that the second FIR is alive. On the contrary, it means that the proceedings stand closed, the closure having been accepted, and only leaves open a possibility for revival by ED in the event the second FIR is revived. To that extent, Mr. Agarwal submitted that liberty may be granted to ED in that regard, to which petitioners have no quarrel. C.15. It was, therefore, not permissible to place reliance upon an addendum pertaining to an FIR lodged in 2019, being a prior FIR in point of time on a completely distinct and different cause of action, giving rise to entirely separate "proceeds of crime". The same cannot be clubbed through an amendment in order to continue the investigation. Mr. Agarwal admitted tha....
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.... the legality of the addendum. Thus, according to them, the addendum clearly forms part of the dispute in the present proceedings. On the issue of finality, reliance upon Rajinder Singh Chadha (supra) was reiterated in support of the petitioners. It was further submitted that the order of the Supreme Court merely issuing notice and directing status quo regarding properties does not dilute the effect of the Trial Court's order accepting the closure report, which admittedly has not been stayed by this Court. C.20. Mr. Agarwal, further submitted that the predicate offence and chargesheet alone would govern the proceedings. They contended that no jewellery was being sought by the petitioners and, in any event, the ECIR itself related to mutual funds, stocks, and other financial documentation rather than jewellery. D. Submissions made on behalf of petitioners by Mr. Dayan Krishnan, Senior Advocate in W.P.(C) 15406/2025, W.P.(C) 15408/2025, W.P.(C) 15886/2025, W.P.(C) 15909/2025 & W.P.(C) 1021/2026 D.1. Mr. Dayan Krishnan, Senior Advocate, appeared on behalf of Mr. Umesh Sharma, who was a Director of M/s Aristo Pharmaceuticals Pvt. Ltd. since 1978 and its Managing Director since....
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....ior to the closure report, petitioners were never summoned by ED. However, post amendment to ECIR, a search came to be initiated and two summons were issued, one dated 30th September 2025 and the second dated 16th January 2026. It was highlighted that despite being arrayed as an accused in the second FIR, ED never sought to investigate them. D.7. The nature of the questioning being undertaken, as evident from the notice dated 16th January 2026, was highlighted to include demands for passport-size photographs, Aadhaar cards, passports, details of all movable and immovable properties held since 1998, details of all bank accounts maintained since 1998, details of entities with which the petitioners have been associated in India and abroad since 1988, as well as balance sheets, profit and loss statements, and income tax returns of all entities associated with the petitioners in India and abroad from Financial Year [FY] 2011-2012 till date. D.8. Mr. Krishnan, submitted that despite the aforesaid documents having no relevance to the surviving first FIR, which was registered in 2019, ED filed an Original Application [OA No. 319/2025] before AA under Section 17(4) of PMLA, seeking re....
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....ly paragraphs 15 and 16. D.13. It was further submitted that the first FIR pertains to an entirely different transaction and, therefore, cannot form the basis of an addendum to the ECIR. D.14. Mr. Krishnan addressed the issue of "clubbing of cases" by adverting to T.T. Antony v. State of Kerala (2001) 6 SCC 181, wherein the Supreme Court held that a single FIR ought to be registered in respect of offences committed in the course of the "same transaction" and permitted clubbing of FIRs relating to the "same transaction". It was submitted that since the two FIRs pertain to entirely different transactions, there was no question of clubbing either the FIRs or the ECIR. D.15. He submitted that there exists a distinction between "clubbing of cases" and "clubbing of FIRs". In the context of clubbing of cases, reliance was placed on the decision of the Supreme Court in State of A.P. v. Cheemalapati Ganeswara Rao, 1963 SCC OnLine SC 38, wherein the Supreme Court laid down the test for determining when offences may be said to form part of the "same transaction". The Supreme Court held that "same transaction" would imply unity of purpose and design; or proximity of place and time; or....
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....LA. D.20. In Vijay Madanlal Choudhary (supra), the Supreme Court observed that the actions of ED must be tested on well-established principles of judicial review and administrative action. Reliance in this regard was also placed upon the following decisions: i. Madhyamam Broadcasting Ltd. v. Union of India (2023) 13 SCC 401, particularly paragraph 38, and; ii. Krishnadatt Awasthy v. State of M.P. (2025) 7 SCC 545, particularly paragraph 16. D.21. Apart from unreasonableness and irrationality, Mr. Krishnan also focused on the aspect of bias and mala fides. Reliance was placed on Ravi Yashwant Bhoir v. Collector, (2012) 4 SCC 407, particularly paragraphs 47 and 48, wherein it was observed that mala fide exercise of power refers to exercise of power for "purposes foreign to those for which it is in law intended". It was submitted that the genesis of the proceedings lay in a family dispute between two factions of the family, who have been involved in multifarious civil and criminal proceedings, including disputes relating to the Will of Late Dr. Mahender Prasad. D.22. Senior Counsel submitted that ED was not acting to prosecute offences of money laundering bu....
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....pute between two ladies involving allegations of confinement and jewellery. The jewellery itself stood recovered and the order of the Trial Court records the same. E.3. Once the jewellery stood recovered, there could be no subsisting "proceeds of crime". Even independently viewed, the allegations do not disclose any "proceeds of crime". At best, they concern personal family transactions. The allegations substantially pertain to domestic and inter-personal disputes. The only offence alleged in that context is under Section 406 IPC, which is not even a scheduled offence under the PMLA. E.4. Therefore, it was emphasized that the first FIR is unconnected with the corporate transactions forming the basis of the allegations in the second FIR; it is not part of the "same transaction", occurred at a separate point in time, discloses no continuity of action, and does not involve any "proceeds of crime", besides the alleged offence itself not being scheduled under the PMLA. E.5. Mr. Hariharan submitted that at one stage there may have existed a suspicion giving rise to proceedings under the PMLA, however, once the predicate offence stood closed upon acceptance of the closure report,....
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.... para 28, where it states "the Department chose not to register separate ECIR but record the scheduled offences registered by 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" F.5. In the said case, the Court further recorded that the second FIR was taken on record by the Department in the said ECIR despite an order of compounding and acquittal, which was not challenged by petitioners therein. Likewise, inclusion of first FIR in the present matter by way of an addendum was also never challenged by petitioners despite their knowledge of the same. It was, therefore, submitted that an addendum can be added and such addition is neither illegal nor contrary to law. Petitioners seek to contend that the two FIRs do not form part of the "same transaction". According to the ED, however, this submission is factually incorrect and can be determined upon examination of the FIRs. F.6. The second FIR, records that taking advantage of the mental condition of Late Dr. Mahendra Prasad, Smt. Uma Devi and Kanchana Rai hatched a conspiracy to take away valuable assets and wrongfully and illegally confined th....
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....n Rajinder Singh Chadha (supra), there was a compromise, compounding, and no challenge to the acquittal. It was, therefore, submitted that the order accepting the closure report had not attained finality, in terms of what has been observed by the Supreme Court in Vijay Madanlal Choudhary (supra). F.11. In Directorate of Enforcement v. Akhilesh Singh & Ors. (supra), the respondents had been discharged from the offence of money laundering on the ground that they had been acquitted in the predicate offence. However, the judgment of acquittal had not attained finality since an appeal preferred by the State of Jharkhand remained pending. It was held that the acquittal would attain finality only upon affirmation by the Appellate Court. Further reliance was placed on the following judgements: i. Director of Enforcement v. Gagandeep Singh & Ors order dated 14th July 2017 and 11th May 2018 in Crl.Rev.Pet.493/2017; ii. Directorate of Enforcement vs. Gagandeep Singh & Ors in SLP (Crl.) D. No. 42315/2022 decided on 10th February 2023; and iii. Joint Director ED vs. A. Raja & Ors., 2020:DHC:2892 F.12. It was contended that if the "proceeds of crime" were to be r....
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....of India, W.P. (C) No.29265/2023 particularly paragraph nos.3.13-3.17; iv. Angad Singh Makkar v. Union of India & Ors. (CRM-M-5228/2024 particularly paragraph no. 23; v. Pritpal Singh v. Directorate of Enforcement & Ors. (CRM-M-24276/2022 particularly paragraph nos.14-19; vi. Sikander Singh v. Directorate of Enforcement (CRM-M-51250/2023) judgment passed by the Division Bench of the Punjab & Haryana High Court F.18. On the issue of "efficacious alternative remedy" being available, reliance was placed on the following decisions: i. Ms Krrish Realtech Pvt. Ltd. Through its Authorized Representatives v. UOI Through Secretary, Ministry of Finance & Anr. in W.P.(C) No. 895/2025, decided on 3rd November 2025. ii. NIUM India Pvt. Ltd. v. UOI & Ors. (W.P.(C.)10466/2024, decided on 30th July 2024 G. Submissions by Mr. Vikas Singh, Senior Advocate on behalf of complainant Smt. Satula Devi G.1. On the issue of two FIRs being interconnected constitute valid predicate offences sustaining ECIR addendum, Mr. Vikas Singh, Senior Counsel for complainant submitted that petitioners' contention that the matter constitutes a mere family dispute is a....
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....Devi, from alleged unlawful confinement by the accused persons, including. Smt. Uma Devi. According to the submissions, Ranjeet Sharma had been denied access to his mother and the accused persons were allegedly attempting to obtain signatures forcibly while she remained in captivity. This Court appointed a six-member Medical Committee, which submitted a report diagnosing Dr. Prasad with "frontotemporal dementia". G.6. Thereafter, Smt. Satula Devi was released from confinement and, this Court, being alarmed by the situation, directed registration of an FIR by the Crime Branch. During investigation, it allegedly transpired that Smt. Uma Devi had used her proximity to Dr. Prasad to exercise control over his residence, staff, and companies for procuring execution of documents. Pursuant to directions of this Court, the first FIR came to be registered and Smt. Uma Devi remained in police custody for 14 days. G.7. It was further submitted that the financial statements of Aristo Pharmaceuticals revealed that Umesh Sharma had transferred company assets worth approximately Rs. 4.10 crores into his own name and increased his annual remuneration from Rs. 70,00,000/- to approximately Rs.1....
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....orate such information into its investigative record through addendums. The Court further held that Section 3 of the PMLA does not restrict proceedings to a 'single scheduled offence' and the relevant test is the existence of "proceeds of crime" connected with a 'scheduled offence', rather than the numerical identity of the 'predicate offence'. G.12. According to the complainant, in the present case also, both FIRs are bound by a common thread of criminal activity generating "proceeds of crime" so as to constitute related 'scheduled offences'. G.13. On the issue of petitioner not being entitled to any relief approaching the Court with unclean hands, Mr. Singh, submitted that petitioners' contention that acceptance of the Closure Report by the Trial Court extinguishes the predicate offence is misconceived. According to complainant, in connected petitions, interim protection against coercive action was obtained on the basis of a misleading statement that the predicate offence had attained finality, while deliberately suppressing the pendency of CRL.M.C. 4884/2025 challenging acceptance of the Closure Report as well as the order dated 26th September 2025 issuing notice therein. ....
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....ood extinguished, the department could neither initiate nor continue proceedings, including investigation. However, the Court declined to quash the ECIR in entirety since, in the meantime, a third FIR disclosing a substantive offence had been taken on record. According to the complainant, the present case stands on an entirely different footing. The first FIR continues to subsist and the closure report in the second FIR remains subject matter of challenge before this Court. Unlike Rajinder Singh Chadha (supra), it is not a case where the prosecution failed to challenge the closure, but one where the complainants/intervenors have actively pursued remedies before this Court. H. Submissions by Mr. Mahesh Jethmalani, Senior Advocate on behalf of Intervenor Rajeev Sharma H.1. Mr. Mahesh Jethmalani, Senior Advocate appearing on behalf of Rajeev Sharma, co-complainant, made a brief intervention relying upon Enforcement Directorate v. High Tech Mercantile India Pvt. Ltd. on the issue of what constitutes "finality" within the meaning of the Supreme Court's decision in Vijay Madanlal Choudhary (supra). Reliance was placed on paragraphs 61 to 64 of the said judgment, wherein the Divisio....
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..... Agarwal referred to the scheme of PMLA and, in particular, Sections 5, 8, 17, 17(1A), 26, 42, 44, 50, 65 and 66. He submitted that these provisions respectively deal with provisional attachment, adjudication, search and seizure, freezing of property, appeals before the Appellate Tribunal and the High Court, prosecution before the Special Court, the Directorate's power to summon persons and record evidence, the applicability of the Code of Criminal Procedure, 1973, and the sharing of information with other statutory authorities during the course of investigation. I.A.3. Mr. Agarwal submitted that, in view of the aforesaid statutory framework, it is evident that certain provisions contemplate civil action under the PMLA, while others provide for criminal action. This hybrid character is also reflected in the distinction between an FIR and an ECIR. While an FIR initiates a criminal investigation, an ECIR is distinct, being merely an internal document and an administrative exercise of the Directorate of Enforcement, as categorically recognised by the Supreme Court in Vijay Madanlal Choudhary (supra). Proceedings arising out of the ECIR involve search, freezing and adjudication of ....
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....r or for purely investigating a criminal offence. I.B.2. The aforesaid powers have been conferred to enable the authorities to collect evidence for proceedings before the AA and to take coercive measures such as freezing, confiscation and seizure. I.B.3. Mr. Krishnan emphasised that every inquiry initiated pursuant to an ECIR does not necessarily culminate in the filing of a prosecution complaint. He further clarified that, in the facts of the present case, the stage contemplated under Section 44 had not yet arisen. He submitted that an investigation under the PMLA is not akin to an investigation conducted by the police, and there is no comparison between such investigation and the investigation or trial of criminal cases under the CrPC. I.B.4. The PMLA is not a penal statute, and police officers are not empowered to investigate offences thereunder or take cognizance thereof. Vijay Madanlal Choudhary (supra) further holds that there is no requirement to formally register an ECIR, unlike the registration of an FIR by a jurisdictional police station. An ECIR is merely an internal document created before the initiation of penal action and, therefore, cannot be quashed in crim....
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.... questions raised before this Court, namely whether the ECIR could validly subsist and whether it could have been altered by way of an addendum, clearly fall outside the jurisdiction of the AA. I.C. Submissions by Mr. N. Hariharan, Senior Advocate, on behalf of the petitioners in W.P. (C) 15407/2025 I.C.1. Mr. Hariharan, Senior Counsel, adopted the submissions advanced by Mr. Siddharth Agarwal and Mr. Dayan Krishnan, Senior Advocates. In addition, he adverted to paragraphs nos. 338-339 of Vijay Madanlal Choudhary (supra), wherein the Supreme Court observed that summons under Section 50 of PMLA could be issued for the purpose of collecting information and evidence to be placed before AA, and not necessarily for the initiation of prosecution against the notice. According to him, recording of statements under Section 50 of the PMLA does not amount to an investigation for the purpose of prosecution. Further, in paragraph no. 360, the Supreme Court observed that, at the stage of issuance of summons under Section 50 of PMLA, the powers exercised by the designated officer or authority conducting the inquiry are analogous to those vested in a Civil Court, and the said provision is in....
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....C:277, upheld by the Supreme Court in Enforcement Directorate v. Emta Coal Ltd. 2023 SCC OnLine SC 2185, and RKM Powergen v. Assistant Director ED, 2025 SCC OnLine Mad 3272. I.C.6. On the issue of alternative remedy, Mr. Hariharan emphasised that the jurisdiction of AA under Section 8 of PMLA is confined to examining the validity of provisional attachment and confiscation proceedings and does not extend to examining the legality or validity of the ECIR itself. I.C.7. It was submitted that once it is accepted by ED itself that ECIR is in the nature of an administrative exercise, the jurisdiction to initiate proceedings necessarily depends upon the existence of a predicate offence. The authority to proceed under PMLA is derived from the existence of the predicate offence. Once the predicate offence ceases to exist, petitioners are entitled to challenge the executive action of registering and continuing the ECIR by invoking the civil writ jurisdiction of this Court. I.C.8. At this stage, the administrative action results in various civil consequences, including 'search and seizure' under Section 17 of PMLA and other connected provisions, on the basis of a suspicion regarding ....
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.... behalf of the complainant in W.P. (C) 9799/2023 I.E.1. Mr. Vikas Singh, Senior Counsel, submitted that the present challenge pertains to the initiation and continuation of a criminal investigation under a penal statute, which may ultimately culminate in prosecution. Accordingly, relying upon Pay 10 Services (supra), it was contended that the present proceedings are not maintainable as civil writ petitions. I.E.2. It was submitted that since the impugned action arises from powers exercised pursuant to a registered FIR, the challenge is unmistakably criminal in nature. Reliance placed by petitioners upon EMTA Coal Ltd. (supra) was misconceived, since the said decision did not consider the question whether a civil writ petition would be maintainable to challenge proceedings arising out of an ECIR. I.E.3. It was further submitted that Section 41 of PMLA expressly bars the jurisdiction of Civil Courts in respect of matters falling within the domain of the authorities constituted under the Act. In view of the statutory bar, it was contended that this Court lacked the jurisdiction to entertain or adjudicate the present proceedings. J. Analysis- Maintainability as a Civil Writ....
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....he above provisions, it is evident that the PMLA creates two distinct, yet interrelated, streams/proceedings involving civil and criminal consequences. While the offence of money laundering is defined under Section 3 of the PMLA, the punishment therefor is prescribed under Section 4. Chapter III [Sections 5 to 17(1A)] empowers the Directorate to take 'civil measures', inter alia, attachment and freezing of property. Such measures are amenable to adjudication before the AA under Section 8 and are further appealable to the Appellate Tribunal under Section 26. J.3. The second stream concerns the criminal consequences, namely, prosecution for the offence of money laundering before the Special Court constituted under Section 43 upon the filing of a complaint under Section 44. Proceedings before the Special Court are governed by the principles of criminal procedure, including the Cr.P.C. and its successor, the Bharatiya Nagarik Suraksha Sanhita, 2023 ("BNSS"). Appeals against the orders of the Special Court lie before the High Court under Section 47. J.4. These two streams do not necessarily operate simultaneously and are governed by distinct procedural mechanisms. First, pertains ....
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....m or involved in money laundering. The authorities under the Act are empowered to work the Act and while doing so, inter alia, to carry out investigation i.e. to summon persons and require them to give evidence and produce records; to record their statements; to attach properties involved in money laundering; to carry out search and seizure of properties; to search persons, and; to even arrest persons." (emphasis added) ii) The opinion rendered by the three-Judge Bench of the Supreme Court in Vijay Madanlal Choudhary (supra) in 2023 fleshed out the nature of the procedure employed post issuance of summons under Section 50 for conducting an inquiry into the existence of "proceeds of crime", which could potentially disclose the commission of an offence. The Court also cited Vakamulla (supra) with approval in paragraph 341 of the reported judgement. For reference, other paragraphs for providing context, are extracted below: "338. In the context of the 2002 Act, it must be remembered that the summons is issued by the authority under Section 50 in connection with the inquiry regarding proceeds of crime which may have been attached and pending adjudication befo....
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....reof, and also permits prosecution of the persons found involved in the money laundering activity. Keeping in mind the sweep of the purposes and objectives of the 2002 Act, the reason weighed with this Court while dealing with the provisions of the NDPS Act, will have no bearing whatsoever. In Tofan Singh case [Tofan Singh v. State of T.N., (2021) 4 SCC 1, para 320 : (2021) 2 SCC (Cri) 246], this Court also noted that the offences under the NDPS Act are cognizable as opposed to other statutes referred to above. The scheme of the NDPS Act, including regarding making offences under that Act as cognizable by the designated officer as well as the local police, and the scheme of the 2002 Act is entirely different." (emphasis added) J.6. Another critical aspect crystallised by the Supreme Court in Vijay Madanlal Choudhary (supra) pertains to the nature of the ECIR. The discussion in this regard is contained in paragraphs 366 to 373 of the judgment. The Supreme Court observed that no comparison could be drawn between the sui generis mechanism under the PMLA relating to prevention and investigation, on the one hand, and the trial in respect of the scheduled offence, which is go....
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.... in the process or activity connected with the proceeds of crime for offence of money laundering. Considering the mechanism of inquiry/investigation for proceeding against the property (being 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." (emphasis added) J.7. Thus, the Supreme Court underscored that the inquiry/investigation resulting in the collection of material and evidence is a separate and distinct procedure, to which no analogy can be drawn from the provisions of the Cr.P.C. In fact, there is no requirement to formally register an ECIR for carrying out such inquiry or investigation, unlike the registration of an FIR in respect of a cognizable offence. The Supreme Court also recorded the ED's submission that the ECIR is an internal administrative document and not a statutory document. In this regard, paragraph 370 of the judgment is extracted below: "370. There is force in the stand taken by the ED that ECIR is an internal document created by the departm....
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....ontended by the petitioners, the challenge to the freezing of the bank accounts and the search and seizure proceedings raises constitutional issues, as such actions, though civil in nature, affect the petitioners' right to carry on business under Article 19(1)(g) and their right to property under Article 300A of the Constitution. It was also noticed that, in paragraph 360 of Vijay Madanlal Choudhary (supra), the Supreme Court observed that the powers exercised by AA are analogous to those vested in a Civil Court under the CPC in respect of the matters referred to therein. J.12. Reliance was also placed on Pawan Insaa (supra), a decision of the Punjab and Haryana High Court rendered in 2024, wherein a petition under Section 482 of the Cr.P.C. was filed seeking quashing of ECIR. ED objected to the maintainability of the petition on the ground that the 'ECIR is merely an internal administrative document'. The Punjab and Haryana High Court accepted the said objection and held that the "ECIR is neither registered under the Cr.P.C. nor can it be equated with the commencement of criminal proceedings". Relying upon the observations in Vijay Madanlal Choudhary (supra), the Punjab and....
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....Section 482 Cr. P.C." (emphasis added) J.13. The issue, therefore, is no longer res integra in view of the authoritative pronouncement of the Supreme Court that an ECIR is not a statutory document but merely an internal administrative document, and that its registration is not a precondition for carrying out an inquiry or investigation or for initiating civil action by way of attachment of property. J.14. Having regard to the views expressed by the Supreme Court as well as by this Court, it is evident that the petitioners, who have essentially sought relief in relation to proceedings under Section 17 of PMLA, including the 'search and seizure' proceedings initiated or sought to be initiated by the ED, fall within the ambit of the civil stream under the PMLA. It is an admitted position that no complaint has yet been filed before the Special Court under Section 44 of PMLA alleging the commission of the offence of money laundering. The proceedings initiated by the ED are, at this stage, confined to investigation and to securing the "proceeds of crime", if any, so as to prevent their dissipation. J.15. Since the challenge pertains only to the administrative/executive ....
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....judicatory process under Section 8 of the PMLA is confined to examining the consequential actions taken under Sections 5, 17 and 18 of the PMLA. That, however, is not the nature or scope of the relief sought in the present petitions. K.4. More specifically, the jurisdiction of the Adjudicating Authority under Section 8 extends to consideration of applications made under Sections 5(5), 17(4) and 18(10), together with the material relied upon by the ED, and to recording a finding as to whether the properties referred to in the notice are involved in money-laundering. The challenge before this Court, however, goes to the very jurisdictional basis for continuation of the ECIR following closure of the second FIR and the subsequent introduction of the addendum taking on record the first FIR. These are not matters which fall within the statutory remit of the Adjudicating Authority. K.5. Counsel for the petitioners also drew attention to two decisions, one of this Court and the other of the Madras High Court, to demonstrate that, in circumstances where the ECIR itself or the foundational action under the PMLA was under challenge, Courts have entertained writ petitions under Article 2....
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....utine manner, yet, the mere fact that the petitioner before the High Court, in a given case, has not pursued the alternative remedy available to him/it cannot mechanically be construed as a ground for its dismissal. It is axiomatic that the High Courts (bearing in mind the facts of each particular case) have a discretion whether to entertain a writ petition or not. One of the self-imposed restrictions on the exercise of power under article 226 that has evolved through judicial precedents is that the High Courts should normally not entertain a writ petition, where an effective and efficacious alternative remedy is available. At the same time, it must be remembered that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the High Court under article 226 has not pursued, would not oust the jurisdiction of the High Court and render a writ petition "not maintainable". In a long line of decisions, this court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the "maintainability" of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided ....
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.... subsist, while the ED and complainants contend that a challenge has been filed against the acceptance of the Closure Report by the Additional Chief Metropolitan Magistrate (ACJM) Patiala House Courts, and therefore the ECIR would continue to subsist. L.2. The second FIR, viz. FIR No. 27/2021, was registered by the EOW Delhi, on 10th February 2021 under Sections 403/409/411/ 420/423/424/ 463/465/467/468/472/474 and 120 B of the Indian Penal Code 1860 ["IPC"] against all petitioners alleging that share transfers and bank transactions, relating to Aristo Pharmaceuticals had been fraudulently carried out by forging the signatures of Late Smt. Satula Devi on share transfer forms and cheques. On 28th December 2021, the impugned ECIR was registered exclusively on the basis of the second FIR, which constituted the predicate/schedule offence for the purposes of investigation under PMLA. Upon completion of the investigation, the EOW filed a Cancellation Report dated 8th December 2022, concluding that no offence was made out. A Protest Petition against the Cancellation Report was filed on 29th March 2023 by the legal representatives of Late Smt. Satula Devi. In the meantime, proceedings u....
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.... "22. In Vijay Madanalal Choudhury Case (supra) Supreme Court observed offence under section 3 of the PMLA is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property which constitutes offence of money laundering and property must qualify the definition as given in section 2(1)(u). Relevant paragraphs of said judgment may be reproduced below:- 148. The next question is: Whether the offence under Section 3 is a standalone offence? Indeed, it is dependent on the wrongful and illegal gain of property as a result of criminal activity relating to a scheduled offence. Nevertheless, it is concerning the process or activity connected with such property, which constitutes offence of money laundering. The property must qualify the definition of "proceeds of crime" under Section 2(1)(u) of the 2002 Act. 149. As observed earlier, all or whole of the crime property linked to scheduled offence need not be regarded as proceeds of crime, but all properties qualifying the definition of "proceeds of crime" under Section 2(1)(u) will necessarily be ....
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....pect of matters connected with offence of money laundering, and for that, existence of proceeds of crime within the meaning of Section 2(1)(u) PMLA is quintessential. Absent existence of proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot step in or initiate any prosecution. 23. After laying down the aforesaid ratio by the Apex Court in Vijay Madnalal Case (supra), thereafter on several occasion the same question arose before Supreme Court and before different High Courts i.e. if the predicate case is absolved by way of either acquittal or discharge or quashing of predicate case or by acceptance of the closure report, whether PMLA proceeding can continue." (emphasis added) L.6. The Court thereafter noted the decision in Deputy Director of Enforcement v. EMTA (supra), where a submission on behalf of the learned Additional Solicitor General was recorded that, since a Closure Report had been filed in the predicate offence, no further proceedings under PMLA could continue. However, in the event any further action was taken in respect of the predicate offence, liberty was reserved to take further steps, including revival of those proceedings. ....
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.... 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." (emphasis added) L.10. Relying on the above, the Calcutta High Court in Future Gaming (supra) stated as under: "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 acquittal or d....
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....nclude other similar FIRs; however, where Closure Reports had been accepted in respect of the FIRs, the ECIR could not survive and would cease to exist. L.14. Mr. Mahesh Jethmalani, Senior Counsel appearing for the intervenor, relied upon the decision of a Division Bench of this Court in Enforcement Directorate v. Hi-Tech Mercantile India (P) Ltd. 2025 SCC OnLine Del 6524. The Division Bench noticed the view of the learned Single Judge that the offence of money laundering is a standalone offence only in the sense that it is required to be tried separately and not in the sense that it can survive independently after proceedings in respect of the predicate offence have been quashed. The Division Bench found the said reasoning to be erroneous and observed as under in paragraphs 62 and 64: "62. The aforesaid view taken by the LSJ is flawed on three premises, firstly, as elaborated in the preceding paragraphs, the Directorate's power to initiate proceedings is not constrained to the four corners of the CBI's report or limited to the findings of the chargesheet. Secondly, the judgment of the High Court, quashing the first FIR and chargesheet is currently under challen....
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.... Cancellation Report is accepted by the competent Court, and the Protest Petition is thereafter also dismissed, the conclusion of the investigating agency receives a judicial imprimatur. It is difficult to comprehend how, in such circumstances, it can still be contended that a scheduled offence continues to exist or remains lurking in the background. Such a proposition would be anathema to basic jurisprudence and cannot be sustained. L.18. Of course, a subsequent challenge or appellate proceeding may ultimately result in revival of the investigation if the Cancellation Report is set aside by a superior Court. However, until such eventuality occurs, the contention of the ED that the ghost of a scheduled offence continues to hover and continues to furnish a cause of action to continue with the proceedings under the ECIR on that basis cannot be accepted. Such a construction would be wholly illogical and would amount to subverting the foundational premise of the PMLA, besides permitting misuse of the statutory process. L.19. In Yash Tuteja v. UOI (supra), the challenge was to the complaint filed under Section 44(1)(b) of the PMLA based upon allegations of scheduled offences under....
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....eeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression "derived or obtained" is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a court of competent jurisdiction owing to an order of discharge, 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 definitio....
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....the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till 31-7-2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all." (emphasis added) L.22. The Court, therefore, concluded that the conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and there must be "proceeds of crime" in relation to that scheduled offence, as defined under Section 2(1)(u). Thereafter, the Court recorded its determinative opinion in the paragraph extracted below: "17. Coming back to Section 3 PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled offence is committed. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of ....
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....-sheets filed in the scheduled offences deserves to be rejected." (emphasis added) L.23. The reliance placed by Mr. Vikas Singh, Senior Advocate, on the decision of the High Court of Jammu & Kashmir and Ladakh in Niket Kansal v. Union of India (supra) also needs to be assessed. Mr. Singh relied upon the said decision of the learned Single Judge to contend that the offence of money laundering is distinct and independent and that summons issued under Section 50 of the PMLA do not cease to operate merely because an accused has been discharged in the predicate offence. At the outset, it may be noted that the decision in Niket Kansal (supra) was challenged before the Supreme Court, which, by order dated 20th July 2025, directed that, subject to the petitioner cooperating with the ongoing investigation, no coercive action be taken against him. Mr. Singh therefore contended that the Supreme Court had given its imprimatur to the continuance of the investigation by the ED. L.24. The petition before the High Court of Jammu & Kashmir and Ladakh sought quashing of the ECIR, summons issued under Section 50 of the PMLA and the related search and seizure proceedings. The Trial Cour....
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....Even in Pavana R. Dibbur (supra) the Supreme Court stated categorically (as noted in the extract of paragraph 18 above) that such an accused can still be prosecuted under PMLA "as long as the scheduled offence exists". L.27. The expression "proceeds of crime", as defined under Section 2(1)(u) of the PMLA, is circumscribed to mean property derived or obtained, directly or indirectly, by any person "as a result of criminal activity relating to a scheduled offence". To keep an investigation alive after the scheduled offence itself has ceased to subsist would be to proceed on an abstraction and, metaphorically speaking, to exhume a corpse from which the life breath has gone. Vijay Madanlal Choudhary (supra) is categorical that the existence of a scheduled offence is a condition precedent for the existence of "proceeds of crime". Once that condition precedent ceases to exist, the investigation under the PMLA cannot be sustained on that basis. In any event, the facts in Niket Kansal (supra) are materially distinguishable. There, only one of the accused had been discharged while the predicate proceedings continued against the remaining accused. In the present case, the FIR itself stand....
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....lso revealed from the scrutiny of the above Vouchers/letters/cheques that several of the transactions in the bank accounts are between the accounts of DMP at Delhi and Mumbai. No monies have been diverted from the above bank account of Dr Mahendra Prasad and no unauthorised payments made. The maximum amount in the said accounts has been converted into Fixed Deposits." L.29. Reliance was also placed upon the order of the Supreme Court in M. Nagarajan (supra), wherein a petition had been filed seeking quashing of criminal proceedings, which relief had been declined by the High Court. Q.29. It was brought to the notice of the Supreme Court that a Closure Report had subsequently been filed and accepted by the Magistrate. ASG submitted that the ED proposed to question the Closure Report. The Supreme Court noted that the respondents would always be at liberty to take appropriate action as permissible in law. It was further observed as under: "we close these criminal proceedings at this stage. However, at a later stage if any change in circumstances arises, the respondent is at liberty to take appropriate steps available under the law including recall of the present o....
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....ourt of Bombay and the fact that Special Leave Petition had been filed by the ED would not "dilute or erode the finality of the order of the High Court of Bombay". What was also noted in particular based on para 253 of the following extract from Vijay Madanlal Choudhary (supra) that the that "authorities under the PMLA cannot resort to action against any person for money laundering on an assumption that the property recovered by them must be "proceeds of crime" and that a scheduled offence has been committed" and that "no action under PMLA can be resorted to unless there is a substratum of scheduled offence for the same, which substratum should legally exist in the form of a subsisting (not caused criminal complaint/enquiry) or if it did exist, the accused has since been discharged or acquitted by a court of competent jurisdiction". L.36. The decision in Rajinder Singh Chadha (supra) also arose in an entirely different factual matrix. In that case, the Court permitted the ECIR to continue in view of a subsequent third FIR, which had revived the scheduled offence that had earlier existed in the first two FIRs, both of which had subsequently been quashed on the basis of settlement....
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....al of accused or at the closure of an FIR by way of quashing or closure report, the jurisdiction of the Enforcement Directorate to proceed further, ends. Thus, any action that may have been taken by the Enforcement Directorate, exercising jurisdiction during the continuance of the scheduled offence would come to an end on the closure of the FIR. L.43. Ergo, the proceedings and coercive action taken under the ECIR, insofar as it relates to the second FIR, is without jurisdiction and cannot subsist, subject to liberty to the ED to seek revival at a later stage if the investigation in the predicate offence is revived by a superior Court. L.44. Taking into account that the PMLA does not even define or refer to the term "ECIR", and that the ECIR is merely an internal departmental document maintained for administrative purposes, the mere fact that an ECIR may relate to "proceeds of crime" as an independent offence does not detract from the position that every step taken pursuant thereto must necessarily relate to a scheduled offence. Once the scheduled offence stands extinguished by a Court of competent jurisdiction, ED cannot legitimately continue to exercise its civil or coercive....
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....t the scheduled offence sought to be introduced by way of the addendum should bear a clear nexus with the prior scheduled offence and form part of the "same transaction"; and that the addendum must steer clear of unreasonableness, arbitrariness, mala fides, illegality and disproportionality. To this extent, the submission of the ED is accepted. M.4. Reliance was placed by Mr. Anurag Jain, counsel for ED, on the following decisions: Vijay Madanlal Choudhary (supra), Rajinder Singh Chadha (supra), IREO Pvt. Ltd. (supra), Angad Singh Makkar (supra), Pritpal Singh (supra) and Sikander Singh (supra). M.5. The stated position of the ED before the Supreme Court in Vijay Madanlal Choudhary (supra), subsequently reiterated and echoed in several decisions of the High Courts and the Supreme Court, that "an ECIR is an internal document" of the ED and not a statutory document, has been pressed into service to support the proposition that there is no legal impediment to incorporating other scheduled offences into the ECIR by way of an addendum. M.6. On the third issue, namely whether a challenge to the addendum can only be maintained by filing an independent substantive writ petition an....
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.... undertaken by a statutory/investigative/executive authority, it would certainly fall within the purview of judicial review under Article 226 of the Constitution of India. No argument has been presented before this Court to contend that such action is altogether immune from judicial review. The issue as to whether the challenge is maintainable as a civil writ or criminal writ, and whether availability of an alternative remedy would preclude the writ petitions from being entertained, have already been dealt with in Sections 'J' and 'K' above, respectively. M.10. On the aspect of the tenets of administrative law which may be employed while assessing an ECIR in exercise of judicial review, certain decisions have been cited by Mr. Dayan Krishnan, Senior Counsel appearing for one of the petitioners, which may usefully be referred to as under: i. In Krishnadatt Awasthy (supra), a 2025 decision of the Supreme Court, the issue was considered by a three-Judge Bench in view of a split verdict rendered by two learned Judges of the Supreme Court. The matter related to the validity of appointments made to the posts of school teachers in a Panchayat. The conflict was between two foun....
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....of irrationality as a ground for a court's reversal of a decision by ascribing it to an inferred though unidentifiable mistake of law by the decision-maker. "Irrationality" by now can stand on its own feet as an accepted ground on which a decision may be attacked by judicial review. I have described the third head as "procedural impropriety" rather than failure to observe basic rules of natural justice or failure to act with procedural fairness towards the person who will be affected by the decision. This is because susceptibility to judicial review under this head covers also failure by an Administrative Tribunal to observe procedural rules that are expressly laid down in the legislative instrument by which its jurisdiction is conferred, even where such failure does not involve any denial of natural justice. But the instant case is not concerned with the proceedings of an Administrative Tribunal at all."" (emphasis added) ii. Aside from the above, the landmark decision of the Supreme Court on judicial review is Tata Cellular v. Union of India, (1994) 6 SCC 651, wherein the scope and parameters of judicial review were discussed. Relevant paragraphs ar....
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....om an ordinary appeal. It is made effective by the court quashing the administrative decision without substituting its own decision, and is to be contrasted with an appeal where the appellate tribunal substitutes its own decision on the merits for that of the administrative officer." ......... 77. The duty of the court is to confine itself to the question of legality. Its concern should be: 1. Whether a decision-making authority exceeded its powers? 2. committed an error of law, 3. committed a breach of the rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality : This means the decision-maker must understand....
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....reasons to believe" justify the arrest in terms of Section 19(1) of the PML Act, the exercise of power of judicial review would not be a cause of concern. Doubts will only arise when the reasons recorded by the authority are not clear and lucid, and therefore a deeper and in-depth scrutiny is required. Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid "reasons to believe", meeting the parameters prescribed by the law. In fact, not to undertake judicial scrutiny when justified and necessary, would be an abdication and failure of constitutional and statutory duty placed on the court to ensure that the fundamental right to life and liberty is not violated. ......... 64. A wrong application of law or arbitrary exercise of duty leads to illegality in the process. The court can exercise their judicial review to strike down such a decision. This would not amount to judicial overreach or interference with the investigation, as has been argued by DoE. The court only ensures that the enforcement of law is in accordance with the statute and the Constitution. An adverse decision would only....
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....s be malice-laden or even benign. If the purpose is corrupt the resultant act is bad. If considerations, foreign to the scope of the power or extraneous to the statute, enter the verdict or impel the action, mala fides or fraud on power vitiates the acquisition or other official act." (emphasis added) M.13. No contention was advanced by counsel for ED or by the complainant that, once the matter falls within the writ jurisdiction of this Court, the administrative action of the ED cannot be tested on the recognised grounds of judicial review. In fact, several judgments cited before this Court by learned counsel appearing for all sides are themselves indicative of the fact that Courts have entertained writ petitions and quashed proceedings under ECIRs or other actions taken under the PMLA by applying principles which constitute the bulwark of judicial review. M.14. The reference made by Mr. Vikas Singh, Senior Counsel, in this regard to the decision of the Allahabad High Court in Satinder Singh Bhasin (supra) is to be assessed. The Division Bench of the Allahabad High Court, upon examining the scheme of the PMLA, held that since an ECIR is an internal administrative doc....
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.... Late Dr. Mahendra Prasad, Smt. Uma Devi and Kanchana Rai had hatched a conspiracy to appropriate valuable assets and had wrongfully and illegally confined the complainant, Smt. Satula Devi, tortured and physically assaulted her as part of the alleged criminal conspiracy. M.17. It was further alleged that the accused persons used physical force to take control of valuables and transfer them into their own names. This, according to the complainant, constituted the underlying theme of the first FIR. It was contended that, in 2019, the complainant had been unlawfully confined and tortured and was not in a position to furnish the entire narrative, as was also evident from the habeas corpus proceedings before this Court, pursuant to which the first FIR came to be registered. M.18. Mr. Anurag Jain's submission was that the second FIR did not constitute a separate cause of action but was in continuation of the alleged acts and illegalities forming part of a continuous sequence of events. Since the entirety of the allegations had not been recorded in the first FIR, the complete narrative was reflected in the second FIR, which was, according to the ED, a continuation of the first FIR ....
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....ped and Section 406 IPC was retained. Cognizance was taken of the chargesheet and summons were issued. The Supreme Court thereafter consolidated the FIRs and directed that the other charge-sheets would stand merged. While the proceedings in the predicate FIRs were pending, the ED registered an ECIR in 2021. The petitioner challenged the ECIR, contending that since the first predicate offence survived only under Section 406 IPC, which is not a scheduled offence, no proceedings under the PMLA could continue on the basis of subsequent FIRs. It was in this context that the Court held that, an ECIR being an administrative document whose contours are not statutorily circumscribed, offences arising from subsequent FIRs which disclose distinct scheduled offences could also form the predicate basis of the ECIR. M.23. The fundamental distinguishing feature between Satinder Singh Bhasin (supra) and the present matter is that in the former there were subsequent FIRs concerning the same project, which had been clubbed together by the Supreme Court and were to be investigated in a composite manner on the basis of substantially similar allegations. It was in those circumstances that continuati....
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....respect of the second FIR had been dismissed. M.27. The conduct of the ED in this regard is found wanting and raises serious concerns. The chronology assumes particular significance when viewed in conjunction with the other circumstances noticed above. Despite being aware of the first FIR at least since 2023, the ED did not seek to rely upon it as a predicate offence until after the very FIR forming the original substratum of the ECIR had been brought to an end. This circumstance further fortifies the conclusion of this Court that the impugned addendum is vitiated by illegality, procedural impropriety, irrationality and a colourable exercise of power. M.28. From the filing of the Cancellation Report in respect of the second FIR in December 2022 until its acceptance in June 2025, there was not even a suggestion from the ED that the first FIR furnished any basis for its inclusion in the existing ECIR. The ED acted only after the Cancellation Report in the second FIR had been accepted and thereafter issued the addendum in August 2025. Having already held above that, upon acceptance of the Cancellation Report, the predicate offence forming the foundation of the second FIR stood e....
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....i that she had been illegally confined by Smt. Uma Devi and that her ornaments had been stolen. A chargesheet in the matter was filed under Sections 323/344/406/509/411/34/420 IPC and Section 12 of the Passports Act against Smt. Uma Devi and five others, who were stated to be domestic helps. There was no allegation of siphoning of funds. It was argued on behalf of the petitioners that no "proceeds of crime" were generated since the jewellery stood recovered and, therefore, no investigation under the PMLA ensued. Moreover, charges have not been framed as yet. M.32. The second FIR related to the alleged transfer of shares and monies in favour of Kanchana Rai and her minor sons during the period 2015 to 2017 by allegedly forging signatures on various documents. Smt. Uma Devi was amongst the several accused in the said FIR. The scheduled offences in the first FIR, as pointed out by Senior Counsel for the petitioners, are only Sections 411 and 420 IPC. As regards Section 420 of IPC read with Section 12 of the Passports Act, the allegation is that Smt. Uma Devi falsely represented herself as the wife of Late Dr. Prasad. It has been argued that no "proceeds of crime" could have been ge....
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....is generally thought that where there is proximity of time or place or unity of purpose and design or continuity of action in respect of a series of acts, it may be possible to infer that they form part of the same transaction." (emphasis added) M.35. In State of Jharkhand v. Lalu Prasad Yadav (supra), a 2017 decision of the Supreme Court, various defalcations and transactions allegedly undertaken by the accused in relation to the Animal Husbandry Department were considered. The Court held, in the context of Sections 218 and 219 Cr.P.C., that the defalcations did not constitute the "same transaction" since they concerned different treasuries, different years and amounts, and different allotment letters, supply orders and suppliers. The provisions relating to the "same transaction" were, therefore, held not to be attracted. Importantly, the Court also noted that "they are different sets of accused persons in different cases with respect to defalcation". M.36. It was further pointed out that there is a distinction between clubbing of cases and clubbing of FIRs, and reliance was placed upon T.T. Antony (supra), where the Supreme Court held that a single FIR ought to be ....
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....ent. The persons proceeded against are not the same. There is no direct nexus between these two sets of offences registered under separate FIRs, except that the complainant is common. Neither would they fall within the factual schematic of Satinder Singh Bhasin (supra) nor within the test laid down in Cheemalapati Ganeswara Rao (supra). In fact, the Supreme Court in Lalu Prasad Yadav (supra) also did not consider the various defalcations for which the accused was charged as constituting the "same transaction". M.39. The other aspects which Mr. Vikas Singh, Senior Counsel, stressed upon were the medical circumstances of the complainant, which, according to him, led to the second FIR being lodged in continuation of the first FIR. The diminished mental conditions of Late Dr. Mahendra Prasad have been cited as the common thread. The Court is consciously not adverting to these issues, considering that they pertain to the factual merits of the underlying disputes and would fall for determination in the respective proceedings in which they arise. The issue before this Court is a narrow one, i.e., whether the first FIR could, after a period of six years, be incorporated into an ECIR whi....
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....persons. Relevant paragraph is 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." (emphasis added) M.41. In view of the conclusions already reached that the proceedings under the ECIR itself stand quashed till subsequen....
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....tered on the basis of the first FIR for almost six years, despite the disputes between the parties being repeatedly agitated before various Courts, is a circumstance which assumes significance while examining the timing and purpose of the impugned addendum. It lends support to the petitioners' contention that the first FIR had not previously been treated by the ED as furnishing an independent basis for investigation of "proceeds of crime" under the PMLA. M.44. Whether the entirety of the jewellery was recovered and secured by the police during investigation of the first FIR is a disputed factual issue which need not be determined or commented upon by this Court in the present proceedings. What is material for the present purpose is that the addendum was sought to be incorporated into an ECIR whose original substratum had already ceased to subsist. On that ground alone, the addendum cannot survive. M.45. All coercive steps taken pursuant to and in respect of the addendum to the ECIR cannot subsist, are quashed, and status quo ante is to be restored qua the respective petitioners. N.1. To sum up, basis the deliberation and analysis above, this Court arrives at the following ....