Back
KERALA HIGH COURT
Bechu Kurian Thomas, J.
South Indian Bank Ltd. – Petitioner
versus
Directorate of Enforcement and Ors. – Respondents
Crl. MC No.5127 of 2024
Decided on 9.7.2024
(A) Prevention of Money Laundering Act, 2002 – Section 3 – Indian Penal Code, 1860 – Sections 420 and 471 – Criminal Procedure Code, 1973 – Section 482 – Scheduled offences – Crime registered against respondents has resulted in a final report referring the case as civil in nature – Final report has been accepted by Chief Judicial Magistrate and predicate offence does not survive any more – Since predicate offence is not in existence, ED cannot continue its investigation on proceeds of crime emanating out of predicate offence – ED ought to have immediately closed case – When ED refuses to close ECIR, aggrieved person is entitled to knock at doors of this Court either under Article 226 of Constitution of India or under Section 482 Cr.P.C. – ECIR and all proceedings pursuant thereto hereby quashed. (Paras 6, 10, 11 and 12)
(B) Criminal Procedure Code, 1973 – Section 482 – Constitution of India – Articles 226 and 227 – Exercise of inherent jurisdiction – Any order passed under provisions of Cr.P.C can be given its full effect by issuing appropriate orders under Section 482 Cr.P.C. – Scope of power under Section 482 Cr.P.C is not limited or constricted by character or nature of order under challenge – Even an administrative order can be quashed in exercise of power under Section 482 Cr.P.C, if it is required to give effect to an order issued under the Cr.P.C or if it is necessary to secure ends of justice – As long as power exists, nomenclature under which petition is filed is not relevant, unless a special procedure is mandatorily prescribed – Power conferred on High Court under Articles 226 and 227 of Constitution and under Section 482 of Cr.P.C have no limits and only restriction is that, more power more care and caution ought to be exercised while invoking such powers. (Para 8)
Result: Crl.M.C allowed.
ORDER
Petitioner, though a de facto complainant, has approached this Court under section 482 of the Code of Criminal Procedure (for short ‘Cr.P.C’ ) seeking to quash the proceedings initiated by the Enforcement Directorate (for short ‘ED’) under the Prevention of Money Laundering Act, 2002.
2. Petitioner is a scheduled bank, which had initiated FIR.No.38/2019 of Crime Branch, Thrissur, alleging offences including Sections 420 and 471 of the Indian Penal Code 1868 against respondents 2 to 4 and others. The aforesaid offences are scheduled offences under the Prevention of Money Laundering Act, 2002 (for short PML Act). While the crime was being investigated by the Crime Branch, pursuant to the FIR, the Enforcement Directorate stepped in and commenced their investigation after registering ECIR No.KCZO/05/2019. In the meantime, the Crime Branch completed the investigation and filed a final report referring the case as a civil matter. The said report was accepted by the Chief Judicial Magistrate, Thrissur as RC.No.73/2023 on 05.01.2024. Thus the predicate offence has ended in a closure of the investigation as no crime was committed by the accused.
3. The properties which are the subject matter of mortgage with the petitioner, continue to be under attachment as per the provisions of the PML Act, and hence they claim sufficient locus standi to seek the reliefs. In view of the acceptance of the final report by the learned Magistrate, petitioner contends that the Enforcement Directorate cannot continue with the proceedings and thus the petitioner, though a de facto complainant in the predicate offence, seeks to quash the proceedings.
4. I have heard Sri. Joseph Kodianthara, learned Senior Counsel instructed by Adv. G. Chithra, learned counsel for the petitioner as well as Sri. Jayanshankar V. Nair, learned Standing Counsel for the 1st respondent. Considering the nature of the contentions urged and the order that is proposed to be issued, notices to respondents 2 to 4 are dispensed with.
5. In Vijay Madanlal Choudhary and Others v. Union of India and Others (2022 SCC online SC 929), it has been observed that “if the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or anyone claiming such property being the property linked to stated scheduled offence through him”. Thus, if the investigation into the predicate offence has ended in a refer charge, no offence under the PML Act will arise.
6. Concededly, the crime registered against respondent Nos.3 to 5 has resulted in a final report referring the case as civil in nature. The final report has been accepted by the Chief Judicial Magistrate on 05.01.2024 as per Annexure A5, which is also not disputed. In view of the above, the predicate offence does not survive any more. Since the predicate offence is not in existence, the ED cannot continue its investigation on the proceeds of crime emanating out of the predicate offence. Consequently, the ED ought to have immediately closed the case. Having not done so, petitioner is justified in approaching this Court.
7. The contention of ED that an ECIR cannot be challenged in a proceeding under section 482 Cr.P.C, though impressive at first blush, on a deeper scrutiny, is legally untenable. Though the decisions in N. Dhanraj Kochar and Others v. Director, Directorate of Enforcement and Others [2022 SCC Online (Mad) 8794, Jitendra Nath Patnaik v. Enforcement Directorate Bhubaneswar in Crl.M.C No. 2891/2023 [2023 SCC Online Ori 7026], and that of Pawan Insaa v. Director, Directorate of Enforcement [2024 SCC Online P&H 5461] were cited in support of the aforesaid contention, I respectfully disagree with the said proposition for reasons narrated hereafter.
8. Section 482 Cr.P.C saves the inherent power of the High Court. The said provision clothes this Court with the power to make such orders as may be ne
(1) Scheduled offences – When predicate offence is not in existence, ED cannot continue its investigation on proceeds of crime emanating out of predicate offence.(2) Power conferred on High Court und....
The court established that the closure of a predicate offence negates the basis for any subsequent money laundering investigation under the PML Act.
Section 66(1) of the PMLA prescribes the obligations of Enforcement Directorate (ED) to provide or facilitate the provision of pertinent information to designated government entities when such inform....
Money laundering proceedings under the Prevention of Money Laundering Act cannot be sustained without a validly registered predicate offense; if the predicate offense is quashed, so are the related m....
The court established that the offense of money laundering under PMLA cannot exist independently of a scheduled offense.
FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other.
A quashed FIR does not automatically invalidate an ECIR; the ECIR is independent and requires substantive grounds for quashing based on the merits of the predicate offence under PMLA.
Without a predicate offense, proceedings under the Prevention of Money Laundering Act cannot be sustained, as established by the Supreme Court.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
