IMPORTANT POINT
The presence of a scheduled offence legitimizes the existence of an ECIR and allows the department to continue the investigation. However, the settlement or quashing of scheduled offences in FIRs prohibits the department from initiating or continuing any proceeding, including investigation.

JUDGMENT

Amit Sharma, J. - The present petition under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 ('CrPC') seeks primarily the following prayer:

"i. Pass a writ/order/direction in the nature of certiorari thereby issuing direction to quash and set aside all proceedings and actions taken pursuant to the Enforcement Case Information Report bearing number ECIR/09/HIU/2019 dated 27.06.2019."

Background

2. Briefly stated, the facts of the case, relevant for adjudication of the present petition are as under:

i. Two FIRs, i.e., FIR No. 16/2018 dated 24.01.2018 and FIR No. 49/2021 dated 12.03.2021 were registered under Sections 420/406/120B of the Indian Penal Code, 1860 ('IPC') at PS Economic Offences Wing ('EOW'). The said FIRs were registered against the persons accused therein, including the petitioner and arose out of a similar set of facts and circumstances.

ii. In both the FIRs, the respective complainants, inter-alia, alleged that despite payment of monies in 2006-07, they did not receive possession of flats, as was promised by accused company M/s Uppal Chadha Hi-Tech (hereinafter referred to as the 'company'). It was alleged that in his capacity as a Director of the said firm, the petitioner was responsible for siphoning of the funds collected from the complainants.

iii. During the pendency of the respective trials in FIRs No. 16/2018 and 49/2021, the accused persons therein settled the dispute with the respective complainants amicably.

iv. In FIR No. 16/2018, the accused persons moved an application for compounding under Section 320 of the CrPC before the learned Trial Court, which was allowed vide order dated 19.11.2019 passed by Sh. Deepak Sherawat, Chief Metropolitan Magistrate, South-East, Saket and the accused persons were accordingly acquitted for offences under Sections 406/420/120B of the IPC.

v. FIR No. 49/2021 was quashed by a coordinate bench of this Court, vide order dated 22.12.2022 passed in CRL.MC. 7083/2022 titled 'Uppal Chadha Hi Tech Developers Pvt. Ltd. & Ors. v. State & Ors.'.

vi. The present ECIR was lodged on 26.07.2019 by the Directorate of Enforcement/respondent no. 2 ('the department') against M/s Uppal Chadha Hi-Tech, Harmandeep Singh, Gurjit Singh Kochar, Kritika Gupta, Rajinder Singh Chadha - the petitioner and other unknown persons.

vii. After the ECIR was lodged, the department carried out a search and seizure on 18.11.2022 under Section 17(1) of the Prevention of Money Laundering Act, 2002 at the office and residential premises of the petitioner. Various phones, documents, digital records and cash was seized. Follow-up searches were conducted on 19.11.2022, 22.11.2022 and 09.12.2022. Pursuant to the search and seizure, the department filed an application under Section 17(4) of the PMLA for retention of records and digital devices seized on 18.11.2022, 19.11.2022, 22.11.2022 and 09.12.2022.

viii. A show-cause notice under Section 8(1) of the PMLA, alongwith recording of reasons dated 21.12.2022 was issued by the Adjudicating Authority to the petitioner, for filing of a written response, on or before 09.02.2023, as to why the department's application under Section 17(4) of the PMLA should not be allowed.

Submissions of behalf of the Petitioner/Rajinder Singh Chadha

3. Learned Senior Counsel appearing on behalf of the petitioner submitted that the basis of the present ECIR, i.e., the predicate offences in FIRs No. 16/2018 and 49/2021 now stand compounded and quashed, respectively. As a consequence of that, the jurisdictional fact which formed the basis of the department's investigation has now come to an end and hence, the ECIR and the subsequent proceedings cannot continue any longer. Attention of this Court was drawn to the application under Section 17(4) of the PMLA filed on behalf of the department, wherein it has been clearly stated that the ECIR in question was registered on account of FIRs No. 16/2018 and 49/2021. It was submitted that it is thus