Point of Law: 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 information is deemed essential for the discharge of their functions under relevant legislation

ORDER :

The petitioners herein have been arrayed as accused Nos.1 and 2 in the Enforcement Case Information Report (‘ECIR’ for the sake of brevity) registered by the Enforcement Directorate (‘ED’ for the sake of brevity) as ECIR/36/KCZO/2022 dated 06.09.2022. They have approached this Court seeking to quash the ECIR and all further proceedings pursuant thereto.

2. The petitioner asserts that the aforementioned ECIR arose following the registration of Crime No.376/2022 at the Valappad Police Station, which pertains to an alleged offence under Section 420 of the IPC. It was consequent to the registration of the FIR at the instance of a certain P.K. Sagar that ECIR/36/KCZO/2022 dated 06.09.2022 was drawn up, invoking the provisions of the Prevention of Money Laundering Act, 2002 (PMLA, 2002).

3. The petitioners contend that immediately after the registration of the FIR, both the petitioners and the complainant arrived at an amicable settlement and decided to resolve the issues. The petitioners approached this Court and instituted Crl.M.C.No. 4436/2022, seeking to quash all further proceedings. This Court, after getting the response from the complainant and the State, wielding its authority under Section 482 of the Cr.P.C., quashed all further proceedings in Crime No. 376/2022 at the Valappad Police Station.

4. The petitioners, relying on the observations and the law laid down by the Apex Court in the case of Vijay Madan Lal Chaudhary v. Union of India, [2022 SCC OnLine SC 929], articulate that since this Court has quashed the crime and all further proceedings, any subsequent action under the Prevention of Money Laundering Act, 2002 (PMLA, 2002) lack a valid foundation. They contend that these actions under the PMLA, 2002 are therefore liable to fail. Anchored by these assertions, the petitioners have filed this petition, seeking the following reliefs:

For these and other grounds which may be permitted to be urged at the time of the hearing, it is most humbly prayed that this Hon’ble Court may be pleased to quash Annexure-A1 Enforcement Case Information Report numbered as ECIR/36/KCZO/2022 dated 6.9.2022 and all the further proceedings arising therefrom, in the interest of justice.

5. Sri. Mahesh Jethmalani, the learned senior counsel appearing for the petitioners, as instructed by Sri. Sharan Shahier, the learned counsel, advanced the following contentions:

a) The continuation of proceedings in relation to ECIR/36/KCZO/2022 is a clear abuse of process, particularly when the predicate offence, which has its basis in Crime No. 376/2022, stands quashed by this Court by Anneuxure-A10 judgment.

b) Reliance is placed on paragraph No. 467 (v)(d) of the law laid down by the Apex Court in Vijay Madan Lal Chaudhary (supra), and it is urged in the event of the Crime involving the predicate offense being quashed by this court, there can be no offence of money laundering. To substantiate the above point, reliance is also placed on Sekar @ Sekar Reddy v. Directorate of Enforcement, [(2022) 7 SCC 370].

c) Attention of this Court is drawn to the order passed by the learned Single Judge quashing the proceedings, and it is pointed out that this Court had referred to the affidavit filed by the wherein he had stated in clear terms that he had no direct knowledge about the facts in the complaint and he does not have any evidence to prove the allegations.

6. In response, Sri. Jayasankar, the learned Central Government Counsel, advanced the following submissions:

a) After the registration of the ECIR, a detailed enquiry was carried out by the ED, and several discrepancies were noticed. These aspects are to be brought to the notice of the concerned Government Departments.

b) Placing reliance on Section 66 (2) of Act 15 of 2003, it is submitted that the said provision permits the ED or any authority specified by them to notify any other officer or authority or body of any information received or obtained by the ED which in the opinion of the ED is necessary for t