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IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M.Subramaniam, V.Sivagnanam, JJ.
Vijayraj Surana - Petitioner
Versus
Assistant Director, Enforcement Directorate - Respondent
W.P.Nos.14782, 14786 & 14787 of 2024 and W.M.P.Nos.16016 to 16024 of 2024
Decided On : 28-08-2024
| Table of Content |
|---|
| 1. allegations of money laundering against petitioner. (Para 2 , 3 , 4) |
| 2. petitioner argues for exoneration due to quashing of fir. (Para 5 , 6 , 7) |
| 3. respondent states ecir is valid regardless of fir status. (Para 8 , 9 , 10) |
| 4. quashing of fir does not invalidate ongoing complaints. (Para 12 , 13 , 14 , 15 , 16 , 17) |
| 5. pmla operates independently from scheduled offences. (Para 19 , 20 , 21) |
| 6. discussion on the distinctions between fir and ecir. (Para 22 , 23 , 24) |
| 7. distinction between ecir and fir emphasized. (Para 25 , 26 , 27 , 28) |
| 8. not all quashed firs lead to quashing of ecir. (Para 32 , 34 , 36 , 39 , 40) |
| 9. conclusion that quashing of fir does not automatically quash ecir. (Para 33) |
| 10. technical quashing of fir does not affect ecir. (Para 42 , 43) |
| 11. petition for quashing ecir dismissed. (Para 45 , 46) |
ORDER :
S.M. SUBRAMANIAM, J.
| Table of Contents | ||
| I. | FACTUAL MATRIX | |
| II. | CONTENTIONS OF THE PETITIONER | |
| III. | REPLY BY RESPONDENT | |
| IV. | DISCUSSIONS | |
| A) | LEGAL GROUNDS ON WHICH FIR PERTAINING TO THE SCHEDULED OFFENCE WAS QUASHED | |
| B) | SCHEDULED OFFENCE OF SECTION 447 OF THE COMPANIES ACT, 2013 IS STILL PENDING AGAINST THE PETITIONER | |
| C) | PMLA IS A SUI-GENERIS LEGISLATION | |
| D) | SECTION 3 OF PMLA IS A STANDALONE PROVISION | |
| E) | ECIR CANNOT BE EQUATED WITH FIR | |
| F) | DELIBERATIONS ON THE PRINCIPLE OF AUTOMATIC QUASHING OF ECIR ONCE FIR STANDS QUASHED | |
| G) | IMPLICATIONS OF AUTOMATIC QUASHING OF ECIR BASED ON FIR QUASH | |
| V. | CONCLUSION | |
Under assail are the proceedings of the Enforcement Directorate in ECIR Nos.CEZO-I/05/2019 dated 27.12.2019, CEZO-I/37/2020-dated 25.09.2020 and CEZO-I/42/2020 dated 24.12.2020.
I. FACTUAL MATRIX:
2. The crux of the allegations against the petitioner under Prevention of Money Laundering Act, 2002, [hereinafter referred as 'PMLA'] complaint are that they have obtained loans from IDBI Bank to the tune of Rs.1301.76 Crores and Rs.1495.76 Crores from the same IDBI Bank and from the SBI Bank, Rs.1188.56 Crores. The loan borrowed by the said companies have facilitated mis-appropriation, manipulation of books of accounts through fictitious accounts and conversion of property of SIL by way of No.(1) Capital advances to potentially related party, (2) Sales and purchase with potentially related properties (3) bilateral transactions with properties related amongst themselves.
3. Thereafter, the petitioner and the company for the purpose of routing of funds borrowed money from one Mr.Gowtham Raj Surana to the tune of Rs.33,09,80,860/- for Global Industries, Rs.14,53,95,350/- for Prince Enterprises and Rs.20,47,69,749/- for Supreme Corporation. Totally, Rs.68,11,45,959. Similarly, from Mr.Shantilal Surana, a total sum of Rs.62,65,19,112/- was borrowed from the above 3 companies, namely, for Global Industries, Prince Enterprises, and for Supreme Corporation. The similar transaction was done in the name of Mr.Vijayraj Surana to the tune of Rs.74,65,14,732 /- and in the name of Mr.Dinesh Chand Surana to the tune of Rs.80,99,23,739/-.
4. Thereafter, during the course of investigation, the properties acquired by M/s Karwalal and Company has been attached vide Provisional Attachment Order No.09/2022, dated 01.08.2022, as it been derived from proceeds of crime and confirmed by Adjudicating Authority vide order dated 27.01.2023 (O.C.No.1800/2022). The petitioner was also made as a defendant in the impugned proceedings in O.C.No.1887 of 2023 because the properties in possession of Mrs.Alka Surana, w/o. Mr.Vijayraj Surana (defendant No.7 in the OC No.1887 of 2023) and Mr.Mitesh Surana S/o. Mr.Vijayraj Surana (defendant 20 in the OC No.1887 of 2023) have been attached vide provisional Attachment order No.17/22 date 26.12.2022 on the reasonable belief that the same had been acquired out of the proceeds of crime generated out of the commission of offences by the company, wherein Mr.Vijayraj Surana was promoters, Managing Director of M/s.Surana Corporation Limited and Director in other firms. Against the said order of Adjudicating Authority, the petitioner has filed a
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.
FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other.
The court established that the offense of money laundering under PMLA cannot exist independently of a scheduled offense.
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 pro....
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....
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....
The Prevention of Money Laundering Act proceedings cannot survive if the predicate offences linked to them are closed by the court, indicating the non-existence of 'proceeds of crime'.
Prosecution under the Prevention of Money Laundering Act, 2002 is not sustainable without a registered scheduled offence, as established by the Supreme Court in Vijay Madanlal Choudhary.
Without a predicate offense, proceedings under the Prevention of Money Laundering Act cannot be sustained, as established by the Supreme Court.
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