ORDER :

1. This Criminal Petition, under Section 482 of the Code of Criminal Procedure, 1973, is filed by the petitioner, seeking to quash the complaint and investigation in ECIR/05/HYZO/2014, dated 25.02.2014 on the file of Joint Director, Enforcement Directorate, Hyderabad Zonal Office, Hyderabad.

2. Heard the submissions of Sri M.P. Chandramouli, learned senior counsel and Sri Dil Jit Singh Ahluwalia, learned counsel, appearing on behalf of Sri H.Rajesh Kumar, learned counsel for the petitioner, Sri T. Surya Karan Reddy, learned Additional Solicitor General of India appearing on behalf of respondent No. 1, Sri Manu, learned counsel for respondent No. 2 and perused the record.

3. Learned senior counsel appearing on behalf of the petitioner would inter alia submit that the petitioner is the Director of M/s. MBS Group of companies. The subject ECIR registered against the petitioner and others is liable to be quashed, as the ingredients of Section 3 of Prevention of Money Laundering Act, 2002 (for short ‘PMLA’) are not made out. Sine qua non for Section 3 of PMLA is, firstly, it has to be connected to ‘proceeds of crime’, as defined under Section 2(u) of PMLA and secondly, it has to be projected as untainted property. Further, to constitute offence under PMLA, three ingredients should be satisfied: (i) Placement, which surreptitiously injects the ‘dirty money’ into the legitimate financial system; (ii) Layering, which conceals the source of the money through a series of transactions and bookkeeping tricks and (iii) Integration, where the laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals intend. There is distinction between commission of offence under PMLA and commission of scheduled offence. In the instant case, the CBI, ACB, Hyderabad, registered a case in FIR No. RC-01(A)/2013, dated 03.01.2013, against the petitioner and others for the offences under Sections 120B r/w 409, 420, 465, 471, 477A of IPC and Section 13(2) read with Section 13(1)(d) of The Prevention of Corruption Act, 1988 (for short ‘PC Act’) for allegedly causing wrongful loss to respondent No. 2/MMTC Limited, a public sector enterprise, to a tune of Rs. 194 crores. Though the CBI registered FIR against ten accused persons, the subject ECIR was registered against nine accused persons only. A perusal of the subject ECIR would show that there is no whisper about any property connected/acquired with proceeds of crime. On 25.11.2005, MMTC sent the first MOU for signatures of MBS Impex Pvt. Ltd with the terms already agreed to be put into writing for its record. For the years 2005-11, gold was purchased by MMTC from foreign buyers in USD, with a credit period of 90/180 days. As per the bullion drill, MMTC was mandated to hedge its exposure, subsequently debiting the expenses from the account of the purchaser. It was also mandated to monitor all open rupee transactions on a daily basis and in case the margin is reduced from 5% to 2% then to either take more margin or to close the transaction. From the Financial Year 2005-11 to 2010-11, MBS purchased gold amounting to over Rs. 20,000 Crores from MMTC without any dispute, whatsoever. During July, 2011, Foreign Exchange fluctuation occurred and the rupee value suddenly crashed up to 27% due to which the alleged liability arose. On 05.10.2012, the second MoU was signed between MBS & MMTC, whereby, the MMTC, after due diligence, fixed the total liability of MBS as Rs. 181.39 crores as on 31.03.2012 and estopped itself from altering the said liability further. Thereafter, MMTC engaged M/s. KPMG to conduct forensic audit to ascertain liability of MBS. On 31.12.2012, the MMTC lodged a complaint with the CBI, which was registered as RC No. 1(A)/CBI/Hyd, for the offences under Sections 120B r/w 409, 420, 465, 471 and 477A of IPC and Section 13 of PC Act. Further, there was no rendition of accounts by MMTC. In fact, MMTC itself owes nearly Rs. 270 crores to MBS, as per Project