The High Court overstepped its authority by directing the Enforcement Directorate to register an ECIR without sufficient justification, emphasizing the discretion of the Directorate under the Prevention of Money Laundering Act.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Section 3 - Writ appeals - High Court directed Enforcement Directorate to register Enforcement Case Information Report (ECIR) based on prima facie conclusion of predicate offence - Court found no justification for such a drastic order, quashing the direction to register ECIR - Enforcement Directorate has discretion to initiate proceedings under the Act. (Paras 4-5)

Facts of the case:
The appellant challenged the High Court's decision directing the Enforcement Directorate to register an ECIR against certain individuals for misappropriation, breach of trust, and cheating, without sufficient justification for excluding others from the FIR.

Findings of Court:
The High Court's directive for the ECIR was set aside, leaving it to the Enforcement Directorate to decide on proceeding under the Act.

Issues: The main issue was whether the High Court had the authority to direct the registration of an ECIR based solely on a prima facie finding of a predicate offence.

Ratio Decidendi: The court ruled that the High Court overstepped its bounds by issuing a directive to register an ECIR without adequate justification, emphasizing that the Enforcement Directorate retains discretion in such matters.

Result: Appeals allowed.

O R D E R

1. As per the office report, all the respondents have been served. The second to fourth respondents are represented by a learned counsel.

2. Leave granted.

3. The explanation of the appellant in the affidavit filed pursuant to the order dated 27^th January, 2025 is hereby accepted.

4. While dealing with the writ appeals, by the impugned judgment, the Division Bench of the High Court directed the Enforcement Director to register an Enforcement Case Information Report (for short, “the ECIR”). Paragraphs 6 and 7 of the impugned judgment read thus:

“6. On perusal of the order passed as extracted above, it is evident that the FIR has been only registered firstly against only the Secretary. It is wholly intriguing as to how and in what manner the other surcharge persons has been let off with no criminal case. We would like to have the information from tho Home Secretary and Additional Chief Secretary, Co- operative Societies by way of an affidavit, explaining the circumstances and the reasons of not registering the FIR against the other persons, as it is settled law that both criminal and civil proceedings for recovery Signature Not Verified Digitally signed by ASHISH KONDLE Date: 2025.03.06 Reason:

can go side by side which will also state the stage of investigation or submissions of final report in the aforementioned FIRs.

7. Prima facie, it is a case of breach of trust and cheating which which is a predicate offence as per the provisions of Section 3 of the Prevention of Money Laundering Act , 2002. Since we had issued a notice to Mr.Jayasankar, Standing Counsel for the Enforcement Directorate, we thus direct the Enforcement Director to register an ECIR as provided under the Act against all the persons involved, for misappropriation, breach of trust, cheating as Well as offences under the PC Act forthwith.”

5. According to us, the High Court had no reason to pass a drastic order of directing the Enforcement Directorate to register an ECIR only because the High Court prima facie came to a conclusion that a predicate offence exists. Therefore, we set aside that part of the impugned judgment by which a direction is issued to the Enforcement Directorate to register an ECIR. Therefore, the ECIR registered on the basis of the impugned judgment is hereby quashed and set aside. We leave it to the Enforcement Directorate to take a call on the question of initiating proceedings under the Prevention of Money-laundering Act, 2002.

6. The Appeals are allowed on the above terms.

..........................J.

(ABHAY S. OKA)

..........................J.

(UJJAL BHUYAN)

NEW DELHI;

MARCH 03, 2025.

ITEM NO.64 COURT NO.4 SECTION XI-A S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS PETITION(S) FOR SPECIAL LEAVE TO APPEAL (C) NO(S). 2987-2988/2025 [Arising out of impugned final judgment and order dated 04-12-2024 in WA No. 1861/2024 and WA No. 1845/2024 passed by the High Court of Kerala at Ernakulam]

R.MADHAVAN PILLAI PETITIONER(S)

VERSUS RAJENDRAN UNNITHAN. S & ORS. ETC. RESPONDENT(S)

(IA NO.54822/2025 -PERMISSION TO BRING ON RECORD SUBSEQUENT EVENTS)

Date : 03-03-2025 This matter was called on for hearing today.

CORAM : HON'BLE MR. JUSTICE ABHAY S. OKA HON'BLE MR. JUSTICE UJJAL BHUYAN For Petitioner(s): Mr. Dama Seshadri Naidu, Sr. Adv.

Mr. Arun Chandran, Adv.

Mr. P.S. Sudheer, AOR Mr. Rishi Maheshwari, Adv.

Ms. Anne Mathew, Adv. Mr. Bharat Sood, Adv.

Mr. Jai Govind M J, Adv.

For Respondent(s): Mr. C.K. Sasi, AOR Ms. Meena K. Poulose, Adv.

UPON hearing the counsel the Court made the following

O R D E R