THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HON’BLE SMT.JUSTICE TIRUMALA DEVI EADA Date:25.02.2026 Between:

Sukesh Gupta and two others …Petitioners And Directorate of Enforcement, Represented by Shiv Kumar Gupta, Assistant Director, Hyderabad Zonal Office, Basheerbagh, Hyderabad and another.

… Respondent

ORDER:

This Writ Petition is filed seeking to issue a writ of Certiorari calling for the records and to declare the action of the respondent in registering ECIR/HYZO/34/2020 as arbitrary and illegal and consequently set aside all the consequential proceedings emanating out of ECIR/HYZO/34/2020.

2. Heard Sri Rajesh Kumar Herur, learned counsel for the petitioners, Sri Anil Prasad Tiwari, learned Standing Counsel for respondent No.1 and Sri Bharat Reddy Bommineni, learned counsel for the respondent No.2.

3. Learned counsel for the petitioner has submitted that the predicate offence is not in existence and that FIR No.41 of 2020 was quashed by this Court vide order dated 22.11.2022 in Crl.P. No.1559 of 2020, and hence, continuation of the offence under the Prevention of Money Laundering Act (for short ‘PMLA’) is not tenable. The genesis of any PMLA case would be from the predicate offence and once the predicate offence itself is closed, there is no point in continuing the proceedings under PMLA. Thus, there is no case at all against the petitioners herein. He further has submitted that while quashing the FIR No.41 of 2020 in Crl.P. No.1559 of 2020, the High Court has observed that the dispute between the parties is of civil nature and there is no occurrence of the schedule offence for giving rise to proceeds of crime and that the precondition for the existence of predicate offence is not triggered and hence, the proceedings under the provisions of PMLA would be non est in the eye of law. He, therefore, prayed to quash the proceedings against the petitioners. He relied upon the decision of the Apex Court in Vijay Madanlal Chowdary and others v. Union of India and others, 2022 SCC OnLine SC 929 wherein it was held that:

“If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such property being the property linked to stated scheduled offence through him.”

4. The learned Standing Counsel for the respondent No.1 has submitted that in Crl.P. No.1559 of 2020 the entire offence is not quashed but, the offence is quashed only against three accused and that the proceedings against the companies i.e. accused Nos.1 and 2 are not quashed. He further has submitted that inspite of the FIR getting quashed in the predicate offence, the ECIR registered by the Enforcement Directorate is still sustainable and that this Court cannot quash the proceedings in ECIR. In case, if the offence is not made out against the petitioners during the course of investigation, the ED can always file a closure report under Section 44(1)(b) of PMLA in view of the decision laid down by the Apex Court in Vijay Madanlal Chowdary’s case (1 supra) and therefore, the petition lacks merit and hence, prayed to dismiss the petition. He also relied upon the decision of the High Court of Punjab and Haryana in Pawan Insaa v. Directorate of Enforcement, 2024 Supreme (P&H) 295

5. Perused the record.

6. It is borne out by record that the petitioners in the representative capacity of partner of Ashi Realtors along with Neeharika Infrastructures Private Limited approached M/s. SREI Equipment Finance Limited (for short ‘SEFL’) and availed loan by mortgaging immovable properties to the satisfaction of the SEFL.

When they committed default in payment of installments, one of the properties was sold on which SERI had a right of second charge and the Associate Vice President of SERI has lodged a complaint, based on which the police registered FIR No.41 of 2020 dated 28.02.2020 wherein the petitioners and one R