Bombay High Court Rejects Mehul Choksi's Challenge To ED’s Application Seeking His Declaration As A Fugitive Economic Offender

The Bombay High Court on Thursday rejected an application filed by businessman Mehul Choksi challenging an application filed by the Enforcement Directorate (ED) to declare him a fugitive economic offender (FEO) in the Punjab National Bank fraud case.

Justice Sarang V Kotwal observed that the ED’s application complied with the form and manner prescribed in the Fugitive Economic Offenders Act, 2018 (FEO Act) and FEO Rules.

“I do not find any infirmity in the verification and even otherwise I find that all the requirements under Section 4 of the FEO Act and under Rule 3 of the FEO Rules are properly complied with in this case. Therefore, I do not see any reason to interfere with the impugned order and hence the application is rejected”, the court observed.

In February 2018, CBI registered an FIR against Choksi under sections 120-B (criminal conspiracy) and 420 (cheating) of the IPC and sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988. CBI filed a charge sheet against Choksi May 2018. In July 2018, ED registered an ECIR and filed a complaint under section 45 of the Prevention of Money Laundering Act, 2002 (PMLA).

In July 2018, the ED filed an application under section 4 of the FEO Act, 2018, seeking Choksi's declaration as a fugitive economic offender and confiscation of his properties. The Special PMLA Judge rejected Choksi’s application seeking the dismissal of ED’s application. Thus, he filed the present application before the High Court.

Advocate Vijay Aggarwal for Choksi contended that the application's averments should be supported by a proper affidavit. The verification clause filed with the ED’s application did not comply with section 297 of the CrPC and the Criminal Manual issued by the Bombay High Court, he argued. He also claimed that ED’s application contained various false statements.

Aggarwal argued that unless there is a specific inconsistency with the FEO Act, the CrPC, including section 297, are applicable. He argued that the overriding effect of the FEO Act in sections 21 and 22 did not affect the CrPC as there was no inconsistency. Hence, the FEO Act should be read in addition to the CrPC, he said.

Advocate HS Venegavkar for the Enforcement Directorate argued that the FEO Act provided its own special procedure, and when such a procedure was prescribed, the provisions of the CrPC should not be applied. He emphasized that neither the FEO Act nor the FEO Rules required filing an affidavit with the application.

The court held that the verification clause in ED’s application satisfied the requirements of the criminal manual of the court as the deponent (deputy director of ED) clearly stated that the information in the application was based on his knowledge derived from records.

The court agreed with Venegavkar’s contention that the FEO Act provided its own special procedure which should be followed in this case.

“Section 5 of Cr.P.C. provides that nothing contained in the Cr.P.C., in the absence of specific provision to the contrary, affect any special law or any special form of procedure prescribed by any other law”, the court added observing that procedure prescribed under FEO Act is not affected by CrPC as per section 21 (overriding effect to FEO Act) and section 5 (saving clause) of the CrPC.

“section 4 of the FEO Act and Rule 3 of the FEO Rules are made to further the objective of this Act and they cannot be bypassed by taking recourse to the other provisions of Cr.P.C. to contend that the affidavit was not proper”, the court observed.

Case no. – Criminal Application No. 1505 of 2019

Case Title – Mehul Choksi v. State of Maharashtra and Anr.

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