High Court Can Exercise Inherent Power U/S 482 CrPC To Quash ECIR Registered By Enforcement Directorate: Kerala High Court

Justice Bechu Kurian Thomas observed:

“Any order passed under the provisions of the Cr.P.C can be given its full effect by issuing appropriate orders under section 482 Cr.P.C. The scope of the power under section 482 Cr.P.C is not limited or constricted by the character or nature of the order under challenge. Even an administrative order can be quashed in exercise of the power under section 482 Cr.P.C, if it is required to give effect to an order issued under the Cr.P.C or if it is necessary to secure the ends of justice.”

The respondents were alleged of committing some offences which are scheduled offences under Prevention of Money Laundering Act (PMLA). While the crime was being investigated by the Crime Branch, the Enforcement Directorate (ED) registered an ECIR. The Crime Branch filed a final report saying that the issue was a civil matter. This report was accepted by the Chief Judicial Magistrate. Even after this order, ED did not release the properties it had attached under PMLA. The petitioner filed this case under S. 482 of Cr.P.C to quash the proceedings by ED.

The Court referred to Vijay Madanal Choudhary and Others v Union of India and Others (2022) which held that no offence of money laundering can stand when a person is discharged, acquitted or the criminal case against him is quashed by a competent court.

The Court rejected the argument of ED that ECIR cannot be challenged under Section 482 of Cr.P.C. Further, the court observed, unless a special procedure is mandated, it does not matter under what nomenclature the petition is filed as long as the court has power.

The Court referred to R. P. Kapur v State of Punjab (1960) where the Supreme Court laid out cases where court can exercise its inherent power to quash the proceedings:

1. Where there is a legal bar against the institution or continuation of the case
2. Where the allegation in the FIR or complaint accepted in its face value does not constitute the offence alleged
3. Where the allegation constitutes an offence, but there is no legal evidence adduced or the evidence adduced clearly and manifestly fails to prove the charge.

The Court held that the ED should on its own, close the ECIR once the predicate offence is quashed or the accused is acquitted or discharged. However, if the ED does not do so, the aggrieved person can approach the High Court under Article 226 of the Constitution or Section 482 of Cr.P.C.

The Court observed that the order of the Judicial Magistrate accepting the final report of the Crime Branch is an order issued under Cr.P.C. To give full effect to that order, High Court can exercise its inherent power to quash the ECIR when it continues to exist without legal authority.

Counsel for Petitioner: Senior Counsel Adv. Joseph Kodainthara, Adv. G. Chitra

Counsel for Respondent: Adv. Jayashankar V. Nair

Case No: Crl.M.C. 5127/ 2024

Case Title: South Indian Bank v Directorate of Enforcement and Others

Citation: 2024 LiveLaw (Ker) 493