FIR In Predicate Offence Stands Quashed Based On Settlement, ED Complaint Cannot Survive: Delhi High Court

The Delhi High Court has quashed an ECIR and proceedings arising therefrom, observing that the predicate offence had already been quashed and the order to that effect had attained finality.

Earlier, the Court had taken a prima facie view in the case that since the FIR had been quashed on the basis of settlement, the ECIR also needed to be closed. Accordingly, investigation in the ECIR had been stayed.

Notably, the FIR had been registered against the petitioners under Sections 409/420/467/468/471/120B IPC on the allegations of embezzlement and misappropriation of a loan disbursed by Yes Bank, reduction of equity shareholding of the complainant and falsification of accounts.

Subsequently, the matter was settled between the complainant and the petitioner. A no-dues certificate was also issued in its favour by Yes Bank.

Advocate Giriraj Subramanium appearing for the petitioners contended that the ED complaint was not maintainable. To buttress his argument, he placed reliance on Vijay Madanlal Choudhary v. UOI.

ED counsel Zoheb Hossain opposed the argument and asserted that the FIR was quashed on the basis of settlement. He drew attention of the Court to Directorate of Enforcement v. Gagan Deep Singh, a case where the issue as to whether PMLA proceedings would survive upon acquittal/discharge of accused in a scheduled offence is pending before the Supreme Court.

In arriving at the decision to quash ED complaint, Justice Amit Bansal took note of the following excerpt from Vijay Madanlal Choudhary:

“467. … (d) … 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.”

The Court also considered decisions in Nik Nish Retail Ltd. v. Assistant Director, Enforcement Directorate, 2022 SCC OnLine Cal 4044 and Manturi Shashi Kumar v. Director, Directorate of Enforcement, 2023 SCC OnLine TS 1098, where ED complaints were quashed because the predicate offence did not survive. It was further noted that SLP against Nik Nish Retail Ltd. had been dismissed by the Supreme Court.

Counsels for Petitioners: Mr. Giriraj Subramanium, Mr. Simarpal Singh Sawhney, Mr. Akhilesh Talluri and Mr. Ravi Pathak, Advocates

Counsels for Respondents: Mr. Anurag Ahluwalia, CGSC for UOI

Mr. Zoheb Hossain, Spl. Counsel with Mr. Vivek Gurnani and Mr. Kartik

Sabharwal, Advocates for ED

Case Title: Nayati Healthcare and Research NCR Pvt. Ltd. and Ors. through its Authorized Representative Sh. Satish Kumar Narula & Ors. v. Union of India Ministry of Home Affairs through its Standing Counsel & Anr.

Citation: 2023 LiveLaw (Del) 982

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