PMLA | Stay On FIR Doesn't Bar ED From Registering ECIR: Punjab & Haryana High Court

The Punjab and Haryana High Court has made it clear that stay on a FIR lodged on a predicate offence does not mean that the Enforcement Directorate (ED) cannot register an Enforcement Case Information Report (ECIR) for a money laundering case under Prevention of Money Laundering Act, 2002 (PMLA).

The observation came in response to the plea seeking quashing of a money laundering case in a matter pertaining to allegations on builders for duping the investors after obtaining the licence to develop a housing project in Gurugram.

A CJM Court under Section 156 (3) Cr.P.C. issued a direction to the police to register FIRs and thereafter FIR was lodged. However, the Single Bench of the High Court stayed the operation of the CJM's orders and also the further proceedings in the consequential FIRs.

While refusing to quash the money laundering case, a division bench of Justice Arun Palli and Justice Vikram Aggarwal observed, "stay of proceedings in the FIRs would, at best, mean no further investigation in the FIRs during operation of the interim order but cannot be stretched to mean that even an ECIR could not have been recorded."

The accused, Sikander Singh and others had challenged the ECIR on the ground that the single bench of High Court, in a separate proceeding, had stayed the CJM's order for the registration of a FIRs against them.

Therefore, the ED could not have registered a money laundering case in the meanwhile in the same matter, it was argued.

The main argument of the petitioners were that once the basic order passed on the complaint filed under Section 156(3) Cr.P.C. had been set aside, the FIRs under Section 406, 420, 467, 468, 471, 120-B IPC, would cease to be in operation and would be rendered nullity.

It was further argued that once, the operation of the CJM orders, passed on the complaint filed under Section 156(3) Cr.P.C. and further proceedings in the consequential FIRs had been stayed by the single bench of High Court, the ECIR could not have been registered.

After considering the submissions, the Court noted that, the ECIR was not recorded on account of CJM orders.

It was further noted that the FIRs which were stayed were being investigated in the ECIR but apart from those FIRs, there are a number of other FIRs against the petitioners which are being investigated in the ECIR in question.

The Court opined that stay of proceedings in the FIRs would, at best, mean no further investigation in the FIRs during operation of the interim order but cannot be stretched to mean that even an ECIR could not have been recorded.

It also opined that when the single bench passed an order on interim stay on the FIR registered against the petitioner, the Enforcement Directorate was nowhere in the picture, in the complaints or in the petitions filed, which challenged the CJM's order. Hence "Enforcement Directorate was not bound" by the single bench's decision.

Reliance was placed upon Vijay Madanlal Choudhary and Others Vs. Union of India and Others, to underscore that even if one of the petitioners was not shown to be an accused, he could be prosecuted under the PMLA so long as the scheduled offence exists.

The scheduled offence,  is not only in FIRs which were stayed but also but also in other FIRs filed against the petitioner, the Court noted.

The Court said it is also clear from Vijay Madanlal Choudhary case, that since there were other FIRs also, proceeds of crime cannot be ruled out and, therefore, it cannot be said that no offence of money laundering can be said to have been committed.

Stating that the the case is only at the stage of investigation and nothing can be said conclusively at this stage, the Court dismissed the petition.

Appearance: Senior Advocates Ashok Aggarwal and Vikram Chaudhari with Advocates Hari Pal, Mukul Aggarwal, Shrenik Jain and Hargun Sandhi for the petitioners.

Additional Solicitor General SV Raju, Deputy Solicitor General JS Lalli, and Senior Panel Counsel Lokesh Narang and Shobit Phutela for the ED.

Sikandar Singh v. Directorate of Enforcement and another

Citation: 2024 LiveLaw (PH) 74

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