1. The petitioner is before this Court calling in question proceedings instituted by the Enforcement Directorate in No. ECIR/BGZO/68/2022 and all further proceedings taken thereto.

2. Heard Sri Sandesh J.Chouta, learned senior counsel appearing for the petitioner and Sri A.R.L. Sundareshan, learned Additional Solicitor General along with Sri Madhukar Deshpande, learned Special Public Prosecutor for the respondent.

3. Sans details, facts in brief, are as follows:-

The petitioner claims to be a businessman by profession, a civil contractor and a Member of the Gram Panchayat of Gour Village Panchayat, Kalaburgi. A crime comes to be registered against the petitioner in Crime No.48 of 2022 alleging his involvement in the recruitment process for the selection of Police Sub-Inspectors conducted by Government of Karnataka on 03-10-2021. The allegation against the petitioner was that at the time of conduct of examination and evaluation, some candidates had manipulated their Optical Mark Recognition (‘OMR’) sheet and had thereby committed fraud by forging certain documents. The role of the petitioner was, he also found to have abetted the said crime. It is therefore, the aforesaid crime comes to be registered against the petitioner for offences punishable under Sections 109, 114, 120, 120B, 409, 420 r/w 34, 36, 37 and 149 of the IPC.

4. On the aforesaid malpractice in the conduct of examination and evaluation, demand arose that investigation be directed to be conducted. Therefore, the State Government transferred the investigation of crime to the Crime Investigation Department (‘CID’ for short). The CID took up investigation and found involvement of the petitioner along with several other persons. Various crimes come to be registered in various Police Stations of Kalaburagi District and all over the State. In all about 10 crimes are registered. After release of the petitioner on bail, the petitioner prefers a criminal petition before the Kalaburagi Bench of this Court in Criminal Petition No.200948 of 2022 and connected cases seeking a direction to club all the cases together for the purpose of trial, as by then 12 FIRs were pending with the same cause of action and the petitioner was accused in most of the crimes. This Court, in terms of its order dated 27-09-2022, rejected the criminal petition observing that it was open for the petitioner to approach the concerned District Court or trial Court for clubbing of cases and try it together. This was called in question before the Apex Court by the petitioner. The Apex Court disposed of the Special Leave Petition directing the petitioner to approach this Court seeking clubbing. By then, the charge sheet had been filed by the Police after investigation in which the petitioner had also been arrayed as accused in C.C.No.1465 of 2023 and C.C.No.148 of 2022.

5. Pursuant to the order passed by the Apex Court, the matter was taken up before the Kalaburagi Bench of this Court in Criminal Petition No.200189 of 2023 seeking clubbing of all the cases where the petitioner was arrayed as accused. This Court, in terms of its order dated 17-04-2023, directed not to precipitate the action against the petitioner until further orders. During the pendency of the proceedings before the Kalaburagi Bench, a notice comes to be issued by the 2nd respondent/Director of Enforcement on 12-05-2023 directing the petitioner to appear for investigation in a proceeding which had been initiated under the Prevention of Money Laundering Act, 2002 (‘the Act’ for short). The petitioner seeks time and places the order passed by the Kalaburagi Bench that no precipitative action shall be taken against him. Repeated summons were issued to the petitioner directing his appearance. It is this that drives the petitioner to this Court in the subject petition.

6. The learned senior counsel Sri Sandesh J.Chouta would vehemently contend that this Court had directed that no precipitative action shall be taken against the petitioner till further orders. In the light of the said order, it was not open to the Enforcement Directorate to initiate or continue proceedings since there is an interim order of stay staying all further action in the predicate offence. It is his submission that the predicate offence forms the foundation for registration of proceedings under the Act. That having been interdicted, it is his submission that it would not be open for the Enforcement Directorate to continue the proceedings. He would seek stay of all further proceedings in the cases at hand till conclusion of criminal proceedings i.e., predicate offence. He would seek to place reliance upon the judgment of the Apex Court in the case of VIJAY MADANLAL CHOUDARY v. UNION OF INDIA1 .

7. On the other hand, the learned counsel Sri Madhukar Deshpande would vehemently refute the submissions contending that the petitioner has given up his claim for quashment of proceedings against him and has only restricted his prayer for clubbing of all cases. Therefore, the petitioner having given up his prayer for quashment in all the proceedings relating to the schedule offence/predicate offence the stay of investigation in any other cases qua the petitioner cannot be made applicable to the petitioner. He would submit that the Apex Court in a subsequent judgment in the case of Y.BALAJI v. KARTHIK DESARI2 has clearly interpreted that merely because there is an interim order of stay in the predicate offence, the hands of the Enforcement Directorate need not be tied. He would seek dismissal of the petition.

8. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.

9. It is evident from the said chart that the complainants in all the cases are not the same. Even all the accused are not same except this petitioner who is alleged as kingpin of the PSI scam and who is the master mind behind the alleged offence. The offence are not same. Place of offence is different and only in three cases, the charge sheets are filed. It is alleged that the petitioner in all these petitions has committed the alleged offence by providing blue-tooth device to the candidates by taking the money, who have appeared for the PSI examinations and with the help of blue-tooth device, some of the candidates have written the exam in different exam centers illegally. Ofcourse, the matters require investigation in several cases and still investigation is going on. As stated by learned State Public Prosecutor, that in view of the nature of the offences, the amount involved, the magnitude of the cases involved and as public servants are involved, there may be chances that investigation officer after investigation may file charge sheet invoking the offences under Prevention of Corruption Act, Prevention of Money Laundering Act and also under Organised Crime Act and other different offences may be invoked. Therefore, the decision of Hon'ble Supreme Court in the case of Abishek Singh Chauhan referred supra will not help the petitioner at this stage.

10. On the other hand, the decision in the case of State of Bihar Vs. Anil Singh Alias Anil Kumar Kingh and others referred supra is squarely applicable to this case and it is for the petitioner to apply to the concerned Court seeking clubbing of the trial of the cases which are to be tried together and if any such applications are filed by the petitioner, the concerned Court shall decide the matter on merits. It is also open for the accused/petitioner to requests the District/Sessions Court for allotting the charge sheet to one Court to proceed in accordance with law. In the light of decision of State of Bihar Vs. Anil Singh Alias Anil Kumar Kingh and others, referred supra, it is also possible that the accused may argue or apply for discharge before the concerned Court, if he so desire. The Hon'ble Supreme Court at paragraph Nos.6, 7 and 8 of the said decision held as under:

"6. In light of this development, it may not be appropriate to examine the correctness of the view taken by the High Court in the present appeal. Instead, we would give liberty to the respondents/accused to apply/argue for discharge before the concerned Court, it so advised. All contentions available in respect of that relief will have to be considered by the concerned Court on its own merits in accordance with law without being influenced by any observation made by the High Court in the impugned judgment, which we hereby set aside in terms of this order.

7. Needless to observe that in the application for discharge, it will be open to the respondents/accused to urge the grounds taken by them before the High Court and referred to in the impugned judgment which, as aforesaid, will have to be considered on its own merits and in accordance with law uninfluenced by the observations made in the impugned judgment.

8. In addition, it will be open to the respondents/accused to apply to the concerned courts for clubbing trial of all the cases to be tried together, which application also may be considered by the concerned Court on its own merits and in accordance with law. Alternatively, it may be open to the respondents/accused, including to the prosecution to make a request to the Sessions Judge for allotting the charge sheets to one Court, to be proceeded in accordance with law."

11. In the decision of Shamsahd Ahamad referred supra, relied on by petitioner's counsel, the Allahabad High Court observed that the accused were protesters who were opposing implementation of CAA and NRC and in the FIR's, the sections of IPC are almost same except one or two charges and the complainants are Police Officers/Officials and therefore, 'Test of Sameness' which says that where there is proximity of time, or place or unity of purposes and design or continuity of action in respect of series of acts, the safe inference may be drawn that they form part of the same transactions, therefore, ordered for clubbing of three FIRs' and the Allahabad High Court at paragraph Nos. 33, 34, 35, 36 & 37 held as under:

"33. Therefore, 'Test of Sameness' which says that where there is proximity of time, or place or unity of purposes and design or continuity of action in respect of series of acts, the safe inference may be drawn that they form part of the same transactions, therefore, the aforesaid test appears to have been applied in the present case.

34. In view of the above, I find it appropriate that the direction may be issued for clubbing all the three Charge-sheets together inasmuch as the occurrence indicated in the second and third FIR is prima-facie appearing as a fall out of the first occurrence indicated in the first FIR. Therefore, I am an agreement with the dictum of Hon'ble Apex Court in re:C.Muniappan (supra) to the effect that merely because three separate FIRs have been filed do not mean that they could not be clubbed together and one charge-sheet could not be filed.

35. In the present case, Investigating Officer should have clubbed all the FIRs and should have filed one charge-sheet. Such act of clubbing would have been in conformity with the Circular No.DG-21/2016 dated 26.04.2016, which has been issued by the Director General of Police, Uttar Pradesh in consonance with the direction of Hon'ble Apex Court issued in re: T.T. Anthony (supra).

36. So far as the manner in which the learned Magistrate has taken cognizance in all the three impugned charge-sheets is concerned, I must observe that while taking cognizance it appears that he has not applied his judicious mind and has not appreciated and perused the material available on record, particularly, not examined the complicity and involvement of the present petitioner who has been implicated in the present case invoking Section 120-B I.P.C. Even if the Magistrate has appreciated and perused the material available on record while taking cognizance of the FIR dated 05.08.2020, at least while taking cognizance of second and third charge-sheet, the Magistrate must have asked the Investigating Agency as to why after carrying out separate investigation in all the three, more or less similar, incidents, three separate charge-sheets have been filed therein. The Magistrate must have asked as to why all the three charge-sheets have not been clubbed together for the purposes of trial. The learned Magistrate must have seen that what prejudice would be caused to the prosecution if the single charge-sheet is filed clubbing all the charge- sheets together inasmuch as Section 220 Cr.P.C. itself authorizes that in a similar situation the accused person should be tried in one trial. Therefore, the guidelines of Hon'ble Apex Court in re:Fakhruddin Ahmad (supra) must have been followed by the learned Magistrate while taking cognizance of the charge-sheet.

37. Therefore, without interfering with the impugned charge-sheets, I hereby quash the cognizance order dated 26.08.2020 whereby the cognizance has been taken of the Charge-sheet No.33-A of 2020 dated 25.04.2020 and the cognizance order dated 26.11.2020 whereby the cognizance has been taken of the Charge-sheet No.99-A of 2020 dated 25.04.2020."

12. This decision will not come to the aid of the petitioner. In this case, investigation is still going on, Courts jurisdiction may also differ and charge sheet may also be filed invoking Prevention of Corruption Act and Prevention of Money Laundering Act and other special enactment as submitted by State Public Prosecutor and those offences have to be triable by Special Court designated or District and Sessions Court and Magistrate Court, by taking into consideration the nature of the offences and jurisdiction.

13. Therefore, in view of the decision of Hon'ble Supreme Court in the case of State of Bihar Vs. Anil Singh Alias Anil Kumar Singh and others reported in 2021 SCC Online SC 1294 referred supra, these petitions are liable to be dismissed, as the prayer for clubbing is at the premature stage. After filing of final report or charge sheet for different offence, the petitioner may approach or request the concerned Court for his discharge or may seek for clubbing of cases.

14. Therefore, as the petitioner in all the cases has given up the request of quashing of the FIRs and the charge sheets filed against him. Therefore, taking into consideration the facts and circumstances of the case, the petitions are liable to be dismissed as the same does not survive for consideration.

15. Hence, I pass the following:

ORDER

The Criminal Petition Nos.200948/2022, 200700/2022, 200701/2022, 201151/2022, 201152/2022, 201153/2022, 201154/2022 and 201155/2022 are hereby by dismissed.

2. However, it is open to the petitioner/accused to approach the concerned District Court or trial Court and apply for clubbing of trial of the cases which are to be tried together by one Court, after the charge sheets are filed in other cases. It is open to the petitioner to file application seeking for his discharge, if he is so advised. The concerned Court shall consider such application or request on its own merits and in accordance with law without being influenced by the observations made by this Court.

3. All other contentions are kept open.”

The challenge to the registration of crime is dismissed. The petitioner was directed to approach the District Court or trial Court for necessary action. What would unmistakably emerge is that the claim of the petitioner to quash the proceedings in the predicate offence is dismissed. Only clubbing prayer is allowed. The petitioner calls this in question before the Apex Court. The Apex Court on 13-12-2022 in S.L.P.Nos.9861-9868 of 2022 passes the following order:

“The petitioner has already given up his claim for quashing which was reiterated before this Court on 21.10.2022.

The Court, while issuing notice on 21.10.2022, had recorded the statement made on behalf of the petitioner that they are only pressing for clubbing of the matter in one Court in Karnataka.

Shri Mukul Rohatgi, learned senior counsel appearing for the petitioner, relying on the judgment of this Court in Abhishek Singh Chauhan v. Union of India, [reported in Livelaw (SC) 608 (W.P.No.40/2022)] and in some other cases submits that this Court has also clubbed the cases which are filed in different States.

Undoubtedly, in the present case the cases are filed in different districts of one State. As such, the High Court has the jurisdiction to decide as to whether the cases are clubbed together or tried together or not.

The High Court, in our view, was not justified in relegating the petitioner to the District Courts or Trial

Court to apply for clubbing. Such a jurisdiction to transfer cases from different District Courts would not be available with the District Court.

We, therefore, dispose of the present petitions, with liberty to the petitioner to move appropriate petition before the High Court for such reliefs as are permissible in law.

We further clarify that, we are not considering the merits of the matter and parties on both the sides would be entitled to raise all the questions available to them in law before the High Court.

Pending application(s), if any, shall stand disposed of.”

The petitioner was permitted to approach this Court seeking clubbing of the petitions. After the order being passed by the Apex Court, the proceedings were taken up again before the Kalaburagi Bench in Criminal Petition No.200189 of 2023. The Bench at Kalaburagi passes the following order:

“Heard on I.A No.1/2023.

Sri.Sandesh J.Chouta, learned Senior counsel appearing on behalf of Sri.Ahok B. Mulage, learned counsel for the petitioner and Sri.Sharanabasappa M.Patil, learned High Court Government Pleader for the respondent-State.

The learned Senior counsel submits that, the respondent-police have registered 11 cases against the petitioner, out of 11 cases, 8 cases are registered within the jurisdiction of Kalburagi and 3 cases i.e. Crime No.415/2022 is of Ramamurthy Nagar Police Station, Bengaluru, Crime No.247/2022 is of Kyatasandra Police Station, Tumkuru and Crime No.216/2022 is of Dharwad Sub Urban Police Station, Dharwad. It is further submitted that in the catena of judgment of Hon'ble Supreme Court Including T.T.Antony case, the Hon'ble Supreme Court issued guideline as to how in such circumstances, the Court has to deal with it. It is further submitted that, if the cases are clubbed and post before in one appropriate Court, no hardship would be caused to the other side.

On the other hand, the learned High Court Government Pleader vehemently opposed the interim order and submitted that if the cases are clubbed and transferred to one particular Court, it would be difficult to mobilize the witnesses to a particular Court and administrative hardship would be caused, in such circumstances, the interim order cannot be granted.

Be that as it may, on considering the submission of the learned Senior counsel and also learned High Court Government Pleader, it is noticed that, there are as many as 8 cases have been filed against the petitioner within the jurisdiction of Kalaburgi and rest of three cases have been filed in different jurisdiction. Considering the interim order granted earlier by the Co-ordinate Bench of this Court on same ground, it is appropriate to extend such benefit to the present case. Accordingly, I.A No.1/2023 is allowed.

There shall by stay of further proceedings in

1) Crime No.48/2022 of Chowk Bazaar Police Station, Kalaburgi pending of the file of Prl. Sessions Judge, Kalaburgi in Special case (Corruption) No.7/2022.

2) Crime No.57/2022 of Station Bazaar Police Station, Kalaburgi pending on the file of Prl. J.M.F.C, Kalaburgi in C.C No.15193/2022.

3) Crime No.79/2022 of Station Bazaar Police Station, Kalaburgi pending on the file of Prl. J.M.F.C, Kalaburgi in C.C No.17174/2022.

4) Crime No.96/2022 of Ashok Nagar Police Station, Kalaburgi pending on the file of V Additional J.M.F.C, Kalaburgi C.C No.18934/2022.

5) Crime No.97/2022 of Ashok Nagar Police Station, Kalaburgi pending on the file of V Additional J.M.F.C, Kalaburagi in C.C No.18935/2022.

6) Crime No.98/2022 of Ashok Nagar Police Station, Kalaburgi pending on the file of v Additional J.M.F.C, Kalaburagi in C.C No.18937/2022.

7) Crime No.99/2022 of Ashok Nagar Police Station, Kalaburgi pending on the file of V Additional J.M.F.C, Kalaburagi in C.C No.18938/2022.

8) Crime No.182/2022 of Ashok Nagar Police Station, Kalaburgi pending on the file of V Additional J.M.F.C, Kalaburagi in C.C No.18573/2022.

9) Crime No.415/2022 of Ramamurthy Nagar Police Station, Bengaluru City pending on the file of I ACMM, Bengaluru in C.C No.1465/2023

10) Crime No.247/2022 of Kyatasandra Police Station, Tumkur pending on the file of Prl. Civil Judge and J.M.F.C, Tumkuru in C.C No.148/2023.

11) Crime No.216/2022 of Dharwad Sub-Urban Police Station, Dharwad pending on the file of Prl. Civil Judge and Prl. JMFC, Dharwad in C.C No.42/2023, till next date of hearing.

In the meantime, the learned Senior counsel expressed apprehension regarding possibility of taking the petitioner to police custody again by registering subsequent FIRS on the same allegation in respect of same offences.

The jurisdictional authority is directed not to precipitate any further action against the petitioner, till the next date of hearing.

List this matter on 30.05.2023.”

Therefore, all the crimes registered against the petitioner came to a grinding halt. The interim order is further extended on 30-05-2023.

11. Then comes the notice by the 2nd respondent on 12-05-2023 directing appearance of the petitioner. Repeated summons were issued to the petitioner seeking his appearance for conduct of investigation in the Enforcement Case Information Report (ECIR). It is those actions of calling the petitioner that forms the challenge in the present petition. Now the only issue would be, in the teeth of the order that is passed by the Kalaburagi Bench staying further proceedings in all the cases where the petitioner is a party, whether the Enforcement Directorate can proceed further. In identical circumstance, this Court in the case of C.UMA REDDY v. STATE3 has considered this very issue as to whether an interim order of stay granted by the competent Court of law in the cases involving a predicate offence, the investigation by the Enforcement Director should be permitted to be continued. This Court concerning issue of attachment of property had observed as follows:

“16. It cannot be disputed, that at a later point in time if the petitioners are acquitted, no proceeding under the ECIR can continue. In the event they are convicted, it is always open to the Enforcement Directorate to pass any order of attachment or conviction as the case would be. If that be the right of the Enforcement Directorate, since there is no determination in C.C.No.11606 of 2020 in the light of the interim order being granted by this Court, so long as the interim order is in operation, the impugned proceedings, in the considered view of this Court, cannot be permitted to continue, failing which, it would run completely counter to law as enunciated by the Apex Court.

17. In somewhat similar circumstance, a Division Bench of the High Court of Madras in B. SHANMUGAM’S case (supra) considers this very point as to what is the effect of the stay order and has held as follows:

“What is the effect of a stay order

17. The effect of an order of stay means that the operation of the impugned order is stayed or stands stalled as if the impugned order does not exist. Therefore, to bring the parties to the proceedings from taking further action in relation to the subject matter pending the final adjudication, stay order is granted in the interest of both parties.

During the currency of stay order, if any proceedings are permitted to go on and in the meanwhile, if any damage has been caused to the reputation or the goodwill of the parties, the same cannot be compensated. Whereas if the Department waits for the final outcome of the proceedings, no prejudice would be caused to them. In all these cases, the admitted case of the respondent Department is that the ECIR has been initiated based on the three First Information Reports in Crime Nos. 441 of 2015, 298 of 2017, 344 of 2018, which culminated in the proceedings in C.C. No. 24 of 2021, C.C. No. 19 of 2020 and C.C. No. 25 of 2021 respectively and the proceedings in C.C. No. 25 of 2021 culminating from Crime No. 344 of 2018 have been quashed. The calendar cases arising out of the other two First Information Reports have been stayed. As stated supra, since the ECIR itself was only on the basis of the said three First Information Reports, when the proceedings pursuant to the said First Information Reports have been stayed by the High Court, whether the ECIR, which is also pursuant to the First Information Reports, can be proceeded with, is a question that stares at open. Our considered answer is in the negative.

18. Because, it is not the case of the respondent that apart from the above three First Information Reports, there are other materials based upon which they have initiated the proceedings under the Prevention of Money- laundering Act. Hence, in our view, when the calendar cases which culminated from the said two First Information Reports also have been stayed, the respondent Department should also refrain itself from proceeding any further, as it is their admitted case that the summons issued to the petitioners are pursuant to the initiation of ECIR based upon the three First Information Reports.

19. Learned Senior Counsels appearing for the petitioners in extenso argued that there is no jurisdictional facts to initiate the proceedings under the Prevention of Money-laundering Act. According to them, the following jurisdictional facts have to be there for initiating proceedings under the Prevention of Money-laundering Act.

20. Firstly, there must be predicate/scheduled offence.

21. Secondly, there must be a criminal activity.

22. Thirdly, there must be proceeds of crime which is quintessential to connect the first and second i.e. Scheduled offence and criminal activities.

23. According to them, except for the three First Information Reports indicating commission of scheduled offence, there is no document or pleading on the side of the respondent to substantiate that there are proceeds of crime as per Section 2(l)(u) of the Prevention of Money- laundering Act and that proceeds had a link with the scheduled offence. According to them, out of three calendar cases, one has been quashed and two Calendar Cases have been stayed. Therefore, in the eye of law, firstly, there is no scheduled offence as per section 2(y) of the Prevention of Money-laundering Act, 2002 as on this date for the respondent to proceed under the said Act.

24. On the contrary, Mr. R. Sankaranarayanan, learned Additional Solicitor General strenuously contended that it is true that the proceedings have been stayed, but that does not mean the offence has been wiped out. Till it is quashed by a competent Court or the person is discharged or acquitted, the offence continues to be alive and the respondent has the authority to proceed under the Act.

25. Let us see what is the jurisdictional fact to be taken into account by a Court before assuming jurisdiction over a particular matter. The Hon'ble Supreme Court explaining the above facts in Arun Kumar v. Union of India, (2007) 1 SCC 732, [LQ/SC/2006/843 ;] has held as follows:—

“74. A “jurisdictional fact” is a fact which must exist before a court, tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional fact is one on existence or non- existence of which depends jurisdiction of a court, a tribunal or an authority. It is the fact upon which an administrative agency's power to act depends. If the jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by erroneously assuming existence of such jurisdictional fact, no authority can confer upon itself jurisdiction which it otherwise does not possess.

75. In Halsbury's Laws of England, it has been stated:

“Where the jurisdiction of a tribunal is dependent on the existence of a particular state of affairs, that state of affairs may be described as preliminary to, or collateral to the merits of, the issue. If, at the inception of an inquiry by an inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue; but that ruling is not conclusive.”

76. The existence of jurisdictional fact is thus sine qua non or condition precedent for the exercise of power by a court of limited jurisdiction.”

26. Further, the Apex Court in the case of State of Punjab v. Davinder Pal Singh Bhullar, (2011) 14 SCC 770, [LQ/SC/2011/1534] has held that if a foundation is being removed, structure/work falls.

27. A mere perusal of the above judgment clearly shows that the existence of jurisdictional fact is a condition precedent for the exercise of power by a Court of limited jurisdiction. Therefore, in the cases on hand, when there is no cause of action, since the proceeding in one of the calendar cases was quashed by the order dated 30.07.2021 in Criminal Original Petition No. 13374 of 2021 and the proceedings in two other calendar cases have been stayed by this Court, there is no jurisdictional fact or cause of action for the respondent/department to initiate any proceedings during the period of order of stay operating against the two FIRs. Viz. C.C. No. 19/2020 and C.C. No. 24 of 2021.

28. Secondly, as already held by us, when the basis, namely, the proceedings which culminated through the First Information Reports had been stayed, the respondent should await the result of such proceedings before continuing any further under the Prevention of Money-laundering Act. It is the further case of the learned Additional Solicitor General that the Hon'ble Supreme Court in Vijay Madanlal Choudhary has held that the summons issued to the individual is to collect factual evidence as regards to the offence of money- laundering. It is his further case that only after concluding such inquiry, the authorities under the Prevention of Money-laundering Act could proceed any further as provided under the Act, that is, after ascertaining the proceeds of crime and its nexus with the scheduled offence. Till the First Information Report is quashed, the scheduled offence continues to be alive.

29. In our view, the grant of stay of any particular proceedings would amount to eclipsing the proceedings initiated. An order of stay is interim in nature pending the final proceedings. The Hon'ble Apex Court in State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335, in paragraph-5 stated thus:

“Everyone whether individually or collectively is unquestionably under the supremacy of law. Whoever he may be, however high he is, he is under the law. No matter how powerful he is and how rich he may be.”

30. Therefore, the Apex Court has given the guidelines to be followed by the Courts while exercising the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code that where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not constitute any offence or make out a case against the accused, based on which, when the orders of stay are granted, the parties to the proceedings bound by the rule of law, should abide by the orders of stay. In this background, when the learned Additional Solicitor General appearing for the respondent fairly conceded that in view of the order of quash passed in Criminal Original Petition No. 13374 of 2021 dated 30.07.2021, the respondent Department would not proceed against the accused therein, the same analogy would equally apply to the other cases, where orders of stay granted are operating against the C.C. No. 19/2020 and C.C. No. 20 of 2020 based on which the ECIRs are recorded and summons are issued till the cases are decided. Therefore, the impugned proceedings/summons do not have any legal sanctity. Interim order of stay granted will be subject to the final orders in the main proceedings, after which the eclipse would also wane away. In such circumstances, we are not inclined to enter upon the merits and demerits of the proceedings initiated by the Department, as it is at the stage of budding. It may either blossom into a full flower or wither away. Hence, we leave open all the questions that are raised on the merits and de-merits of the proceedings initiated by the

respondent, to be dealt with in appropriate proceedings.

31. Generally, the summons are issued for appearance of a party on a particular date. If a party does not appear on the given date, fresh summons demanding the appearance of the person have to be issued. In the present cases, in view of the reasonings and the findings as stated supra, the last of the summons issued to the petitioners for their appearance on 09.05.2022 have elapsed. Therefore, as we have concluded that in view of the quashing of the proceedings in C.C. No. 25 of 2021 and staying of the proceedings in

C.C. No. 19 of 2020 & C.C. No. 24 of 2021 as highlighted above, the scheduled offence for the present is eclipsed, suspended or stop operating during the period of stay, the respondent Department has to await the finality of the said proceedings. Needless to mention, if the proceedings in C.C. No. 19 of 2020 and C.C. No. 24 of 2021 are quashed pursuant to the orders in the applications filed by the respective persons to quash the proceedings, in which event, the respondent cannot step in or initiate any proceedings under the Prevention of Money-laundering Act, as held by the Hon'ble Supreme Court in Vijay Madanlal Choudhary and in Parvathi Kollur v. State by Directorate of Enforcement, 2022 Live Law (SC) 688 cited supra. Therefore, the respondent is hereby refrained from proceeding any further pursuant to the impugned proceedings in ECIR/MDSZO/21/2021, till the disposal of the Criminal Revision Case No. 224 of 2021, Criminal Original Petition No. 15122 of 2021 and the SLP (Crl) Diary No. 9957 of 2022 (SLP (Crl) No. 3841 of 2022).”

(Emphasis supplied)

A Division Bench of the High Court of Madras holds that in the light of the link between the two and the judgment of the Apex Court in VIJAY MADANLAL CHOUDARY (supra) further proceedings under the PMLA should not be permitted to be continued, till the disposal of the case pending before the competent Court in the predicate offence, where there is an interim order of stay operating. I am in respectful agreement with the judgment rendered by the High Court of Madras only to the extent of the challenge laid with regard to the impugned proceedings of attachment.

18. In the light of the judgments rendered by the Apex Court in the case of VIJAY MADANLAL CHOUDARY and that of the Division Bench of the High Court of Madras interpreting judgment of the Apex Court in the case of VIJAY MADANLAL CHOUDARY, I deem it appropriate to stall all further action in the impugned proceedings till conclusion of Writ Petition No.14431 of 2020 and Criminal Petition No.7949 of 2020. If the proceedings in the predicate offence are stayed, the impugned proceedings of attachment under the ECIR cannot be permitted to continue. If the proceedings move on in the predicate offence, the offence under the ECIR should also be permitted to continue, failing which, it would defeat the proceedings under the PMLA or the IPC and would fall foul of the judgment of the Apex Court. Therefore, in the event the proceedings in C.C.No.11606 of 2020 are permitted to continue, the interjection of the proceedings in ECIR in this case would stand automatically vacated and the proceedings would be permitted to be continued. Wherefore, there cannot be any of the order of attachment as is prayed. These proceedings will have to be kept in the oblivion, awaiting the result of the proceedings in Writ Petition No.14431 of 2020 and Criminal Petition No.7949 of 2020.

19. Insofar as the judgments relied on by the learned counsel appearing for the Enforcement Directorate particularly with reference to the case in J.SEKAR v. UNION OF INDIA reported in 2018 SCC OnLine Del 6523, rendered by the High Court of Delhi holding that the proceedings under the PMLA and the

proceedings under the IPC or predicate offences are completely different and they can go hand in hand is concerned, there can be no qualm about the principles so laid down at the relevant point in time. With the judgment of the Apex Court in the case of VIJAY MADANLAL CHOUDARY (supra), the judgment in J.SEKAR would not become applicable to the facts of the case. The other judgments relied on would also follow suit in the light of the judgment of the Apex Court rendered in the case of VIJAY MADANLAL CHOUDARY (supra).

20. For the praedictus reasons, the following:

O R D E R

(i) The Writ Petition is allowed in part.

(ii) The Enforcement Directorate is restrained from proceeding further in No.ECIR/BGZO/04/2019/ AD- AKV/1541 qua the order dated 01-08-2022 with regard to provisional attachment, till disposal of Writ Petition No.14431 of 2020 and Criminal Petition No.7949 of 2020.

(iii) As a result of the aforesaid order (clause (ii)), grant of provisional attachment order dated 01-08- 2022 shall be kept in abeyance till disposal of Writ Petition No.14431 of 2020 and Criminal Petition No.7949 of 2020, which would mean the properties subject to attachment cannot be released in favour of the petitioners nor can be confirmed or sold by the Enforcement Directorate.

(iv) It is made clear that no particular order from the Court hearing Writ Petition No.14431 of 2020 and Criminal Petition No.7949 of 2020 is required, to continue these proceedings. Once those proceedings are permitted to continue, the continuation of impugned proceedings then becomes axiomatic.

Ordered accordingly.”

This Court was following a judgment of the Division Bench of Madras High Court with regard to the effect of stay order in the enforcement proceedings. The Division Bench judgment of Madras High Court was tossed before the Apex Court along with connected cases which becomes a judgment in Y.BALAJI (supra). In the said judgment the Apex Court holds as follows:

“50. As we have narrated in the sequence of events, ED registered an Information Report on 29.07.2021, only after filing of a Final Report under Section 173(8) of the Code., in CC No. 24 of 2021, including the offences punishable under the PC Act. This Final Report was in FIR No. 441 of 2015, which was originally registered as CC No. 3627 of 2017 (it became CC No. 24 of 2021). The Final Report filed under Section 173(8) of the Code on 08.03.2021, named Shri V. Senthil Balaji (Minister) as Accused No. 1 and the offences charged against the accused were under Sections 406, 419, 420 read with Section 34 and 120B, 465, 467, 471 and 201 IPC read with Sections 7, 12, 13(2) read with Section 13(1)(d) of the PC Act and Section 109 of IPC. Since the offences under Sections 120B, 419, 420, 467 and 471 of IPC and sections 7 and 13 of the PC Act are included in The Schedule to the Prevention of Money-laundering Act, 2002, the registration of the Information Report by ED on 29.07.2021 cannot be faulted.

51. After registration of the Information Report, the ED started issuing summons to the accused. ED also filed petitions before the Special Court (in seisin of the predicate offences) seeking copies of documents. These petitions were partly allowed by the Trial Court by an order dated 09.11.2021. As against the portion of the order of the Trial Court disentitling ED to certified copies of the unmarked documents, ED filed petitions under Section 482 of the Code before the High Court. The petitions were partly allowed by the High Court by an order dated 30.03.2022 permitting the ED to follow the procedure of conducting inspection under Rule 237 of Rules, 2019 and thereafter by filing a fresh third-party copy application before the Special Court.

52. Thereafter, ED sent fresh summons to the Minister and others in April, 2022. Immediately, the Minister and two others filed three separate writ petitions seeking the quashing of the summons issued by ED.

53. In the writ petition filed by the Minister in W.P. No. 18213 of 2022 for quashing the summons issued by the ED, he contended inter-alia:—

(i) that he was falsely implicated in FIR Nos. 441 of 2015, 15 of 2016, 298 of 2017 and 344 of 2018;

(ii) that FIR No. 15 of 2016 had already been quashed;

(iii) that FIR Nos. 441 of 2015 and 298 of 2017 were stayed by the High Court;

(iv) that FIR No. 344 of 2018 was quashed by the High Court;

(v) that in view of the above, the mandatory requirements of Section 2(1)(y) and Section 3 of the PMLA, are not attracted;

(vi) that the registration of ECIR was based upon those complaints;

(vii) that since those complaints are the subject matter of scrutiny in the quash petitions, there is nothing for ED to proceed;

(viii) that Section 63 of the PMLA prescribes a punishment for false information or failure to give

information and hence the summons issued under Section 50 will force him to give statements incriminating himself in the cases for the predicate offences, thereby infringing upon his rights under Article 20(3) of the Constitution;

(ix) that ED had not identified any proceeds of crime with the accused, so as to enable them to proceed with the investigation;

(x) that before the Trial Court and the High Court, ED wanted copies of documents available with the State Police, on the ground that without the copies of such documents, it was not possible for ED to proceed;

(xi) that the initiation of investigation by the ED is vitiated by malafide;

(xii) that without any material being available with the ED either about the proceeds of crime or about the act of money-laundering on the part of the accused, ED cannot proceed; and

(xiii) that without having any incriminating material against the accused about money-laundering, ED cannot proceed further.

54. The focus in the writ petitions challenging the summons issued by the ED was primarily on:—

(i) the stay of further proceedings in two criminal cases for the predicate offences;

(ii) the quashing of one criminal case for a predicate offence; and

(iii) the attempt of the ED to proceed with the investigation in wilderness, after getting copies of the basic documents from the Special Court, without actually identifying the proceeds of crime. However, certain legal arguments were developed before the High Court in the course of oral hearing.

55. The arguments advanced before the High Court in the course of arguments, revolved around:—

(i) the law laid down by this Court in Vijay Madanlal Choudhary v. Union of India;

(ii) the necessity for the existence of jurisdictional facts before an authority or officer assumes jurisdiction;

(iii) the absence of a combination of criminal activity amounting to a scheduled offence, the generation of proceeds of crime therefrom and the act of money-laundering, which form the jurisdictional fact for ED to step in; and

(iv) the danger of allowing the ED to go on a fishing expedition without any material.

56. It is of interest to note that the accused argued before the High Court that their case was squarely covered by the decision in Vijay Madanlal Choudhary (supra). It will be worthwhile to extract the relevant portions of the order of the High Court dated 01.09.2022, in which the counsel for each of the accused is stated to have relied upon the decision in Vijay Madanlal Choudhary.

57. The argument of the counsel for R.V. Ashok Kumar, brother of the Minister is extracted by the High Court in paragraph 3 as follows:—

“3. Mr. Aryama Sundaram, learned Senior Counsel appearing for the petitioner in Writ Petition No. 18209 of 2022 pleaded at the outset that his client's case is squarely covered by the judgment of the Hon'ble Supreme Court in Vijay Madanlal Choudhury case (supra) in his favour, again proceeding further contended that Mr.

R. V. Ashok Kumar is the brother of Mr. V. Senthil Balaji, who was the former Transport Minister during the period from 2011 to 2015…”

58. The argument of the counsel appearing for Shanmugam (Accused No. 3) is extracted by the High Court as follows:—

“2. … there is no basis for proceeding against the petitioner under the Prevention of Money-laundering Act, because the Hon'ble Supreme Court in Vijay Madanlal Chaudhary v. Union of India, (2022) 10 Scale 577 has held that in the absence of proceeds of crime, the authorities under the Prevention of Money-laundering Act cannot step in or initiate any prosecution, therefore, the writ petition deserves to be allowed, by quashing the impugned proceedings.

59. Thus, it is seen from the impugned order that at least two out of three accused specifically argued before the High Court that their case was squarely covered by the decision of this Court in Vijay Madanlal Choudhary, but interestingly most of the arguments advanced before us turned out to be an attack on the correctness of the decision in Vijay Madanlal Choudhary. We are not suggesting that this defection from one point of view to the other is covered by Schedule X. We are just recording this fact to show that most of the arguments were actually arguments of convenience.

60. Keeping in mind what the accused argued before the High Court, let us now see what the High Court did. In paragraph 13 of the impugned order, the High Court took note of Vijay Madanlal Choudhary with particular reference to paragraph 187(v)(d). In paragraph 14, the High Court took note of the quashing of the complaint for the predicate offence in one case and the stay of further proceedings in the other two cases relating to predicate offences. In paragraph 15, the High Court addressed the question as to what is the effect of a stay order. The High Court concluded that if proceedings under the PMLA are permitted to go on during the operation of the stay order in respect of predicate offences, it will

cause damage to the reputation and goodwill of the parties and that therefore investigation by the ED cannot proceed. In paragraph 16 of the impugned order, the High Court recorded that other than the three FIRs, the ED was not in possession of anything else to proceed under the PMLA. In paragraph 17, the High Court recorded the contention relating to the nonexistence of jurisdictional facts and referred to the decision in Arun Kumar v. Union of India in paragraph 19. Thereafter, the High Court came to the conclusion in paragraph 20 that the quashing of the complaint in one criminal case and the stay of proceedings in other two Calendar Cases, showed that there was no jurisdictional fact or cause of action for the ED to initiate proceedings.

61. Since lot of arguments were advanced before us as though the ED proceeded without the existence of jurisdictional facts, it is necessary to extract paragraph 20 of the impugned order to show what the High Court thought to be a jurisdictional fact. Hence, paragraph 20 of the impugned order is extracted as follows:

“20. A mere perusal of the above judgment clearly shows that the existence of jurisdictional fact is a condition precedent for the exercise of power by a Court of limited jurisdiction. Therefore, in the cases on hand, when there is no cause of action, since the proceeding in one of the calendar cases was quashed by the order dated 30.07.2021 in Criminal Original Petition No. 13374 of 2021 and the proceedings in two other calendar cases have been stayed by this Court, there is no jurisdictional fact or cause of action for the respondent/department to initiate any proceedings during the period of order of stay operating against the two FIRs. Viz. C.C. No. 19/2020 and C.C. No. 24 of 2021.”

62. Again, in paragraph 22, the High Court recorded an opinion that the grant of stay would amount to eclipsing the proceedings. Therefore, on this sole ground, the High Court concluded in paragraph 22 of the impugned order that the ED has to await the outcome of the proceedings for quashing the criminal complaints, in which a stay order was in force. But the High Court made it clear that it was not entering upon the merits and demerits of the proceedings initiated by the ED and the High Court left all the questions to be dealt with in appropriate proceedings.

63. Eventually, the High Court concluded in paragraph 23 of the impugned order as follows:

“23. … Therefore, as we have concluded that in view of the quashing of the proceedings in C.C. No. 25 of 2021 and staying of the proceedings in C.C. No. 19 of 2020 & C.C. No. 24 of 2021 as highlighted above, the scheduled offence for the present is eclipsed, suspended or stop operating during the period of stay, the respondent Department has to await the finality of the said proceedings. Needless to mention, if the proceedings in C.C. No. 19 of 2020 and C.C. No. 24 of 2021 are quashed pursuant to the orders in the applications filed by the respective persons to quash the proceedings, in which event, the respondent cannot step in or initiate any proceedings under the Prevention of Money-laundering Act, as held by the Hon'ble Supreme Court in Vijay Madanlal Chaudhary and in Parvathi Kollur v. State by Directorate of Enforcement, 2022 LiveLaw (SC) 688 cited supra. Therefore, the respondent is hereby refrained from proceeding any further pursuant to the impugned proceedings in ECIR/MDSZO/21/2021, till the disposal of the Criminal Revision Case No. 224 of 2021, Criminal Original Petition No. 15122 of 2021 and the SLP (Crl) Diary No. 9957 of 2022 (SLP (Crl) No. 3841 of 2022).”

64. Irrespective of the correctness of the reasonings given by the High Court in the impugned order, the conclusion of the High Court was only this, namely, that the ED cannot proceed, till the disposal of (i) Criminal Revision Case No. 224 of 2021 filed by Minister-Senthil Balaji against the order of the Trial Court refusing to discharge him; and (ii) Criminal O.P. No. 15122 of 2021, filed by Devasagayam seeking de novo investigation.

65. Therefore, it is as clear as crystal, that the High Court, in the impugned order dated 01.09.2022 has given only a temporary reprieve to the accused against the summons issued by the ED. Today, Criminal Revision Case No. 224 of 2021 filed by the Minister against the dismissal of his discharge petition, has been rejected by the High Court by its order dated 31.10.2022. Though Criminal O.P. No. 15122 of 2021, filed by Devasagayam has been allowed by the High Court, by the very same order dated 31.10.2022, the said order has been set aside by us in Part-I of this judgment.

66. Insofar as the SLP (Crl.) No. 3941 of 2022 @ Diary No. 9957 of 2022 is concerned, it arises out of the order of the High Court dated 30.03.2022, which again is the subject matter of the present appeals.

67. In other words, the High Court has not quashed the summons issued by ED. The High Court had merely injuncted ED from proceeding further till the clog on the cases relating to the predicate offences is removed.

68. Interestingly, none of the accused has come up with any appeal challenging the order of the High Court dated 01.09.2022, on the ground that the High Court ought to have quashed the summons issued by the ED in total, on other grounds. Instead, the accused appeared through counsel only to defend the impugned order dated 01.09.2022.

69. Therefore, in law, (i) once the dismissal of the petition for discharge has attained finality with the dismissal of Criminal Revision Case No. 224 of 2021; (ii) once the order for de novo investigation in Criminal O.P. No. 15122 of 2021 is set aside; (iii) once the order of the High Court dated 30.03.2022 relating to right of the ED to secure the copies of documents is dealt with; (iv) once the order of the High Court dated 30.07.2021 quashing one of the criminal cases is set aside; and (v) once the stay operating in two of the criminal cases for predicate offences is vacated, then the temporary reprieve that has been granted by the High Court to the accused in the impugned order would automatically go. Realising this difficulty in law, the accused changed the theme of the song completely before us, despite the fact that they were ordained as respondents in the appeals only to support the impugned order of the High Court.

70. In fact, all the learned senior counsel appearing for all the accused in the PMLA case, advanced arguments for the grant of larger reliefs than what they got under the impugned order, without even filing any appeal against the same. It is possible in law for a successful party (though in civil proceedings) to support the decree without supporting the judgment. But what the accused sought to do before us was to support the judgment and seek an enlargement of the decree, without independently filing appeals. Since they took a chance by adopting such a course, they may not even be able to challenge the impugned order hereafter, once the seal of approval on the same is affixed by this Court and the doctrine of merger comes into play.

71. We may look at this from another angle also. Suppose we dismiss all the appeals challenging the order of the High Court dated 01.09.2022, then the other portion of our order dealing with the challenge to the order of the High Court dated 31.10.2022 would automatically result in lifting the injunction imposed by the Division Bench of the High Court in the ED case by its order dated 01.09.2022. Therefore, it is not even necessary for us to deal with the contentions raised on behalf of the accused for the purpose of getting larger reliefs. But we do not wish to adopt this route. Therefore, we shall address the contentions raised.

72. The contentions of Shri Kapil Sibal, learned senior counsel are:

(i) that to constitute the offence of money-laundering, one must have involved in any process or activity connected to the proceeds of crime;

(ii) that none of the three FIRs which formed the basis for the registration of an Information Report contained any allegation of generation of proceeds of crime or the offence of money-laundering;

(iii) that the ED was never in possession of any material to suspect that the accused did any activity connected with the proceeds of crime;

(iv) that this is why the ED filed applications before the Special Court seeking copies of documents to find out if something could be found;

(v) that under Section 66(2) of PMLA, the flow of information can be only from the ED to the other authorities about the contravention of the provisions of any other law and not the other way about;

(vi) that there are lot of inherent contradictions in the way the provisions of the PMLA were interpreted in Vijay Madanlal Choudhary;

(vii) that though Section 50(2) of PMLA empowers the Director and his subordinates to summon any person whether to give evidence or to produce any record during the course of investigation, this Court held in Vijay Madanlal Choudhary that it is not investigation in the real sense;

(viii) that the power under Section 50(2) of PMLA is akin to the power of the Police Officer under Section 160 of the Code;

(ix) that with the amendment of PMLA by Finance (No. 2) Act, 2019 w.e.f. 01.08.2019, the requirement of mens rea was done away with and the Explanation inserted by the amendment made all processes or activities such as concealment, possession, acquisition, use, projecting as untainted property and claiming as untainted property, available in the alternative. In other words, while the main part of Section 3 uses the conjunction “and”, the Explanation under Section uses the expression disjunction “or”;

(x) that the amendment of Section 3 goes completely contrary to the law laid down in Bihta Co-operative Development and Cane Marketing Union Ltd. v. Bank of Bihar14, to the effect that an Explanation cannot widen the scope of the main Section;

(xi) that it is only where proceeds of crime are laundered that the PMLA comes into play, though the existence of proceeds of crime is a sine qua non for the commission of an offence under PMLA;

(xii) that if the ED were to have jurisdiction to investigate solely on the basis of information that a predicate offence has been committed, involving the proceeds of crime, it would amount to empowering the ED to enter the domain of the State Police, thereby causing fissures in the federal structure;

(xiii) that the mere existence of proceeds of crime without the quantum of proceeds being specified/identified and without the proceeds of crime being laundered, an offence of money- laundering cannot be made out;

(xiv) that it was wrongly decided in Vijay Madanlal Choudhary that it was not a penal statute, though the object of the Act is to prosecute and punish a person for the offence of money-laundering;

(xv) that the procedural safeguards available under the Code are also not available and hence Vijay Madanlal Choudhary has not been correctly decided. The learned counsel also drew our attention to several passages such as paragraphs 159, 163, 168 and 172 in the decision in Vijay Madanlal Choudhary and it was contended that it was wrongly decided.

73. According to Shri Kapil Sibal, learned senior counsel, certain fundamental questions arise in the present proceedings. They are:—

• What are the jurisdictional prerequisites for the ED to initiate investigation under the PMLA

• Does the ED have the power to seek information from authorities investigating the predicate offence merely on the basis that investigation of a predicate offence is ongoing, even without receiving any information that a cognizable offence under the PMLA has occurred and being in possession of material that indicates the offence of money-laundering has taken place

• Can the mere existence of proceeds of crime confer jurisdiction upon the ED to initiate investigation

• What are the elements of “money-laundering”

• What conditions need to be satisfied before the ED is empowered to issue summons under Section 50 of the PMLA

• Can a summons under Section 50 PMLA be issued to a person who is in the nature of an accused under the PMLA or in the predicate offence

• Do Sections 50 and 63 of the PMLA violate the constitutional safeguards under Art. 20(3) and 21 of the Constitution

74. Admitting the inevitable position in law that as a Two Member Bench, we are bound by the decision of the Three Member Bench in Vijay Madanlal Choudhary, Shri Kapil Sibal argued that the matter may be placed before a Three Member Bench for resolving the conundrum created by the PMLA. In this connection, he drew our attention to paragraph 113 of the decision of another Three Member Bench in Union of India v. Ganpati Dealcom Private Limited, wherein this Court expressed an opinion that the ratio laid down in Vijay Madanlal Choudhary with respect to confiscation proceedings under Section 8 of the PMLA, required further exposition in an appropriate case and that without such exposition, much scope is left for arbitrary application. Learned senior counsel also drew our attention to an order passed by another Two Member Bench of this Court in a writ petition being Writ Petition (Crl.) No. 65 of 2023, challenging some of the provisions of the PMLA. By an order dated 03.03.2023, a Two Member Bench of this Court directed the said writ petition to be placed when the Bench would be sitting in a combination of three Judges. After it was so placed before a Three Member Bench, notice was ordered in the writ petition. Therefore, he contended that the present appeals arising out the proceedings initiated by ED may be placed before a larger Bench.

75. In sum and substance, all the above arguments of Shri Kapil Sibal, learned senior counsel are aimed at convincing us that Vijay Madanlal Choudhary was wrongly decided and that therefore we may refer it to a larger Bench.

76. Shri Sidharth Luthra, learned senior counsel appearing for one of the accused contended:—

(i) that when ECIR was registered, ED did not have requisite foundational materials, as admitted by them in their own counter affidavit;

(ii) that there has been a long delay both in the registration of FIRs for the predicate offence and the ECIR;

(iii) that the period of the commission of offence, according to the de-facto complainants was between December, 2014 and January, 2015 but the FIRs other than those filed by Devasagayam were of the year 2017 and 2018 and the ECIR was registered in the year 2021;

(iv) that there is no explanation on the part of the ED for such a delay;

(v) that to make out an offence of money-laundering even prima facie, three things are essential, namely (i) the commission of a crime, which is a scheduled offence, (ii) generation of proceeds of crime; and (iii) the laundering of those proceeds, and that none of these three foundational facts are present in this case.

77. The arguments of Shri Sidharth Luthra, learned senior counsel is actually two-fold, namely, (i) that in the absence of a jurisdictional fact, which is a sine qua non or condition precedent for the exercise of power by ED, the summons issued by ED should go; or alternatively (ii) that in view of inherent contradictions contained in the decision in Vijay Madanlal Choudhary and in view of this Court having ordered notice in the review petition, the appeals on hand should also be referred to a larger Bench.

78. In support of his contention that the existence of a jurisdictional fact is a condition precedent for the exercise of power by ED, the learned senior counsel relies upon the decisions in Shauqin Singh v. Desa Singh and Arun Kumar v. Union of India.

79. To demonstrate that there are inherent contradictions in the decision in Vijay Madanlal Choudhary, the learned senior counsel relies upon the decision of the Delhi High Court in Enforcement Directorate v. Gagandeep Singh and Parvathi Kollur v. State through ED.

80. To show that a petition for review has been entertained by this Court, the learned senior counsel relies upon the record of proceedings of this Court dated 25.08.2022 in Review Petition (Crl.) No. 219 of 2022 in Karti P. Chidambaram v. The Directorate of Enforcement.

81. Lastly, it is contended that when certain questions of law are referred to a larger Bench, all subsequent matters should be tagged or deferred. In support of this contention, the learned senior counsel relies upon the orders passed by this Court in Jairam Ramesh v. Union of India, Thomas Franco Rajendra Dev v. Union of India, Kantaru Rajeevaru (Right to Religion, In re-9 J.) v. Indian Young Lawyers Association Asgar Ali v. State of Jammu and Kashmir and Central Board of Dawoodi Bohra Community v. State of Maharashtra.

82. Contending that when the very initiation of proceedings by the ED was without the existence of jurisdictional facts, all subsequent actions, like a pack of cards should fall, the learned senior counsel relies upon the latin maxim sublato fundamento cadit opus meaning that “if initial action is not in consonance with law, all subsequent and consequential proceedings fall through”. In support of this contention, the learned senior counsel has relied upon the following decisions :

(i) Badrinath v. Government of Tamil Nadu; (ii) State of Kerala v. Puthenkavu N.S.S. Karayogam; and (iii) State of Punjab v. Davinder Pal Singh Bhullar.

83. Shri C.A. Sundaram, learned senior counsel appearing for one of the accused, adopted a different line of argument. Instead of attacking the correctness of Vijay Madanlal Choudhary, the learned senior counsel contended:—

(i) that the object of PMLA is to prevent money- laundering;

(ii) that to constitute an offence of money-laundering, a person should have involved himself in any process or activity connected with the proceeds of crime;

(iii) that ED can assume jurisdiction only after identification of the proceeds of crime;

(iv) that the mandate of ED does not extend to the prosecution of any one for offences other than money-laundering;

(v) that this is why Section 66(2) obliges the Director to share the information available with him with other authorities, whenever such information discloses the contravention of the provisions of any other law;

(vi) that without the identification of a property which represents the proceeds of crime, a jurisdictional fact for the initiation of proceedings does not get triggered;

(vii) that no summons can be issued under Section 50 without registering an information report;

(viii) that the power to issue summons under Section 50(2) can be exercised only during the course of any investigation or proceeding under the Act;

(ix) that in the case on hand, no property representing the proceeds of crime has been identified;

(x) that this is why the High Court questioned the ED as to how Section 3 got invoked; and

(xi) that therefore the initiation of proceedings by the ED cannot be sustained even within the contours of law interpreted in Vijay Madanlal Choudhary.

84. Lastly, it is contended by Shri C.A. Sundaram, learned senior counsel for one of the accused that though the High Court allowed the prayer of the accused for reasons other than those argued now, the party successful before High Court can always seek to sustain the judgment, on grounds other than those stated in the impugned order. In support of this contention, the learned senior counsel relies upon the decision of this Court in Management of the Northern Railway Co- operative Credit Society Ltd., Jodhpur v. Industrial Tribunal, Rajasthan, Jaipur.

85. In response to the above submissions, it was argued by Shri Tushar Mehta, learned Solicitor General:

(i) that the offence of money-laundering is treated by the global community as an offence of international implication, affecting the economies of Nations;

(ii) that the law could be traced to Palermo and Vienna Conventions;

(iii) that the Conventions led to the establishment of Financial Action Task Force;

(iv) that for a long time after the above Conventions and the formation of FATF, India was found to be lacking in curbing money-laundering and hence certain recommendations were made for the Mutual Evaluation of Anti-Money Laundering and Combating the Financing of Terrorism;

(v) that the recommendations made by them were carried into effect by making suitable amendments to the Act;

(vi) that the historical perspective of the Act and the amendments thereto are discussed in detail in Vijay Madanlal Choudhary;

(vii) that almost all provisions of the PMLA were challenged in Vijay Madanlal Choudhary and every ground of attack to each of the provisions is dealt with in extenso by the Three Member Bench;

(viii) that there cannot be repeated attempts to have several bites at the cherry;

(ix) that by doubting the correctness of the decision of a larger Bench, a cloud of uncertainty cannot be created on the application of a law;

(x) that the decision in Vijay Madanlal Choudhary is a binding precedent and the doctrine of stare decisis should be given meaning and value;

(xi) that the English precedents on the doctrine of stare decisis, such as those in Street Tramways v. London County Council30 and Redcliffe v. Ribble Motor Services31, have been followed by our Courts;

(xii) that as laid down by this Court in Sakshi v. Union of India32, the doctrine of stare decisis gives certainty to law and guides people to mould their affairs in the future;

(xiii) that as held by this Court in Central Board of Dawoodi Bohra Community v. State of Maharashtra33, a Bench of lesser coram cannot express disagreement with or question the correctness of the view taken by a Bench of larger coram;

(xiv) that as opined by Chief Justice John Roberts of the Supreme Court of the United States, ‘it is a jolt to the legal system when you overrule a precedent’;

(xv) that the ratio laid down by a larger Bench should not become suspect merely because another view is possible;

(xvi) that in any case, Vijay Madanlal Choudhary has taken note of different views of several High Courts including the High Courts of Bombay, Delhi,

Jharkhand and Punjab and Haryana, etc.; and

(xvii) that unsettling the law laid down in Vijay Madanlal Choudhary at a time when the ranking of the country in curbing the menace of money- laundering has improved, will derail the whole process.

86. We have carefully considered the rival contentions. A careful analysis of the arguments advanced by all the three learned senior counsel appearing for the accused namely Shri Kapil Sibal, Shri

C.A. Sundaram and Shri Sidharth Luthra would show that a three-pronged strategy has been formulated in their attack on the initiation of proceedings by the ED. This three-pronged strategy goes as follows:

(i) questioning the correctness of the decision in Vijay Madanlal Choudhary and seeking a reference to larger Bench (by Shri Kapil Sibal);

(ii) accepting the decision in Vijay Madanlal Choudhary as correct and trying to demonstrate how the initiation of proceedings in the present case falls foul of the ratio in Vijay Madanlal Choudhary (by Shri C.A. Sundaram); and

(iii) relying upon some portions, but attacking some other portions of Vijay Madanlal Choudhary so that any one of these provide an escape route (by Shri Luthra).

87. In terms of issues, the arguments advanced by all the three learned senior counsel can be crystallized and formulated into two fundamental questions that may have to be addressed by us. These questions are:—

(i) Whether without identifying the proceeds of crime or a property representing the proceeds of crime

and without identifying any process or activity connected to proceeds of crime as required by Section 3, which constitute the foundational/jurisdictional fact, ED can initiate an investigation and issue summons

(ii) Whether in the light of the fact that notice has been ordered in the review petition and a few interim orders have been passed in some proceedings, it is necessary for this Court to tag these appeals along with a review petition or defer the hearing of these matters until a decision is rendered in the review petition and other petitions

88. Before we find an answer to these two questions, it is necessary to take note of how and why PMLA came into existence and what geopolitical circumstances compelled India to bring the law. According to United Nations Office on Drugs and Crime34, South Asia, corruption is recognized as a crucial governance and security challenge in South Asia region. UNODC has estimated that corruption costs more than 5% of global GDP (US$2.6 trillion) annually, with estimates of global money-laundering at around $500 billion (works out to INR 40 lakhs crores) annually. Based upon a study conducted by Pune based Forensic Accounting Company by name “Indiaforensic” way back in the year 2011 on “Ascertaining size of Corruption in India with respect to money laundering”, the Economic Times reported in its Edition dated 17.07.2011 that money laundered out of India in the decade 2001-2010 could be pegged at Rs. 18,86,000 crores. This is why in May 2011, India became party to the United Nations Convention against Corruption (UNCAC) joining over 160 other countries who were party to this UN Convention.

89. The history of the legislation on money- laundering is almost six decades old. In brief, this history can be traced as follows:

(i) In 1961, United Nations Convention on Narcotic Drugs was adopted and it was amended by the protocol of the year 1972.

(ii) In 1971, United Nations Convention on Psychotropic Substances was made.

(iii) In 1974, a bank known as Herstatt Bank in Germany was forced into liquidation by the Regulators. On the day on which it happened, a number of banks had released payments to Herstatt in exchange for US dollars to be delivered in New York. But due to the time zone differences, Herstatt ceased operations between the times of the respective payments. As a result, payments were not made in New York. Therefore, a Standing Committee which came to be known as Basel Committee on Banking Supervision (BCBS) was formed by G-10 countries namely Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, UK and USA.

(iv) In December 1988, two things happened. One was the adoption of a Convention by name UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (popularly known as Vienna Convention). The second was that at about the same time, the Basel Committee issued a general statement of ethical principles which encourages banks' management to put in place effective procedures to ensure that all persons conducting business with their institutions are properly identified, that transactions that do not appear legitimate are to be discouraged and that cooperation with law enforcement agencies is achieved.

(v) In 1989, the FATF was established at the G-7 summit held at Paris, as an inter-governmental body by the member countries namely Canada, France, Germany, Italy, Japan, UK and USA. Now

FATF consists of 39 members including India and over 200 jurisdictions around the world have committed to the FATF recommendations.

(vi) In 1990, the Member States of the Council of Europe signed and ratified a Convention known as The Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, also known as the Strasbourg Convention or CETS 141. Interestingly, Australia though not a Member of the Council of Europe, also signed and ratified this Convention. The Convention sought to facilitate international co-operation and mutual assistance in investigating crime and tracking down, seizing and confiscating the proceeds thereof. The purpose of bringing the States together was to assist them in attaining a similar degree of efficiency even in the absence of full legislative harmony.

(vii) As part of United Nations office on Drugs and Crime, a Global Programme against Money Laundering (GPML) was established in 1987 to assist Member States to comply with UN Conventions and other instruments that deal with money-laundering and terrorism financing.

(viii) On 15.11.2000, the UN General Assembly adopted the United Nations Convention against Transnational Organized Crime and it opened for signature by Member States at a high level political Conference convened at Palermo, Italy in December 2000 (now known as Palermo Convention).

(ix) On October 31, 2003, the United Nations General Assembly adopted the UN Convention against corruption and the Convention came into force in 2005.

(x) Pursuant to the political Declaration adopted by the special session of the United Nations General

Assembly held between 8th to 10th June 1998 (of which India is one of the signatories) calling upon member States to adopt Anti Money Laundering Legislation & Programme, the Parliament has enacted a special law called the ‘Prevention of Money Laundering Act, 2002’ (PMLA 2002). The Act has come into force with effect from 1st July 2005. It has been substantially amended, by way of enlarging its scope, in 2009 (w.e.f. 01.06.2009), by enactment of Prevention of Money Laundering (Amendment) Act, 2009. The Act was further amended by Prevention of Money-Laundering (Amendment) Act, 2012 (w.e.f. 15-02-2013).

(xi) As part of the effort to assist jurisdictions prepare or upgrade their legislative framework to conform with international standards and best practices to implement anti-money laundering measures and combating the financing of terrorism, UNODC issued in 2003, “Model Money-Laundering, Proceeds of Crime and Terrorist Financing Bill”.

90. The Commonwealth Secretariat of the UNODC released in April 2009 an updated version of the “Model Provisions on Money Laundering, Terrorist Financing, Preventive Measures and Proceeds of Crime”. Some of the provisions of the UN Model Law 2009 show that PMLA has been brought in tune with the Model Law.

91. The Drafting Note on self-laundering, contained in the Model Law deals with the question whether a person should necessarily be implicated in the predicate offence so as to be an accused in the offence of money- laundering. It reads as follows:

“Self-laundering:

“As the section refers to “any person,” this includes both the person who committed the predicate offence and third party launderers. Although generally not an issue in States in the common law tradition, there can be a

question whether the offence should be extended to the person who also committed the predicate offence.

The Vienna and Palermo Conventions provide an exception to the general principle that both the predicate offender and third parties should be liable for money laundering where fundamental principles of domestic law require that it not apply to the person who committed the predicate offence. In some countries, constitutional principles prohibit prosecuting a person both for money laundering and a predicate offence. In the case of most common law countries, there do not appear to be fundamental principles that prohibit the application of the money laundering offence to self-launderers. However, if an exception is necessary, an additional provision, as “[t]he offence of money laundering shall not apply to persons who have committed the predicate offence” should be incorporated.

If drafters believe that there is a need for additional clarity beyond the reference to “any person” to ensure that those who launder their own proceeds are covered, a provision can be added as “[t]he offences set forth in Section 3(2) - (5) shall also apply to the person who has committed the offence(s), other than money laundering, that generated the proceeds of crime.”

92. Similarly, the portion of the Drafting Note in the Model Law, enlisting the kind of activities that may constitute the offence of money laundering reads as follows:

“Kinds of Offences : As the UN's Legislative Guide to the Palermo Convention and Legislative Guide for the Implementation of the United Nations Convention Against Corruption make clear, there are four general kinds of conduct that should be criminalized. The minimum requirements for each are:

1. Conversion or transfer of proceeds of crime. This includes “instances in which financial assets are

converted from one form or type to another, for example, by using illicitly generated cash to purchase precious metals or real estate or the sale of illicitly acquired real estate, as well as instances in which the same assets are moved from one place or jurisdiction to another or from one bank account to another.” (See, e.g., paragraph 231, in Legislative Guide for the implementation of the UN Corruption Convention). Regarding mental elements, the conversion or transfer must be intentional, the accused must have knowledge at the time of conversion or transfer that the assets are criminal proceeds, and the act must be done for either one of the two purposes stated - concealing or disguising criminal origin or helping any person (whether one's self or another) to evade criminal liability for the crime that generated the proceeds.

2. Concealment or disguise of proceeds of crime. There are many aspects noted in the provision as to which there can be concealment or disguise - almost any aspect of, or information about, the property, so this section is broad. The concealment or disguise must be intentional and the accused must have knowledge that the property constitutes proceeds of crime at the time of the act. This provision deals with the intentional deception of others. This will include the intentional deception of law enforcement authorities. True nature may be the essential quality of it having been derived from criminal activity. Origin may be the physical origin, or its origin in criminality. For this second offence, there should not be a requirement of proof that the purpose of the concealment or disguise is to frustrate the tracing of the asset or to conceal its true origin. Although as a general matter this will be the purpose of the concealing or disguising, the applicable UN Conventions require that there be

criminalization that is not dependent upon a showing of such purpose.

3. Acquisition, possession or use of proceeds. This section imposes liability on recipients who acquire, possess or use property, and contrasts with the two provisions above that deal with liability for those who provide illicit proceeds. There must be intent to acquire, possess or use, and the accused must have knowledge at the time of acquisition or receipt that the property was proceeds.

4. Participation in, association with or conspiracy to commit, attempts to commit and aiding, abetting, facilitating and counselling. There are varying degrees of complicity or participation other than physical commission of the offence : assistance (aiding and abetting, facilitating) and encouragement (counselling). In addition, attempts are to be criminalized. Finally, this section includes conspiracy, a common law concept, or as an alternative, an association of persons working together to commit an offence.

Knowledge : The variants suggested are first, the basic one of knowledge that the property is proceeds of crime (which knowledge may be inferred from objective factual circumstances); and secondly a more flexible standard of knowledge or suspicion that the property is proceeds of crime.”

93. Therefore, it is clear that the provisions of PMLA are in tune with the Model Law drafted by UNODC. Keeping this in mind, let us now search for an answer to the two questions.

Question 1 : Whether without identifying the proceeds of crime or a property representing the proceeds of crime and without identifying any process or activity connected to proceeds of crime as required by Section 3, which constitute the

foundational/jurisdictional fact, ED can initiate an investigation and issue summons

94. The common theme of the song of the learned counsel for the accused is that the mere registration of a FIR for a predicate offence, even if it is a scheduled offence, is not sufficient for the ED to register an Information Report and summon anyone. According to the learned counsel, the commission of the scheduled offence should have generated proceeds of crime and those proceeds of crime should have been laundered by someone, for the ED to step in. Going a step further, it was contended by the learned senior counsel that the ED should first identify some property as representing the proceeds of crime, before an Information Report is registered and a summon issued under Section 50(2).

95. These contentions, in our opinion, if accepted, would amount to putting the cart before the horse. Unfortunately for the accused, this is not the scheme of the Act.

96. Section 3 of the Act which defines the offence of money-laundering reads as follows:

“3. Offence of money-laundering.—Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.

Explanation.—For the removal of doubts, it is hereby clarified that,—

(i) a person shall be guilty of offence of money- laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes

or activities connected with proceeds of crime, namely:—

(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e) projecting as untainted property; or

(f) claiming as untainted property, in any manner whatsoever;

(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.”

97. If the main part of Section 3 is dissected with forensic precision, it will be clear that Section 3 addresses itself to three things (we may call them 3 ‘P's) namely, (i) person; (ii) process or activity; and (iii) product. Insofar as persons covered by Section 3 are concerned, they are, (i) those who directly or indirectly attempt to indulge; or (ii) those who knowingly assists; or (iii) those who are knowingly a party; or (iv) those who are actually involved. Insofar as process is concerned, the Section identifies six different activities,

namely (i) concealment; (ii) possession; (iii) acquisition

; (iv) use; (v) projecting; or (vi) claiming as untainted property, any one of which is sufficient to constitute the offence. Insofar as product is concerned, Section 3 identifies “proceeds of crime” or the property representing the proceeds of crime as the product of the process or activity.

98. Out of the three things that Section 3 addresses, namely (i) person; (ii) process; and (iii) product, the first two do not require any interpretation or definition. The third aspect namely “product”, which Section 3 refers to as “proceeds of crime” requires a definition and hence it is defined in Section 2(1)(u) as follows:—

“2. Definitions. — (1) In this Act, unless the context otherwise requires, —

xxxxxxxxx

(u) “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;

Explanation.—For the removal of doubts, it is hereby clarified that “proceeds of crime” including property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;”

99. Keeping in mind these essential elements that make up the molecular structure of Section 3, if we go back to the case on hand, we will find (i) that the offences under Sections 120B, 419, 420, 467 and 471 IPC are scheduled offences included in paragraph

1 of the Schedule; and (ii) that the offences under Sections 7 and 13 of the PC Act are included in paragraph 8 of the Schedule.

100. All the three FIRs allege that the accused herein had committed offences included in the Schedule by taking illegal gratification for providing appointment to several persons in the Public Transport Corporation. In one case it is alleged that a sum of more than Rs. 2

crores had been collected and in another case a sum of Rs. 95 lakhs had been collected. It is this bribe money that constitutes the ‘proceeds of crime’ within the meaning of Section 2(1)(u). It is no rocket science to know that a public servant receiving illegal gratification is in possession of proceeds of crime. The argument that the mere generation of proceeds of crime is not sufficient to constitute the offence of money- laundering, is actually preposterous. As we could see from Section 3, there are six processes or activities identified therein. They are, (i) concealment;

(ii) possession; (iii) acquisition; (iv) use; (v) projecting as untainted property; and (vi) claiming as untainted property. If a person takes a bribe, he acquires proceeds of crime. So, the activity of “acquisition” takes place. Even if he does not retain it but “uses” it, he will be guilty of the offence of money-laundering, since “use” is one of the six activities mentioned in Section 3.

101. The FIRs for the predicate offences identify all the three components of Section 3, namely, (i) persons; (ii) process; and (iii) product. Persons accused in the FIRs are those who have indulged in the process or activity. The illegal gratification that they have taken, represents the proceeds of crime. The (i) acquisition of such illegal gratification in the first instance; (ii) the possession of the tainted money before putting it to use; and (iii) today projecting it as untainted money, is the process or activity in which the accused have indulged. The corruption money represents the proceeds of crime.

102. Therefore, all the arguments as though there are no foundational facts or jurisdictional facts, are simply aimed at hoodwinking the Court.

103. It is true that there are some offences, which, though scheduled offences, may or may not generate proceeds of crime. For instance, the offence of murder punishable under Section 302 is a

scheduled offence. Unless it is a murder for gain or murder by a hired assassin, the same may or may not generate proceeds of crime. It is in respect of such types of offences that one may possibly argue that mere commission of the crime is not sufficient but the generation of proceeds of crime is necessary. In the case of an offence of corruption, the criminal activity and the generation of the proceeds of crime are like Siamese twins.

104. In fact, PMLA defines the word “property” in Section 2(1)(v) as follows:

“2. Definitions.—(1) In this Act, unless the context otherwise requires,—

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(v) “property” means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;

Explanation.—For the removal of doubts, it is hereby clarified that the term “property” includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences;”

105. Therefore, even if an intangible property is derived as a result of criminal activity relating to a scheduled offence, it becomes proceeds of crime under Section 2(1)(u). In view of the above, we are not impressed with the contention that the investigation by ED was triggered without any foundational/jurisdictional facts. In our view, the allegations in the FIR point out to (i) involvement of persons in criminal activity relating to scheduled offences; (ii) the generation as well as (iii) laundering of the proceeds of crime within the meaning of Section 3. This is in view of the fact that wherever there are allegations of corruption, there is

acquisition of proceeds of crime which itself tantamount to money-laundering.

106. A lot of heat and dust was generated about the ED registering an Information Report on 29.07.2021 without any material whatsoever and thereafter indulging in a fishing expedition both by summoning the respondents and by seeking copies of various documents from the Special Court before which the complaints relating to the predicate offences are pending. But we do not see any substance in these arguments. The reason why we say so will be understood if we rewind and go back to a few facts.

107. On 29.10.2015, Devasagayam made a complaint. It was against ten different persons, but not against the Minister, his brother and his Secretary. But on 07/08.03.2016, one Gopi made a complaint naming the brother of the Minister and claimed that a total amount of more than Rs. 2 crores was paid. Gopi then filed Criminal

O.P. No. 7503 of 2016 on the file of the High Court in which the High Court passed an order on 20.06.2016, to expand the investigation and go against the real culprits. But a Final Report under Section 173(2) of the Code was filed on 13.06.2017. This was followed by another complaint filed by V. Ganesh Kumar on 09.09.2017 in FIR No. 298 of 2017. In this FIR, a Final Report was filed on 07.06.2018. Similarly, one Arulmani filed a complaint on 13.08.2018 in FIR No. 344 of 2018 in which a Final Report was filed on 12.04.2019.

108. Subsequently, at the instance of one R.B. Arun Kumar, further investigation was ordered in FIR No.

441 of 2015, by an order of the High Court dated 27.11.2019. Thereafter, a discharge petition was filed by the Minister in one of those cases and after the same was dismissed, he filed a revision before the High Court. During the pendency of the revision, a Final Report was filed under Section 173(8) in one of those cases.

109. Around the same time, writ petitions were filed pointing out that there was a huge jobs-for-cash scam. In those writ petitions, the Assistant Commissioner of Police filed counter affidavits.

110. Thus, the information about all complaints, the nature of the complaints, the amount of money allegedly collected towards illegal gratification had all come into public domain. To say that the ED should have adopted an Ostrich like approach, without trying to find out where and to whom the huge money generated in the scam had gone, is something unheard of.

111. In fact, ED was not trying to access any document which was inaccessible. In several proceedings before the High Court, such as (i) petitions for further investigation; (ii) writ petitions; and (iii) quash petitions, some of the documents whose certified copies were sought by the ED were already annexed. All that the ED wanted was authenticated copies of those documents and nothing more.

112. In fact, the FIRs as well as Final Reports are now uploaded in the websites of the Police Department in some of the States. In the State of Tamil Nadu, Police started uploading FIRs online, way back in 2016. In all Police Stations, a Crime and Criminal Tracking Network and Systems, popularly known as ‘CCTNS’ is installed. Therefore, the information relating to FIRs is in the public domain.

113. Once an information relating to the acquisition of huge amount of illegal gratification in the matter of public employment has come into the public domain, it is the duty of the ED to register an Information Report. This is because “acquisition” is an activity amounting to money-laundering and the illegal gratification acquired by a public servant represents “proceeds of crime,” generated through a criminal activity in respect of a scheduled offence. Therefore, it does

not require any expedition, much less a fishing expedition for someone to say that the receipt of bribe money is an act of money-laundering.

114. The contention of Shri Sidharth Luthra that there was no explanation for the delay on the part of the ED in registering the Information Report, is a self-serving argument. If the ED registers an Information Report immediately upon the registration of a FIR for a predicate offence, ED will be accused of acting in haste. If they wait until the drama unfolds up to a particular stage, ED will be attacked as guilty of delay. The accused should be thankful to ED for giving a long rope from 2016 till 2021.”

(Emphasis supplied)

The Apex Court at paragraph 69 (supra) deduces the principles. The Apex Court holds that once stay operating in two of the criminal cases for predicate offence is vacated, then the temporary reprieve that has been granted by the High Court to the accused would automatically go.

12. What would become unmistakably clear from the aforesaid judgment of the Apex Court is that the temporary reprieve would temporarily suspend these proceedings. When the temporary reprieve would get vacated, the proceedings under the Enforcement Directorate can continue. Since the temporary reprieve is still in force as the Bench at Kalaburagi has stayed further proceedings, permitting further proceedings to continue against the petitioner in the subject ECIR would become unavailable. Therefore, it is necessary that both the proceedings are taken up hand in hand, as one is dependent on the other i.e., the PMLA proceedings are dependent upon the predicate offences.

13. For the aforesaid reasons, the following:

O R D E R

(i) The Criminal Petition is partly allowed.

(ii) The impugned proceedings shall remain suspended till the temporary reprieve granted to the petitioner in the predicate offence - the IPC subsists. On the reprieve getting vacated, the impugned proceedings shall automatically commence and can be taken to its logical conclusion.

(iii) The Enforcement Directorate is at liberty to move the Kalaburagi Bench where matters concerning predicate offences are pending, for getting this matter clubbed along with them and, give a quietus to the conundrum.