High Court of KeralaSingle Judge2023-09-12Writ petition allowed; Ext.P12 set aside; origi...

V.P. Nandakumar vs. Assistant Director, Directorate of Enforcement, Cochin Zonal Office

Case / Petition Number:WP(C) No. 15651 of 2023

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Devan Ramachandran, J.
Judgment Date: 2023-09-12
Court Decision / Holding: Writ petition allowed; Ext.P12 set aside; the original documents relating to the properties covered by Ext.P12 to be returned by the respondent within three weeks of receipt of copy of the judgment. The Court clarifies that, should predicate offences revive and a fresh ECIR be opened, the ED would be at liberty to issue similar protective orders.
Final Disposition: Writ petition allowed; Ext.P12 set aside; original property documents to be returned within three weeks; ED may revive proceedings if predicate offence revives and a fresh ECIR is opened.

Parties to the Case

Appellants / Petitioners

V.P.Nandakumar, aged 69 years, Padmasaroj', Vazhapppully House, Valappad, Thrissur, PIN - 680567

Respondents

The Assistant Director Directorate of Enforcement, Cochin Zonal Office, Kanoos Castle, A.K. Seshadri Road, Mullassery Canal Road West, Cochin, PIN - 682011

Legal Representation & Advocates

Counsels for Petitioners

• D. Kishore
• Meera Gopinath
• R. Muraleekrishnan (Malakkara)

Counsels for Respondents

• Jaishankar V. Nair

Case Synopsis & Summary

This writ petition challenges Ext.P12, an order issued under Section 17(1A) of the Prevention of Money Laundering Act, 2002, to protect properties allegedly linked to a money-laundering investigation. The ECIR registered against the petitioner was quashed by this Court in Crl.M.C.No.5167/2023, and no FIR remains active. The core question is whether Ext.P12 can still stand. The petitioner’s counsel argues that with the predicate offence and ECIR quashed, the underpinning for Ext.P12 dissolves; continuing the order would prejudice the petitioner and would not be sustainable in law. The ED contends that, although the ECIR has been quashed, the offence of money laundering is an independent offence connected to the proceeds of crime, and information gathered during ED’s investigation has been transferred to police for further action; thus, the order under Section 17(1A) may be valid and protective. The court acknowledges the ED's argument but notes that there is no active FIR or ECIR; without a live predicate, further ED action under PMLA cannot proceed. It cites the Supreme Court's ruling in Vijay Madanlal Choudhary to the effect that, upon revival of the predicate offence, ED may revive proceedings. The judge ultimately holds that Ext.P12 cannot remain in force and quashes it, directing the return of original documents within three weeks. He clarifies that future action remains possible if predicate offences are revived and a fresh ECIR opened.

Provisions of Law Cited

Section 17(1A) of the Prevention of Money Laundering Act, 2002Section 2(1)(y) of the Prevention of Money Laundering Act, 2002Section 66 of the Prevention of Money Laundering Act, 2002Section 420 of the Indian Penal Code

Legal Doctrines & Maxims

ad idem
Money laundering is an independent offence relating to proceeds of crime (doctrine cited from Vijay Madanlal Choudhary & others v. Union of India & others, 2022 SCC OnLine SC 929)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends Ext.P12 is unsustainable once the predicate offence and the ECIR have been quashed. With no active FIR or ECIR, continuing Ext.P12 would prejudice the petitioner and lack legal footing. The ED’s reliance on Section 66 PMLA and information handed to police does not salvage an order founded on a quashed ECIR. The Advocate for the petitioner emphasizes that the PMLA regime requires a live predicate offence to sustain proceedings, and any revival must be legally grounded; Ext.P12 cannot stand in the absence of a viable ECIR. The petition therefore seeks to set aside Ext.P12 and return the property documents.

Contentions of Respondents

The ED argues Ext.P12 was issued to safeguard assets during an ongoing inquiry into money laundering, and that even though the ECIR has been quashed, the money-laundering offence remains independent of the predicate offence. It relies on the Supreme Court’s observation that the offence relates to proceeds of crime and that information gathered can be handed to police for further investigation under Section 66 PMLA. It contends that Ext.P12 was issued in the proper exercise of jurisdiction and should not be vacated unless a live FIR/ECIR exists. The ED further asserts that a revival of predicate offences would permit renewal of proceedings under PMLA if warranted by law.”},

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Vijay Madanlal Choudhary & others v. Union of India & others	2022 SCC OnLine SC 929	Positive	Court relies on the principle that money laundering is an independent offence connected to the proceeds of crime; supports the argument that information obtained during ED investigation can be used for further action, justifying potential revival of proceedings if predicate offence revives.
Crl.M.C.No.5167/2023	Crl.M.C.No.5167/2023	Mentioned Only	The judgment notes that ECIR was quashed in this Court in Crl.M.C.No.5167/2023; cited as a background fact but not treated as binding precedent in the current writ petition.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **TUESDAY, THE 12[TH] DAY OF SEPTEMBER 2023 / 21ST BHADRA, 1945** ## **WP(C) NO. 15651 OF 2023** ## **PETITIONER:** V.P.NANDAKUMAR AGED 69 YEARS, PADMASAROJ', VAZHAPPULLY HOUSE, VALAPPAD, THRISSUR, PIN - 680567 BY ADVS. D.KISHORE MEERA GOPINATH R.MURALEEKRISHNAN (MALAKKARA) ## **RESPONDENT:** THE ASSISTANT DIRECTOR DIRECTORATE OF ENFORCEMENT, COCHIN ZONAL OFFICE, KANOOS CASTLE, A.K.SESHADRI ROAD, MULLASSERY CANAL ROAD WEST, COCHIN, PIN - 682011 BY ADV. SRI.JAISHANKAR V.NAIR [SC] THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C).No. 15651 of 2023 : 2 : ## **C.R.** ## **DEVAN RAMACHANDRAN, J.** ## **========================= W.P.(C).No. 15651 of 2023 ========================== Dated this the 12[th] day of September, 2023** ## **JUDGMENT** The parties are _ad idem_ that the Enforcement Case Information Report (hereinafter referred to as 'ECIR', for short) registered against the petitioner, has already been quashed by this Court in Crl.M.C.No.5167/2023. 2. The axiomatic question is whether Ext.P12 order assailed in this writ petition, issued under Section 17(1A) of the Prevention of Money Laundering Act, 2002 ('PMLA' for short), is now sustainable. 3. Sri.Mahesh Jethmalani – learned Senior counsel, instructed by Sri.D.Kishore, appearing for the petitioner, emphatically predicated that, with the foundational edifice of the case – registered by the Enforcement Director ('ED' for short) under the provisions of the 'PMLA' – having been abrogated by this Court in Crl.M.C.No.5167/2023, Ext.P12 order has lost its legs to stand on; and cannot, therefore, be now supported or justified to continue. The learned Senior Counsel, therefore, prayed that Ext.P12 be set aside. 4. Sri.Jaishankar V. Nair – learned Standing Counsel for the W.P.(C).No. 15651 of 2023 : 3 : 'ED', however, argued in support of Ext.P12, saying that said order was issued at a time when the petitioner was facing a criminal charge under Section 420 of the Indian Penal Code (IPC), registered by the jurisdictional Police Authorities. He argued that since Section 420 of the IPC is one among the scheduled offences under Section 2(1)(y) of the 'PMLA', and the 'ECIR' having been registered on 06.09.2022; it became imperative that the properties covered by Ext.P12 be protected from depletion or destruction. He explained that, therefore, Ext.P12 was issued under the provisions of Section 17(1A) of the 'PMLA' on 04.05.2023 (shown incorrectly in Ext.P12 as 04.05.2022); and vehemently asserted that it was within the jurisdiction of the competent Authority to have done so. 5. However, to a pointed question from this Court, Sri.Jaishankar V. Nair was unable to cogently justify how the proceedings under the 'PMLA' is still maintained against the petitioner, when the 'ECIR' itself has been quashed by this Court. His explanation was that, it has been well settled in law by the Hon'ble Supreme Court in **Vijay Madanlal Choudhary & others v. Union of India & others (2022 SCC OnLine SC 929)** , that the offence of money laundering is an independent offence relating to processes or activities connected with the proceeds of crime; and that, during the investigation conducted by the 'ED', it has W.P.(C).No. 15651 of 2023 : 4 : come into possession of vital information against the petitioner, which has now been handed over to the police for further investigation. He submitted that this course was adopted under Section 66 of the 'PMLA' and, therefore, that unless the police complete their investigation on such additional inputs, made available to them by the officials of the ED, Ext.P12 order cannot be vacated. He thus prayed that this writ petition be dismissed and that competent Authority of the 'ED' be permitted to await further information from the Kerala Police, after investigation into the additional information favoured to them by the former. 6. Though this Court finds in favour of the law as afore explained by Sri.Jaishankar V. Nair, the singular fact remains that any investigation against the petitioner under the 'PMLA' is possible only if it is edificed on a crime registered. As matters now stand, the FIR registered by the jurisdictional police officers against the petitioner has been quashed by this Court; consequent to which, the 'ECIR' has also been quashed, as said above, through the judgment in Crl.M.C.No.5167/2023. 7. Of course, the 'ED' now asserts that, during their investigation, they have came to be in possession of certain other inputs, which would be sufficient to implicate the petitioner in various offences; and that they have handed over the same to the W.P.(C).No. 15651 of 2023 : 5 : Kerala Police for further investigation. However, Sri.Jaishankar V. Nair was candid enough to admit that his clients have neither received any information from the Kerala Police _qua_ such investigation yet; nor are they aware of any new FIR having been registered. 8. Indubitably, therefore, when there is no FIR registered, hypostised on which an 'ECIR' is also not available, any further investigation against the petitioner under the 'PMLA' will have to cease. 9. In such perspective, the acme question is whether Ext.P12 order should be allowed to continue. 10. I am certain, without any doubt, that in view of quashing of the 'ECIR' and in the absence of any further FIR being registered against the petitioner, Ext.P12 cannot be allowed to hold the field, particularly when it causes sure prejudice to the person against which it is issued. 11. That being said, I notice from the judgment in Crl.M.C.No.5167/2023, that this Court has made it abundantly clear that _“in the event of the predicate offence getting revived, it would always be open for the ED to revive the proceedings under the Prevention of Money Laundering Act, 2002 as well.”_ Indubitably, this is the best protection that the 'ED' can have; and W.P.(C).No. 15651 of 2023 : 6 : apodictically, therefore, as and when any such revival is to take place in law, they will be at full liberty to issue orders akin to Ext.P12 under Section 17 (1A) of the PMLA, 2002; for which, none of my observations in this judgment would be a fetter. With the afore clarification, I allow this writ petition and set aside Ext.P12. As a necessary corollary to the afore declaration, the respondent will return all the original documents of the properties covered by Ext.P12 without any avoidable delay, but within three weeks from the date of receipt of a copy of this judgment. **Sd/DEVAN RAMACHANDRAN JUDGE** anm : 7 : ## W.P.(C).No. 15651 of 2023 ## **APPENDIX OF WP(C) 15651/2023** |PETITIONER EXHIBITS|| |---|---| |Exhibit P1|TRUE COPY OF THE COMPLAINT DATED| ||11.05.2022 REGISTERED AS C.M.P.| ||NO.4374/2022 BEFORE THE JUDICIAL FIRST| ||CLASS MAGISTRATE'S COURT, KODUNGALLUR| |Exhibit P2|TRUE COPY OF THE FIR NO.376/2022, DATED| ||24.05.2022 REGISTERED BEFORE VALAPPAD| ||POLICE STATION| |Exhibit P2(a)|ENGLISH TRANSLATION OF EXHIBIT P2| |Exhibit P3|TRUE COPY OF THE FINAL REPORT, DATED| ||19.01.2023 FILED BY THE INSPECTOR OF| ||POLICE, VALAPPAD POLICE STATION| |Exhibit P3(a)|ENGLISH TRANSLATION OF EXHIBIT P3| |Exhibit P4|TRUE COPY OF THE JUDGMENT DATED| ||08.01.2021 IN WP(C). NO.35024/2019| |Exhibit P5|TRUE COPY OF THE STATEMENT DATED| ||06.07.2022 FILED BY THE RESPONDENT HEREIN| ||IN WP(C). NO.12387/2021| |Exhibit P6|TRUE COPY OF THE ADDITIONAL STATEMENT,| ||DATED 25.11.2022 FILED BY COUNSEL FOR THE| ||RESPONDENT HEREIN IN WP(C).NO.12387/2021| |Exhibit P7|TRUE COPY OF THE JUDGMENT DATED| ||14.02.2023 IN WP(C). NO.12387/2021| |Exhibit P8|TRUE COPY OF ONE SUCH SUMMONS ISSUED TO| ||THE PETITIONER DATED 01.12.2022 BY THE| ||OFFICE OF THE RESPONDENT DIRECTING TO| ||APPEAR ON 05.12.2022| |Exhibit P9|TRUE COPY OF THE LETTER DATED 05.12.2022| ||(WITHOUT ITS ANNEXURES) SUBMITTED BY THE| ||PETITIONER BEFORE THE RESPONDENT| |Exhibit P10|TRUE COPY OF THE LETTER DATED 07.12.2022| ||(WITHOUT ITS ANNEXURES) SUBMITTED BY THE| ||PETITIONER BEFORE THE RESPONDENT| |Exhibit P11|TRUE COPY OF THE INSPECTION REPORT| ||(WITHOUT ITS ANNEXURES), DATED NIL,| ||ISSUED BY THE RBI| |Exhibit P12|TRUE COPY OF THE ORDER DATED 04.05.2023| ||(WRONGLY SHOWN AS 04.05.2022) ISSUED BY| ||THE RESPONDENT| |Exhibit P13|TRUE COPY OF THE STATEMENT DATED| ||04.05.2023 ISSUED BY THE RESPONDENT TO| ||THE PETITIONER| |Exhibit P14|TRUE COPY OF THE LETTER DATED 01.01.2015| ||ISSUED BY THE RBI TO THE PETITIONER| |Exhibit P15|TRUE COPY OF THE ORDER DATED 06.07.2022| ||IN CRL MC NO. 4436-2022| ## W.P.(C).No. 15651 of 2023 : 8 : |Exhibit P16|TRUE COPY OF THE ORDER DATED 15.03.2023| |---|---| ||IN CRL. MA NO. 1 OF 2022 IN CRL MC NO.| ||4436 OF 2022.| |Exhibit P17|TRUE COPY OF THE JUDGMENT DATED 18/8/2017| ||IN CRL.MC NO. 764 OF 2014| |Exhibit P18|TRUE COPY OF THE JUDGMENT DATED| ||19/10/2017 IN CRL.MC NO. 733 OF 2014 OF| ||THIS COURT| |Exhibit P19|TRUE COPY OF THE NOTICE VIDE NO. T-| ||3/52/KCZO2014/1815 ISSUED BY THE| ||RESPONDENT REQUIRING THE PETITIONER TO| ||FURNISH THE DETAILS GIVEN UNDER THE| ||SCHEDULE WITHIN 7 DAYS OF RECEIPT OF THE| ||SAID LETTER| |Exhibit P20|TRUE COPY OF THE ECIR/KCZO/36/2022 ISSUED| ||BY THE RESPONDENT DATED 6/9/2022| |Exhibit P21|TRUE COPY OF THE JUDGMENT DATED 15/6/2023| ||OF THIS HON'BLE COURT IN CRL.MC NO. 4436| ||OF 2022| |Exhibit P22|TRUE COPY OF THE INTERIM ORDER DATED| ||12/7/2023 IN CRL MA NO. 1 OF 2023 IN| ||CRL.MC NO. 5167 OF 2023| |Exhibit P23|TRUE COPY OF THE ORDER IN CRL.M.C NO.| ||5167 OF 2023 DATED 25.8.2023| |RESPONDENT EXHIBITS|| |Exhibit R1(a)|TRUE COPY OF THE P L ACCOUNT FOR THE YEAR| ||ENDED 31 03 2022|