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Delhi High Court's Ruling on Amit Katyal's Petition: Understanding the Recent Judgment

Delhi High Court passed a Judgment on 03.11.2023 in respect to the writ petition which was filed under Article 226 of the Constitution of India (read with Section 482 of the Code of Criminal Procedure, 1973) by Amit Katyal, a businessman and a former director of various companies namely M/s Iceberg Industries and M/s AK Infosystem Pvt. Ltd. and also belongs to the family which owns Krrish group of companies and has been in Breweries and Distilleries business since 1983, against Directorate of Enforcement while seeking certain reliefs, mentioned infra:
  1. Direction be made to call the records pertaining to ECIR no. 31/2022 and proceedings thereto against the petitioner be quashed;
  2. The respondent be restrained from taking any coercive action against the petitioner in pursuance to ECIR no. 31/2022 (that includes conducting further investigation) and the summon dated 06.10.2023 qua the petitioner be quashed;
  3. Directorate of Enforcement ('ED') case against the petitioner qua ECIR no. 31/2022, summon dated 06.10.2023 and all the proceedings emanating therefrom be quashed;
  4. Any other order or directions deems fit and proper in the eyes of the Hon'ble Court be passed.

Facts of the case:
The brief/summarized facts of the case are mentioned infra:
  • The petitioner is having a background related to the business of Breweries and Distilleries, and was on the position of director in several companies. One of the companies, in which the petitioner was a director, was M/s Iceberg Industries Ltd. The said company purchased land of 12 acres in Bihta, Biharin order to set up a plant of Distillery and Brewery. Thence, the petitioner started purchasing different lands in the name of different companies for the purpose of storage and expansion of the said plant.
  • Among these transactions, the petitioner, being the director of M/s AK Infosystem Pvt. Ltd., purchased a land of 9527 sq. ft. situated in Rupaspur, Danapur, Patna, Bihar for a sale consideration of Rs. 10,83,000/- (paid in case) from the owner of said land Sh. Hazari Rai, who was a relative of one of the recruits in Railway Department Group-D.
  • Later on, the petitioner sold M/s Iceberg Industries and also resigned from the directorship, thereby completely exiting the company. Further, M/s Ak Infosystem Pvt. Ltd. was sold to Smt. Rabri Devi and Sh. TejPartap (Family members of Sh. Lalu Prasad Yadav) and the petitioner resigned from the directorship, thereby completely existed from the company in 2017. It is purported that there was no embargo in the said sale of M/s Ak Infosystem Pvt. Ltd., given that at the time of sale, Sh. Lalu Prasad Yadav and his family were holding no portfolio in the government.
  • A RC bearing no. RC2202022E0007 dated 18.05.2022 was registered by the Central Bureau of Investigation ('CBI') Economic Offence-II branch, New Delhi on the charges under section 120-B of Indian Penal Code, 1860 ('IPC') and Section 11,12,13(2)read with 13(1) of Prevention of Corruption Act, 1988 ('PC Act') against Sh. Lalu Prasad Yadav (then Railway Minister) and others for committing criminal conspiracy of abusing official position for monetary interest. He was imputed for recruiting a person on the post of substitute (Group-D) in Railways in return of land parcel benefits (Job for Land Scam in colloquy). Later, on 16.08.2022, an ECIR bearing no. 31/DLZO/2022 was registered by ED on the basis of predicate offenses in the RC registered by CBI and an investigation was commenced under the Prevention of Money Laundering Act, 2002 ('PMLA').
  • After the due procedure, whereby petitioner was summoned by CBI on several occasions, CBI ultimately pinnacled their case with a Chargesheet. After conducting an investigation at length, the Special CBI Court, New Delhi made the petitioner a prosecution witness and exonerated the petitioner. Thereafter, ED has summoned the petitioner several times in respect to the abovementioned ECIR. Further, it is purported that petitioner, despite being cooperative and exonerated of the predicate offence, repeatedly called, grilled and being asked the same questions as CBI did before only because of the transaction between the petitioner and Sh. Lalu Prasad Yadav family members.

    A search of various premises and offices of the petitioner has also been conducted, whereby, several articles of the petitioner were also seized. The grievance of the petitioner is that the ED is now summoned the petitioner vide two impugned notices whereby he has been called upon to produce documents more than 20 years old which are not related to the petitioner in any manner as he is no longer associated with the entities to which the said documents belong.

Arguments in Petitioner's favour
On behalf of the petitioner, Learned Senior Counsel argued that the proceedings under PMLA are not maintainable as the petitioner has already been absolved from the scheduled offenses in the RC registered by the CBI, while citing Vijay Madanlal Choudhary v. Union of India[1]in support. Further argued that inasmuch as the petitioner is not even an accused in the predicate offense, the question of ECIR being sustained against the petitioner in isolation does not arise, as decided in Harish Fabiani v. Enforcement Directorate[2]. Additionally, with reference of Section 44 of the PMLA, it was asserted that the prosecution by CBI and ED was to be tried together by the same judge.

Arguments in Respondent's favour
On behalf of the respondent, the Learned Special Counsel argued that the prayer of the petitioner seeking quashing of ECIR is not maintainable because reliance is placed on the verdict in the case of Hukum Chand Garg & Anr. v. State of Uttar Pradesh & Ors.[3]and averred that a person has no locus to seek relief of quashing the ECIR who is not even named in ECIR. In counter to the petitioner counsel's averments, it is stated that money laundering is an independent offense and one does not need to be named accused in the predicate offense decided in the same matter i.e. Vijay Madanlal Choudhary v. Union of India[4]. Further, in regards to the contention pertaining to section 44 of PMLA raised by the learned Senior Counsel for the petitioner, the case of Benoy Babu v. Directorate of Enforcement[5].

Observation of Court
It is apparent by the case set out by the petitioner that in light of the recent conduct of ED i.e. conducting raids at his premises, he apprehends that he may be arrested if he joins the investigation in compliance with the summons received, and therefore, he wants to get the summons issued by the ED quashed. In pursuance to check the position of law in this regard, Court deems it fit to reproduce Section 50 of PMLA while taking into consideration the observation pertaining to the said section in the case of Vijay Madanlal Choudhary[6].

On behalf of the respondent, reliance has been placed upon decision in case of Kirit Shrimankar v. Union of India & Ors.[7], wherein there was similar facts qua apprehension of arrest. Based on averments thereto, which in no way could be termed as prima facie apprehension of arrest, the Court observed the petition highly premature. Hon'ble Apex Court, in case of Commissioner of Customs v. M.M. Exports[8], had expressed the interference of High Courts at the stage of issuance of summons unconscionable, expect in exceptional cases.

While refusing to quash the summons issued under Section 50 of PMLA in case of Virbhadra Singh v. Enforcement Directorate[9], the Court had expressed that the PMLA is a complete Code which overrides the general criminal law to the extent of inconsistency. Hence, there is nothing which can substantiate the prejudice to any of them. To put it succinctly, the petitioner, a close associate of Sh. Lalu Prasad Yadav, is alleged to have facilitated the enjoyment of the said land parcel to Sh. Lalu Prasad Yadav and his family members.

The investigation in the present ECIR is still continuing, and the petitioner has received a summons dated 06.10.20232023 whereby he has been called upon to submit certain documents and records, which are deemed necessary by the ED for the purpose of investigation in the Railway Job for Land Scam case. The petitioner himself acknowledges having attended six investigative occasions between March and August 2023 upon being summoned by ED. Therefore, there are no substantial reasons to justify quashing the said summons. Moreover, as per various legal precedents, this court cannot obstruct the investigative process merely at the stage of summons issuance to the petitioner.

The other alternate relief sought by the petitioner is to get present ECIR qua the petitioner quashed. However, after the due examination of the records of the case and the law on point, this Court found the prayer for quashing of ECIR is highly premature in the present case. During the course of arguments, learned Special Counsel for ED averred that "a person who is named in the ECIR cannot seek its quashing", and in this regard, learned Special Counsel simultaneously cited the Hon'ble Apex Court judgment titled Hukum Chand Garg & Ors. v. The State of Uttar Pradesh & Ors.[10],wherein, it was held the petitioners will have no locus to seek relief of quashing of FIR or the case of CBI when the petitioner has not been named as accused in the said crime.

So far as the argument raised on behalf of the petitioner that "since the petitioner has not been made an accused, but rather a witness in the predicate offense by the CBI, he cannot be made an accused in the PMLA case by the Directorate of Enforcement" is concerned, reliance was also placed upon judgments of Hon'ble Apex Court in case of Parvathi Kollur v. State[11], Indrani Patnaik v. Enforcement Directorate[12] and in case of Harish Fabiani[13] in which the aforesaid principle laid down in case of Vijay Madanlal Choudhary[14] was followed, whereby, it has been held ad verbatim that "If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money laundering against him", as argued on behalf of petitioner.

However, the facts of the present case are entirely distinguishable and the ratio of the aforesaid decisions cannot be made applicable to the present case for the several reasons i.e.despite the learned Senior Counsel for the petitioner submitted that the petitioner is a witness in the case registered by the CBI, the learned Special Counsel for the ED stated that he was not aware about the same since the names of these witnesses have not been disclosed.

The third prayer of the petitioner was to get the ED restrained from taking any coercive steps against the petitioner in the present ECIR. In this regard, this Court Observed that the petitioner has been summoned by the ED on about six occasions in past as well, hitherto has not been arrested. Merely with the reason of being in receipt of one more summon, no case of coercive steps can be made out.

While adjudicating upon such a prayer, this Court deems it fit to refer to the decision of the Hon'ble Apex Court in case of Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra & Ors.[15], whereby the Hon'ble Apex Court had cautioned the High Courts to abstain from passing order of 'no-coercive steps' in petitions filed under Article 226 of the Constitution of India or Section 482 of Cr.P.C. since the same would render the proceedings to the nature of anticipatory bails.

Additionally, a prayer of the same nature seeking no-coercive steps upon issuance of summons under Section 50 of PMLA in the matter of Ashish Mittal v. Directorate of Enforcement[16]. While declining to grant such a relief, the Co-ordinate Bench had observed that since the remedy under Section 438 of Cr.P.C. i.e. anticipatory bail was available to the petitioner in case he apprehended any arrest in the ECIR, the question of granting any interim relief of no-coercive steps did not arise.

In the light of the law laid down by the Hon'ble Apex Court and the facts of the present case, Court refused to quash the impugned summons as well as ECIR. Hon'ble Court further held that no case is made out for restraining the respondent from taking any coercive steps against the petitioner. Further, the Court is not inclined to quash the impugned summons or the ECIR against the petitioner or to grant any relief of no-coercive steps. Accordingly, the present petition stands dismissed alongwith pending application.

  1. 2022 SCC Online SC 292
  2. 2022 SCC Online Del 3121
  3. SPL (Crl.) No. 762/2020
  4. See Supra note 1
  5. 2023 SCC Online Del 3771
  6. See Supra note 1
  7. W.P.(Crl.) No. 109/2013
  8. (2010) 15 SCC 647
  9. 2017 SCC OnLine Del 8930
  10. SLP(Crl.) No. 762/2020
  11. 2022 SCC OnLine SC 1975
  12. W.P.(C) No. 368/2021
  13. See Supra note 2
  14. See Supra note 1
  15. 2021 SCC OnLine SC 315
  16. 2023 SCC OnLine Del 6678

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