Afr Jitendra Nath Patnaik vs For
2023 Latest Caselaw 10622 Ori

            IN THE HIGH COURT OF ORISSA AT CUTTACK

                       CRLMC No. 2891 of 2023

        Application under Section 482 of the Code of Criminal
        Procedure, 1973.
                                   ---------------
AFR     Jitendra Nath Patnaik                        ......         Petitioner

                              -Versus-

        Enforcement Directorate,
        Bhubaneswar                                  ......         Opp.Party

        Advocate(s) appeared in this case:-
        _________________________________________________________
              For Petitioner : Mr. P. Nayyar, Sr. Advocate
                                  with Mr. P. Mittal, Advocate.

             For Opp. Party :     Mr. G.K. Agarwal, Advocate for
                                  Enforcement Directorate
        _________________________________________________________
        CORAM:
             JUSTICE SASHIKANTA MISHRA

                                   JUDGMENT

nd 2 September, 2023

SASHIKANTA MISHRA, J. In the present application filed

under Section 482 Cr.P.C., the petitioner has prayed to

quash the ECIR No.BSZO/ECIR/13/2021 and all

proceedings initiated by the Enforcement Directorate

consequent upon registration of the ECIR against him.

2. Briefly stated, the petitioner seeks the above

relief on the ground that the Supreme Court of India is in

seisin over the matter relating to discharge of the

petitioner from the schedule/predicate offence under the

Prevention of Corruption Act. It is contended that as per

the settled position of law if the proceedings in the

schedule/predicate offence are ultimately quashed, the

proceedings emanating from ECIR registered against him

for commission of the offence under Section 3 of the

Prevention of Money-Laundering Act, 2002 (for short 'PML

Act'), not being a stand-alone offence, would automatically

fall to the ground. Therefore, pending adjudication of the

petitioner's prayer for discharge from the scheduled

offence by the Supreme Court, continuance of

investigation against him for the offence under the PML

Act would be an abuse of the process of the Court.

3. A preliminary objection was raised by learned

counsel for the Enforcement Directorate regarding

maintainability of the application under Section 482 of

Cr.P.C. mainly on the ground that an ECIR not being akin

to an FIR within the meaning of Section 154 of Cr.P.C.,

cannot be deemed to have given rise to a criminal action

against the petitioner so as to give him a cause of action

to invoke the inherent power of this Court under Section

482 of Cr.P.C..

Since the question of maintainability goes to the

root of the matter, this Court deems it proper to deal with

it at the outset more so, as the main relief claimed by the

petitioner can be considered only if the present proceeding

is held to be maintainable in the eye of law.

4. Heard Mr. Nikhil Nayyar, learned Senior

Counsel with Mr. P. Mittal, learned counsel for the

petitioner and Mr. G.K. Agarwal, learned counsel for the

Enforcement Directorate.

FACTS

5. On the basis of a written complaint submitted

by the D.S.P., Vigilance Cell, Cuttack on 17.11.2009,

State Vigilance P.S. Case No. 51 of 2009 corresponding to

VGR No. 19 of 2011 of the Court of learned Special Judge,

Vigilance, Cuttack was registered against the Managing

Partners of M/s. B.D. Patnaik Minerals (Pvt.) Ltd. and

other Government Officials under Section 13(2) read with

Section 12(1)(d) of the Prevention of Corruption Act, 1988,

Section 120-B of IPC, Section 21 of MMDR Act and

Section 3 of the Forest Conservation Act, 1988. Upon

completion of investigation, charge sheet was submitted

by the Vigilance Police on 26.03.2013. Learned Special

Judge, Vigilance, Cuttack took cognizance of the offences

vide order dated 11.06.2013. After appearance, the

petitioner filed an application under Section 239 of Cr.P.C.

for discharge citing several grounds which came to be

rejected by order dated 19.07.2019. The petitioner carried

the matter in revision to this Court in CRLREV No. 534 of

2019. By order dated 06.08.2020, the said revision was

dismissed. Being further aggrieved, the petitioner has

carried the matter to the Supreme Court of India in

S.L.P.(Crl.) No. 2278 of 2021. By order dated 15.03.2021,

the Supreme Court directed as follows:

"Issue notice returnable in four weeks. In the meanwhile, no coercive steps be taken against the petitioner."

On 19.03.2021, the Enforcement Directorate registered

ECIR No.BSZO/ECIR/13/21 against M/s. B.D. Pattnaik

Mines and Others for alleged commission of offence under

Section 3 of PML Act on the basis of the aforementioned

vigilance case. On 09.04.2021, the ED issued summons to

the petitioner to appear on 15.04.2021 pursuant to which

he appeared and submitted certain documents. Again on

15.06.2021, he was directed to appear on the same day

but he could not appear because of non-issue of transit

pass by the district authority. On 11.05.2022, a search

was conducted in the office of the petitioner and his wife

by the E.D., during which cash amounting to

Rs.14,60,900/-, fixed deposit (receipts) amounting to

Rs.133,17,03,387/- were collected from his office and

cash of Rs.55 lakhs from the house of his wife. Thereafter,

the ED filed application under Section 17(4) of PML Act

before adjudicating authority for retention of movable

properties in the form of Currency Digital Devices Records

and documents seized during the search operations. The

petitioner sought clarification from the Director of Mines

Odisha on 21.06.2022 regarding operation of Kalaparbat

Iron Ore mines, in response to which the Director of

Mines, clarified that the lease was operated by the mines

under the different provisions of the MC Rules, 1960. The

adjudicating authority however, in its order dated

01.11.2022 observed that the materials shown in the O.A.

are sufficient to arrive at the conclusion that retention of

records, cash and documents under seizure memo dated

11.05.2022 is required for the purpose of adjudication

under Section 8 of the PML Act. Challenging such order of

the adjudicating authority, the petitioner has preferred an

appeal before the PML Appellate Authority, Delhi being

Appeal No. 5255/2022, which is pending adjudication.

RIVAL CONTENTIONS ON MAINTAINABILITY

6. Mr. Gopal Agarwal, learned counsel for the E.D.

would contend that implication in a schedule offence is

sufficient for E.D. to cause investigation under the

provisions of PML Act which is a separate and

independent offence having no connection with the

proceedings initiated on the basis of the FIR registered by

the vigilance police. Therefore, the present application

under Section 482 of Cr.P.C. at this stage is not

maintainable. Mr. Agarwal further submits that the E.D.

is not a party in the SLP (Crl.) filed by the petitioner and

the petitioner's prayer to implead E.D. as a party was

dismissed by the Supreme Court. Mr. Agarwal submits

that even otherwise, the present application is premature

as the proceeding is at the inquiring stage and no

complaint under Section 44 of the PML Act has yet been

filed against the petitioner. He further argued that the

ECIR is purely an internal administrative document of the

Department for initiation of inquiry/investigation into the

offence of money laundering and to launch prosecution

against the person concerned. It is not equivalent to an

FIR under Section 154 of Cr.P.C. The different between

ECIR and FIR has been highlighted by the Supreme Court

of India in the case of Vijay Madanlal Choudhary v.

Union of India, reported in 2022 SCC OnLine SC 929.

Mere registration of the ECIR cannot therefore, be equated

with prosecution of the person concerned so as to be

judicially reviewed by this Court exercising its inherent

power under Section 482 of Cr.P.C.. In order to further

buttress his contention, Mr. Agarwal has relied upon

several other judgments which shall be referred to at the

appropriate Stage.

7. Mr. Nikhil Nayyar on the other hand would

argue that the power of the High Court under Section 482

Cr.P.C. is exercised ex debito justitiae i.e., to do real and

substantial justice for the administration of which alone

Courts exist. Referring to the interlocutory order passed

by the Supreme Court in the SLP (Crl.) filed by the

petitioner, Mr. Nayyar would further contend that if the

maintainability of the predicate offence itself is under

adjudication it would be a travesty of justice to allow the

present proceedings to continue. Mr. Nayyar has relied

upon the decision of the Supreme Court in the case of

State of Karnataka vs. M. Devendrappa, reported in

(2002) 3 SCC 89 in this regard as also the observations of

the Supreme Court in the case of Vijay Madanlal

Choudhary (supra), wherein it was held that once the

schedule offence is not established, the proceeding under

the PML Act must fail. The judgment of the Delhi High

Court in the case of Emta Coal Ltd. and others. Vs. The

Deputy Director, Directorate of Enforcement and

others (W.P.(C) No. 3821 of 2022) has also been relied

upon. As regards maintainability of the application under

Section 482 of Cr.P.C., Mr. Nayyar has relied upon the

judgment of the Telengana High Court in the case of

Sukesh Gupta vs. Directorate of Enforcement,

Hyderabad and another, reported in 2023 SCC OnLine

TS 987 and of Sikkim High Court in the case of Smt.

Usha Agarwal vs. Union of India and others, (2017) SCC

OnLine, Sikk 146. On the above basis, Mr. Nayyar would

sum up his arguments by contending that the ECIR is the

genesis of the criminal proceedings contemplated under

the PML Act and since in the instant case the ECIR has

been registered in spite of the fact that the Supreme Court

is in seisin over the matter relating to maintainability and

continuance of the predicate offence, allowing the

investigation/enquiry on the basis of the ECIR would

amount to an abuse of the process of Court and therefore,

the inherent power of this Court under Section 482 of

Cr.P.C. can be exercised to prevent the same.

ANALYSIS AND FINDINGS

8. Having regard to the rival contentions noted

above, it would be apposite to refer to the provision under

Section 482 of Cr.P.C. at the outset, which is quoted

hereinbelow:

"482. Saving of inherent power of High Court.-Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice."

9. Thus, Section 482 envisages three

circumstances under which the inherent jurisdiction may

be exercised (i) to give effect to an order under the Code,

(ii) to prevent abuse of the process of Court, and (iii) to

otherwise secure the ends of justice. Obviously, such

power is to be exercised in relation to a proceeding which

is criminal in nature. It would now be proper to examine

whether the proceeding 'purportedly emanating from the

ECIR' registered against the petitioner can be treated as

criminal proceedings so as to come within the sweep of

the power under Section 482 of Cr.P.C. Be it noted that

under the scheme of Cr.P.C., the criminal law is set into

motion after registration of the FIR under Section 154 of

Cr.P.C. and/or filing of a complaint under Section 200 of

Cr.P.C. The PML Act, 2002 also prescribes for filing of

complaint before the Special Court under Section 44

thereof. So what is the scope and purport of the ECIR?

This very question has been considered extensively by the

Supreme Court in the case of Vijay Madanlal Choudhary

(supra) and decided in the following words.

"ECIR VIS-À-VIS FIR

456. As per the procedure prescribed by the 1973 Code, the officer in-charge of a police station is under an obligation to record the information relating to the commission of a cognizable offence, in terms of Section 154 of the 1973 Code703. There is no corresponding provision in the 2002 Act requiring registration of offence of money-

laundering. As noticed earlier, the mechanism for proceeding against the property being proceeds of crime predicated in the 2002 Act is a sui generis procedure. No comparison can be drawn between the mechanism regarding prevention, investigation or trial in connection with the scheduled offence governed by the provisions of the 1973 Code. In the scheme of 2002 Act upon identification of existence of property being proceeds of crime, the Authority under this Act is expected to inquire into relevant aspects in relation to such property and take measures as may be necessary and specified in the 2002 Act including to attach the property for

being dealt with as per the provisions of the 2002 Act. We have elaborately adverted to the procedure to be followed by the authorities for such attachment of the property being proceeds of crime and the follow-up steps of confiscation upon confirmation of the provisional attachment order by the Adjudicating Authority. For facilitating the Adjudicating Authority to confirm the provisional attachment order and direct confiscation, the authorities under the 2002 Act (i.e., Section 48) are expected to make an inquiry and investigate. Incidentally, when sufficient credible information is gathered by the authorities during such inquiry/investigation indicative of involvement of any person in any process or activity connected with the proceeds of crime, it is open to such authorities to file a formal complaint before the Special Court naming the concerned person for offence of money-laundering under Section 3 of this Act. Considering the scheme of the 2002 Act, though the offence of money-laundering is otherwise regarded as cognizable offence (cognizance whereof can be taken only by the authorities referred to in Section 48 of this Act and not by jurisdictional police) and punishable under Section 4 of the 2002 Act, special complaint procedure is prescribed by law. This procedure overrides the procedure prescribed under 1973 Code to deal with other offences (other than money- laundering offences) in the matter of registration of offence and inquiry/investigation thereof. This special procedure must prevail in terms of Section 71 of the 2002 Act and also keeping in mind Section 65 of the same Act. In other words, the offence of money-laundering cannot be registered by the jurisdictional police who is governed by the regime under Chapter XII of the 1973 Code. The provisions of Chapter XII of the 1973 Code do not apply in all respects to deal with information derived relating to commission of money-laundering offence much less investigation thereof. The dispensation regarding prevention of money- laundering, attachment of proceeds of crime and inquiry/investigation of offence of money- laundering upto filing of the complaint in respect of offence under Section 3 of the 2002 Act is fully governed by the provisions of the 2002 Act itself. To

wit, regarding survey, searches, seizures, issuing summons, recording of statements of concerned persons and calling upon production of documents, inquiry/investigation, arrest of persons involved in the offence of money-laundering including bail and attachment, confiscation and vesting of property being proceeds of crime. Indeed, after arrest, the manner of dealing with such offender involved in offence of money-laundering would then be governed by the provisions of the 1973 Code - as there are no inconsistent provisions in the 2002 Act in regard to production of the arrested person before the jurisdictional Magistrate within twenty- four hours and also filing of the complaint before the Special Court within the statutory period prescribed in the 1973 Code for filing of police report, if not released on bail before expiry thereof.

457. Suffice it to observe that being a special legislation providing for special mechanism regarding inquiry/investigation of offence of money-laundering, analogy cannot be drawn from the provisions of 1973 Code, in regard to registration of offence of money-laundering and more so being a complaint procedure prescribed under the 2002 Act. Further, the authorities referred to in Section 48 of the 2002 Act alone are competent to file such complaint. It is a different matter that the materials/evidence collected by the same authorities for the purpose of civil action of attachment of proceeds of crime and confiscation thereof may be used to prosecute the person involved in the process or activity connected with the proceeds of crime for offence of money- laundering. Considering the mechanism of inquiry/investigation for proceeding against the property (being proceeds of crime) under this Act by way of civil action (attachment and confiscation), there is no need to formally register an ECIR, unlike registration of an FIR by the jurisdictional police in respect of cognizable offence under the ordinary law. There is force in the stand taken by the ED that ECIR is an internal document created by the department before initiating penal action or prosecution against the person involved with process or activity connected with proceeds of crime. Thus, ECIR is not a statutory document, nor

there is any provision in 2002 Act requiring Authority referred to in Section 48 to record ECIR or to furnish copy thereof to the accused unlike Section 154 of the 1973 Code. The fact that such ECIR has not been recorded, does not come in the way of the authorities referred to in Section 48 of the 2002 Act to commence inquiry/investigation for initiating civil action of attachment of property being proceeds of crime by following prescribed procedure in that regard." [Emphasis added]

As can be seen, the ECIR is an internal document created

by the Department before initiating penal action or

prosecution against the person involved with process or

activity connected with the proceeds of crime. In other

words, registration of ECIR is not akin to launching of

prosecution, which can only be done by way of lodging a

complaint under Section 44 of the PML Act. Thus, a

document or an act, which is administrative in nature,

cannot partake the nature of criminal prosecution so as to

attract judicial review. In the case of State of West

Bengal v. Sujit Kumar Rana, reported in (2004) 4 SCC

129, the Supreme Court held as under:

"33. From a bare perusal of the aforementioned provision, it would be evident that the inherent power of the High Court is saved only in a case where an order has been passed by the criminal court which is required to be set aside to secure the ends of justice or where the proceeding pending before a court amounts to abuse of the process of court. It is, therefore, evident that power under

Section 482 of the Code can be exercised by the High Court in relation to a matter pending before a court; which in the context of the Code of Criminal Procedure would mean "a criminal court" or whence a power is exercised by the court under the Code of Criminal Procedure. Once it is held that the criminal court had no power to deal with the property seized under the Act, the question of the High Court exercising its jurisdiction under Section 482 of the Code of Criminal Procedure would not arise."

Similar view was taken by a Division Bench of the Madras

High Court in the case of N. Dhanraj Kochar and others

vs. The Director, Directorate of Enforcement (CRL.

O.P. No.SR 46376/2021, wherein it was held that

registration of ECIR being an administrative act for

initiation of investigation under the PML Act, which is a

special statute, cannot be quashed in exercise of the

power under Section 482 of Cr.P.C. because registration of

the ECIR is not an act undertaken under the Code.

Significantly, the aforequoted observation of the Supreme

Court in Sujit Kumar Rana (supra) was also referred to

therein. On such reasoning, it was held that the

registration of an ECIR by the officers of the E.D. cannot

be the subject matter of judicial review under Section 482

of Cr.P.C.

10. In so far as the case laws cited at the bar,

particularly by learned Senior Counsel appearing for the

petitioner, this Court finds that in the case of Sukesh

Gupta (supra), the Telengana High Court held on the facts

of the case before it that since there is no evidence of

criminal activity nor any property being derived as a

consequence of such criminal activity, the proceedings in

the concerned ECIR cannot be permitted to continue. In

arriving at such finding, learned Single Judge of

Telengana High Court relied upon the observations of the

Supreme Court in the case of State of Harayana v.

Bhajanlal reported in 1992 Supp (1) SCC 335, State of

Karnataka v. M. Devendrappa reported in (2002) 3 SCC

89 and Anil Khadkiwala v. State (NCT of Delhi),

reported in (2019) 17 SCC 294 were relied upon. This

Court is however, unable to agree with the reasoning of

the learned Single Judge for the reason that the nature of

the proceedings emanating from registration of ECIR short

of filing of the complaint under Section 44 of the PML Act

was not specifically taken into account vis-à-vis the

distinction made between the ECIR and FIR by the

Supreme Court in Vijay Madanlal Choudhury (supra). In

the considered view of this Court, the same forms the very

basis to decide whether the proceedings emanating from

the ECIR would partake the nature of a penal action so as

to attract the provision under Section 482 of the Cr.P.C..

As already discussed, the act of registration of ECIR is an

administrative act in contradistinction with a penal act

and therefore, the ratio of Sujit Kumar Rana (supra)

would be squarely applicable.

11. The decision of the Sikkim High Court in Smt.

Usha Agarwal (supra) and of the Delhi High Court in

Emta Coal Ltd. (supra) being on merits are not applicable

in the present context and are therefore, not referred to.

CONCLUSION

12. From the conspectus of the analysis made

hereinbefore, this Court is of the considered view that the

act of registration of ECIR against the petitioner and the

investigation/enquiry said to be in progress on such basis

are not amenable to judicial review by this Court in

exercise of its inherent power under Section 482 of

Cr.P.C.. Further, the present motion, which is at a stage

when the investigation/enquiry initiated on the basis of

the ECIR registered against the petitioner has not

culminated in lodging of a complaint under Section 44 of

the PML Act, is premature. In view of such finding, the

contentions raised by the parties touching upon the

merits of the case are not required to be gone into.

13. In the result, the CRLMC is dismissed being not

maintainable in the eye of law.

..................................

Sashikanta Mishra, Judge

Orissa High Court, Cuttack, The 2nd September, 2023/ A.K. Rana, P.A.

Signature Not Verified Digitally Signed Signed by: AJAYA KUMAR RANA Reason: Authentication Location: Orissa High Court, Cuttack