Mr. M. Gopal Reddy vs Directorate Of Enforcement
2023 Latest Caselaw 2073 Tel

         THE HONOURABLE SRI JUSTICE K.SURENDER

              CRIMINAL PETITION No.845 OF 2021

O R D E R:

The petitioner is questioning the continuance of investigation

against him in ECIR/HYZO/36/2020, dated 15.12.2020, by the

Enforcement Directorate. The said investigation was initiated on

the basis of the case filed by the Economic Offences Wing (for short

'EOW'), Bhopal, Madhya Pradesh, for the offences under Section

120-B, r/w.420 and 471 of the Indian Penal Code and Section 7

r/w 13(2) of the Prevention of Corruption Act, 1988.

2. Heard both sides. Perused the record.

3. The main contention of the learned senior counsel Sri

Pradyumna Kumar appearing on behalf of the petitioner is that the

predicate offence which was investigated by the EOW, Bhopal was

tried before the competent Court and acquitted by the said Court.

The petitioner herein is not an accused in the predicate offence.

However, the said case registered for the predicate offence ended in

acquittal. Till date, no appeal was filed by the State questioning the

acquittal. He further submits that in view of the Judgment of the

Honourable Supreme court in Vijay Madanlal Choudhary vs.

Union of India and others 1, once the predicate offence resulted in

acquittal, the proceedings cannot go on, under Prevention of

Money-Laundering Act, 2002. Further, this Court in Crl.P.No.634

of 2021, quashed the proceedings against Mantena Srinivas Raju

who was arrayed as an accused in predicate offence. In the said

order it was found that the said Mantena Srinivas Raju has

conspired with Aditya Tripathi and M/s.Osmo I.T.Solutions Private

Limited for tampering the E-tenders and succeeded in tampering

the tenders and getting orders. However, fact remains that the

accused were acquitted and the entire process was cancelled and

no crime proceeds were generated in favour of the venture company

including Mantena Srinivas Raju.

4. Relevant para-34 of the Crl.P.634 of 2021, reads as follows;

"34. In the present case, the offence for which the FIR was issued was ended in acquittal of the prime accused. The allegation against the present petitioner is that the joint venture company has conspired with Aditya Tripati and M/s.Osmo I.T.Solutions Private limited and digital certificate holders i.e., accused nos.1 to 3 for tampering the e-tenders and succeeded in tampering the e- tenders and getting the contracts. However, the fact remains that accused Nos.1 to 3 were acquitted and in fact, entire tender process was cancelled and no crime proceeds were generated in favour of the joint venture, including the petitioner herein. When crime proceeds were not generated or such crime proceeds did not

2022 SCC OnLine SC 929

come into possession of the petitioner, the authorities have no jurisdiction to continue the proceedings under the PML Act. The authorities cannot justify the continuation of proceedings in spite of acquittal of main accused on the ground that there were previous tampering of e-tenders based on the suspicion, which action amounts of abuse of process."

5. Learned Counsel also relied on the orders of the Honourable

Supreme Court in Parvathi Kollur v. State by Directorate of

Enforcement in Criminal Appeal No.1254 of 2022 (arising out of

SLP (Crl.) No.4258 of 2021) wherein it was held as follows;

"Learned counsel for the appellants has contended that the issue as involved in this matter is no more res integra, particularly for the view taken by a 3-Judge Bench of this Court in the case of Vijay Madanlal Choudhary & others v. Union of India and others, decided on 27.07.2022 where, the consequence of failure of prosecution for the scheduled offence has been clearly provided in the following terms:

"187.................(d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money- laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. 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 or any one claiming such property being the property linked to stated scheduled offence through him."

Learned ASG appearing for the respondent, in all fairness, does not dispute the above position of law declared by this Court.

The result of the discussion aforesaid is that the view as taken by the Trial Court in this matter had been a justified view of the matter and the High Court was not right in setting aside the discharged order despite the fact that the accused No.1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence."

6. Counsel further submits that the allegation against the

petitioner is that he has facilitated the said Mantena Srinivas Raju

and in return facilities of foreign trips, private airplane etc, were

taken from the accused. The predicate offence ended in acquittal.

The allegation against this petitioner is that he helped Mantena

Srinivas Raju. But, the case against said Mantena Srinivas Raju in

ECIR was also quashed by this Court. The said orders of quashing

proceedings of the Enforcement Directorate against Mantena

Srinivas Raju is neither suspended nor stayed by the Honourable

Supreme Court. In the said circumstances, the proceedings against

the petitioner herein have to be quashed by following the decision

of Honourable Supreme Court in Vijay Madanlal Choudhary's

case (cited supra).

7. On the other hand learned Assistant Solicitor General

appearing on behalf of the Enforcement Directorate would submit

that it is not necessary that a person should be an accused in the

predicate offence to initiate proceedings under the ED Act. In fact,

this Court had granted Anticipatory Bail to the petitioner herein

and the said Anticipatory Bail order was questioned before the

Honourable Supreme Court vide Crl.Appeal No.534 of 2023. The

Honourable Supreme Court had set aside the Anticipatory Bail vide

order dated 24.02.2023.

8. The Honourable Supreme Court found that the allegations

against this petitioner are serious and required to be investigated

thoroughly. According to the Investigating Agency, material was

collected connecting the petitioner herein for taking undue

advantage from Mantena Srinivas Raju.

9. Learned Assistant Solicitor General further argued that on

the basis of Vijay Madanlal Choudhary's case, proceedings cannot

be quashed for the reason of the Honourable Supreme Court while

setting aside the Anticipatory Bail has also considered the acquittal

order in the predicate offence. The Honourable Supreme Court had

considered both the allegations against the petitioner herein and

also the acquittal order in the predicate offence, however, set aside

the anticipatory bail order. In such circumstances, no benefit can

be extended to the petitioner and accordingly, the petition has to be

dismissed. He relied on paragraph Nos. 290, 295 and 425 of the

Vijay Madanlal Choudhary's case and argued that the proceeds of

crime have to be dealt with and the culprits cannot go unpunished.

Section 50 of PMLA empowers the officers to investigate into the

case, which cannot be curtailed.

10. It cannot be disputed that the person who is not charged

under the predicate offence cannot be investigated into under the

Prevention of Money-Laundering Act, 2002. Any person dealing

with the proceeds of crime in any manner whatsoever comes within

the purview of the offence punishable under Section 3 of the

Prevention of Money-Laundering Act, 2002.

11. The Judgment of the Honourable Supreme Court in Vijay

Madanlal Choudhary's case was followed subsequently in the case

of Parvathi Kollur v. State by Directorate of Enforcement in

Crl.Appeal No.1254 of 2022 arising out of SLP (Crl.) 4258 of 2021,

dated 16.08.2022.

12. The 3-Judge Bench of Honourable Supreme Court in Vijay

Madanlal Choudhary's case (cited supra) held as follows;

"467.Conclusion:

(i)..(ii)..(iii)..(iv)...(v)(a)...(b)...(c)..

(d). The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. 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 or any one claiming such property being the property linked to stated scheduled offence through him."

13. This Court in Crl.P.No.634 of 2021 held that there were no

crime proceeds in the case. According to the counsel for the

petitioner, the question of the petitioner herein being a beneficiary

in any manner attracting Section 3 of the Prevention of Money-

Laundering Act, 2002, does not arise.

14. The Honourable Supreme Court while cancelling the bail of

this petitioner has not referred to Vijay Madanlal Choudhary's

case. The Judgment in Vijay Madanlal Choudhary's case was

rendered by the 3-Judge Bench of Honourable Supreme Court. The

bail of the petitioner was cancelled by a 2-Judge Bench.

15. Article 141 of the Constitution recognizes the doctrine of stare

decisis. The doctrine of stare decisis establishes that the

subordinate courts are bound to follow the decisions pronounced

by the higher courts while dealing with cases with similar legal

issues. Ignoring the ruling of the Honble Supreme Court, is both

judicial indiscipline and also in violation of Article 141 of the

Constitution of India.

16. The issue of ratio decidendi has been explained by the

Supreme Court in Director of Settlements, Andhra Pradesh and

Others vs. M.R. Apparao and Another 2, wherein it was observed

by the Hon'ble Supreme Court that Article 141 of the Constitution

unequivocally indicates that the law declared by the Supreme

Court shall be binding on all Courts within the territory of India.

17. In another judgment pronounced on 02-03-2020 by the

Supreme Court in Dr. Shah Faesal and Others vs. Union Of

India and another 3 it was emphasized by the Apex Court that: It

is only the principle laid down in the judgment that is binding law

under Article 141 of the Constitution.

AIR 2002 SC 1598

(2020) 03 SC CK 0001

18. In Siddharam Satlingappa Mhetre vs. State of

Maharashtra and Others 4 it was observed by the Apex Court

that the judgment of a larger strength is binding not only on a

judgment of smaller strength but the judgment of a co-equal

strength is also binding on a Bench of Judges of co-equal strength.

19. In State of Uttar Pradesh and another versus Synthetics

and Chemicals Ltd. and another 5 it was observed that a decision

which is not expressed and is not founded on reasons, nor it

proceeded on consideration of issue, cannot be deemed to be a law

declared to have binding effect as is contemplated by Art. 141.

20. It was concluded by the 3-Judge Bench of the Honourable

Supreme Court in Vijay Madanlal Chudhary's case (cited

supra), that if a person is finally discharged or acquitted of a

scheduled offence or the criminal case, is quashed by the court of

competent jurisdiction, there can be no offence of money

laundering against him or anyone claiming such property being the

property linked to stated scheduled offence through him. As

already discussed, the petitioner is being investigated for taking

benefits from Mantena Srinivas. The said person was acquitted of

the predicate offence and the proceedings against him in the

(2011) 1 SCC 694

(1991) 4 SCC 139

present ECIR were also quashed on the ground that there were no

criminal proceeds. In the said circumstances when there are no

"criminal proceeds", following the law as laid down by the

Honourable Supreme Court in Vijay Madanlal Choudary's case

(supra) this Court deems it appropriate to quash the proceedings

against the petitioner.

21. Accordingly, the Criminal Petition is allowed and the

proceedings against the petitioner in ECIR/HYZO/36/2020, dated

15.12.2020, by the Enforcement Directorate, are hereby quashed.

Miscellaneous applications pending, if any, shall stand

closed.

__________________ K.SURENDER, J Date: 08.09.2023 tk

THE HON'BLE SRI JUSTICE K.SURENDER

CRIMINAL PETITION No.845 OF 2021

Dt.08.09.2023

tk