The Allahabad High Court has made a significant ruling in a high-profile money laundering case, refusing to halt the Enforcement Directorate's (ED) proceedings related to the controversial Grand Venice project in Greater Noida. The court, however, issued crucial observations on the legal boundaries of the Prevention of Money Laundering Act (PMLA) and directed the agency to pause coercive actions until a specific stage in the trial.
Court's Key Ruling on Jurisdiction and Predicate Offence
On Thursday, a division bench comprising Justice Chandra Dhari Singh and Justice Lakshmi Kant Shukla declined to quash the proceedings initiated by the ED under the PMLA, 2002. The case stems from multiple FIRs filed against the developers of the Grand Venice project, a theme-based commercial mall and tower complex in Gautam Budh Nagar.
The bench strongly reiterated that the existence of a scheduled offence is the foundational requirement for the ED to begin or continue any action under the PMLA. This point became central to the court's analysis as the nature of the alleged crimes evolved.
The Genesis: From FIRs to PMLA Case
The legal troubles for the project began on June 9, 2015, when an FIR was registered at Kasna police station. It accused the petitioners, including Satinder Singh Bhasin, and others of criminal breach of trust (Section 406 IPC) and cheating (Section 420 IPC) concerning alleged irregularities in the project.
Subsequently, between 2015 and 2019, a large number of similar FIRs were lodged by aggrieved parties. The complaints cited non-delivery of promised units, failure to pay assured returns, non-payment of invoices, and significant delays in giving possession to buyers.
Based on these FIRs, which are considered predicate offences, the ED registered an Enforcement Case Information Report (ECIR) and proceeded with its money laundering investigation, including searches, seizures, and issuing non-bailable warrants.
Petitioners' Challenge and Court's Critical Observations
The petitioners approached the High Court under Article 226 of the Constitution, challenging the ED's actions. Their primary argument was that the sole surviving predicate offence against them was under Section 406 IPC (criminal breach of trust), which is notably not listed as a scheduled offence under the PMLA. They further pointed out that the proceedings in the main FIR had been stayed and consolidated by an order of the Supreme Court.
The court took serious note of the fact that the charge of cheating (Section 420 IPC) was dropped in a supplementary charge-sheet, leaving only Section 406 IPC. "Once section 420... was dropped... and only section 406 IPC remained, serious questions arose as to the continuance of PMLA jurisdiction," the bench observed. It stated this critical issue would need thorough examination at the appropriate legal stage.
The judges also emphasized that investigating agencies like the ED cannot act in disregard of binding judicial directions. They noted that the Supreme Court's order to consolidate multiple FIRs and the stay on proceedings directly impacted the "operative field of the predicate offence."
The Directive: A Temporary Shield for Accused
While refusing to quash the entire PMLA case at this preliminary stage, the court provided interim relief to the petitioners. It directed the ED to refrain from pursuing or continuing its investigation, inquiry, summons, searches, seizures, attachments, or any other coercive measures, including warrants.
This restraint is specifically concerning the allegations arising from the consolidated FIRs related to the Grand Venice project. The order will remain in effect until the stage of framing of charges in the trial or until any final order is passed by the competent court regarding these FIRs, whichever occurs earlier.
The court's ruling underscores the delicate balance between empowering agencies to investigate financial crimes and protecting individuals from potential overreach when the legal foundation of the probe is under question. The case will now proceed with the ED's PMLA proceedings in abeyance, awaiting the outcome of the core criminal case.
