AMAR MANDAL vs DIRECTORATE OF ENFORCEMENT
- Court
- Jharkhand High Court
2026:JHHC:26755
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (Cr). No. 231 of 2026
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Amar Mandal, aged about 48 years, Son of Ravan Mandal,
Resident of Village-Sejakora, P.O. & P.S. Jama, District-
Dumka, State-Jharkhand.
…………… Petitioner
Versus
Directorate of Enforcement, through its Deputy Director,
having its office at Plot No.1520/B, Airport Road, P.O. &
P.S. Hinoo, District-Ranchi, Jharkhand-834002.
................ Opposite Party
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CORAM: HON’BLE MR. JUSTICE SUJIT NARAYAN PRASAD
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For the Petitioner : Mr. Ajit Kumar, Sr. Advocate
Mr. Kartik Sabharwal, Advocate
Ms. Aprajita Bhardwaj, Advocate
Mr. Sabi Uddin, Advocate
Mr. Abash Ajit Kumar, Advocate
Mr. Abhishek Abhi, Advocate
For the Opp. Party : Mr. Amit Kumar Das, Sr. Advocate
Mr. Saurav Kumar, Advocate
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C.A.V. on 05/08/2026 Pronounced on 01/09/2026
Prayer:
1. The instant application has been filed under Sections
226 of the Constitution of India for the following reliefs:
a. For issuance of an appropriate writ(s), order(s) or
direction(s) in the nature of Certiorari, to call for the
records and to quash the entire criminal
proceedings arising out of ECIR/RNZO/08/2023
registered by the Respondent-Directorate of
Enforcement, insofar as it relates to the present
Petitioner, for the alleged offences under Sections 3
and 4 of the Prevention of Money Laundering Act,
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2002, in view of the fact that the Petitioner has
already been acquitted vide judgment and order
dated 10.02.2026 passed in connection with the
predicate offence arising out of Poraiyahat P.S. Case
No. 07/19 dated 20.01.2019 registered for the
alleged offences under Sections 414 and 120B of the
Indian Penal Code, 1860 read with Sections 4 and
21 of the Mines and Minerals (Development and
Regulation) Act, Pending 1957, by the Court of Shri
Amit Bansal, learned Judicial Magistrate First
Class, Godda.
b. For issuance of an appropriate writ(s), order(s) or
direction(s) in the nature of Declaration declaring
that in view of the acquittal of the Petitioner in the
aforesaid predicate offence, on the basis of which
ECIR/RNZO/08/2023 has been registered by the
Respondent-Directorate of Enforcement for the
alleged offences under Sections 3 and 4 of the
Prevention of Money Laundering Act, 2002, no
further investigation as defined under Section 2(na)
of the Prevention of Money Laundering Act, 2002
can be continued against the present Petitioner.
c. For grant of an interim order staying all further
proceedings in connection with
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ECIR/RNZO/08/2023 during the pendency of the
present writ petition.
d. For issuance of any other appropriate writ(s),
order(s) or direction(s) as this Hon'ble Court may
deem fit and proper in the facts and circumstances
of the present case.
Factual Matrix of the Case
2. The background of the case, in brief, is that on
20.01.2019, the Jharkhand Police received information
regarding illegal transportation of mined coal. Upon this,
the police intercepted a truck bearing registration no. OR-
16D/8350, which was found loaded with coal. Upon
interception, the driver of the said vehicle, namely Kartik
Bhandari, was unable to produce any valid documents or
permits authorising the transportation of the coal. During
preliminary enquiry, the said driver allegedly disclosed that
the owner of the truck, Amar Mandal, along with Avadh
Kishore Sharma, Vinod Singh and Manoj Sah, were
engaged in the illegal trade and transportation of coal,
allegedly transporting the same from the State of West
Bengal for sale in the States of Bihar, Jharkhand and other
places.
3. On the basis of the aforesaid occurrence, Poraiyahat
Police Station, District Godda, Jharkhand, instituted
Poraiyahat P.S. Case No. 07 of 2019 dated 20.01.2019 for
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the alleged offences punishable under Sections 414
(assisting in concealment of stolen property) and 120B
(criminal conspiracy) of the Indian Penal Code, 1860 read
with Sections 4 and 21 of the Mines and Minerals
(Development and Regulation) Act, 1957.
4. Upon completion of investigation, the Jharkhand Police
submitted Charge-sheet No. 137/2022 dated 12.07.2022
against Amar Mandal, Avadh Kishore Sharma, Manoj Sah
and Kartik Bhandari alleging their involvement in the illegal
trading and transportation of coal without valid
authorisation and in violation of the applicable statutory
provisions.
5. From the allegations made in the said F.I.R. and the
charge-sheet submitted pursuant thereto, it was alleged
that Amar Mandal and his associates were involved in the
theft, illegal trading and transportation of coal without valid
transport documents, which allegedly resulted in wrongful
gain to the accused persons and corresponding loss of
revenue to the Government exchequer.
6. On the basis of the aforesaid predicate offence, being
Poraiyahat P.S. Case No. 07 of 2019, and in view of the fact
that the offences under Sections 120B and 414 of the
Indian Penal Code, 1860 fall within the category of
scheduled offences under Part A of the Schedule to the
Prevention of Money Laundering Act, 2002, the
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Respondent-Directorate of Enforcement recorded an
Enforcement Case Information Report bearing ECIR No.
ECIR/RNZO/08/2023 dated 13.02.2023 and consequently
initiated investigation under the provisions of the
Prevention of Money Laundering Act, 2002 against the
persons named therein, including the present Petitioner.
7. In furtherance of the aforesaid proceedings, the officials
of the Directorate of Enforcement (hereinafter referred to as
"ED Officials" for the sake of brevity) for the first time
visited the premises of the Petitioner situated at Village-
Sejakora, P.S.-Jama, District-Dumka, Jharkhand-834002
on 21.11.2025 for the purpose of conducting search and
seizure proceedings.
8. During the course of the aforesaid search and seizure
operation, a sum of Rs. 85,00,000/- in cash, along with
134 original property deeds and certain loose sheets, were
seized by the officials of the Directorate of Enforcement.
9. Pursuant to the aforesaid search and seizure, the
Respondent-Directorate of Enforcement filed an application
under sub-section (4) of Section 17 of the Prevention of
Money Laundering Act, 2002 before the Adjudicating
Authority constituted under the said Act, seeking
confirmation and retention of the cash and documents
seized from the Petitioner. The said application came to be
registered as Original Application No. 381 of 2025.
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10. Upon receipt of the Show Cause Notice and in
compliance with the directions issued by the Learned
Adjudicating Authority to file a response thereto, the
Petitioner filed his reply to the Original Application on
06.02.2026 (hereinafter referred to as "Reply" for short),
inter alia stating that the proceedings initiated by the
Directorate of Enforcement are wholly arbitrary and legally
unsustainable, as neither the seized cash nor the
documents bear any nexus with any alleged proceeds of
crime.
11. The Petitioner further clarified that the cash amount
seized from his residence largely pertains to the legitimate
business operations of M/s Rudra Minerals, a partnership
firm engaged in mineral trading in which the Petitioner
holds a substantial share, and the remaining amount
represents his lawful personal savings. It was also
specifically contended that the seized documents, including
property deeds and loose sheets, do not establish
acquisition of any property from proceeds of crime and that
the Original Application seeking retention of the seized
material is devoid of any material demonstrating the
commission of the offence of money laundering or any
connection between the alleged predicate offence and the
seized assets.
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12. In the meantime, the Petitioner duly contested the
criminal trial arising out of the predicate offence, being
Poraiyahat P.S. Case No. 07 of 2019 dated 20.01.2019,
registered for the alleged offences punishable under
Sections 414 (assisting in concealment of stolen property)
and 120B (criminal conspiracy) of the Indian Penal Code,
1860 read with Sections 4 and 21 of the Mines and
Minerals (Development and Regulation) Act, 1957.
13. The Petitioner, after a full-fledged contested trial in
G.R. Case No. 1125, has been acquitted vide judgment and
order dated 10.02.2026 passed in connection with the
predicate offence arising out of Poraiyahat P.S. Case No. 07
dated 20.01.2019, registered for the alleged offences under
Sections 414 and 120B of the Indian Penal Code, 1860 read
with Sections 4 and 21 of the Mines and Minerals
(Development and Regulation) Act, 1957, by the Court of
Shri Amit Bansal, learned Judicial Magistrate First Class,
Godda holding that the prosecution has failed to establish
the alleged offences beyond reasonable doubt and the
essential ingredients of the offences were not proved in
accordance with law.
14. It is the case of the petitioner that the aforesaid
judgment of acquittal has attained finality and has not
been stayed, reversed or set aside by any superior court of
competent jurisdiction.
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15. The Petitioner has also filed an Affidavit dated
19.02.2026 before the Adjudicating Authority in Original
Application No. 381 of 2025, placing on record the fact that
the Petitioner, after undergoing a detailed and contested
trial, has been acquitted in the predicate offence.
16. Pursuant to his acquittal in the predicate offence,
the Petitioner submitted a detailed representation along
with a copy of the judgment and order dated 10.02.2026
before the office of the Respondent-Directorate of
Enforcement, bringing to its notice the factum of his
acquittal, but no order was passed thereupon, hence, the
present writ petition.
Argument advanced by learned senior counsel for the
petitioner:
17. Learned senior counsel appearing for the petitioner
has argued inter alia on the following grounds.
18. Referring to the judgment rendered by the Three-
Judge Bench of the Hon'ble Supreme Court of India in the
case of Vijay Madanlal Choudhary and Others v. Union
of India and Others reported in 2022 SCC OnLine 929 ,
submission has been made that offences under the PMLA
are predicate on the existence and continuation of the
scheduled offence and that if the person in question is
finally discharged/acquitted of the scheduled offence or if
the criminal case against him is quashed by the Court of
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competent jurisdiction, there can be no offence of money-
laundering against him.
19. Submission has been made that the aforesaid
authoritative pronouncement of the Hon‟ble Supreme Court
unequivocally settles the legal provision governing the
offence of money laundering and the dependency of such
offence upon the existence of a scheduled offence.
20. Learned senior counsel for the petitioner submits
that the offence of money laundering under Section 3 of the
Prevention of Money Laundering Act, 2002 is intrinsically
linked with the existence of a scheduled offence from which
the alleged "proceeds of crime" are said to have been
generated. The statutory framework of the PMLA clearly
establishes that the jurisdiction of the Directorate of
Enforcement to initiate or continue proceedings under the
Act is dependent upon the existence of criminal activity
relating to a scheduled offence. Once the scheduled offence
itself ceases to exist in the eyes of law by virtue of acquittal
of the accused, the very foundation upon which the
proceedings under the PMLA are built stands extinguished.
21. It has been submitted that in this regard, the
Hon'ble Supreme Court in Pavana Dibbur v. Directorate
of Enforcement, (2023) 15 SCC 91 has categorically held
that the offence of money laundering cannot survive
independently in the absence of criminal activity relating to
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a scheduled offence and that the existence of proceeds of
crime is the sine qua non for invoking the provisions of the
PMLA. The Hon'ble Court further clarified that unless the
property in question is shown to be derived from or
connected with a scheduled offence, the machinery of the
PMLA cannot be set in motion. The said judgment reiterates
that the PMLA is not intended to operate in isolation but
only in relation to property derived from criminal activity
relating to a scheduled offence.
22. Referring to the judgment rendered by Hon‟ble Apex
Court in the case of Yash Tuteja v. Directorate of
Enforcement, 2024 SCC Online SC 1586 submission has
been made that the law has been reiterated therein that
that proceedings under the Prevention of Money
Laundering Act, 2002 cannot be sustained in the absence
of a subsisting scheduled offence or where the accused
stands exonerated in the predicate offence. The Court has
emphasized that the offence of money laundering is not a
standalone offence divorced from the scheduled offence and
that the existence of "proceeds of crime" derived from
criminal activity relating to such scheduled offence is the
foundational requirement for invoking the provisions of the
PMLA. Accordingly, once the accused has been acquitted in
the predicate offence, the continuation of proceedings
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under the PMLA would be legally unsustainable and
contrary to the statutory scheme of the Act.
23. It has been submitted that various High Courts
have also consistently held that once a competent court of
law records a finding of acquittal or exoneration in the
predicate offence, the proceedings under the PMLA cannot
be permitted to continue in a vacuum.
24. It has been submitted that it is well settled principle
that for invoking the provisions of the PMLA, the
Respondent authorities must demonstrate a clear and
direct nexus between the property sought to be proceeded
against and the alleged criminal activity relating to the
scheduled offence. In Rajiv Channa v. Directorate of
Enforcement, 2024 SCC Online Del 270 it has been
emphasized that the mere possession of property or
financial assets cannot by itself attract the rigours of the
PMLA unless it is shown that such property constitutes
proceeds of crime within the meaning of Section 2(1)(u) of
the Act.
25. It has been submitted that the continuation of the
impugned ECIR despite the acquittal of the Petitioner in the
predicate offence is wholly without jurisdiction and
amounts to permitting the Respondent-Directorate of
Enforcement to investigate and prosecute the Petitioner for
a non-existent offence of money laundering, which is
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impermissible under the scheme of the Prevention of Money
Laundering Act, 2002.
26. It has been submitted that in the absence of any
subsisting scheduled offence and in view of the acquittal of
the Petitioner in the predicate offence, there remains no
material whatsoever to establish the existence of any
proceeds of crime. Consequently, the continuation of
proceedings arising out of the impugned ECIR against the
Petitioner is wholly without jurisdiction and contrary to the
settled legal position governing the provisions of the PMLA.
27. It has further been submitted that allowing the
impugned proceedings to continue despite the acquittal of
the Petitioner in the predicate offence would amount to
permitting the Respondent authorities to prosecute the
Petitioner for an offence which cannot exist independently
in law. Such continuation of proceedings would therefore
constitute a clear abuse of the process of law and an
unwarranted violation of the Petitioner's constitutional
rights guaranteed under Articles 14 and 21 of the
Constitution of India.
28. Learned senior counsel for the petitioner on the
aforesaid grounds has submitted that the very substratum
of the impugned ECIR proceedings stands extinguished
upon the acquittal of the Petitioner in the predicate offence
by a competent court of law. The offence of money
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laundering being entirely dependent upon the existence of
"proceeds of crime" arising from a scheduled offence, the
continuation of proceedings under the Prevention of Money
Laundering Act, 2002 in the absence of any subsisting
scheduled offence is wholly without jurisdiction and
contrary to the scheme of the Act.
29. It has been submitted that in such circumstances,
permitting the Respondent-Directorate of Enforcement to
continue investigation or coercive proceedings against the
Petitioner would amount to allowing a criminal prosecution
to survive despite the collapse of its very foundation in law.
The impugned ECIR and the proceedings arising therefrom,
therefore, deserve to be quashed.
Argument advanced by learned counsel for the opposite
party-Enforcement Directorate:
30. While on the other hand, Mr. Amit Kumar Das,
learned senior counsel for the opposite party-Enforcement
Directorate has seriously opposed the said
submission/ground both based upon the fact and the law
as referred hereinabove, on the following grounds.
31. Raising the issue of maintainability, submission has
been made that it is a well-settled belief of jurisprudence
that the PMLA, 2002 is a complete, self-contained code that
provides a robust, multi-tiered statutory hierarchy for fact-
finding, adjudication, and appellate review.
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32. The statute specifically designates the Adjudicating
Authority under Section 8 to conduct detailed inquiries and
adjudicate upon the retention and eventual confiscation of
proceeds of crime, which is followed by a statutory right of
appeal to the Appellate Tribunal under Section 26 of the
PMLA, and a further second appeal to the High Court
under Section 42 of the PMLA. Therefore, submission has
been made that when a special, self-contained statute
prescribes a specific specialized forum and a detailed
procedure for the redressal of grievances, the invocation of
the extraordinary and discretionary writ jurisdiction of this
Court under Article 226 of the Constitution of India is
legally impermissible, especially when the sole intent is to
interdict and paralyze the statutory machinery at its very
inception.
33. It has been submitted that in the case at hand, after
following due procedure of law, the search and seizure
operations was conducted on 21.11.2025 by the
Directorate of Enforcement strictly adhering to the
statutory mandate and filed Original Application No. 381 of
2025 before the Adjudicating Authority, New Delhi, under
Section 17(4) of the PMLA, 2002.
34. It has further been contended that the Learned
Adjudicating Authority, found sufficient prima facie ground
to issue a Show Cause Notice under Section 8(1) of the Act.
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Upon this, the Petitioner submitted reply dated 06.02.2026
to the jurisdiction of the Adjudicating Authority, wherein
he has raised exhaustive factual defenses regarding the
purportedly legitimate nature of the seized physical cash
amounting to Rs. 85 Lakhs and the 134 property deeds.
Having actively participated in the ongoing statutory
adjudication and having submitted to the jurisdiction of
the competent authority, the Petitioner is legally obstructed
by simultaneously pursuing parallel litigation by way of the
present Writ Petition.
35. It has been submitted that the present case appears
to be an instance of forum shopping and an attempt to
disrupt the ongoing adjudication process through an
indirect challenge.
36. It has been submitted that the Hon‟ble Supreme
Court of India and various High Courts have consistently
deprecated the practice of entertaining writ petitions
directed against Show Cause Notices or pending
adjudicatory proceedings under the PMLA, 2002. The
determination of whether the seized physical cash of Rs. 85
Lakhs genuinely represents the "working capital" of a
proprietorship firm, or whether the 134 coordinated gift
deeds/lease agreements/Sale Deeds constitute a
methodology for the integration of illicit wealth, are deeply
intensive questions of fact. Such complex factual
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determinations, which require the rigorous sifting of
financial ledgers, bank statements, and the evidentiary
evaluation of documents, fall exclusively within the
specialized domain of the learned Adjudicating Authority.
The extraordinary writ jurisdiction of this Court cannot be
converted into a parallel fact-finding inquiry to prematurely
declare the seized assets as "untainted". Therefore,
submission has been made that allowing the Writ Petition
to proceed would not only violate the cardinal principles of
exhaustion of alternative statutory remedies but would also
render the entire adjudicatory machinery established by
the Parliament under the PMLA, 2002 completely otiose
and redundant. The Petitioner cannot be permitted to use
the extraordinary writ jurisdiction as an instrument to
derail a lawful, ongoing statutory proceeding and to evade
the scrutiny of the specialized forum designated by law.
37. It has been submitted that the Petitioner has a full,
fair, and ongoing opportunity to present his factual and
legal defenses including his arguments regarding the trial
court acquittal before the learned Adjudicating Authority.
Therefore, the present Writ Petition, being grossly
premature and a transparent abuse of the process of law
aimed at bypassing a self-contained statutory code, is
liable to be dismissed in limine.
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38. It has further been submitted that although the
Petitioner has put heavy reliance upon the judicial
pronouncement in Vijay Madanlal Choudhary v. Union
of India (2022) SCC OnLine SC 929 to assert that his
acquittal in the predicate offence mechanically and
automatically extinguishes the ongoing PMLA proceedings
but the acquittal order passed by the learned Judicial
Magistrate First Class, Godda, on 10.02.2026 in GR Case
No. 1125/2022 does not constitute the 'final absolution'
contemplated by the Hon'ble Supreme Court. An order of
acquittal recorded by a court of first instance is inherently
subject to the statutory appellate mechanism and is liable
to be challenged before the competent appellate forum
under the applicable provisions of the Bharatiya Nagarik
Suraksha Sanhita, 2023.
39. The legal fiction of final absolution only crystallizes
when all appellate remedies have been exhaustively utilized
and the acquittal is affirmed by the highest competent
court, or when the statutory limitation period for filing an
appeal expires without any challenge being mounted.
40. Consequently, the jurisdictional foundation of
ECIR/RNZO/08/2023 remains entirely intact, rendering
the present attempt to scuttle the investigation at this
nascent stage legally untenable.
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41. Learned senior counsel for the respondents-Opp.
Party has emphasized that the Hon'ble Supreme Court,
uses the specific caveat " finally absolved " to describe the
threshold required to extinguish PMLA proceedings. It has
been submitted that an un-appealed, first-instance
acquittal by a Judicial Magistrate does not meet the
threshold of final absolution.
42. It has been submitted that applying this principle to
the present facts, the judgment of the learned Judicial
Magistrate First Class, Godda, was entirely confined to the
localized police investigation regarding a single intercepted
truck. The learned Magistrate had absolutely no occasion
to examine, let alone positively adjudicate upon, the
massive cash recovery of Rs. 85 Lakhs, the 134 original
property deeds, or the forensic trail of Rupees eight point
nine four crores deposited in the Petitioner's bank
accounts. Therefore, it has nowhere been established in a
court of law that these highly incriminating assets were
rightfully owned and possessed by the Petitioner through
legitimate means. In the total absence of such an
adjudication by the trial court regarding the seized wealth,
the Petitioner cannot use a localized, non-final acquittal as
a blanket shield to demand the release of heavily
documented proceeds of crime, which are currently subject
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to independent statutory adjudication before the learned
Adjudicating Authority, New Delhi.
43. So far factual aspect involved in the present case is
concerned, it is a well-settled proposition of law that the
offence of money laundering under Section 3 of the PMLA,
2002 is an independent and standalone offence concerning
the process and activity connected with the proceeds of
crime. The trial before the Judicial Magistrate First Class,
Godda, was strictly confined to the interception of a single
coal-laden truck on 20.01.2019 and the limited, isolated
police evidence adduced in connection with that singular
incident. In stark contrast, the investigation conducted by
the Directorate of Enforcement spans over a decade from
2012 to 2025 and is anchored in independent, voluminous
forensic financial evidence that was never placed before,
nor considered by, the learned trial court. This
independent material includes the detection of massive,
unexplained cash deposits aggregating to over Rs. 8.94
crores in the bank accounts of proprietary concerns
controlled by the Petitioner, namely M/s Maa Laxmi Coal
Traders and M/s Rudra Minerals, alongside the physical
recovery of Rs. 85 lakhs in physical cash from his
residential premises during the search operations
conducted on 21.11.2025. The simultaneous recovery of
134 original property deeds further evidences a systematic
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methodology of integrating the proceeds of crime into
immovable assets.
44. It has been submitted that the acquittal recorded
merely on the ground that the local police failed to
establish the predicate offences beyond reasonable doubt
regarding a single truck interception does not and cannot
negate the independent findings of the Directorate.
Crucially, the learned trial court has nowhere given a
positive judicial determination establishing that the
massive cash deposits, the physical hoarding of Rs. 85
lakhs in cash and the 134 immovable properties were
rightfully owned and possessed by the Petitioner through
legitimate means. Therefore, relying on the ratio of Vijay
Madanlal Choudhary to claim that the substratum of the
ECIR has collapsed is legally fallacious.
45. Learned senior counsel for the respondent-ED has
submitted that the sole objective of the present writ
application is to prematurely derail the ongoing
independent investigation and to bypass the statutory
adjudication process regarding the retention and eventual
confiscation of these heavily documented proceeds of
crime. Thus, the present Writ Petition is an abuse of the
process of law and is liable to be dismissed.
46. Learned senior counsel for the respondent-ED
further referring to the judgment rendered by three-judge
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Bench of Hon‟ble Apex Court in the case of Vijay
Madanlal Choudhary (supra) has submitted that the
Hon‟ble Apex Court has categorically held that an ECIR
cannot be equated with an FIR under the general criminal
law. The ECIR is strictly an internal, administrative
document created by ED for its own departmental
reference, tracking a record-keeping, which cannot be the
subject matter of quashing a petition under Article 226 of
the Constitution of India.
47. Submission has been made that in the fact
situation, entertaining a writ petition to quash an internal
departmental record would not only directly contravene the
settled principles of law laid down by the Hon‟ble Supreme
Court, but would also severely paralyze the statutory
mandate of the investigating agency to unearth the
intricate layers of this organized economic offence.
48. Therefore, submission has been made that the writ
petition being devoid of merit, is liable to be dismissed in
limine on this ground alone.
Analysis
49. This Court has considered the submissions of the
learned counsel representing the parties while analyzing,
evaluating and appreciating the respective contentions.
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50. The some of the relevant provisions of the 2002 Act
are reproduced as under for better comprehension and
context.
51. Section 3 of the PMLA defines the offence of money
laundering and it reads as under:
“ 3. Offence of money-laundering. - Whosoever directly or
indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process
or activity connected with the proceeds of crime and
projecting it as untainted property shall be guilty of offence
of money laundering.”
52. Section 2(u) of the PMLA describes what is
proceeds of crime and the provision reads as under:
“2.Definitions. ………………………….
(u) "proceeds of crime" means any property derived or
obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value
of any such property;”
53. Sections 2(x) and 2(y) of the PMLA read as under:
(x) "Schedule" means the Schedule to this Act
(y) "scheduled offence" means--
(i) the offences specified under Part A o f the Schedule; or
(ii) the offences specified under Part B ofthe Schedule if the
total value involved in such offences is thirty lakh rupees
or more; “
54. Section 5 deals with attachment under the PMLA
which reads as under:
“ 5. Attachment of property involved in money-
29
laundering .— [(1) Where the Director or any other officer
not below the rank of Deputy Director authorised by the
Director for the purposes of this section, has reason to
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believe (the reason for such belief to be recorded in writing),
on the basis of material in his possession, that—
(a) any person is in possession of any proceeds of crime;
and
(b) such proceeds of crime are likely to be concealed,
transferred or dealt with in any manner which may result in
frustrating any proceedings relating to confiscation of such
proceeds of crime under this Chapter,
he may, by order in writing, provisionally attach such
property for a period not exceeding one hundred and eighty
days from the date of the order, in such manner as may be
prescribed:
Provided that no such order of attachment shall be made
unless, in relation to the scheduled offence, a report has
been forwarded to a Magistrate under Section 173 of
30
the Code of Criminal Procedure, 1973 (2 of 1974) , or a
complaint has been filed by a person authorised to
investigate the offence mentioned in that Schedule, before a
Magistrate or court for taking cognizance of the scheduled
offence, as the case may be, or a similar report or complaint
has been made or filed under the corresponding law of any
other country:
Provided further that, notwithstanding anything contained
31
in [first proviso], any property of any person may be
attached under this section if the Director or any other
officer not below the rank of Deputy Director authorised by
him for the purposes of this section has reason to believe
(the reasons for such belief to be recorded in writing), on the
basis of material in his possession, that if such property
involved in money-laundering is not attached immediately
under this Chapter, the non-attachment of the property is
likely to frustrate any proceeding under this Act.]
32
[Provided also that for the purposes of computing the
period of one hundred and eighty days, the period during
which the proceedings under this section is stayed by the
High Court, shall be excluded and a further period not
exceeding thirty days from the date of order of vacation of
such stay order shall be counted.]
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(2) The Director, or any other officer not below the rank of
Deputy Director, shall, immediately after attachment under
sub-section (1), forward a copy of the order, along with the
material in his possession, referred to in that sub-section, to
the Adjudicating Authority, in a sealed envelope, in the
manner as may be prescribed and such Adjudicating
Authority shall keep such order and material for such period
as may be prescribed.
(3) Every order of attachment made under sub-section (1)
shall cease to have effect after the expiry of the period
specified in that sub-section or on the date of an order made
33
under [sub-section (3)] of Section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person
interested in the enjoyment of the immovable property
attached under sub-section (1) from such enjoyment.
Explanation.—For the purposes of this sub-section, “person
interested”, in relation to any immovable property, includes
all persons claiming or entitled to claim any interest in the
property.
(5) The Director or any other officer who provisionally
attaches any property under sub-section (1) shall, within a
period of thirty days from such attachment, file a complaint
stating the facts of such attachment before the Adjudicating
Authority.”
55. Section 17 deals with search and seizure under the
PMLA which reads as under:
68
“ 17. Search and seizure .—(1) Where [the Director or any
other officer not below the rank of Deputy Director authorised
by him for the purposes of this section,] on the basis of
information in his possession, has reason to believe (the
reason for such belief to be recorded in writing) that any
person—
(i) has committed any act which constitutes money-
laundering, or
(ii) is in possession of any proceeds of crime involved in
money-laundering, or
(iii) is in possession of any records relating to money-
69
laundering, [or]
24
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70
[(iv) is in possession of any property related to crime,]
then, subject to the rules made in this behalf, he may
authorise any officer subordinate to him to—
(a) enter and search any building, place, vessel, vehicle or
aircraft where he has reason to suspect that such records or
proceeds of crime are kept;
(b) break open the lock of any door, box, locker, safe, almirah
or other receptacle for exercising the powers conferred by
clause (a) where the keys thereof are not available;
(c) seize any record or property found as a result of such
search;
71
(d) place marks of identification on such record or [property,
if required or] make or cause to be made extracts or copies
therefrom;
(e) make a note or an inventory of such record or property;
(f) examine on oath any person, who is found to be in
possession or control of any record or property, in respect of
all matters relevant for the purposes of any investigation
under this Act:
72
[ ] *
73
[(1-A) Where it is not practicable to seize such record or
property, the officer authorised under sub-section (1), may
make an order to freeze such property whereupon the
property shall not be transferred or otherwise dealt with,
except with the prior permission of the officer making such
order, and a copy of such order shall be served on the person
concerned:
Provided that if, at any time before its confiscation under
sub-section (5) or sub-section (7) of Section 8 or Section 58-B
or sub-section (2-A) of Section 60, it becomes practical to
seize a frozen property, the officer authorised under sub-
section (1) may seize such property.]
(2) The authority, who has been authorised under sub-section
74
(1) shall, immediately after search and seizure [or upon
issuance of a freezing order], forward a copy of the reasons
so recorded along with material in his possession, referred to
in that sub-section, to the Adjudicating Authority, in a sealed
envelope, in the manner, as may be prescribed and such
25
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Adjudicating Authority shall keep such reasons and material
for such period, as may be prescribed.
(3) Where an authority, upon information obtained during
survey under Section 16, is satisfied that any evidence shall
be or is likely to be concealed or tampered with, he may, for
reasons to be recorded in writing, enter and search the
building or place where such evidence is located and seize
that evidence:
Provided that no authorisation referred to in sub-section (1)
shall be required for search under this sub-section.
75
[(4) The authority seizing any record or property under sub-
section (1) or freezing any record or property under sub-
section (1-A) shall, within a period of thirty days from such
seizure or freezing, as the case may be, file an application,
requesting for retention of such record or property seized
under sub-section (1) or for continuation of the order of
freezing served under sub-section (1-A), before the
Adjudicating Authority.]”
56. Section 20 deals with retention of seized property
under the PMLA which reads as under:
“ [ 20. Retention of property .—(1) Where any property
has been seized under Section 17 or Section 18 or frozen
under sub-section (1-A) of Section 17 and the officer
authorised by the Director in this behalf has, on the basis
of material in his possession, reason to believe (the reason
for such belief to be recorded by him in writing) that such
property is required to be retained for the purposes of
adjudication under Section 8, such property may, if seized,
be retained or if frozen, may continue to remain frozen, for
a period not exceeding one hundred and eighty days from
the day on which such property was seized or frozen, as
the case may be.
(2) The officer authorised by the Director shall, immediately
after he has passed an order for retention or continuation
of freezing of the property for purposes of adjudication
under Section 8, forward a copy of the order along with the
material in his possession, referred to in sub-section (1), to
the Adjudicating Authority, in a sealed envelope, in the
26
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manner as may be prescribed and such Adjudicating
Authority shall keep such order and material for such
period as may be prescribed.
(3) On the expiry of the period specified in sub-section (1),
the property shall be returned to the person from whom
such property was seized or whose property was ordered
to be frozen unless the Adjudicating Authority permits
retention or continuation of freezing of such property
beyond the said period.
(4) The Adjudicating Authority, before authorising the
retention or continuation of freezing of such property
beyond the period specified in sub-section (1), shall satisfy
himself that the property is prima facie involved in money-
laundering and the property is required for the purposes of
adjudication under Section 8.
(5) After passing the order of confiscation under sub-
81
section (5) or sub-section (7) of Section 8, [Special Court],
shall direct the release of all property other than the
property involved in money-laundering to the person from
whom such property was seized or the persons entitled to
receive it.
(6) Where an order releasing the property has been made
82
by the [Special Court] under sub-section (6) of Section 8
or by the Adjudicating Authority under Section 58-B or
sub-section (2-A) of Section 60, the Director or any officer
authorised by him in this behalf may withhold the release
of any such property for a period of ninety days from the
83
date of [receipt of] such order, if he is of the opinion that
such property is relevant for the appeal proceedings under
this Act.]”
57. Section 25 deals with appellate tribunal for hearing
appeals against the order of adjudicating authority under
the PMLA which reads as under:
25. Appellate Tribunal .—The Appellate Tribunal
constituted under sub-section (1) of Section 12 of
the Smugglers and Foreign Exchange Manipulators
(Forfeiture of Property) Act, 1976 (13 of 1976) shall be the
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Appellate Tribunal for hearing appeals against the orders of
the Adjudicating Authority and the other authorities under
this Act.]
58. Section 66 deals with disclosure of information
under PMLA which reads as under:
154
“ 66. Disclosure of information .— [(1)] The Director or
any other authority specified by him by a general or special
order in this behalf may furnish or cause to be furnished to—
(i) any officer, authority or body performing any functions
under any law relating to imposition of any tax, duty or cess
or to dealings in foreign exchange, or prevention of illicit
traffic in the narcotic drugs and psychotropic substances
under the Narcotic Drugs and Psychotropic Substances Act,
1985 (61 of 1985); or
(ii) such other officer, authority or body performing functions
under any other law as the Central Government may, if in its
opinion it is necessary so to do in the public interest, specify,
by notification in the Official Gazette, in this behalf, any
information received or obtained by such Director or any
other authority, specified by him in the performance of their
functions under this Act, as may, in the opinion of the
Director or the other authority, so specified by him, be
necessary for the purpose of the officer, authority or body
specified in clause (i) or clause (ii) to perform his or its
functions under that law.
155
[(2) If the Director or other authority specified under sub-
section (1) is of the opinion, on the basis of information or
material in his possession, that the provisions of any other
law for the time being in force are contravened, then the
Director or such other authority shall share the information
with the concerned agency for necessary action.]”
59. It is evident that Section 3 of the 2002 Act defines
the offence of money laundering and it is not narrowly
focused. The proceeds of crime is a pivotal ingredient
constituting the offence of money laundering. Section 3 of
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the 2002 Act has been explained elaborately in Vijay
Madan Lal Chaudhary’s case (supra) . It is evident that
the definition of the offence of „money laundering‟ is wide
and expansive. It makes liable not only the person who
directly or indirectly indulges with the proceeds of crime
including its concealment, possession, acquisition or use
and projecting or claiming it as untainted property, but
even the person who knowingly assists or knowingly is a
party or is actually involved in any process or activity
connected shall also be liable. Explanation (i) further
explains the position.
60. Similarly, Explanation (ii) to Section 3 of the 2002
Act provides that the process or activity connected with the
proceeds of crime is a continuing activity and it continues
till the time a person is directly or indirectly enjoying the
proceeds of crime. While defining the expression „proceeds
of crime‟, it has been provided that any property derived or
obtained directly or indirectly by any person as a result of
criminal activity relating to the said property shall
constitute the proceeds of crime. Where the property is
taken or held outside the country, then the property
equivalent in value held within the country or abroad shall
be included in such proceeds. In the explanation attached
to the definition, it has been added that if the property is
directly or indirectly derived or obtained as a result of any
29
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criminal activity related to the scheduled offence, the same
shall also be included in the proceeds of crime.
61. Sub-section (1) of Section 17 of Act 2002 stipulates
that where the Director or any other officer not below the
rank of Deputy Director and authorized by him for the
purpose of Section 17 on the basis of information in his
possession has reason to believe which must be recorded in
writing that any person - i) has committed any act which
constitutes money laundering; or ii) is in possession of any
proceeds of crime involved in money laundering; or iii) is in
possession of any records relating to money laundering; or
iv) is in possession of any property related to crime; then he
may authorize any officer subordinate to him to - a) enter
and search any building, place, vessel etc., where he has
reason to suspect that such records or proceeds of crime
are kept; b) break open the lock of any door etc., for
exercising the powers conferred by clause (a) where the
keys thereof are not available; c) seize any record or
property found as a result of such search; d) place marks of
identification on such record or property or make or cause
to be made extracts or copies therefrom; e) make a note or
an inventory of such record or property; f) examine on oath
any person who has found to be in possession or control of
any record or property relevant for the purpose of
investigation under PMLA.
30
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62. There is a distinct difference in the reason to believe
appearing in Section 17 and the reason to believe in respect
of Section 5. While the reason to believe is for the purpose
of attachment under Section 5(1), the reason to believe is
for the purpose of search and seizure under sub- section (1)
of Section 17. The reason to believe in Section 5(1) is that a
person must be in possession of any proceeds of crime and
such proceeds of crime are likely to be concealed etc.,
thereby frustrating any proceeding for confiscation then the
Director or the authorised officer may provisionally attach
such property. On the other hand, the reason to believe in
Section 17(1) should be that the person has committed an
act of money laundering or is in possession of any proceeds
of crime involved in money laundering or is in possession of
any proceeds relating to money laundering or is in
possession of any property related to crime then he may
cause search of such property. Thus, the requirement or
the standard of reason to believe in Section 17(1) is on a
higher plane than in Section 5(1) inasmuch as the Director
or the authorised officer must have reason to believe that
the person concerned has committed the offence of money
laundering or is in possession of any proceeds of crime
involved in money laundering etc., instead of being in
possession of any proceeds of crime etc.
31
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63. Sub-section (2) of Section 17 says that the authority
who has been authorised under sub-section (1) shall
immediately after search and seizure or upon issuance of
the freezing order forward a copy of the reasons so recorded
along with the material in his possession to the
Adjudicating Authority in a sealed envelope which shall be
retained by the Adjudicating Authority. Sub-section (4)
mandates that the authority seizing any record or property
under sub-section (1) or freezing any record or property
under sub-section (1A) shall within a period of thirty days
from such seizure or freezing, as the case may be, file an
application before the Adjudicating Authority for retention
of such record or property seized or for continuation of the
order of freezing.
64. Section 20 deals with retention of property. Sub-
section (1) says that where any property has been seized
under Section 17 or Section 18 or frozen under sub-section
(1A) of Section 17 and the officer authorized by the Director
in this behalf, on the basis of material in his possession,
has reason to believe which must be recorded by him in
writing that such property is required to be retained for the
purposes of adjudication under Section 8, such property
may, if seized, be retained or if frozen may continue to
remain frozen for a period not existing 180 days from the
32
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date on which such property was seized or frozen, as the
case may be.
65. Further as per sub-section (2) of Section 20 the
officer authorized by the Director shall, immediately after
he has passed an order for retention or continuation of
freezing of the property for the purposes of adjudication
under Section 8, forward a copy of the order along with the
material in his possession referred to in sub-section (1) to
the Adjudicating Authority in a sealed envelope in the
manner as may be prescribed and Adjudicating Authority
shall keep such order and material for such period as may
be prescribed.
66. As per sub-section (3) of Section 20, on expiry of the
period specified in sub-section (1) the seized property or the
frozen property, as the case may be, shall be returned to
the person from whom such property was seized or whose
property was ordered to be frozen unless Adjudicating
Authority permits retention or continuation of freezing of
such property beyond the said period.
67. Requirement of sub-section (4) of Section 20 is that
Adjudicating Authority before authorizing retention or
continuation of freezing of such property beyond the period
specified in sub-section (1) shall satisfy himself that the
property is prima facie involved in money laundering and
33
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that the property is required for the purposes of
adjudication under Section 8.
68. Thus, that subsection (1) of Section 17 of PMLA
deals with two stages: one is at the stage of pre-
authorization and the next is the stage of post-
authorization. While in the first part, the Director or the
authorized officer must have reason to believe that the
concerned person has committed an act of money
laundering etc., in the second part, based on such reason
to believe he may authorise any subordinate officer to enter
into and search any building etc., if he has reason to
suspect that record relating to money laundering or
proceeds of crime are kept there.
69. Further Section 66(2) of the 2002 Act enables the
Director or other authority specified by a general/special
order under sub-section (1) to share information if he is of
the opinion that the provisions of any other law for the time
being in force are contravened on the basis of information
or material in his possession.
70. Moreover, sine qua non to proceed under the 2002
Act is the offence of money laundering which is wholly
dependent upon the proceeds of crime. It is evident that
the proceeds of crime should be the result of criminal
activity related to a scheduled offence included in the
34
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Schedule attached to the Act which also includes offence
under Section 414 and 120B of the Indian Penal Code,
1860 (hereinafter referred to as “IPC”). In that context, the
offence of money laundering is dependent upon the
proceeds of crime from criminal activity relating to a
scheduled offence, however, the registration of FIR in the
scheduled offence is not sine qua non for initiating the
proceedings under the 2002 Act. Section 66 of the 2002 Act
is not dependent on the predicate offence as explained by
the Supreme Court in Pavana Dibbur v. Directorate of
Enforcement 2023 SCC Online SC 1586.
71. Further on a plain reading of Section 66 of the 2002
Act, it becomes evident that the Statute enables the
Director or any other officer authorized by him to share
information with any officer, authority or body performing
any functions under any law in public interest.
72. Sub Section 2 of Section 66 of the 2002 Act is also
confined to sharing information if the Director or any other
authority is of the opinion that the provisions of any other
law for the time being in force are contravened; on the
basis of information and the material in his possession. In
the opinion of the Court, the aforesaid provision has a
laudable object; as it enables exchange of information
between the various public authorities who are in the field
of law enforcement, collection of tax, duty or cess or
35
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prevention of illicit traffic in the narcotics and psychotropic
substances.
73. Further as per Anil Tuteja v. Union of India,
2025 SCC OnLine SC 2110 , wherein the Hon'ble Supreme
Court held that Section 66 (2), casts a mandatory duty on
the ED to share the materials collected with the other
concerned agencies.
74. In the backdrop of the aforesaid settled position of
law and discussed aforesaid provision of the Act 2002 this
Court is now re-adverting of the factual aspect of the case.
75. The case originates from an incident dated
20.01.2019, when Jharkhand Police intercepted a truck
carrying coal without valid documents, leading to
registration of Poraiyahat P.S. Case No. 07 of 2019 under
Sections 414 and 120B IPC read with Sections 4 and 21 of
the Mines and Minerals Act, 1957. The driver implicated
Amar Mandal and others in illegal coal trading, and after
investigation, a charge-sheet was filed against them in
2022. Based on this predicate offence, the Directorate of
Enforcement registered ECIR No. ECIR/RNZO/08/2023 on
13.02.2023 under the Prevention of Money Laundering Act,
2002, and initiated proceedings against the Petitioner and
others.
76. Subsequently, ED officials conducted a search at
the Petitioner‟s premises on 21.11.2025, seizing ₹ 85,00,000
36
2026:JHHC:26755
in cash, 134 property deeds, and loose sheets. The
Enforcement Directorate filed Original Application No. 381
of 2025 before the Adjudicating Authority under Section
17(4) of PMLA seeking retention of the seized assets. The
Petitioner filed a reply on 06.02.2026, contending that the
seized cash was from legitimate business operations of M/s
Rudra Minerals and personal savings, and that the
documents bore no nexus with proceeds of crime. He
argued that the proceedings were arbitrary and devoid of
material linking the assets to money laundering.
77. Meanwhile, the Petitioner contested the criminal
trial arising from the predicate offence and was acquitted
on 10.02.2026 in G.R. Case No. 1125 by the Judicial
Magistrate, Godda, holding that the prosecution failed to
prove the charges beyond reasonable doubt and accordingly
acquitted the petitioner. The Petitioner filed an affidavit
dated 19.02.2026 before the Adjudicating Authority and
submitted a representation with the judgment to the
Enforcement Directorate, but no order was passed, leading
to the filing of the present writ petition.
78. The principal contention advanced by learned
counsel for the Petitioner, relying upon the judgment of the
Hon‟ble Supreme Court in Vijay Madanlal Choudhary
and Others v. Union of India and Others, 2022 SCC
OnLine SC 929 , is that since the Petitioner has already
37
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been acquitted in the predicate offence by a competent
court of jurisdiction, the offence of money-laundering
cannot survive against him.
79. It is further urged that, in the absence of any
subsisting scheduled offence and in view of the Petitioner‟s
acquittal in the predicate offence, there exists no material
to establish the presence of proceeds of crime.
Consequently, the continuation of proceedings pursuant to
the impugned ECIR is wholly without jurisdiction and
contrary to the settled legal position under the PMLA, and
therefore the ECIR deserves to be quashed and set aside.
80. Per contra, Mr. Amit Kumar Das, learned senior
counsel appearing for the Enforcement Directorate, has
opposed the submissions both on facts and in law. He
contends that the statute itself provides a comprehensive
mechanism under Section 8 of the PMLA for adjudication
by the Adjudicating Authority, followed by a statutory
appeal under Section 26 to the Appellate Tribunal and a
further appeal under Section 42 to the High Court. Hence,
invocation of writ jurisdiction under Article 226 of the
Constitution is impermissible. He further submits that
reliance upon Vijay Madanlal Choudhary (supra) is
misplaced, as the acquittal order dated 10.02.2026 passed
by the Judicial Magistrate First Class, Godda, in G.R. Case
No. 1125 does not amount to “final absolution” envisaged
38
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by the Hon‟ble Supreme Court, being subject to the
statutory appellate process under the Bharatiya Nagarik
Suraksha Sanhita, 2023.
81. In the backdrop of the aforesaid factual matrix, and
upon due consideration of the submissions advanced by
the learned counsel for the parties, the following issues
now arise for adjudication before this Court:
(i) Whether the ECIR, is amenable to quashing, under
the jurisdiction invoked before this Court under Article
226 of the Constitution of India, upon acquittal of the
Petitioner in the scheduled offence by the Court of first
instance?
(ii) Whether, in a case such as the present one, the
investigation or enquiry initiated upon registration of an
ECIR can be said to lose its force merely on account of
the Petitioner’s acquittal in the predicate offence,
particularly when a specific provision has been
incorporated under Section 66(2) of the Prevention of
Money Laundering Act, 2002?
(iii) Whether, in exercise of the jurisdiction invoked before
this Court under Article 226 of the Constitution of India,
a direction can be issued for release of properties which
was attached by the Enforcement Directorate on the
premise that they constitute proceeds of crime, thereby
bypassing the statutory appellate remedy expressly
39
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provided under Prevention of Money Laundering Act,
2002?
(iv) Whether, once the Petitioner has already invoked the
jurisdiction of the Adjudicating Authority, is it open to
him to simultaneously approach two forums, in view of
the settled principle that a litigant cannot pursue
remedies in two forums at the same time?
(v) Whether the information, which has been obtained
during enquiry/investigation shared under Section 66(2)
of the Act, 2002, can it be quashed at threshold ?
82. Since all the issues are intrinsically interconnected,
they are accordingly taken up together and answered
conjointly.
83. Since both the parties have taken aid of the
Judgment rendered by the Hon‟ble Supreme Court in Vijay
Madanlal Choudhary v. Union of India (supra) , it
becomes apposite to advert to the different paragraphs of
the said judgment.
84.
The aforesaid case deals with the constitutionality
of certain provisions of the Prevention of Money
Laundering Act (PMLA), 2002. The petitioners challenged
powers granted to the Enforcement Directorate
(ED) regarding arrest, property attachment, and
investigation under PMLA, and questioned the legality of
40
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provisions like reverse burden of proof, bail conditions, and
statements made during investigations.
85. The Hon‟ble Supreme Court upheld the validity of
the powers under Sections 5, 8(4), 15, 17, 19 of the Act
2002 affirming that these provisions have a reasonable
link to combat money laundering. The Court validated
the reverse burden of proof under Section 24, where the
accused must prove their innocence. This is seen as a
reasonable measure to fight money laundering, considering
the difficulty in proving the origin of illicit money.
86. Bone of contention herein is that if petitioner has
been acquitted in the predicate offence therefore entire
proceeding including the ECIR and adjudication pending
before the adjudicating authority should also be quashed
and set-side.
87. As is evident from the prayers sought in this writ
petition, the main relief sought is to quash the ECIR. To
answer the said issue, it is apt to refer to the relevant
portions of the judgment in Vijay Madanlal (supra) where
the Supreme Court had explained the subtle distinction
between an ECIR and an FIR. Paragraphs 366 to 372 of the
judgment are of relevance, which reads as under:
“366. 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 Code [Lalita Kumari v. State of
U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524]. There is no
41
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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.
367. In the scheme of the 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 person
concerned for offence of money laundering under Section 3 of this
Act.
368. 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 the 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
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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 up to 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 persons concerned 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.
369. 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 the 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
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an FIR by the jurisdictional police in respect of cognizable offence
under the ordinary law.
370. 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 the 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.
371. The next issue is : Whether it is necessary to furnish copy of
ECIR to the person concerned apprehending arrest or at least after
his arrest? Section 19(1) of the 2002 Act postulates that after
arrest, as soon as may be, the person should be informed about
the grounds for such arrest. This stipulation is compliant with the
mandate of Article 22(1) of the Constitution. Being a special
legislation and considering the complexity of the
inquiry/investigation both for the purposes of initiating civil action
as well as prosecution, non-supply of ECIR in a given case cannot
be faulted. The ECIR may contain details of the material in
possession of the authority and recording satisfaction of reason to
believe that the person is guilty of money laundering offence, if
revealed before the inquiry/investigation required to proceed
against the property being proceeds of crime including to the
person involved in the process or activity connected therewith,
may have deleterious impact on the final outcome of the
inquiry/investigation. So long as the person has been informed
about grounds of his arrest that is sufficient compliance of
mandate of Article 22(1) of the Constitution. Moreover, the
arrested person before being produced before the Special Court
within twenty-four hours or for that purposes of remand on each
occasion, the court is free to look into the relevant records made
available by the authority about the involvement of the arrested
person in the offence of money laundering. In any case, upon filing
of the complaint before the statutory period provided in the 1973
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Code, after arrest, the person would get all relevant materials
forming part of the complaint filed by the authority under Section
44(1)(b) of the 2002 Act before the Special Court.
372. Viewed thus, supply of ECIR in every case to the person
concerned is not mandatory. From the submissions made across
the Bar, it is noticed that in some cases ED has furnished copy of
ECIR to the person before filing of the complaint. That does not
mean that in every case same procedure must be followed. It is
enough, if ED at the time of arrest, contemporaneously discloses
the grounds of such arrest to such person. Suffice it to observe
that ECIR cannot be equated with an FIR which is mandatorily
required to be recorded and supplied to the accused as per the
provisions of the 1973 Code. Revealing a copy of an ECIR, if made
mandatory, may defeat the purpose sought to be achieved by the
2002 Act including frustrating the attachment of property
(proceeds of crime). Non-supply of ECIR, which is essentially an
internal document of ED, cannot be cited as violation of
constitutional right. Concededly, the person arrested, in terms of
Section 19 of the 2002 Act, is contemporaneously made aware
about the grounds of his arrest. This is compliant with the
mandate of Article 22(1) of the Constitution.
88. Thus, from the aforesaid paragraph it is evident that
no comparison can be drawn between the mechanism
regarding prevention, investigation or trial in connection
with the scheduled offence, while testing it against the
provisions of the CrPC it was also pointed out that, in the
scheme of the PMLA, upon identification of existence of
property, being the proceeds of crime, the authority under
the Act is expected to inquire into the relevant aspects in
relation to such property and take measures as may be
necessary including the attachment of the property for
being dealt with as per the provisions of the PMLA.
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89. For facilitating the adjudicating authority to confirm
the provisional attachment, order and direct confiscation,
the authorities mentioned in Section 48 are expected to
conduct inquiry and investigation. When sufficient credible
information is gathered during such inquiry/investigation,
indicative of the involvement of any person in any process
or activity connected with the proceeds of crime, it would
be open to such authorities to file a formal complaint
before the Special Court, naming the person concerned for
the offence of money laundering under Section 3 of the
PMLA.
90. It was also held that an ECIR is nothing but an
internal document, created by the Department before
initiating penal action or prosecution proceedings against
the person involved with process or activity, connected with
proceeds of crime. More importantly, it was held that the
fact that such ECIR has not been registered shall not come
in the way of the authorities referred to in Section 48 of the
PMLA to commence inquiry/investigation for initiating civil
action of attachment, being proceeds of crime by following
the prescribed procedure.
91. In plain and simple words, the ECIR is not a
statutory document and if the existence of an ECIR is not a
legal prerequisite for ED action, it follows that the quashing
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of an ECIR is not a remedy that would have any operative
legal consequence.
92. The Hon‟ble Supreme Court further held that merely
because the expression “investigation” is used in the PMLA
for various actions carried out by the authorised officer, it
does not limit itself to matters of “investigation” as defined
in Section 2( h ) of the CrPC. It has further been held that
the expression “investigation” is interchangeable with the
function of “inquiry” to be undertaken by the authorities
under the PMLA, including collection of evidence for being
presented to the adjudicating authority for its
consideration and for confirmation of provisional
attachment order. It was also held in paragraph No. 194
of Vijay Madanlal (supra) that the provisions of the PMLA
are not only to investigate into the offence of money
laundering, but more importantly, to prevent money
laundering and to provide for confiscation of property
related to money laundering and matters connected
therewith and incidental thereto.
93. The Hon‟ble Apex Court has further observed in the
said case that in the event the person named in the
criminal activity relating to a scheduled offence is finally
absolved by a court of competent jurisdiction owing to an
order of discharge, acquittal or because of quashing of the
criminal case (scheduled offence) against him/her, there
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can be no action for money laundering against such a
person or person claiming through him in relation to the
property linked to the stated scheduled offence. For ready
reference the relevant paragraph is being quoted herein
which reads as under:
“109. Tersely put, it is only such property which is derived
or obtained, directly or indirectly, as a result of criminal
activity relating to a scheduled offence that can be regarded
as proceeds of crime. The authorities under the 2002 Act
cannot resort to action against any person for money
laundering on an assumption that the property recovered by
them must be proceeds of crime and that a scheduled
offence has been committed, unless the same is registered
with the jurisdictional police or pending inquiry by way of
complaint before the competent forum. For, the expression
“derived or obtained” is indicative of criminal activity
relating to a scheduled offence already accomplished.
Similarly, in the event the person named in the criminal
activity relating to a scheduled offence is finally absolved
by a court of competent jurisdiction owing to an order of
discharge, acquittal or because of quashing of the criminal
case (scheduled offence) against him/her, there can be no
action for money laundering against such a person or
person claiming through him in relation to the property
linked to the stated scheduled offence. This interpretation
alone can be countenanced on the basis of the provisions of
the 2002 Act, in particular Section 2(1)(u) read with Section
3. Taking any other view would be rewriting of these
provisions and disregarding the express language of the
definition clause “proceeds of crime”, as it obtains as of
now.
94. Thus, there is no dispute of the aforesaid settled
proposition of law as settled by the Hon‟ble Apex Court that
in the event the person named in the criminal activity
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relating to a scheduled offence is finally absolved by a court
of competent jurisdiction owing to an order of discharge,
acquittal or because of quashing of the criminal case
(scheduled offence) against him/her, there can be no action
for money laundering against such a person.
95. But in the instant case the order of acquittal passed
by the Learned Judicial Magistrate First Class, Godda, on
10.02.2026 in G.R. Case No. 1125/2022 remains amenable
to challenge before the competent appellate forum under
the provisions of the Bharatiya Nagarik Suraksha Sanhita,
2023.
96. The legal fiction of “final absolution” crystallizes
upon the exhaustive invocation of all available appellate
remedies or, alternatively, upon the expiry of the statutory
limitation period for filing an appeal without any challenge
being preferred.
97. However, in the instant case it is evident from
perusal of the order of the acquittal, which has been
brought on record by way of filing an affidavit, passed by
Learned Judicial Magistrate First Class, Godda, that it was
confined exclusively to the localized police investigation
concerning a single intercepted truck. The Learned
Magistrate had neither occasion nor jurisdiction to
examine, much less adjudicate upon, the substantial cash
recovery of Rs. 85 Lakhs, the 134 original property deeds,
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or the forensic trail of Rs. 8.94 crores deposited in the
Petitioner‟s bank accounts. The recovery of the aforesaid
money and deed is the admitted fact since the petitioner is
perusing his remedy for release of the same before the
adjudicating authority by filing reply to the show cause.
98. In total absence of any adjudication by the trial
court regarding the seized wealth, the Petitioner cannot rely
upon a localized, non-final acquittal as a blanket shield to
demand release of the heavily documented proceeds of
crime, which remain subject to independent statutory
adjudication before the Learned Adjudicating Authority,
New Delhi.
99. Further the Prevention of Money Laundering Act,
2002 is recognized as a complete and self-contained code,
establishing a structured multi-tiered hierarchy for
fact-finding, adjudication, and appellate review. Section 8
of the Act entrusts the Adjudicating Authority with the
responsibility of conducting detailed inquiries and
determining the retention and eventual confiscation of the
proceeds of crime. From such adjudication, a statutory
appeal lies to the Appellate Tribunal under Section 26, and
thereafter a further appeal lies to the High Court under
Section 42.
100. In the instant case it is admitted fact that following
the search and seizure operations conducted on
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21.11.2025, the Directorate of Enforcement filed Original
Application No. 381 of 2025 before the Adjudicating
Authority, New Delhi, under Section 17(4) of the PMLA,
2002.
101. The Adjudicating Authority, found sufficient prima
facie merit to issue a Show Cause Notice under Section 8(1)
of the Act 2002. The Petitioner has already submitted to
the jurisdiction of the Adjudicating Authority by filing a
detailed Reply dated 06.02.2026, wherein he has raised
exhaustive factual defenses regarding the purportedly
legitimate nature of the seized physical cash amounting to
Rs. 85 Lakhs and the 134 property deeds.
102. Having actively participated in the ongoing statutory
adjudication and having submitted to the jurisdiction of
the competent authority, it is considered view of this Court
that the Petitioner is simultaneously pursuing parallel
litigation by way of the present Writ Petition.
103. Further, the determination of whether the seized
physical cash of Rs. 85 Lakhs genuinely represents the
"working capital" of a proprietorship firm, or whether the
134 coordinated gift deeds/lease agreements/Sale Deeds
constitute a methodology for the integration of illicit wealth,
are deeply intensive questions of fact. Such complex factual
determinations, which require the rigorous sifting of
financial ledgers, bank statements, and the evidentiary
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evaluation of documents, fall exclusively within the
specialized domain of the Adjudicating Authority and at
this stage extraordinary writ jurisdiction of this Court
cannot be converted into a parallel fact-finding inquiry to
prematurely declare the seized assets as "untainted".
Further this Court at this stage under instant jurisdiction
cannot obstruct fact-finding jurisdiction of the Adjudicating
Authority and to deliver a preemptive verdict on highly
disputed questions of financial facts.
104. Further allowing the present Writ Petition at
threshold would violate the cardinal principles of
exhaustion of alternative statutory remedies and would
also render the entire adjudicatory machinery established
by the Parliament under the PMLA, 2002 completely otiose
and redundant. Further the Petitioner has a full, fair, and
ongoing opportunity to present his factual and legal
defenses including his arguments regarding the trial court
acquittal before the Adjudicating Authority, therefore, the
prayer of writ petitioner is not fit to be allowed.
105. Further the relevant point which is required to refer
herein that the Hon‟ble Apex Court in the said
Judgment distinguished ECIR from an FIR , clarifying that
the ECIR is an internal document used by the ED and does
not carry the same legal weight as an FIR and a Special
Court can review it if necessary, during proceedings. It has
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further been observed that ECIR is not a statutory
document, nor there is any provision in the 2002 Act
requiring authority referred to in Section 48 to record
ECIR. For ready reference the relevant paragraph on the
aforesaid point is being quoted herein which reads as
under:
370. 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 the 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.
376. It is true that the ED Manual may be an internal
document for departmental use and in the nature of set of
administrative orders. It is equally true that the accused or
for that matter common public may not be entitled to have
access to such administrative instructions being highly
confidential and dealing with complex issues concerning
mode and manner of investigation, for internal guidance of
officers of ED. It is also correct to say that there is no such
requirement under the 2002 Act or for that matter, that there
is nothing like investigation of a crime of money laundering
as per the scheme of the 2002 Act. The investigation,
however, is to track the property being proceeds of crime and
to attach the same for being dealt with under the 2002 Act.
Stricto sensu, it is in the nature of an inquiry in respect of
civil action of attachment. Nevertheless, since the inquiry in
due course ends in identifying the offender who is involved in
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the process or activity connected with the proceeds of crime
and then to prosecute him, it is possible for the department to
outline the situations in which that course could be adopted
in reference to specific provisions of the 2002 Act or the Rules
framed thereunder; and in which event, what are the options
available to such person before the authority or the Special
Court, as the case may be. Such document may come handy
and disseminate information to all concerned. At least the
feasibility of placing such document on the official website of
ED may be explored .
106. Since ECIR is an internal document, it requires no
approval from the Magistrate and there could be no judicial
superintendence of this proceeding and it can run parallel
to the police FIR. Though, the ECIR is not an FIR, however,
the ED is an Investigating Agency that has been
constituted to investigate the various offences including the
offence of money laundering. In these circumstances, after
the instituting of ECIR in the instant case in the year 2023,
the ED continued to enquire and, in that process, it
collected information and material by various methods
including search and seizure.
107. It is considered view of this Court that ECIR since is
internal administrative file noting or departmental record,
it cannot be the subject matter of a quashing under Article
226 of the Constitution of India. The ECIR does not, in and
of itself, entail penal consequences or affect the
fundamental rights of the Petitioner in a manner that
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warrants judicial interference at the very threshold of a
complex financial probe.
108. In the aforesaid case the Hon‟ble Apex Court has
observed in paragraph 382.26 that in view of special
mechanism envisaged by the 2002 Act, ECIR cannot be
equated with an FIR under the 1973 Code. ECIR is an
internal document of the ED and the fact that FIR in respect
of scheduled offence has not been recorded does not come in
the way of the authorities referred to in Section 48 to
commence inquiry/investigation for initiating “civil action” of
“provisional attachment” of property being proceeds of crime.
109. The directions issued by the Apex Court in Vijay
Madanlal's case cited supra, more specifically, 382 must be
read in conjunction with the principles laid down in the
said case in Paragraph Nos. 281 to 284 and 349. The
conclusion arrived at paragraph 382 by the Hon‟ble Apex
Court cannot be read in isolation so as to quash the ECIR.
The findings, principles and the scope elaborately
considered by the Hon'ble Supreme Court are to be taken
into consideration with reference to factual aspect of the
particular case.
110. Thus , since the ECIR is strictly an internal,
administrative document prepared by the Directorate for its
own departmental reference, tracking and record-keeping,
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therefore it cannot be made the subject of a petition for
quashing under Article 226 of the Constitution of India.
111. Further in the counter affidavit filed by the ED, it
has been mentioned therein that during investigation of the
instant case, it was found that several other predicate
offences have been committed by the petitioner along with
other persons and evidence in this regard has also been
collected. The Enforcement Directorate is in the process of
sharing all such evidences collected during investigation
with the other investigating agencies, including the Income
Tax Department and the State Police in accordance with
section 66(2) of the Prevention of Money Laundering Act,
2002.
112. As discussed in the preceding paragraph, Section
66 of the Prevention of Money Laundering Act, 2002
empowers the Director or any authority specified under
sub-section (1) to share information if, in his opinion, the
provisions of any other law in force stand contravened on
the basis of material in his possession. Importantly, this
provision operates independently of the existence of a
predicate offence.
113. On a plain reading, Section 66 authorizes the
Director or his delegate to share such information with any
officer, authority, or body functioning under any law, in
public interest. Sub-section (2) specifically confines itself to
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enabling such exchange of information where
contravention of another law is perceived, thereby serving
the laudable object of facilitating coordination among
enforcement agencies engaged in law enforcement,
taxation, revenue collection, or prevention of illicit
trafficking in narcotics and psychotropic substances.
114. In the case of Vijay Madanlal Choudhary v. Union
of India (supra), the Hon‟ble Apex Court has categorically
held that the authorized officer may be advised to send
information to the jurisdictional police [under Section 66(2)
of the 2002 Act] for registration of a scheduled offence
contemporaneously,
“151.It is possible that in a given case after the discovery of
huge volume of undisclosed property, the authorised officer
may be advised to send information to the jurisdictional
police [under Section 66(2) of the 2002 Act] for registration of
a scheduled offence contemporaneously, including for further
investigation in a pending case, if any. On receipt of such
information, the jurisdictional police would be obliged to
register the case by way of FIR if it is a cognizable offence or
as a non-cognizable offence (NC case), as the case may be. If
the offence so reported is a scheduled offence, only in that
eventuality, the property recovered by the authorised officer
would partake the colour of proceeds of crime under Section
2(1)(u) of the 2002 Act, enabling him to take further action
under the Act in that regard.”
115. Thus, as per the settled position of law Section 66(2)
casts a duty upon the Enforcement Directorate to share
materials collected with other concerned agencies, thereby
reinforcing the statutory intent of inter-agency cooperation.
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116. Further it needs to refer herein that Section 66(2) of
the Prevention of Money Laundering Act, 2002, operates in
a different field by enabling the Director or other specified
authority to share information with a concerned agency if
they are of the opinion that the provisions of any other law
have been contravened. This facilitates action under those
other laws, distinct from the primary functions under the
Prevention of Money Laundering Act, 2002. Section 66(2) of
the Prevention of Money Laundering Act, 2002, distinctly
operates in a different field by establishing a mechanism
for inter-agency information sharing when a contravention
of "any other law for the time being in force" is detected.
117. While Section 66(1) of the said Act permits the
Director or a specified authority to furnish information to
specific bodies performing functions under laws related to
tax, duty, cess, foreign exchange, or narcotic drugs and
psychotropic substances, Section 66(2) broadens this scope
significantly. It mandates that if the Director or other
specified authority forms an opinion, based on information
or material in their possession, that provisions of any other
law have been contravened, they shall share this
information with the concerned agency for necessary
action. Thus, Section 66(2) extends beyond the primary
objective of preventing and prosecuting money laundering.
It transforms the Directorate of Enforcement into a hub for
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disseminating critical information that can trigger
enforcement actions across a wide spectrum of legal fields,
thereby facilitating a more comprehensive approach to
combating various forms of illegal activities by leveraging
the intelligence gathered during money laundering
investigations. This distinct function underscores its
operation in a field separate from the core mandate of the
Prevention of Money Laundering Act, 2002.
118. It is evident upon a conjoint reading of the
provisions contained in Chapter II and Chapter X of the
Prevention of Money Laundering Act, 2002 that both
operate within distinct spheres and are intended to serve
different purposes. While Chapter II is concerned with
penal consequences flowing from the commission of a
scheduled offence, Chapter X, by contrast, is directed
towards conferring powers of enquiry, coordination, and
communication upon the Enforcement Directorate and
allied agencies, thereby ensuring that the broader object of
the Act is effectuated.
119. The reference to the predicate offence, as
contemplated under Chapter II of the Prevention of Money
Laundering Act, 2002, is premised upon the institution of a
scheduled offence designated as the predicate offence. On
that foundation, proceedings under the PMLA may be
initiated for the purpose of investigation, by way of filing a
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complaint before the Court of competent jurisdiction, so as
to ascertain whether the ingredients envisaged under
Section 3 of the Act are satisfied, thereby attracting the
penal consequences prescribed under Section 4 thereof.
120. Chapter X of the Prevention of Money Laundering
Act, 2002, wherein Section 66 has been incorporated,
operates in a distinct sphere from Chapter II, which
provides for penal consequences predicated upon the
commission of a scheduled offence. While Chapter II
contemplates prosecution and punishment based on the
existence of a predicate offence, Section 66, stipulated in
Chapter X, confers power upon the Enforcement
Directorate on the basis of information or material in his
possession, that the provisions of any other law for the time
being in force are contravened, then the Director or such
other authority shall share the information with the
concerned agency for necessary action.
121. If the authorities under PMLA have got input to
attract the offence of laundering either by way of
concealment or trail then the power has been conferred
upon the authorities of ED to give such information to the
agencies for the purpose of initiating the proceeding.
122. The authorities under the Act while sharing the
information is not to be swayed that the notice under
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Section 66 is not required to be issued solely because no
case said to be instituted under schedule offence or if
instituted the person concerned, the accused has been
acquitted by the competent court of criminal jurisdiction.
Even if a formal case for a scheduled (predicate) offence has
not yet been registered, any incriminating material
uncovered during a money laundering probe that points to
a violation of another law must still be share.
123. The ground urged on behalf of the Petitioner in the
present case is that, if the offence forming the subject
matter of the First Information Report instituted under a
scheduled offence has culminated in the Petitioner‟s
acquittal, then the proceedings under the PMLA
particularly the ECIR and pending proceeding before the
Adjudicating Authority are liable to be quashed.
124. Conversely, the case of the Enforcement Directorate
is that the predicate offence pertains only to the specific
material for which the charge-sheet has been submitted by
the State prosecuting agency. However, during the course
of enquiry pursuant to the institution of the ECIR—an
internal document—the authorities of the Directorate, upon
conducting search, recovered a sum of ₹ 85,00,000/- in
cash along with 134 original property deeds. This discovery
necessitated further enquiry/investigation on the basis of
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the ECIR already registered. It is urged that the matter
presently remains at the stage of enquiry, and further the
PMLA, Section 66(2) of the Act, 2002 expressly provides for
communication of such inputs to other agencies, enabling
them to proceed in accordance with law should any adverse
material be found against the person concerned.
125. Further, as per record, the matter is at the stage of
issuance of notice, intended to afford the Petitioner an
opportunity to satisfy the authorities of the Enforcement
Directorate by demonstrating that the assets and cash
seized have been lawfully procured and are unconnected
with any laundering trail. It is not a situation where the
Petitioner is being proceeded by ED in secrecy; rather, the
Directorate is proceeding by duly calling upon the Petitioner
to explain the seizure of assets i.e. ₹ 85,00,000/- in cash
and 134 original property deeds, found in his possession.
126. It is a well-settled principle of law that where a
provision has been enacted in a statute, the rule of
harmonious construction must be applied so as to advance
the object and purpose of the enactment. The Prevention of
Money Laundering Act, 2002, operates in two distinct
parts. The first part empowers the Enforcement Directorate
to proceed by instituting an ECIR and filing a complaint
before the Court of competent jurisdiction, based upon
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inputs gathered in relation to a predicate offence against
the accused. The question, however, arises as to what
would be the position in a situation where no scheduled
offence has been instituted. Can it then be said that the
Enforcement Directorate would be rendered remediless? If
such an interpretation were to be adopted, the entire scope
and efficacy of the PMLA, 2002 would stand frustrated,
which is contrary to the legislative intent underlying the
statute.
127. The statutory mandate under the Prevention of
Money Laundering Act, 2002, adequately addresses such a
situation by conferring power upon the Enforcement
Directorate to ascertain the details of properties found in
possession of the person concerned. The mandate of Act
2002 enables the Directorate to verify the authenticity of
the procurement of such properties, ensuring that they
have been acquired through lawful means and are
untainted by any laundering trail.
128. An ECIR does not constitute the initiation of a
criminal prosecution; rather, it is an internal document of
the Enforcement Directorate. The mere institution of an
ECIR to invoke jurisdiction does not, by itself, amount to
launching or initiating prosecution against the person
concerned. It only marks the commencement of an enquiry.
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At this stage, the Directorate is empowered to call upon the
person to explain the source and legitimacy of the assets
seized. Where the person fails to establish that the assets
have been procured from known and lawful sources, the
authorities are mandated under Section 66(2) of the Act,
2002 to communicate such information to other agencies
for proceeding further in accordance with law.
129. Therefore, it is not available for the litigant
concerned that merely because in a situation where the
other materials have been found which is not available in
the predicate offence upon which the judgment of acquittal
has been passed and in such circumstances the ED
authorities has decided to proceed under Section 66 as per
the statement made in the counter affidavit particularly in
paragraph 5 of the supplementary Counter affidavit.
130. At this juncture, it needs to refer herein the
principle of harmonious construction. The principle of
harmonious construction is a rule of statutory
interpretation employed by courts to avoid inconsistencies
and conflicts between two or more provisions within the
same statute or between different statutes.
131. The primary objective is to give effect to all
provisions of an enactment, assuming that the legislature
would not ordinarily intend to contradict itself. When faced
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with an apparent conflict, courts endeavor to reconcile the
provisions in a manner that allows each to operate without
nullifying the other, thereby upholding the legislative
intent. The interpretation should, as far as possible, give
full effect to both provisions.
132. A construction that renders one provision otiose or
nugatory is generally to be avoided. Provisions must be read
in their entirety and in the context of the whole statute. The
legislative intent is gathered from the statute as a whole,
not from isolated provisions. The interpretation must align
with the overall purpose and object of the statute. The
court may consider the mischief the statute sought to
remedy and the object it sought to achieve.
133. Thus, the doctrine of harmonious construction is
invoked when there is an apparent inconsistency or
repugnancy between two sections or parts of the same Act.
The courts strive to interpret the provisions in such a way
that both can stand together and operate in their respective
spheres. This approach prevents the invalidation of one
provision merely because it appears to conflict with
another, thereby ensuring the integrity and workability of
the legislative scheme. The Supreme Court of India has
consistently applied this principle in numerous judgments
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to resolve statutory ambiguities and uphold legislative
intent.
134. In Municipal Corporation of Delhi v. Gagan
Narang, (C.A. No.-007463-007464 – 2023) 2025 INSC 2
the Hon‟ble Supreme Court reiterated this fundamental
rule of interpretation. The Hon‟ble Court emphasized that
the statute must be read as a whole, and different parts of
the same section or different sections of the same Act
should be construed with reference to each other to create
a consistent enactment.
135. In Sultana Begum v. Prem Chand Jain, (1997) 1
SCC 373 , the Hon‟ble Apex Court rendered the guideline in
context of principle of harmonious construction wherein it
has been observed that it is the duty of the courts to avoid
a head-on clash between two sections of an Act and to
construe conflicting provisions in a manner that
harmonizes them. It has further been observed that
Provisions of one section cannot be used to defeat other
provisions unless reconciliation is impossible and effect
should be given to both conflicting provisions if possible.
136. Since both the provision under chapter II of the Act
2002 and chapter X of the Act 2002 are not overlapping
rather depending upon the facts and circumstances
involved in the individual case, as the fact of the present
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case herein is that the inputs which has been gathered in
course of investigation by the state prosecuting agency in
the predicate offence is different to that has been gathered
by the ED Directorate by possessing/seized the property of
the petitioner i.e. a sum of Rs. 85,00,000/- in cash, along
with 134 original property deeds.
137. In such a situation, it is the bounden duty of the
court to examine the factual aspect and under the situation
where the facts are same i.e., in the predicate offence and
under ECIR then certainly sharing of information under
Section 66 will be said to be misuse of power but that is not
the case herein as per the details furnished in the counter
affidavit i.e., the predicate offence is only for one offence
while in course of interception/search a sum of Rs.
85,00,000/- in cash, along with 134 original property deeds
property has been found in possession of the petitioner.
Moreover, in addition to the aforesaid fact, the petitioner
has already approached to the adjudicating authority.
138. It is pertinent to note that in Vijay Madanlal
Choudhary v. Union of India (supra), the Hon‟ble
Supreme Court, in paragraph 194, has categorically
observed that the provisions of the Prevention of Money
Laundering Act, 2002 are not confined merely to
investigation of the offence of money-laundering, but more
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significantly, are designed to prevent money-laundering
and to provide for confiscation of property related to
money-laundering, together with matters connected
therewith and incidental thereto. This authoritative
pronouncement underscores that the legislative intent of
the Act extends beyond prosecution, embracing preventive
and confiscatory measures to ensure that the menace of
laundering is comprehensively addressed, for ready
reference the relevant paragraph is being quoted as under:
194. Concededly, the 2002 Act provides for an inquiry to be
conducted by the authorities and with power to collect evidence
for being submitted to the adjudicating authority for consideration
of confirmation of provisional attachment order passed by the
authorities in respect of properties being proceeds of crime
involved in the offence of money laundering. In that sense, the
provisions in the 2002 Act are not only to investigate into the
offence of money laundering, but more importantly to prevent
money laundering and to provide for confiscation of property
related to money laundering and matters connected therewith and
incidental thereto.
139. The Hon‟ble Apex Court in the said case has held
that the PMLA is a comprehensive legislation, not limited to
provide for prosecution of person involved in the offence of
money- laundering, but mainly intended to prevent money-
laundering activity and confiscate the proceeds of crime
involved in money- laundering. In other words, this
legislation is an amalgam of different facets including
setting up of agencies and mechanisms for coordinating
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measures for combating money-laundering. Chapter III is a
provision to effectuate these purposes and objectives by
attachment, adjudication and confiscation. For ready
reference the relevant paragraphs of Vijay Madan Lal
Chaudhary (supra) are being referred herein which reads
as under:
“102. The task of the Director or an authority authorised by
the Central Government under the 2002 Act for the collection
of evidence is the intrinsic process of adjudication
proceedings. In that, the evidence collected by the authorities
is placed before the adjudicating authority for determination
of the issue as to whether the provisional attachment order
issued under Section 5 deserves to be confirmed and to
direct confiscation of the property in question. The expression
“investigation”, therefore, must be regarded as
interchangeable with the function of “inquiry” to be
undertaken by the authorities for submitting such evidence
before the adjudicating authority.
103. In other words, merely because the expression used is
“investigation” — which is similar to the one noted in Section
2(h) of the 1973 Code, it does not limit itself to matter of
investigation concerning the offence under the Act and
Section 3 in particular. It is a different matter that the
material collected during the inquiry by the authorities is
utilised to bolster the allegation in the complaint to be filed
against the person from whom the property has been
recovered, being the proceeds of crime. Further, the
expression “investigation” used in the 2002 Act is
interchangeable with the function of “inquiry” to be
undertaken by the authorities under the Act, including
collection of evidence for being presented to the adjudicating
authority for its consideration for confirmation of provisional
attachment order. We need to keep in mind that the expanse
of the provisions of the 2002 Act is of prevention of money
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laundering, attachment of proceeds of crime, adjudication
and confiscation thereof, including vesting of it in the Central
Government and also setting up of agency and mechanism
for coordinating measures for combating money laundering.”
140. Thus, it becomes evident that the role of the
authorities under Chapter VII of the Prevention of Money
Laundering Act, 2002 is two-fold: first, to conduct enquiry
and collect evidence so as to facilitate adjudication
proceedings before the Adjudicating Authority in exercise of
powers conferred under Chapters III and V of the Act; and
second, to employ the same material to substantiate
allegations against the person concerned by filing a
complaint for the offence of money-laundering before the
Special Court, if the circumstances so warrant. It has
further been held that enquiry constitutes the foundational
process, and once the Enforcement Directorate suggests
the existence of proceeds of crime, it is empowered to
commence enquiry for the purpose of gathering evidence.
141. It is, thus, evident that the provision as contained
under Section 66(2) creates mechanism in the PMLA to act
as a „ bridge’ meaning thereby that confers power upon the
ED that even prior to institution of the FIR, the ED can
proceed to initiate civil action so as to collect the material
for the purpose of sending the information to the
jurisdictional police under Section 66(2) or any other
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agency to proceed further to achieve the object and purport
of the Act.
142. Accordingly, all the issues are being answered as
above.
143. It is evident from record that a supplementary
Counter affidavit dated 04.08.2026 has been filed on behalf
of respondent-ED wherein it has been stated that the
Directorate of Enforcement has acted upon the provisions
of Section 66(2) of the Prevention of Money Laundering Act,
2002 (PMLA) and the Directorate of Enforcement has
formally shared substantial evidence regarding
unexplained assets and potential tax evasion by the
Petitioner with the relevant statutory authorities under
Section 66(2) of the PMLA, 2002.
144. Further, it has been mentioned in the said affidavit
that during the course of the investigation and search
operations, various highly incriminating materials, such as
134 property deeds and Rs. 85 Lakhs in cash, were
recovered and as such the information have been shared to
other agencies under section 66(2) of PMLA.
145. In view of the discussion above, it is considered view
of this Court that at this stage the ECIR cannot be quashed
or set-aside.
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146. Further, as discussed in the preceding paragraphs,
the Adjudicating Authority, New Delhi, is already seized of
the matter concerning retention of the seized cash and
documents in Original Application No. 381 of 2025, to
which the Petitioner has filed his reply.
147. In such circumstances, entertaining the present
writ petition and quashing the ECIR at this stage would
amount to usurping the exclusive statutory jurisdiction of
the Adjudicating Authority. Such interference would
permanently frustrate the statutory scheme and mandate
of the Prevention of Money Laundering Act, 2002.
148. In so far as the Petitioner‟s reliance upon the
judgments of the Hon‟ble Supreme Court and various High
Courts is concerned, it is manifest upon perusal of that
those authorities rest upon distinct factual matrices. In the
present case, as borne out from the supplementary counter
affidavit dated 04.08.2026, the Directorate of Enforcement
has acted in terms of Section 66(2) of the PMLA and has
formally shared substantial evidence regarding
unexplained assets i.e. 134 property deeds and Rs. 85
Lakhs in cash, which has been seized during the course of
the investigation and search operations. Accordingly, in the
facts and circumstances herein, the judgments cited by the
learned Senior Counsel, are inapplicable.
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149. Further, it is settled position of law that the
applicability of judgment is to be tested on the facts and
circumstances of each and every case individually.
Reference in this regard be made to the judgment rendered
by the Hon'ble Apex Court in Dr. Subramanian Swamy
vs. State of Tamil Nadu and Others, (2014) 5 SCC 75,
paragraph 47 of which reads as under:
"47. It is a settled legal proposition that the ratio of
any decision must be understood in the background
of the facts of that case and the case is only an
authority for what it actually decides, and not what
logically follows from it. "
150. Thus, on the basis of discussion made hereinabove
this Court is of the considered view that in the
circumstances, the present writ petition is devoid of merit
and stands dismissed.
151. Consequent thereto, the interim order dated
13.05.2026, whereby further proceedings in connection
with ECIR/RNZO/08/2023 were stayed during the
pendency of the present writ petition, is hereby vacated.
152. The Petitioner shall be at liberty to pursue his
remedies before the Adjudicating Authority and other
concerned authority by placing his case in entirety,
including the factum of his acquittal in the predicate
offence.
153. The Authority concerned is hereby directed to take
appropriate decision in accordance with law.
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154. With the aforesaid observation and direction, the
instant writ petition stands disposed of.
155. Pending Interlocutory Application, if any, stands
disposed of.
(Sujit Narayan Prasad, J.)
st
1 September, 2026
Alankar/--
A.F.R.
Uploaded on 04.09.2026
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