Delhi HC Quashes ED ECIR Against Godrej Properties After FIR In Orris Dispute Was Quashed

In brief

The question

1. Whether the ECIR could continue after the FIR constituting its sole predicate scheduled offence had been quashed.

The court held

The Court allowed the petition and quashed ECIR No. DLZO-II/9/2024 and all consequential proceedings emanating from it.

It also directed

It clarified that, if proceedings under FIR No. 0064/2024 are revived in the future, the ED may seek to revive the ECIR proceedings.

The petition and pending applications were disposed of accordingly.

01Facts

The Enforcement Directorate (ED) recorded ECIR No. DLZO-II/9/2024 against Godrej Properties Ltd. on the basis of FIR No. 0064/2024, registered under Sections 406, 420 and 120-B IPC following a complaint by Orris Infrastructure Pvt. Ltd.

p. 2 · p. 4

The Delhi High Court had subsequently quashed the complaint proceedings, the order directing registration of the FIR, the FIR, and consequential actions, after Orris stated that it no longer wished to pursue the complaint.

pp. 2–3

Godrej sought quashing of the ECIR and related proceedings; the ED did not dispute that the predicate FIR had been quashed.

p. 2, 3

02Issues

i.1. Whether the ECIR could continue after the FIR constituting its sole predicate scheduled offence had been quashed.

pp. 3–5

ii.2. Whether the ECIR and consequential proceedings should be quashed in the circumstances.

p. 5

03Law Applied

Article 226 of the Constitution and Section 528 of the BNSS were invoked as the bases for the petition.

p. 2

Under Sections 2(1)(u) and 3 of the PMLA, property can be treated as “proceeds of crime” only where it is derived or obtained from criminal activity relating to a scheduled offence.

p. 4

Relying on *Vijay Madanlal Choudhary v. Union of India*, 2022 SCC OnLine SC 929, the Court applied the principle that where the scheduled-offence case against a person is quashed, there can be no money-laundering action against that person, or a person claiming through them, in relation to property linked to that offence.

p. 4

Provisions in the judgment · 6 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528

Prevention of Money-Laundering Act, 2002 Section 2 Section 3

Indian Penal Code, 1860 Section 406 Section 420

Code of Criminal Procedure, 1973 Section 156

04Reasoning

The Court found that the ECIR had been recorded solely on the basis of FIR No. 0064/2024.

p. 4

Since the FIR and all consequential actions had already been quashed, the predicate offence forming the ECIR’s sole foundation no longer subsisted.

p. 4

Applying *Vijay Madanlal Choudhary*, the Court concluded that the ECIR had lost its substratum and could not continue independently on allegations arising from proceedings that no longer existed in law.

pp. 4–5