Prayer
Criminal Revision is filed under Section 482 of the Code of Criminal Procedure, to call for the records and set aside the Closure Report filed by the 1st respondent dated 14.11.2022 accepted by the learned Judicial Magistrate-I, Alandur by order dated 17.11.2022 made in Crime No.304 of 2012.
Under assail is the Closure Report dated 14.11.2022 filed by the 1 st respondent, accepted by the learned Judicial Magistrate-I, Alandur by order dated 17.11.2022 made in Crime No.304 of 2012.
I. Brief facts of the case
Information received on sale proceeds of lottery tickets and FIR registered under IPC and PMLA
2. Based on reliable information received on 12.03.2012 that crores of rupees of un-accounted money was available in the house bearing Door No.4, Old No.16, 25th Cross Street, Thillai Ganga Nagar, Nanganallur, Chennai – 600 061 belonging to Mr.Nagarajan, Son of Murugesan (A1 in the predicate offence), house search was conducted and a sum of Rs.7,20,05,000/- (Rupees Seven Crores Twenty Lakhs and Five Thousand) was seized. It was stated by Mr.Nagarajan/Al that the amount was the sale proceeds of lottery tickets of the State of Kerala and Maharastra, which were printed in Calcutta and Faridabad along with his partners Mr.Martin and Mr.Murthy (A2 and A3 in the predicate offence). Based on the said search, an FIR was registered in Crime No.304 of 2012 against Mr.Nagarajan/A1, Mr.Martin/A2 and Mr.Murthy/A3 for offences punishable under Sections 294N, Section 420 and 120B of Indian Penal Code. (Section 420 IPC is a scheduled offence under Prevention of Money Laundering Act, 2002 hereinafter referred as PMLA).
Cash amount seized in the house of A1
3. Mr.Martin/A2, while filing the petition for Anticipatory Bail before the Court concerned, had produced an agreement for sale dated 02.03.2012 typed on stamp paper of the Government of Tamil Nadu bearing No.AE 147535, as if it was issued on 01.03.2012 to Mrs.Leema Rose by a stamp vendor Mr.Mayilsamy under which Mr.G.Murthy/A3 has purportedly entered into a sale agreement for a property in favour of the said Mrs.M.Leema Rose, wife of Mr.Martin/A2. Out of an agreed sale consideration of Rs. 12,30,00,000/-, a sum of Rs.7,30,00,000/- is purportedly to have been paid as advance by cash by Mrs.Leema Rose to Mr.G. Murthy and the amount of cash, which was seized in the house of Mr.Nagarajan/A1 on 12.03.2012 was the amount received under the sale agreement.
Stamp vendor statement was recorded under section 50 of PMLA
4. The stamp paper bearing No.AE 147535 was issued by the Government treasury to the stamp vendor Mr.Mayilsamy only on 09.03.2012 and Mr.Mayilsamy had sold the said stamp paper to one Mrs.Vimala only on 13.03.2012. The said fact was established through the statement of the stamp vendor Mr.Mayilsamy under Section 50 of PMLA. The reply letter dated 12.07.2012 given by the Assistant Treasury Officer, Special Treasury, Coimbatore, addressing to the Enforcement Directorate revealed the said fact that the stamp paper itself was sold on 13.03.2012, but it was ante-dated.
Fabrication of document (stamp paper) dated prior to selling of stamp pater by the Government to the stamp vendor as such offences under IPC and PMLA attracted
5. On 25.03.2013, an alteration report in Crime No.304 of 2012 was filed by the Investigating Officer before the Learned Judicial Magistrate, Alandur that during the course of investigation, the Investigating Officer collected the un-registered sale agreement dated 02.03.2012 between Mr.Martin/A2’s wife Mrs.Leema Rose and Mr.Murthy/A3 typed on stamp paper bearing AE 147535 and 147536, which were issued by the State Government to the stamp vendor Mr.Mayilsamy only on 09.03.2012. The document was sold to the public through Government treasury, only on 13.03.2012, but the document was prepared by Mr.Murthy/A3 and Mrs.Leema Rose, as if the said agreement was prepared on 02.03.2012 on a date even prior to selling of the stamp paper by the Government to the stamp vendor. Therefore, the said act amounted to fabrication of document prepared by Mr.Murthy/A3 and A2’s wife Mrs.Leema Rose, trying to give legal colour to illegal seized money of Rs.7,20,05,000/-. Thus, the penal Sections were altered as Sections 294A, 420, 120B IPC and Section 467, 468 and 471 IPC and Mrs.Leema Rose/A4, wife of Mr.Martin/A2 was also arrayed as an accused in the predicate offence. Pertinently, Sections 420, 467 and 471 IPC are scheduled offences under PMLA.
Single Judge of Hon’ble Madras High Court quashed the proceedings against A3
6. The learned Single Judge of this Court in Crl.O.P.No. 13106 of 2023 filed by A2 and Crl.O.P.No.14971 of 2013 filed by A3 quashed the proceedings in Crime No.304 of 2012.
Challenging the quash order State preferred SLP and were allowed by the Apex court
7. Challenging the said order of the learned Single Judge, the State of Tamil Nadu filed SLP in Criminal Appeal Nos. 423 and 424 of 2018 and the said appeals were allowed by the Hon’ble Supreme Court of India by order dated 28.03.2018, holding that the agreement is said to have been entered on 02.03.2012, but the stamp paper in question was issued on 09.03.2012 and later sold to Mrs.Vimala on 13.03.2012. The question raised was whether possession of huge cash of Rs.7.2 crores can be explained by the accused and whether such explanation can be accepted or not, are the matters, which will be gone into at the relevant stage in the proceedings.
ED filed complaint and A1 A3 and A4 preferred discharge which were dismissed by the PDJ Chennai and State police filed closure report on the IPC (predicate offence) and the same was accepted by the JM,1 as FAD (Further Action Dropped)
8. In the above backdrop, the prosecution complaint has been filed by the Enforcement Directorate on 07.01.2016 in C.C.No.21 of 2016 on the file of the learned Principal Sessions Judge, Chennai. A1, A3 and A4 in the PMLA case filed petition for discharge before the Sessions Court and the said petitions were dismissed on 27.03.2017. Thereafter, Crl.O.P.No. 7632 of 2017 which was filed by the Accused Al to A5 in the PMLA case before the High Court was dismissed as withdrawn on 14.12.2021. Crl.O.P.No.13298 of 2022 filed by A3 and A4 in the PMLA case before this Court to quash the proceedings in C.C.No.21 of 2016 (PMLA case), which was dismissed by the Division Bench of this Court on 06.09.2022. As against the said order, A3 and A4 in PMLA case filed a Special Leave Petition in SLP (Crl.) No. 10971 of 2022. The State Police investigating the predicate offence, inspite of sufficient materials being available to prove the offence under Sections 294A, 420, 120B IPC and Sections 467, 468 and 471 IPC filed a Closure Report on 14.11.2022. The learned Judicial Magistrate No.1, Alandur passed an order accepting the FAD report filed by the State Police on 17.11.2022.
ED preferred to dispose of SLP
9. The Hon’ble Supreme Court of India disposed of the SLP in SLP (Criminal) No.10971 of 2022 on 23.01.2023, closing the PMLA proceedings at that stage, giving liberty to the Enforcement Directorate to question the closure report dated 17.11.2022 by taking appropriate action, which the law permits at their command and with an observation that at a later stage, if there is any change in circumstances, the Enforcement Directorate is at liberty to take appropriate steps available under law, including to recall of the order passed by the Hon’ble Supreme Court of India.
V. Discussions
ED filed to quash the closure report filed by the state police in predicate offence
21. Since the present petition has been filed by the Directorate of Enforcement to quash the closure report filed in the predicate offence, the Enforcement Directorate mainly contended that proceeds of crime is in existence. Therefore, they are the aggrieved persons. In respect of proceeds of crime, the accused persons have projected tainted money as untainted, which is an offence under Section 3 of PMLA.
(A) Proceeds of crime in the present case
22. The Enforcement Directorate passed order under Section 5(1) of PMLA attaching the proceeds of crime under the Provisional Attachment Order Nos.04 and 05 of 2012 dated 02.04.2012 and 11.04.2012 respectively and the said attachment was confirmed by the Adjudicating Authority under order O.C.No.138 of 2012 dated 14.08.2012. Another provisional attachment order was passed bearing No.09 of 2012 dated 22.08.2012 and it was confirmed by confirmation order in O.C.No.154 of 2012 dated 13.12.2012. However, in the appeal, filed by the private respondents herein under Section 26 of PMLA, the Appellate Tribunal has passed an order on 14.09.2023 disposing of the appeal giving liberty to the Enforcement Directorate to take appropriate steps available under law including to recall the said order in the event of the criminal cases under the predicate offence and PMLA are revived. The order was passed by the Appellate Tribunal setting aside the attachments on account of the fact that the predicate offence was closed.
23. Since the confiscation of the Proceeds of Crime has to be decided finally under Section 8(5) of PMLA, it has become necessary for the Enforcement Directorate to challenge the correctness of the impugned order passed by the Learned Magistrate accepting the closure report filed by the State Investigating Agency. Thus, the Enforcement Directorate filed the present quash petition under Section 482 of Criminal Procedure Code.
(B) Maintainability of the present petition
24. The respondents 2 to 5 and the 1st respondent / State of Tamil Nadu raised an issue of maintainability of the present quash petition, more specifically by the Enforcement Directorate. Mr.P.S.Raman, learned Advocate General appearing on behalf of the 1st respondent and Mr.N.R.Elango, learned Senior Counsel appearing on behalf of the respondents 2 to 5 respectively would contend that Enforcement Directorate is not a victim nor an aggrieved person. Thus, not entitled to be heard by the Learned Magistrate at the time of consideration of the closure report filed by the State Investigating Agency. Thus, the Enforcement Directorate has no right to question the order impugned passed by the Learned Magistrate accepting the further actions drop report.
To continue proceedings under PMLA closure report filed in the predicate offence deserves to be challenged
28. In the present case, prosecution complaint was already filed for the offence under Sections 3 and 4 of PMLA by the Enforcement Directorate. The same has been closed by the Hon’ble Supreme Court of India only on account of the closure of the predicate offence. Since the action of the Enforcement Directorate is dependent on the predicate offence, in order to continue the proceedings under PMLA, the closure of the predicate offence deserves to be challenged.
29. The Hon’ble Supreme Court of India, while disposing of the Special Leave Petition in SLP.Crl.No.10917 of 2022 dated 23.01.2023 filed by A1 and A3 against the PMLA proceedings held that the “Enforcement Directorate / respondent to take appropriate steps available under law including recall of the present order, if so advised”. Further observation was made that “If the Enforcement Directorate wants to question the closure report accepted by the Learned Magistrate by order dated 17.11.2022, they are always at liberty to take appropriate action which law permits at their command.
32. As such, if the Investigating Agency dealing with a predicate offence is not taking appropriate action as per law and on account of the same an accused is allowed to go scot free with the proceeds of crime, the Enforcement Directorate, for the purpose of achieving the objects under PMLA and to deal with the proceeds of crime under PMLA is entitled to take recourse to the remedies available under law.
(C) Inherent powers of the high court under section 482 of criminal procedure code
Arguments that the ED is not an aggrieved person or victim is negated
33. Learned Advocate General appearing on behalf of the ‘State’ and the learned Senior Counsel appearing on behalf of the respondents 2 to 5 argued that the Enforcement Directorate is not an victim nor an aggrieved person and they have no locus standi to invoke Section 482 of Criminal Procedure Code by filing the present petition and therefore, it is to be rejected.
It is always open to anyone who is connected with the issues may approach the High Court
34. In the context of the above submissions, pertinently under Section 482 of Criminal Procedure Code, nothing in the code would prevent the High Court from passing such orders as are necessary to prevent abuse of process of law and to meet the ends of justice. Section 482 does not contemplate either aggrieved person or victim alone as the person, who is entitled to file the petition. It is the inherent power conferred to the High Court. It is always open to anyone, who is connected with the issues, and concerned with the outcome of the case to approach the High Court under Section 482 to bring it to the notice of the High Court that an illegality has occurred and the same has to be corrected in the interest of justice to avoid miscarriage of justice.
35. Thus, we are of the opinion that the petition filed under Section 482 of Criminal Procedure Code by the Enforcement Directorate as a person concerned with the issues is very well maintainable and the offence under born from and out of the predicate offence and after investigation the Enforcement Directorate identified the “proceeds of crime”. That being the factum, they cannot be said to be an alien to the issues involved.
(D) Analysis of the judgments relied on by the respondents
36. The respondents relied on the judgment in the case of Bhagwant Singh vs. Commissioner of Police [(1985) 2 SCC 537]. It is a Pre-PMLA judgment, wherein, the issues were considered by the Hon’ble Supreme Court. When the judgment itself is prior to PMLA, the proceeds of crime now present in the case on hand cannot be fit-in with the facts and principles considered by the Hon’ble Supreme Court in the above case. Thus, the facts are distinguishable.
(F) About the closure report by state police and acceptance by the learned magistrate
45. The closure report dated 14.11.2022 filed by the Police in the predicate offence palpably appears to be wrong. In the context of the genuineness of Sale Agreement, which was perpetually to project the tainted money as untainted.
47. The stamp vendor and the buyer of the stamp paper Smt.Vimala were unavailable for examination, which would not justify for acceptance of the closure report by the Learned Magistrate.
48. The closure report of the State Police was filed on the findings from the judgment in Crl.O.P.Nos.13106 and 14917 of 2013 quashing the predicate offence, but the said judgment had been set aside by the Hon’ble Supreme Court in Crl.A.Nos.423 and 424 of 2018 dated 28.03.2018. This renders the reliance on it improper and irrelevant.
50. Learned Magistrate failed to consider the order of the Hon’ble Supreme Court in the Crl.A.Nos.423 and 424 of 2018 dated 28.03.2018 setting aside the order of the Learned Single Judge of this Court in Crl.O.P.No.13106 and 14917 of 2013 and the reasons recorded in the same for restoring the FIR bearing No.304 of 2012, which called for a complete investigation into the allegations.
Accepting the closure report is a mechanical order resulted in miscarriage of justice
52. The impugned order dated 17.11.2012 passed by the Learned Magistrate accepting the further action dropped report seems to be a mechanical order, passed without taking note of all relevant facts and materials available on record. Learned Magistrate accepted the closure report, as if the Court is bound by the report. The Court has not exercised its jurisdiction to examine the materials available in the case and the earlier orders passed by the Hon’ble Supreme Court in the matter. Thus, the acceptance of closure report has resulted in miscarriage of justice happened.
VI. Conclusion
63. In the present case, the State Investigating Agency registered the predicate offence, conducted investigation and against the dismissal of quash petition filed SLP before the Hon’ble Supreme Court and the criminal case was restored by the order of the Apex Court. When the prima facie case regarding a predicate offence has been upheld by the Hon’ble Supreme Court by restoring the criminal case in the predicate offence, filing closure report thereafter by the very same State Agency is undoubtedly suspicious and doubtful.
64. In our opinion, the State Agency has made an attempt to bury the predicate offence against the accused persons in a suspicious manner and on extraneous considerations, which are visible through their actions including the closure report filed by the State police.
65. The State Investigating Agency and the Enforcement Directorate are directed to proceed with the case in tandem, so as to ensure that the criminal case instituted is proceeded in accordance with law. However, the trial must go on uninfluenced by the observations, if any made relating to facts in the present case.
Closure report and Accepting the closure report by the Learned Magistrate set aside
66. The facts established and the legal position considered made us to arrive at an irresistible conclusion that the Closure Report filed by the 1 st respondent dated 14.11.2022 accepted by the learned Judicial Magistrate-I, Alandur by order dated 17.11.2022 made in Crime No.304 of 2012 stands set aside. Accordingly, the Criminal Original Petition stands allowed. Consequently, connected Miscellaneous Petition is closed.
Party
The Assistant Directorate Directorate of Enforcement, Ministry of Finance, Department of Revenue, Chennai Zonal Office, 5 th Floor, Shastri Bhawan, ‘B’ Wing, No.26, Haddows Road, Chennai – 600 026. … Petitioner Vs. 1.The State rep by The Additional Deputy Commissioner of Police-II, Central Crime Branch, Greater Chennai Police, Vepery, Chennai – 600 007. Crime No.304 of 2012. 2.Nagarajan 3.Martin 4.Moorthy 5.Leema Rose … Respondents – Madras High Court – CRL.O.P.No.28289 of 2023 and Crl.M.P.No.19636 of 2023 – 28.10.2024 Coram: THE HONOURABLE MR.JUSTICE S.M.SUBRAMANIAM AND THE HONOURABLE MR.JUSTICE V.SIVAGNANAM –
