Jharkhand High Court
Amit Sharma vs Union Of India Through Director Of … on 25 October, 2024
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
IN THE HIGH COURT OF JHARKHAND AT RANCHI
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Cr. M.P. No. 3156 of 2019
—–
Amit Sharma, age 42 years, s/o Dayanand Sharma, r/o 56B,
Kailash Bose Street, PO and PS Kalighat Kolkata, West
Bengal. … … Petitioner
Versus
Union of India through Director of Enforcement, having its
office at Kaushalya Chambers-II, Pee Pee Compound, P.O.-
G.P.P., P.S.-Lower Chutia, District-Ranchi (Jharkhand)
… … Opp. Party
with
Cr. M.P. No. 3245 of 2019
—-
Laxmikant Khemka, aged 54, S/o Late Radhe Shaym
Khemka, r/o ND-11, Visakha Enclave, PO and PS Pitampura,
District Delhi (UT), Director of M/s Bharat Glass Tube Pvt.
Ltd., Ahmedabad, Gujarat . … … Petitioner
Versus
Union of India through Director of Enforcement, having its
office at Kaushalya Chambers-II, Pee Pee Compound, P.O.-
G.P.O., P.S.-Lower Chutia, District-Ranchi (Jharkhand)
… … Opp. Party
——-
CORAM: HON’BLE MR. JUSTICE SUJIT NARAYAN PRASAD
——
For the Petitioners : Mr. Chadrajit Mukherjee, Advocate
For the Opp. Parties : Mr. Amit Kumar Das, Advocate
Mr. Saurav Kumar, Advocate
——–
th
Order No. 05 : Dated 25 October, 2024
Per Sujit Narayan Prasad J:
Prayer:
1. Both the applications have been filed for
quashing/setting aside of the complaint being Supplementary
Complaint under Section 44 and 45 of the Prevention of
Money Laundering Act, 2002 dated 03.05.2019 in ECIR
02/PAT/2009/AD, to the extent the same seeks to prosecute
the petitioners for the offence under Section 4 of the
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Prevention of Money Laundering Act, 2002, the consequentcognizance order dated 03.05.2019 for offences defined under
Section 3 and punishable under Section 4 of the PMLA and
the entire criminal proceeding with all consequences,
emanating out of the said supplementary complaint dated
03.05.2019, presently pending in the court of learned
Additional Judicial Commissioner-XVI-cum-Special Judge,
PMLA, Ranchi.
Factual Matrix:
2. The factual background of the criminal case in which
the petitioners have been implicated is as follows:
Prosecution case in Cr.M.P. No. 3156 of 2019
3. The writ petitions in the form of „Public Interest
Litigations‟ were filed before this Court alleging acquisition of
properties by one Sri Madhu Koda through his accomplices,
including Binod Sinha, Vikas Sinha, etc.,
4. The Vigilance Bureau had registered an FIR being FIR
No.9/2009 dated 2.7.2009 alleging commission of offences
under sections 409, 420, 423, 424, 465, 120B of IPC and
under Sections 7, 10, 11 and 13 of the Prevention of
Corruption Act, against Madhu Koda and his accomplices,
which eventually got transferred and re-registered by the CBI
as RC No.5A/2010/AHD-Ranchi dated 11.8.2010, pursuant
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to order passed by the Hon’ble High Court in the WP (PIL)No.4700/2008.
5. The crux of the allegation was that Sri Madhu Koda held
the office of Minister of Mines and Cooperative from February,
2005 to September, 2006 and of the Chief Minister of
Jharkhand from September, 2006 to August, 2008. During
this period he acquired money through corrupt or illegal
means and invested them in collusion with his accomplices in
acquisition of properties. The properties so acquired were,
thus, proceeds of crime, and as such the Enforcement
Directorate registered a case vide ECIR/2002/PAT/2009/AD
on 8.10.2009.
6. The CBI, in its investigation upon RC
No.5A/2010/AHD-Ranchi filed two charge-sheets no.6/2010
dated 12.11.2010 and charge-sheet no.1/2013 dated
21.5.2013.
7. The Enforcement Directorate in its investigation under
the PMLA filed successive complaints under section 45 of the
PMLA against Madhu Koda, his accomplices and various
companies allegedly involved in money laundering. The
complaints so filed initially were taken cognizance upon,
charges were framed and trials continued.
8. However, parallely the proceedings under the PMLA
relating to attachment and confiscation of properties said to
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be proceeds of crime were undertaken. Three provisionalattachments were issued vide PAO No.4/2010 dated
10.11.2010, PAO No.1/2013 dated 28.2.2013 and PAO
No.2/2014 dated 26.11.2014, all of which were confirmed by
the Adjudicating Authority, PMLA, New Delhi vide its orders
dated 6.4.2011, 27.2.2013 and 25.3.2015.
9. Out of the properties so attached provisionally, there
were properties of M/s Khalari Cements Limited, which were
attached by the PAO No.4/2010 dated 10.11.2010. The
properties of Khalari Cements Limited so attached were share
capital of Rs.26,62,39,000/- and fixed assets worth
Rs.6,07,21,821/- as on 31.3.2009 (This fact finds mention in
paragraph 8 of a supplementary complaint dated 17.7.2018
filed by the ED against Khalari Cements Limited.
10. The Adjudicating Authority, PMLA confirmed
attachment qua fixed assets of Rs.6,07,21,821/- only, out of
the properties of Khalari Cements Limited provisionally
attached.
11. Later, on 17.7.2018 a Supplementary Complaint under
section 45, PMLA was filed by the Enforcement Directorate
against Khalari Cements Limited, apart from other
companies. On this complaint, cognizance was taken by the
learned Special Judge, CBI-cum-Special Judge, PMLA,
Ranchi on 17.7.2018 itself.
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12. Thereafter the supplementary complaint dated
03.05.2019 was filed by the Enforcement Directorate, in
which the Directors of the Companies, which were made
accused in the previous complaint, were targeted. The
petitioner in Cr.M.P. No.3156 of 2019 figures as accused no.
3 in the complaint in his capacity as Director of M/s Vinni
Iron and Sponge Udyog Pvt. Limited, Kolkata.
13. Allegation made out against the Petitioner in Cr.M.P.
No.3156 of 2019 is to the extent that he was an employee of
M/s IAG Company where he joined on 26.12.2007. On
instructions of one Vijay Joshi, the owner of M/s IAG
Company, this petitioner became the director of M/s Vinni
Iron and Steel Udyog Ltd. This Petitioner has stated 5,000
shares were allotted to him of M/s Vinni Iron and Steel Udyog
Ltd without any payment while majority of shares were held
by Vijay Joshi. On instructions of Vijay Joshi, this Petitioner
has made signatures in banking transactions on behalf of
M/s Vinni iron and Steel Udyog Ltd.
14. It is stated by the Enforcement Directorate in the said
Supplementary Complaints is that after the investigation of
the Vigilance Bureau and then by the CBI into commission of
offences, the Enforcement Directorate made further
investigation and found that illegally earned properties were
channelized into various assets and it became proceeds of
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crime. It is alleged that the proceeds of crime generated by SriMadhu Koda were concealed, transferred and invested by his
accomplices in various companies. One of his accomplices
was Binod Sinha, who was also charged with commission of
scheduled offences. His brother Vikas Sinha disclosed in
statements made under section 50 of the PMLA that certain
properties were purchased out of Binod Sinha’s money,
thereby investing proceeds of crime. The modus operandi for
investing such proceeds of crime was that Vikas Sinha used
to deliver cash himself or through his employees or through
the employees of his Chartered Accountant-one S.K. Naredi.
The cash was handed over to certain persons like Mr.
Chandra Bhushan Jha, Sri Mridul Bhowmick, Mr. Vivek
Kumar Goenka and Mr. Pradeep Kumar Paramsukha, who, in
turn, would arrange for accommodation entries through
certain companies engaged in the business of investment,
trading and non-banking financial transaction with certain
other companies. Such latter set of companies who were
dealing with investment, non-banking finance, etc. provided
accommodation entries by issuing cheques in the name of
former set of companies connected with these four
individuals named above. The companies receiving cheques
would then issue cheques in the name of those companies
where investments were intended to be made by Vikas Snha,
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through share capital or otherwise. These companies who
were ultimate recipient of these cheques would receive them
as share application or unsecured loan. The companies
issuing cheques at the behest of the individuals like Sri
Chandra Bhsushan Jha and others were doing so as against
a small percentage of the money that came from Vikas Sinha,
by keeping some percentage as what was called as service
charge.
15. The allegation is that the companies which have
received cheques by way of share application money or loan
have actually received the proceeds of crime and as such any
investment made therein should be treated as investment of
proceeds of crime in those companies. M/s Vinni Iron and
Steel Udyog Ltd, is one such company. As such they are said
to be involved in the process or activity connected with the
proceeds of crime which are projected or claimed to be
untainted property.
Prosecution case in Cr.M.P. No. 3245 of 2019
16. The instant case has been filed upon a complaint filed
by Shri Swapan Bose, Assistant Director, E.D. by way of a
supplementary complaint under section 45 of the PMLA Act
2002 in ECIR/02/PAT/09/AD wherein it has been alleged by
the complainant that Laxmikant Khemka (petitioner in
Cr.M.P. No. 3245 of 2019) who is the Director of M/s Bharat
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Glass Tube Pvt. Ltd., during his statement u/s 50 of PML Act,
2002, inter alia, has stated that M/s Bharat Glass Tube Pvt.
Ltd. was incorporated with the Registrar of Companies in the
year 1983 and during the period 2007-2010, the petitioner
along with Chandra Kant Khemka, BK Rungta, PM Chauhan
were the Directors of the company and has further stated
that he was the responsible person for day to day business of
the company and was also responsible for taking decisions
about the company affairs.
17. The complainant has further alleged that the petitioner
has also stated that in October 1999, M/s Bharat Glass Tube
Pvt. Ltd. acquired the controlling share of IAG Company Ltd.
The petitioner and his brother Chandra Kant Khemka
became the Directors of IAG Company Ltd. and both of them
were responsible for taking decisions of the company in the
year 2007, however, his father sold the company to Vijay
Joshi and upon Vijay Joshi’s statement being recorded, he
has stated that in the year 2007-08 he had acquired the
controlling shares of M/s IAG Pvt. Ltd.
18. It has also been alleged by the complainant that the
petitioner, who is the Director of M/s Bharat Glass Tube Pvt.
Ltd., had purchased the controlling shares of IAG company in
the year 1999 and sold the same to Shri Vijay Joshi in the
year 2007. Further, he along with one Shri B K Rungta,
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another Director were the authorized signatories of M/s
Bharat Glass and responsible persons for conducting the day
to day business of the company during the period in which
the proceeds of crime were concealed and invested in the said
company.
19. Further the accommodation entries of Rs 31 lakhs each
have been taken through M/s Raina Commodities Pvt. Ltd.,
M/s Sekhar Commerce Pvt. Ltd. and M/s VDR Consultants
Pvt. Ltd. in the form of share application money from Manoj
Sinha, Vikas Kumar Sinha and Vijay Joshi respectively and
have committed the offence of money laundering and hence
this complaint.
Submission of the Petitioners:
20. Learned counsel for the petitioner in Cr.M.P. No. 3156 of
2019 has submitted that the allegation against the petitioner
is that he being the director of the company is said to be
responsible for day-to-day business and banking transactions
of M/s Vinni Iron and Steel Udyog Ltd. It is alleged that Vijay
Joshi in connivance with the petitioner concealed and
transferred proceeds of crime generated by Madhu Koda in an
attempt to project the same as untainted.
21. Submission has been made that the petitioners are
innocent and has committed no offence. Further, the
ingredients of the offence, as alleged, are not attracted
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against the petitioners. Further, the Enforcement Directorate
has not given any finding on the basis of the investigation
and has not produced any material to show that the
petitioner has known to Binod Sinha or Vikas Sinha in
respect to their activities, which later on became the basis for
imputing allegation upon him of complicity with Mr. Madhu
Koda or laundering of money generated out of commission of
any scheduled offence.
22. Further submission has been made that for prosecution
under Section 4 of the PMLA is to be proceeded only in case
any property or money is found to be proceeds of crime but
without coming to such conclusion, since supplementary
complaint under Section 44 and 45 of the Prevention of
Money Laundering Act, 2002 dated 03.05.2019 in ECIR
02/PAT/2009/AD has been filed and cognizance has been
taken vide order dated 03.05.2009, the same requires to be
quashed and set aside.
23. Learned counsel for the petitioner in Cr.M.P. No. 3245 of
2019 has stated that the petitioner is innocent and he has
been falsely implicated in the said case with ulterior motive.
24. Learned counsel for the petitioner in Cr.M.P. No. 3245 of
2019 has further submitted that the entire allegation against
the petitioner in the complaint petition are omnibus and not
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specific in nature as it does not whisper of any allegation as
against this petitioner.
25. Further submission has been made that the said IAG
Company Ltd., formerly known as the Indo-Asahi Glass
Company Ltd., was established at Bhurkunda, District
Hazaribagh, Ranchi in the year 1953 by Japanese Company
Asahi Glass Company Ltd. The company was running
smoothly till 1980 and during this period, the people in this
vicinity were willing to join to Indo Asahi Glass Company
resigned even their government jobs. Thereafter, naxalite
movement and labour trouble started to brew giving a second
blow to the company in the year 1998-99. The Government of
India had reduced controlling power of foreigners from 49% to
40%. At that time, Mr. Radhey Shyam Khemka was a glass
manufacturer in India with his product glass sheet having
control 70% of the market. Mr. C.S. Dubey came to know
about this and approached Mr. Radhey Shyam Khemka to
take over the management of IAG Company Ltd and Mr.
Radhey Shyam Khemka accepted his request and took over
the control by purchasing 41.7% of Shares. The said Mr.
Radhey Shyam Khemka took over the management of IAG
Company Ltd., and made the petitioner and Mr. Chandrakant
Khemka directors along with existing directors of Indo Asahi
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Glass Company Ltd., and later the name of company was
changed to IAG Company Ltd.
26. It has further been submitted that Mr. Laxmikant
Khemka, the petitioner herein, was looking after day to day
activities such as production, purchase of raw materials,
selling of finished goods and payment collection. The
company was running smoothly as Mr. Radhey Shyam
Khemka along with union leader Mr. C.S. Dubey had settled
labour disputes till 2004. In the year 2007 sometime in
November / December one Mr. Vijay Joshi approached Mr.
Radhey Shyam Khemka and showed his interest to take over
this unit. The management of IAG Company Ltd. and since
Mr. Radhey Shyam Khemka was not keeping well it is not
possible to control the management from Delhi to eastern
part of India. He had offered controlling shares to Mr. Vijay
Joshi. Mr. Vijay Joshi accepted his offer and purchased the
controlling shares and simultaneously transferred along with
assets and liabilities. Mr. Radhey Shyam Khemka who was
head of the family and his sons along with other directors
respected him for his decision to sale controlling shares to
Mr. Vijay Joshi. Under these circumstances, controlling
shares were sold to Mr. Vijay Joshi.
27. Therefore, submission has been made that none of
ingredients of the Public Money Laundering Act is attracted
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against the petitioner rather this case has been filed with
ulterior motive of a covert dilatory tactics being adopted by
filing repeated supplementary complaints, which may be
quashed and set aside.
Submission on behalf of respondent-ED
28. Mr. Amit Kumar Das, learned counsel for the
respondent-Enforcement Director has vehemently opposed
the prayer made by learned counsel for the petitioner and at
the outset has placed before the court the copy of order
passed in Cr. M.P. No. 2503 of 2019 and analogous cases
wherein also prayer has been for quashing supplementary
compliant under Section 44 and 45 of the Prevention of
Money Laundering was made, which was refused by the Co-
ordinate Bench of this Court vide order dated 19.09.2022 and
submitted that case of the petitioner is squarely covered by
this order.
Response by the learned counsel for the petitioners
29. In response, learned counsel for the petitioners could
not be able to deny the law down by Co-ordinate Bench of
this Court in Cr. M.P. No. 2503 of 2019 and analogous cases
wherein prayer made for quashing supplementary compliant
under Section 44 and 45 of the Prevention of Money
Laundering was made i.e., arising of the same set of
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transaction, has been refused by the Co-ordinate Bench of
this Court vide order dated 19.09.2022.
Analysis
30. This Court has heard learned counsel for the parties,
gone through the materials available on record as also the
order dated 19.09.2022 passed in Cr. M.P. No. 2503 of 2019
and analogous cases [Sanjay Rungta Vs. Union of India
through ED].
31. Before adverting to the facts of the instant cases, this
Court deems it fit and proper to discuss herein the ambit and
scope of inherent jurisdiction of the Court conferred under
Section 482 Cr.P.C.
32. The provision was crafted to confer discretionary powers
upon the High Court to prevent abuse of the process of the
court and secure justice. Whether it involves quashing
baseless FIRs, rectifying biased investigations, or ensuring
that legal processes are not weaponized for ulterior
motives. High Courts exercise their discretion judiciously,
intervening only when necessary to uphold the integrity of
legal proceedings and safeguard the fundamental principles
of fairness and equity.
33. The powers under Section 482 Cr.P.C. are the exception
and not the rule. Under this section, the High Court has
inherent powers to make such orders as may be necessary to
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give effect to any order under the Code or to prevent the
abuse of process of any court or otherwise to secure the ends
of justice. But the expressions “abuse of process of law” or “to
secure the ends of justice” do not confer unlimited
jurisdiction on the High Court and the alleged abuse of
process of law or the ends of justice could only be secured in
accordance with law, including procedural law and not
otherwise. Reference in this regard may be taken from the
judgment as rendered by the Hon‟ble Apex Court in the case
of Dhruvaram Murlidhar Sonar v. State of Maharashtra,
(2019) 18 SCC 191.
34. At this juncture it requires to refer herein the position of
law for making interference by the court of law either in the
F.I.R./complaint or in the order taking cognizance. The
Hon’ble Apex Court in State of Haryana v. Bhajan Lal
[1992 Supp (1) SCC 335] has laid down the guideline under
paragraph 102 and 103. The relevant passages are extracted
and quoted as under:
“102. In the backdrop of the interpretation of the various
relevant provisions of the Code under Chapter XIV and of the
principles of law enunciated by this Court in a series of
decisions relating to the exercise of the extraordinary power
under Article 226 or the inherent powers under Section 482
of the Code which we have extracted and reproduced above,
we give the following categories of cases by way of
illustration wherein such power could be exercised either to
prevent abuse of the process of any court or otherwise to
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secure the ends of justice, though it may not be possible to
lay down any precise, clearly defined and sufficiently
channelised and inflexible guidelines or rigid formulae and to
give an exhaustive list of myriad kinds of cases wherein such
power should be exercised.
(1) Where the allegations made in the first information
report or the complaint, even if they are taken at their face
value and accepted in their entirety do not prima facie
constitute any offence or make out a case against the
accused. (2) Where the allegations in the first information
report and other materials, if any, accompanying the FIR
do not disclose a cognizable offence, justifying an
investigation by police officers under Section 156(1) of the
Code except under an order of a Magistrate within the
purview of Section 155(2) of the Code. (3) Where the
uncontroverted allegations made in the FIR or complaint
and the evidence collected in support of the same do not
disclose the commission of any offence and make out a
case against the accused. (4) Where, the allegations in the
FIR do not constitute a cognizable offence but constitute
only a noncognizable offence, no investigation is permitted
by a police officer without an order of a Magistrate as
contemplated under Section 155(2) of the Code. (5) Where
the allegations made in the FIR or complaint are so absurd
and inherently improbable on the basis of which no
prudent person can ever reach a just conclusion that there
is sufficient ground for proceeding against the accused. (6)
Where there is an express legal bar engrafted in any of the
provisions of the Code or the concerned Act (under which a
criminal proceeding is instituted) to the institution and
continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act,
providing efficacious redress for the grievance of the
aggrieved party. (7) Where a criminal proceeding is
manifestly attended with mala fide and/or where the
proceeding is maliciously instituted with an ulterior motive
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for wreaking vengeance on the accused and with a view to
spite him due to private and personal grudge.
103. We also give a note of caution to the effect that the
power of quashing a criminal proceeding should be exercised
very sparingly and with circumspection and that too in the
rarest of rare cases; that the court will not be justified in
embarking upon an enquiry as to the reliability or
genuineness or otherwise of the allegations made in the FIR
or the complaint and that the extraordinary or inherent
powers do not confer an arbitrary jurisdiction on the court to
act according to its whim or caprice.”
35. The ratio laid down by the Hon’ble Apex Court in State
of Haryana v. Bhajan Lal (Supra), has again been
reiterated in Fakhruddin Ahmad v. State of Uttaranchal
[(2008) 17 SCC 157] at paragraph 20 which reads as under:
“20. So far as the scope and ambit of the powers of the
High Court under Section 482 of the Code is concerned, the
same has been enunciated and reiterated by this Court in a
catena of decisions and illustrative circumstances under
which the High Court can exercise jurisdiction in quashing
the and Ors. proceedings have been enumerated. However,
for the sake of brevity, we do not propose to make reference
to the decisions on the point. It would suffice to state that
though the powers possessed by the High Court under the
said provision are very wide but these should be exercised in
appropriate cases, ex debito justitiae to do real and
substantial justice for the administration of which alone the
courts exist. The inherent powers possessed by the High
Court are to be exercised very carefully and with great
caution so that a legitimate prosecution is not stifled.
Nevertheless, where the High Court is convinced that the
allegations made in the first information report or the
complaint, even if they are taken at their face value and
accepted in their entirety, do not prima facie constitute any
offence or make out a case against the accused or where the
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allegations made in the FIR or the complaint are so absurd
and inherently improbable on the basis of which no prudent
person can ever reach a just conclusion that there is
sufficient ground for proceeding against the accused, the
powers of the High Court under the said provision should be
exercised.”
36. Further the Hon‟ble Apex Court in the case of State of
A.P. v. Aravapally Venkanna, (2009) 13 SCC 443 has held
that the exercise of power under Section 482 of the Code in a
case of this nature is the exception and not the rule. The
section does not confer any new powers on the High Court. It
only saves the inherent power which the Court possessed
before the enactment of the Code. Further the Hon‟ble Apex
Court has recorded three circumstances under which the
inherent jurisdiction may be exercised, namely, (i) to give
effect to an order under the Code, (ii) to prevent abuse of the
process of court, and (iii) to otherwise secure the ends of
justice. For ready reference the relevant paragraph of
aforesaid judgment is being quoted as under:
4. “5. Exercise of power under Section 482 of the Code in
a case of this nature is the exception and not the rule. The
section does not confer any new powers on the High Court. It
only saves the inherent power which the Court possessed
before the enactment of the Code. It envisages three
circumstances under which the inherent jurisdiction may be
exercised, namely, (i) to give effect to an order under the
Code, (ii) to prevent abuse of the process of court, and (iii) to
otherwise secure the ends of justice. It is neither possible nor
desirable to lay down any inflexible rule which would govern
the exercise of inherent jurisdiction. No legislative enactment
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dealing with procedure can provide for all cases that may
possibly arise. Courts, therefore, have inherent powers apart
from express provisions of law which are necessary for
proper discharge of functions and duties imposed upon them
by law. That is the doctrine which finds expression in the
section which merely recognises and preserves inherent
powers of the High Courts. All courts, whether civil or
criminal, possess in the absence of any express provision, as
inherent in their constitution, all such powers as are
necessary to do the right and to undo a wrong in [the] course
of administration of justice on the principle quando lex aliquid
alicui concedit, conceditur et id sine quo res ipsa esse non
potest (when the law gives a person anything, it gives him
that without which it cannot exist). While exercising powers
under the section, the Court does not function as a court of
appeal or revision. Inherent jurisdiction under the section
though wide has to be exercised sparingly, carefully and
with caution and only when such exercise is justified by the
tests specifically laid down in the section itself. It is to be
exercised ex debito justitiae to do real and substantial justice
for the administration of which alone courts exist. Authority
of the court exists for advancement of justice and if any
attempt is made to abuse that authority so as to produce
injustice, the court has power to prevent such abuse. It would
be an abuse of process of the court to allow any action which
would result in injustice and prevent promotion of justice. In
exercise of [these] powers court would be justified to quash
any proceeding if it finds that initiation or continuance of it
amounts to abuse of the process of court or quashing of these
proceedings would otherwise serve the ends of justice. When
no offence is disclosed by the complaint, the court may
examine the question of fact. When a complaint is sought to
be quashed, it is permissible to look into the materials to
assess what the complainant has alleged and whether any
offence is made out even if the allegations are accepted in
toto.
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6. In R.P. Kapur v. State of Punjab [AIR 1960 SC 866] this
Court summarised some categories of cases where inherent
power can and should be exercised to quash the proceedings
: (AIR p. 869, para 6)
(i) where it manifestly appears that there is a legal bar
against the institution or continuance e.g. want of sanction;
(ii) where the allegations in the first information report or
complaint taken at its face value and accepted in their
entirety do not constitute the offence alleged;
(iii) where the allegations constitute an offence, but there is
no legal evidence adduced or the evidence adduced clearly or
manifestly fails to prove the charge.
7. In dealing with the last category, it is important to bear in
mind the distinction between a case where there is no legal
evidence or where there is evidence which is clearly
inconsistent with the accusations made, and a case where
there is legal evidence which, on appreciation, may or may
not support the accusations. When exercising jurisdiction
under Section 482 of the Code, the High Court would not
ordinarily embark upon an enquiry whether the evidence in
question is reliable or not or whether on a reasonable
appreciation of it accusation would not be sustained. That is
the function of the trial Judge. Judicial process, no doubt
should not be an instrument of oppression, or, needless
harassment. Court should be circumspect and judicious in
exercising discretion and should take all relevant facts and
circumstances into consideration before issuing process, lest
it would be an instrument in the hands of a private
complainant to unleash vendetta to harass any person
needlessly. At the same time the section is not an instrument
handed over to an accused to short circuit a prosecution and
bring about its sudden death. The scope of exercise of power
under Section 482 of the Code and the categories of cases
where the High Court may exercise its power under it relating
to cognizable offences to prevent abuse of process of any
court or otherwise to secure the ends of justice were set out
in some detail by this Court in State of Haryana v. Bhajan
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Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] . A note of
caution was, however, added that the power should be
exercised sparingly and that too in the rarest of rare cases.
The illustrative categories indicated by this Court are as
follows : (SCC pp. 378-79, para 102)
„(1) Where the allegations made in the first information report
or the complaint, even if they are taken at their face value
and accepted in their entirety do not prima facie constitute
any offence or make out a case against the accused.
(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not disclose
a cognizable offence, justifying an investigation by police
officers under Section 156(1) of the Code except under an
order of a Magistrate within the purview of Section 155(2) of
the Code.
(3) Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same
do not disclose the commission of any offence and make out
a case against the accused.
(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non-cognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis of which no
prudent person can ever reach a just conclusion that there is
sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of
the provisions of the Code or the Act concerned (under which
a criminal proceeding is instituted) to the institution and
continuance of the proceedings and/or where there is a
specific provision in the Code or the Act concerned, providing
efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance on
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the accused and with a view to spite him due to private and
personal grudge.‟
8. As noted above, the powers possessed by the High Court
under Section 482 of the Code are very wide and the very
plenitude of the power requires great caution in its exercise.
Court must be careful to see that its decision in exercise of
this power is based on sound principles. The inherent power
should not be exercised to stifle a legitimate prosecution.
High Court being the highest court of a State should normally
refrain from giving a prima facie decision in a case where the
entire facts are incomplete and hazy, more so when the
evidence has not been collected and produced before the
Court and the issues involved, whether factual or legal, are
of magnitude and cannot be seen in their true perspective
without sufficient material. Of course, no hard-and-fast rule
can be laid down in regard to cases in which the High Court
will exercise its extraordinary jurisdiction of quashing the
proceeding at any stage. … It would not be proper for the
High Court to analyse the case of the complainant in the light
of all probabilities in order to determine whether a conviction
would be sustainable and on such premises, arrive at a
conclusion that the proceedings are to be quashed. It would
be erroneous to assess the material before it and conclude
that the complaint cannot be proceeded with. In a proceeding
instituted on complaint, exercise of the inherent powers to
quash the proceedings is called for only in a case where the
complaint does not disclose any offence or is frivolous,
vexatious or oppressive. If the allegations set out in the
complaint do not constitute the offence of which cognizance
has been taken by the Magistrate, it is open to the High Court
to quash the same in exercise of the inherent powers under
Section 482 of the Code. It is not, however, necessary that
there should be meticulous analysis of the case before the
trial to find out whether the case would end in conviction or
acquittal. The complaint/FIR has to be read as a whole. If it
appears that on consideration of the allegations in the light of
the statement made on oath of the complainant or disclosed
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in the FIR that the ingredients of the offence or offences are
disclosed and there is no material to show that the
complaint/FIR is mala fide, frivolous or vexatious, in that
event there would be no justification for interference by the
High Court. When an information is lodged at the police
station and an offence is registered, then the mala fides of
the informant would be of secondary importance. It is the
material collected during the investigation and evidence led
in court which decides the fate of the accused person. The
allegations of mala fides against the informant are of no
consequence and cannot by [itself] be the basis for quashing
the proceeding.
37. The Hon‟ble Apex Court in the case of CBI v. Duncans
Agro Industries Ltd., (1996) 5 SCC 591 while elaborately
dealing with the situation that when the Court can quash
the complaint has observed that for the purpose of
quashing the complaint, it is necessary to consider
whether the allegations in the complaint prima facie make
out an offence or not. The relevant paragraph of the
aforesaid judgment is being quoted as under:
“26. After giving our careful consideration to the facts and
circumstances of the case and the submissions made by the
respective counsel for the parties, it appears to us that for the
purpose of quashing the complaint, it is necessary to consider
whether the allegations in the complaint prima facie make
out an offence or not. It is not necessary to scrutinise the
allegations for the purpose of deciding whether such
allegations are likely to be upheld in the trial. Any action by
way of quashing the complaint is an action to be taken at the
threshold before evidences are led in support of the
complaint. For quashing the complaint by way of action at
the threshold, it is, therefore, necessary to consider whether
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on the face of the allegations, a criminal offence is constituted
or not. In recent decisions of this Court, in the case of Bhajan
Lal [1992 Supp (1) SCC 335 : 1992 SCC (Cri) 426] , P.P.
Sharma [1992 Supp (1) SCC 222 : 1992 SCC (Cri) 192]
and Janata Dal [(1992) 4 SCC 305 : 1993 SCC (Cri) 36] ,
since relied on by Mr Tulsi, the guiding principles in quashing
a criminal case have been indicated.”
38. Now adverting to the facts of the instant case it is
alleged that the petitioner in Cr.M.P. No. 3156 of 2019 joined
as an employee of M/s IAG Company on 26.12.2007.
However, on instructions of one Vijay Joshi, the owner of M/s
IAG Company, the petitioner in Cr.M.P. No. 3156 of 2019
became the director of M/s Vinni Iron and Steel Udyog Ltd. It
is alleged that 5,000 shares were allotted to the petitioner of
M/s Vinni Iron and Steel Udyog Ltd without any payment
while majority of shares were held by Vijay Joshi.
39. In the Supplementary Complaints, it is stated that after
the investigation of the Vigilance Bureau and then by the CBI
into commission of offences, the Enforcement Directorate
made further investigation and found that illegally earned
properties were channelized into various assets and it became
proceeds of crime. It is alleged that the proceeds of crime
generated by Sri Madhu Koda were concealed, transferred
and invested by his accomplices in various companies.
40. Further, allegation is that the companies which have
received cheques by way of share application money or loan
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have actually received the proceeds of crime and as such any
investment made therein should be treated as investment of
proceeds of crime in those companies. M/s Vinni Iron and
Steel Udyog Ltd, is one such company. As such they are said
to be involved in the process or activity connected with the
proceeds of crime which are projected or claimed to be
untainted property. Thus, prima facie, case is made out
against the petitioner in Cr.M.P No. 3156 of 2019.
41. During investigation, it is established that the proceeds
of crime generated by the said Madhu Koda have been
concealed, transferred and invested by his accomplices in
many of the companies, including M/S Bharat Glass Tubes
Ltd., of which petitioner in Cr.M.P. No. 3245 of 2019 was
director and petitioner in Cr.M.P. No. 3156 of 2019 became
the director of M/s Vinni Iron and Steel Udyog Ltd.
42. Further, the modus operandi adopted by the accused
person was complicated in nature and the money was
laundered by a complex web of layering starting from
collection of cash through various parties and arranging
accommodation entries through different companies
including M/s Vinni Iron and Steel Udyog Ltd and M/S
Bharat Glass Tubes Ltd. of which the petitioners are the
directors.
– 25 –
43. Furthermore, the co-ordinate Bench of this Court vide
order dated 19.09.2022 passed in Cr. M.P. No. 2503 of 2019
and analogous cases [Sanjay Rungta Vs. Union of India
through ED] in the same Supplementary Complaint under
Section 44 and 45 of the Prevention of Money Laundering Act,
2002 dated 03.05.2019 in ECIR 02/PAT/2009/AD, has
elaborately dealt with the prayer made for quashing the said
supplementary complaint as also the order taking cognizance
and thereafter refused to grant any relief. The relevant
paragraph of the aforesaid order is being quoted as under:
In the light of the above submissions of the learned
counsels appearing on behalf of the parties, the Court has
gone through the materials on record and finds that there are
allegations against the petitioners, the company as well as
the Directors who are the petitioners in the respective
petitions. In paragraph no.17 of the complaint it has been
disclosed that their transactions were limited to provide
accommodation entries in lieu of cash only that on receipt of
cash, cheques were issued to the companies either as share
application or loan. One of the witness Shri Mridul Bhowmick
at paragraph no.18 of the complaint has stated that he is not
knowing that whether any share certificate is in possession
and he was not aware whether any share certificate has
been issued at all. Vivek Kumar Goenka has said so in
paragraph no.19 of the complaint. Thus, prima-facie it
appears that intentionally the proceed of the crime has been
transferred in the name of share to the petitioners and the
petitioners‟ firm. So far as the contention of Mr. Roy, the
learned counsel for the petitioners with regard to mens rea is
concerned that can only be decided at the time of trial.. It is
well settled that when the prosecution relies upon the
materials, strict standard of proof is not to be applied at the
– 26 –
stage of issuance of summons nor to examine the probable
defence which the accused may take and all that the court is
required to do is to satisfy itself as to whether there are
sufficient grounds for proceeding before summoning the
accused and the facts stated will have to be accepted as they
appear on the very face of it. For issuance of process against
the accused it has to be seen only whether there is sufficient
ground for proceeding against the accused and for that the
Court is not required to weigh the evidentiary value on the
basis of materials on record and the only thing the Court is
required is to apply its judicial mind and in the case in hand
the learned court has taken cognizance by a speaking order.
There is no illegality in the order taking cognizance.
In the case of Dayle De‟souza v. Government of India,
Through Deputy Chief Labour Commissioner(supra) relied by
Mr. Roy, the learned counsel for the petitioners that case was
arising out under the Minimum Wages Act and considering
section 22 of Minimum Wages Act, the Hon‟ble Supreme
Court has held at its paragraph nos.15, 16 and 17 which
have been referred hereinabove. In the case in hand, some of
the petitioners are Directors and the companies are also the
petitioners and hence that judgment is not helping to the
petitioners. In Cr.M.P.No.2193 of 2018 the facts and
circumstances of that case was different in which section
276(B) of the Income Tax Act was the subject matter for
consideration.
Admittedly, section 23 of the Prevention of Money
Laundering Act, 2002 speaks of presumption in
interconnected transactions and the burden of proof is on the
accused in light of section 24 of the said Act which can be
proved in the trial. These two sections have been held to be
legal in the case of Vijay Mondal Choudhary and Ors. V.
Union of India by the Hon‟ble Supreme Court. The Court is
not required to examne such factual submissions which may
be led by Mr. Rai, the learned counsel appearing on behalf of
the petitioners, at this premature stage that the prosecution
evidence is yet to be led in the trial. The complaint does base
– 27 –
on the certain statement, evidence of certain persons it is not
necessary to obey the factual prosecution which is said out of
running proceeds of crime and the Court is not required to go
into the details of that statement while will hamper or
embarrass the learned trial court. Moreover, the quashing
application of the co-accused have been dismissed by this
Court as discussed (supra).
In view of the above facts and the submissions of the
learned counsels for the parties as well as the reasons and
the analysis, the Court is not willing to quash the entire
proceeding including the order taking cognizance.”
44. For the discussions made hereinabove and order passed
in in Cr. M.P. No. 2503 of 2019 and analogous cases [Sanjay
Rungta Vs. Union of India through ED] in the similar
complainant/supplementary complaint, this Court finds no
merit in these petitions for quashing the entire proceeding
including the order taking cognizance.
45. Accordingly, these instant petitions sans merit are
hereby dismissed.
46. Pending Interlocutory Application(s), if any, stands
disposed of.
(Sujit Narayan Prasad, J.)
Alankar/
A.F.R.
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