Stay on FIR does not bar ED from registering PMLA case: Punjab and Haryana High Court

The Punjab and Haryana High Court recently held that a stay on further investigation of a predicate offence does not mean that the Enforcement Directorate (ED) cannot register an Enforcement Case Information Report (ECIR) for a money laundering case in the matter [Sikander Singh v. Directorate of Enforcement and another]..The division bench of Justice Arun Palli and Justice Vikram Aggarwal made the observation while refusing to quash a money laundering case in a matter involving allegations of fraud committed on the home-buyers of a housing project.“Stay of proceedings in the FIRs would, at best, mean no further investigation in the FIRs during operation of the interim order but cannot be stretched to mean that even an ECIR could not have been recorded,” the Court said..The petitioners (accused), Sikander Singh and others had challenged the ECIR on the ground that the High Court, in a separate proceeding, had stayed the Chief Judicial Magistrate (CJM) Gurugram’s order for the registration of a First Information Report (FIRs) against them. Therefore, the ED could not have registered a money laundering case in the meanwhile in the same matter, it was argued. .Pertinently, a single-judge bench of the High Court had later directed the CJM to pass a fresh order under Section 156 (3) (dealing with magistrate's power to order criminal investigation) of Code of Criminal Procedure. The CJM then again ordered the registration of FIRs. This decision too was challenged before the High Court. On January 16, the High Court once again ordered a fresh decision by the CJM under Section 156 (3) of CrPC. The High Court, at the time, also declared the earlier FIRs a nullity..In the present case, the principal contention of the petitioners was that the ED could not have registered the ECIR in the meanwhile, while there was a stay order by the High Court. This was more so since the High Court had earlier quashed the CJM’s order for the registration of an FIR.On the contrary, the ED argued that FIRs were not quashed and that the CJM had only been asked to pass a fresh order on the complaint under Section 156(3) of the CrPC. .After considering rival arguments, the Court found that it was meritless to argue that the ED could not have registered the ECIR during the operation of a stay on proceedings concerning FIRs.In this regard, the Court relied on the ruling in Vijay Madanlal Choudhary and Others Vs. Union of India and Others where it was held by the Supreme Court that there is no necessity to register an ECIR in money laundering cases, unlike the registration of an FIR..The Court also took note of the ED’s stand that apart from the two FIRs connected to the Section 156(3), CrPC complaints, there were other FIRs also which are being investigated in the ECIR in question. “Merely because these FIRs were registered subsequently would not make a difference as presently, they are being investigated in the ECIR,” it added..The Court went on to note that the ECIR did not exist back when the High Court had stayed the operation of CJM’s order for the registration of FIRs.“The same [ECIR] was recorded much later in November, 2021 and in the considered opinion of this Court, there was no bar to record the said ECIR,” the High Court concluded. The Court added that since the ED was “nowhere in the picture” in the complaints before CJM or in the petitions challenging orders for FIRs, it “was not bound” by the High Court's earlier stay order..It was further not persuaded by the argument that the High Court’s direction for a fresh decision on the Section 156 (3) CrPC complaints meant that the CJM’s earlier order stood aside and the FIRs became non-est. The Court agreed that, generally, once the very foundation goes, the subsequent proceedings would have to go. However, on examining the single-judge's order, it found that the CJM had only been directed to take a fresh decision. No judgment had been passed by the High Court with regard to the prayer for quashing of the complaints or the consequential FIRs, it was noted. .The Court eventually concluded that it would be incorrect to suggest that once an order under Section 156 (3), CrPC had been set aside, the FIRs would be deemed to have been quashed or rendered null..The Court proceeded to find the petitions to be devoid of merit and dismissed them..Senior Advocates Ashok Aggarwal and Vikram Chaudhari with Advocates Hari Pal, Mukul Aggarwal, Shrenik Jain and Hargun Sandhi represented petitioners.Additional Solicitor General SV Raju, Deputy Solicitor General JS Lalli, and Senior Panel Counsel Lokesh Narang and Shobit Phutela represented the ED..[Read Judgment]