Grand Venice Case: Allahabad HC refuses to quash ED proceedings

Prayagraj: The Allahabad High Court on Thursday declined to quash proceedings initiated by the enforcement directorate (ED) under the Prevention of Money Laundering Act, 2002 (PMLA) in connection with FIR relating to the Grand Venice project at Greater NOIDA, Gautam Budh Nagar, while making significant observations on the jurisdictional preconditions and statutory safeguards governing the exercise of powers under the Act.The Grand Venice project was undertaken on a commercial plot allotted by the Greater Noida Industrial Development Authority for the development of a theme-based commercial mall and an adjoining commercial tower.On June 9, 2015, an FIR was lodged at Kasna police station, Gautam Budh Nagar against the petitioner and others under sections 406 (criminal breach of trust) and 420 (cheating) IPC alleging irregularities in relation to the said project. Subsequently, between 2015 and 2019, a large number of similar FIRs, were lodged in relation to the same project, alleging non delivery of units, non-payment of assured returns, non-payment of invoices and delay in possession.The writ petition was filed under Article 226 challenging the registration of the ECIR, search and seizure conducted under section 17 PMLA and the issuance of non-bailable warrants (NBWs), contending that the sole surviving predicate offence against the petitioner was under section 406 IPC (criminal breach of trust), which is not a scheduled offence under the PMLA.The petitioner further relied on the fact that proceedings in the predicate FIR stood stayed and consolidated pursuant to orders of the Supreme Court.While declining to interfere with the proceedings at this stage, a division bench, comprising Justice Chandra Dhari Singh and Justice Lakshmi Kant Shukla, reiterated that the existence of a scheduled offence constitutes the jurisdictional foundation for initiation and continuation of proceedings under the PMLA. The court observed that once section 420 (cheating) of Indian Penal Code (IPC) was dropped in the supplementary charge-sheet and only section 406 IPC remained, serious questions arose as to the continuance of PMLA jurisdiction, which would have to be examined at the appropriate stage.While partly allowing and disposing of writ petitions filed by Satinder Singh Bhasin and others, the court also took note of the effect of the stay of proceedings in the principal FIR and the Supreme Court's order consolidating multiple FIRs arising out of the Grand Venice Project. It observed that such consolidation orders have a bearing on the operative field of the predicate offence and cautioned that investigating agencies cannot act in disregard of binding judicial directions.In this backdrop, the court directed that the respondent - ED shall refrain from pursuing or continuing investigation, inquiry, summons, searches, seizures, attachment or any other coercive measures including warrants qua the offences and allegations arising out of the consolidated FIR including FIR, principal FIR (Grand Venice Project consolidated FIRs), till such time as the stage of framing of charges. "Any final order passed by the competent Court qua the said FIRs, whichever is the earliest", the court added.