‘Scheduled Offence’ Cannot Exist After Quashing Of FIR: Delhi High Court Quashes PMLA Proceedings

The Delhi High Court has quashed PMLA proceedings initiated by the Enforcement Directorate (ED) against an accused, on the basis of two FIRs registered against him- that were later quashed and compounded after settlement between the parties.

Justice Amit Sharma said that a scheduled offence, after an FIR has been quashed, cannot exist and therefore, if there is no scheduled offence, there can be no offence of money laundering with respect to the same.

“Thus, in the considered opinion of this Court, in the present case, there can be no prosecution under the PMLA with respect to the scheduled offences‘ in the first two FIRs, i.e., FIR No. 16/2018 and FIR No. 49/2021 registered at PS EOW,” the court said.

It added: “Accordingly, the proceedings undertaken with respect to the said two FIRs qua the present petitioner in the present ECIR stand quashed.”

The court was dealing with a petition moved by one Rajinder Singh Chadha seeking quashing of all the actions and proceedings taken pursuant to the ECIR registered by ED in 2019.

The two FIRs quashed by the court were registered by the Economics Offences Wing (EOW) alleging that despite payment of monies in the year 2006-07, they did not receive possession of flats, as was promised by the accused company, M/s Uppal Chadha Hi- Tech. 

It was further alleged that in his capacity as a Director of the said company, Chadha was responsible for siphoning the funds collected from the complainants.

“There is no dispute with regard to the fact that the third FIR, i.e., FIR No. 55/2023 also relates to the same project which was the subject matter of the two previous FIRs. In the present factual context, even if separate FIRs are registered at the instance of separate home-buyers/ investors, each of the said FIRs cannot be considered as a separate cause of action for registration of different ECIRs,” the court said.

It added that the third FIR related to the commission of a scheduled offence in respect of the complainant, but for the purposes of an investigation under the PMLA, it would be the part of the same ECIR which related to investigation pertaining to proceeds of crime under the PMLA in the previous FIRs.

“In the present case, ‗scheduled offences‘ by way of the third FIR still exist. It is pertinent to note that even in an FIR being investigated by the local police involving multiple complainants, compounding with some of them will not be a ground for quashing of the said FIR. However, partial compounding/quashing is permissible,” the court said.

Counsel for Petitioner: Mr. Sandeep Sethi, Senior Advocate with Mr. Giriraj Subramanium, Mr. Akhilesh Talluri, Mr. Joy Banerjee, Mr. Ravi Pathak, Mr. Simarpal Singh Sawhney, Ms. Urvashi Singh and Mr. Siddhant Juyal, Advocates

Counsel for Respondents: Mr. Amit Tiwari, Senior Panel Counsel for R-1/Union of India; Mr. Zoheb Hossain, Special Counsel for R-2/Directorate of Enforcement with Mr. Vivek Gurnani and Mr. Kartik Sabharwal, Advocates

Title: RAJINDER SINGH CHADHA v. UNION OF INDIA MINISTRY OF HOME AFFAIRS THROUGH ITS CHIEF SECRETARY & ANR.

Citation: 2023 LiveLaw (Del) 1170

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