Mere discharge or quashing of FIR does not automatically result in nullifying ECIR: HC

Srinagar, May 26: The High Court of J&K and Ladakh has ruled that a competent court’s mere discharge or quashing of an FIR does not automatically result in nullifying an Enforcement Case Information Report (ECIR) filed under the Prevention of Money Laundering Act. A bench of Justice Wasim Sadiq Nargal pointed out that the two proceedings factually linked by the scheduled offence are legally independent and governed separately.

“The summons issued to the petitioner constitutes a procedural measure within the legal framework, and its validity persists itself, despite the petitioner’s discharge in the predicate offence. The mere discharge of the petitioner concerning the predicate offence does not, in grant the Court the power to annul the summons,” the court said

This, the court said while dismissing as “devoid of merit” a New Delhi resident N Kansal’s plea seeking quashing of Enforcement Case Information Report under the Prevention of Money Laundering Act (PMLA), summons issued under Section 50 PMLA, and related search and seizure actions.

While the court underscored that petitioner’s discharge in the predicate offence indicates a determination concerning the merits of that particular accusation, it said: “Nonetheless, it does not nullify the overarching legal structure governing the issuance of the summons”.

The discharge should not be regarded as a legal obstacle to the authorities’ capacity to forward with the summons, it said. In his plea, the contention of Kansal was that he had been discharged in predicate NDPS offences by the Special NDPS Court, which found no evidence linking him to the alleged offences. “Without a scheduled offence, there could be no ‘proceeds of crime’ to sustain PMLA proceedings,” he said. The court referred to the Enforcement Directorate’s authority to summon individuals under Section 50 of PMLA and said that it is intended for the acquisition of factual evidence pertaining to money laundering offences.

“Obtaining a summons under this section does not inherently indicate that one is an accused in a money laundering investigation. This indicates that the individual may have information or documents pertinent to the investigation.”

While the court observed that Kansal’s discharge did not constitute a legitimate ground for nullifying the summons, it said: “The authorities may execute the summons issued pursuant to the applicable legislative laws and procedural regulations.”

Noting that the issuance of summons is a fundamental component in the execution of a fair and unbiased investigation, the court said: “It affords the relevant parties an opportunity to be heard, to articulate their case, and to address the allegations levied against them”.

These procedural safeguards are crucial for preserving the integrity of the investigative and adjudicatory processes established by the Act, it said. “The summons mechanism compels individuals to come before authorities, so ensuring the accurate collecting of evidence, assisting in the revelation of truth, and ultimately preserving the effectiveness and integrity of the judicial process”, the court said.

The court held that the issuance of summons under the PMLA should be regarded as an essential element of due process, intended to advance the rule of law and bolster public trust in the legal system.

It said: “The discharge in the predicate offence, albeit substantial, does not, as a legal principle, impact the ongoing validity of the summons.”

The key Legal issues before the court were whether discharge in the predicate offence invalidates PMLA proceedings and if PMLA proceedings are independent of the predicate offence. Besides this, validity of summons under Section 50 PMLA when the predicate offence is discharged.