Mr. Vikram Chaudhri, Senior Advocate with Mr. Raktim Gogoi, Mr. Arveen Sekhon, Mr. Rishi v. UNION OF INDIA & ORS

to the registration of FIR No. 111/2024 dated 30.05.2024 against the petitioners, leading to their arrest on 31.05.2024 by P.S.: Crime Branch; whereafter the petitioners were produced before the learned Magistrate, who remanded them to police custody till 02.06.2024.

5.5. Treating the offences alleged in the subject FIR as predicate or scheduled offences, the ED then proceeded to register an Economic Crime Information Report bearing No. ECIR/HIU- II/13/2024 dated 31.05.2024 alleging commission of offences under the PMLA.

5.6. Since the petitioners were lodged in jail upon their arrest in the subject FIR, on 10.06.2024 the ED filed an application before the learned Sessions Court seeking permission to examine the petitioners in relation to the subject ECIR under section 50(2) of the PMLA. The said application was allowed vide order dated 11.06.2024 passed by the learned ASJ, Dwarka Courts, New Delhi, whereupon the ED recorded the statements of Manideep Mago and Sanjay Sethi in jail under section 50 of the PMLA on 13.06.2024 and 02.07.2024 respectively. Thereupon the ED proceeded to arrest the petitioners in the subject ECIR on 14.06.2024 and 03.07.2024 respectively. The relevant W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 extracts of the grounds of arrest recorded by the ED are as follows: Grounds of Arrest for Manideep Mago arrested on 14.06.2024 “Statement of Manideep Mago was recorded u/s 50 of PMLA, 2002 on 13/06/24 in Tihar Jail, New Delhi. However, during, the recording of his statement, he gave evasive replies contrary to the evidences gathered and statements of his key employees recorded so far. He has thus been concealing information and non- cooperating so as to frustrate the proceedings under PMLA. the material “Shri Manideep Mago has not cooperated with the investigation and has failed to provide the true relevant facts i.e. from whom and how they have collected cash and who were the ultimate beneficiary of the forex remitted by them abroad using various illegal processes.” Grounds of Arrest for Sanjay Sethi arrested on 03.07.2024 “Statement of Sanjay Sethi was recorded u/s 50 of PMLA, 2002 on 02.07.2024 in Tihar Jail, New Delhi. However, during, the recording of his statement, he gave evasive replies contrary to the evidences gathered and statement of employees of Manideep Mago recorded so far. He has thus been concealing the material information and non-cooperating so as to frustrate the proceedings under PMLA. “Shri Sanjay Sethi has not cooperated with the investigation and has failed to provide the true relevant facts i.e. from whom and how they have collected cash and who were the ultimate beneficiary of the forex remitted by them abroad using various illegal processes.”

5.7. The ED then filed an application before the learned Sessions Court on 15.06.2024 seeking the production and remand of the petitioner Manideep Mago, which was allowed vide order dated W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29

18.06.2024 made by the learned ASJ, Dwarka Courts, New Delhi, and the said petitioner was remanded to ED custody from 18.06.2024 till 23.06.2024; which custody was subsequently extended for another 05 days till 28.06.2024; after which he was remanded to judicial custody vide order dated

28.06.2024 till 12.07.2024, where he continues to be till date.

5.8. Insofar as the petitioner Sanjay Sethi is concerned, the ED filed an application before the learned Sessions Court on 04.07.2024 seeking his production and remand, which was allowed vide order dated 05.07.2024 made by the learned ASJ, Dwarka Courts, New Delhi; and the said petitioner was remanded to ED custody till 11.07.2024; after which he was remanded to judicial custody vide order dated 11.07.2024, where he continues to be till date. PETITIONERS’ SUBMISSIONS

6. The principal grounds raised by the petitioners in challenge to their arrest by the ED in the subject ECIR and by the Delhi Police in the subject FIR, are the following : 6.1. Firstly, the petitioners contend, that at worst, their acts and omissions called into question by the ED amount to violation of the provisions of FEMA, which statute contemplates only civil penalty for those infractions; and since that is so, the underlying actions of such acts and omissions also cannot be punished as criminal offences. The essence of the argument is that FEMA was brought-in to replace Foreign Exchange Regulation Act, 1973 („FERA‟) with the objective of W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 decriminalizing acts and omissions relating to foreign exchange transactions; and therefore, an act or omission that violates FEMA cannot be subject matter of criminal action by way of an FIR, since that would in effect bring-back the criminal provisions of FERA through the backdoor.

6.2. Secondly, it is the petitioners‟ submission that registration of the subject FIR is bad in law, inasmuch as no preliminary enquiry was carried-out by the police prior to registering the subject FIR and the allegations in the subject FIR are squarely covered by the provisions of FEMA. Also, that the subject FIR proceeds solely on the search and seizure operations conducted by the ED under FEMA; and the alleged confessions of the petitioners recorded under section 37 FEMA are inadmissible in view of the law laid down in K.T.M.S. Mohd. & Anr. vs. Union of India.1

6.3. Thirdly, it is argued that the petitioners‟ arrest by the police in the subject FIR is bad in law since no „grounds of arrest‟ were served upon the petitioners in writing, which violates the mandate of the Supreme Court in Prabir Purkayastha vs. State (NCT of Delhi);2 and furthermore, the petitioners‟ arrest by the Delhi Police on 31.05.2024 did not fulfil the test of „necessity to arrest‟, which is now a pre-requisite for making any arrest as 1 2 (1992) 3 SCC 178 2024 SCC OnLine SC 934 W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 held by the Supreme Court in Arvind Kejriwal vs. Directorate of Enforcement.3

6.4. Fourthly, the petitioners contend that their arrest under PMLA is also bad in law, since it was made against the postulates of section 19(1) of the PMLA and no „reasons to believe‟ were furnished to the petitioners by the ED. It is contended that the petitioners were arrested at a nascent stage of the proceedings, when no conclusive material was available with the ED and the required satisfaction for making the arrest could not have been fulfilled. It is also contended that in making the arrest, the ED did not comply with the requirements of section 19(2) PMLA read with Arrest Rules, 2005 as mandated by the decision of the Punjab & Haryana High Court in Dilbag Singh vs. Union of India & Anr.4 It is pointed-out that the special leave petition bearing SLP (Crl.) No. 4044/2024 titled Directorate of Enforcement & Anr. vs. Dilbag Singh @ Dilbag Sandhu, filed against the decision of the High Court in Dilbag Singh stands dismissed as withdrawn vide order dated 01.08.2024 passed by the Supreme Court. It is further argued that merely the allegation that the petitioners did not cooperate in response to summons issued under section 50 PMLA, would not render them liable to be arrested under section 19 PMLA. 3 4 (2025) 2 SCC 248 2024 SCC OnLine P&H 2705 W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29

7. In essence, the argument is that FERA which was enacted in 1973, was repealed by Parliament since at the relevant time the Indian economy was undergoing liberalization, privatization globalization and the Legislature felt the need for relaxing control over the foreign exchange market. To this end, in its 11th Report presented to the Lok Sabha on 23.12.1998, the Standing Committee on Finance (1998-99) made the following observations : “9. … … The liability for contravention of an offence under FEMA has been made civil as compared to the criminal one under FERA. The Enforcement Directorate has been entrusted with the same powers as are conferred on the Income Tax authorities under Chapter XIII of the Income Tax Act, 1961. Certain onerous provisions of FERA, 1973 viz. preparation/attempts to contravene any provisions which were deemed to be contraventions under Section 64 and provisions relating to burden of proof have been deleted. A new provision which is an improvement over FERA is with regard to the powers of compounding the contraventions. … …”

8. The petitioners contend that the intention of the Legislature in repealing FERA was clear, namely, that no act or omission relating to a foreign exchange transaction was to attract any element of criminality; and that therefore, based on the ED‟s allegations of violation of the provisions of FEMA, no FIR could at all have been registered against the petitioners.

9. Dilating on their challenge to the registration of the subject FIR, the petitioners contend that the subject FIR has come to be registered solely on the basis of the so-called „investigation‟ conducted by ED under FEMA. It is their contention that the acts and omissions that form the basis of the subject FIR are all an intrinsic part of the alleged W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 FEMA violations. In this regard, attention of the court is drawn to following specific allegations in the subject FIR, to point-out that the allegations in the subject FIR proceed only on the basis of the search and seizure operation conducted by the ED : “… …Credible information was received in ED regarding highly suspect crypto-currency related transactions and large payout in the Bank accounts of M/s. Birfa IT Services Private Limited having office at C1/107, Janakpuri, New Delhi-110058 from ZEBPAY crypto exchange. On this basis, investigation in terms of Foreign Exchange Management Act 1999 was initiated by ED. Analysis of bank accounts of M/s. Birfa IT Services Private Limited & related entities revealed that mammoth amount of cash of around Rs 1300/- Crores as detailed below was illegally deposited in the bank account of Oested Solutions {having office at 301, Top Floor, Plot No.2 Aggarwal Tower, Sector-5, Dwarka, New Delhi-110058} on the pretext of fabricated invoices. … … During search, a lot of incriminating documents regarding forgery & cheating were recovered including invoices from his house at C-2/116, Janakpuri, Delhi. ED investigation has revealed his modus operandi which is explained in brief here :- Mr Manideep Mago was involved in conducted large ticket international hawala operations for Indian Importers etc who need to make compensatory payments to Exporters in China, HongKong etc. In conspiracy with one Mr Sanjay Sethi, his wife, his employees, few Bank Officials, hatched a well planned conspiracy. He deposited cash in his Bank accounts with active connivance of unknown Bank officials. In his firm, in order to cheat the Indian authorities, he started falsely claiming that thousands of Indian customers were buying Cloud Mining Hash value on Hong Kong based Servers (of his WoS in Hong Kong) and all of them were paying him a sum less than Rs 50000 each. He claimed that he did not collect their KYC and created bogus receipts and also generated fabricated entries in his Tally Software. He made this elaborate arrangement and created fabricated entries so that he could show that he was doing genuine crypto-mining business. Further, all the pooled money in his Bank accounts was remitted to the Bank accounts of his M/s Mozire Technologies Limited Hong W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 Kong on the pretext of import of software services. … … On being asked the receipt of money from thousands of alleged Indian clients, Manideep Mago stated that he had sold software testing tools to different individuals through online mode and received amount in cash. It was also found that, such invoices were raised in interval of every 2-3 days and all payments were received in cash only. It further revealed that, Manideep Mago didn‟t have any details of persons to whom these Penetration Testing Tool were sold. He further stated that, the tool kit includes Kali Linux and E-Book written by him (Manideep) as told by him. As per his version, he first used to receive cash payment from buyers at his office, then allowed the buyers to download the tool through WORDPRESS WEBSITE by enabling download link after receiving payment. He failed to give any demo or justification as to how he used to send testing tool to so many individual buyers in a day via this means. … … Mr Manideep Mago has created bogus receipt entries in the name of 60000-70000 non-existing individuals, to justify deposit of cash in his accounts. i. It is further submitted that, during search operation unused Notary stamps (yellow colour) was found from house of Mr & Mrs Manideep bearing stamp impression of “HARPINDER SINGH BOORA NOTARY PUBLIC ONTARIO”. It is pertinent to mention herein that the said stamp impression was also found on invoice dated 15.03.2023 of Absax Technologies Private Limited at C1/107, Basement, Janakpuri, New Delhi-110058 having GSTIN/UIN: 07AAXCA7004N1Z4.. It shows that, alleged person is creating fake and fabricated documents in India by using the stamps of Notary based in Canada. i. (sic) Further, during search at house of Manideep Mago several bogus commercial invoices issued by Mozire Technologies to Birfa IT Services Private Limited were found wherein Cryptocurrency Mining hardware was sold by Mozire Technologies to Birfa IT Services. … … Further, there is a round stamp of MOZIRE TECHNOLOGIES LIMITED HONG KONG and signatures of Jinag Fan (Manager). There are total 18 such Invoices of different dates different dates and invoice numbers, wherein 683 innosillicon T2+57T 1055 Whatsminer MicroBT M30s, 997 BITMAIN Antminer T17 and 3022 AMD radeon RX580 as well as other hardware were sold to Birfa IT. Further, Manideep Mago told W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 that these hardwares never came to India. Further, on the said receipts all the signatures of the Manager are exactly superimposing on each other which points towards computer generated fake receipts. Thus, Manideep Mago has indulged in fabricating the signatures of the Manager. No address of the place of Delivery is given apart from Shanghai, China. He also failed to provide any proof of payment transaction with Chinese Entity where shipment was delivered. The above invoice along with other invoices were found to be fake and fabricated as the said items were never delivered to India or to China, they were created just to do money laundering and hawala operations. The real purpose of this hawala could be to facilitate under-valued imports OR some other sinister motive. Outward remittances have been sent illegally to Hong Kong and Canada. … … Further this invoice bears a stamp having following description:- NOTARY GOVT OF INDIA G.P. SINGH South West Delhi Regd. No. 16965, Register Entry number 2-C/2022 Date 28 MAR 2022 Title of Documenting genesis Invoice. ATTESTED Notary Public, Delhi 28 MAR 2022. This also bears signatures of above Notary Public. There are several other stamps of different of different dates in this document. It was found that, the document itself was generated on 15-03-2023 and the notary entry mentioned is of 28 march 2022. The anti dated notarization of fabricated. documents points Confession by Mr Manideep Mago: During the recording of the statements u/s 37 of FEMA r/w Sec 132 IT. Act, Mr Manideep has admitted that his wife is also a Director in his entities. He finally admitted that he has indulged in international hawala of Rs 3500 Crore. He admitted to creating fabricated documents to facilitate the hawala and cheat the system. He is yet to explain the source of crypto worth Rs 1850 Crore which was credited into his Zebpay Wallet from Binance Wallets. It is also noticed that he was tipped of ED enquiries against him by a Canara Bank (Mayapuri Branch) Official and hence, had burnt many papers and changed his phone to destroy evidence. He has admitted while doing hawala, he used to delay the hawala payments for a week or so and use that money for crypto-mining investment He has admittedly earned substantial commission of around Rs 40 Crore and has invested in real estate forged and it being towards W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 and bought 5 hi-end cars. … … ED is already investigating the foreign remittances under FEMA 1999 which is a civil offence. But since it is prima facie clear that Manideep Mago, his wife and Co- Director of his companies, Mr Sanjay Sethi (who provided the funds for hawala), unnamed Bank Officials, and his business entities and their staff are involved in cognizable predicate offences, hence, this complaint is being filed with a prayer to register a FIR and investigate this entire conspiracy. … …”

10. In support of the aforesaid grounds challenging their arrest, the petitioners have referred to the following judicial precedents : 10.1. On the contention that FEMA contemplates only civil action, and that upon repeal of FERA and enactment of FEMA, no act or omission falling within the ambit of FEMA can attract any criminality, the petitioners have placed reliance on the decision of Supreme Court in Dropti Devi &Anr. vs. Union of India & Ors.5 The petitioners also contend that the provisions of FEMA must be interpreted by applying the „doctrine of mischief‟ or the „mischief rule‟; and to support this contention the petitioners have cited the verdicts of the Supreme Court in Attorney General for India vs Satish &Anr. 6 , Sushila N. Rungta vs. Tax Recovery Officer-16(2) & Ors. 7 and K.S. Paripoornan vs. State of Kerala & Ors.8

10.2. In support of their contention that the subject FIR could never have been registered, the petitioners have placed reliance on 5 6 7 8 (2012) 7 SCC 499 at paras 66, 67 & 68 (2022) 5 SCC 545 at para 63 (2019) 11 SCC 795 at paras 7-8 AIR 1995 SC 1012 at para 87 W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 Lalita Kumari vs. Government of Uttar Pradesh & Ors.9 to argue that since the present case concerns what are essentially civil wrongs being enquired into by the ED under FEMA, it was mandatory for the police to do a preliminary enquiry, which they did not do. The petitioners have also relied upon certain subsequent judgments in Nirmal Singh Kahlon vs. State of Punjab & Ors.,10 Yashwant Singh & Ors. vs. Central Bureau of Investigation & Anr., 11 Central Bureau of Investigation & Anr. vs. Thommandru Hannah Vijayalakshmi & Anr.,12 Kailash Vijayvargiya vs Rajlakshmi Chaudhuri & Ors.13 and Rana Ram vs. State of Rajasthan & Anr.14

10.3. The petitioners have cited the judgment of the Supreme Court in K.T.M.S. Mohd.to argue that the alleged confession of the petitioners recorded by the ED under section 37 of the FEMA is inadmissible in evidence; and that statements recorded under one law can only be used for purposes of the law under which they are recorded and cannot be used to initiate proceedings under any other law. The petitioners have also drawn attention to the most recent decision of the Supreme Court in Arvind 9 (2014) 2 SCC 1 at paras 119 & 120 10 (2009) 1 SCC 441 at para 30 11 12 13 14 (2020) 2 SCC 338 at paras 108, 110, 112 & 114 (2021) 18 SCC 135 at para 26 (2023) 14 SCC 1 at para 60 2024:RJ-JD:33404 at paras 24 & 25 W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 Kejriwal15 to stress that guilt can only be established on the basis of admissible evidence and not on inadmissible evidence. 10.4. In support of their third contention, namely that the petitioners‟ arrest by P.S. : Crime Branch is illegal, the petitioners have placed reliance on the celebrated judgment of the Supreme Court in Prabir Purkayastha, to submit that the grounds of arrest were never served upon the petitioners in writing, which requirement has been held to be sacrosanct. The petitioners have highlighted the fact that in the said verdict, the Supreme Court has held that „reasons for arrest‟ are different and distinct from „grounds of arrest‟ and communicating the grounds of arrest in writing to an arrestee is mandatory, failing which the arrest is rendered illegal.

10.5. To substantiate their contention that their arrest under section 19 of the PMLA is also bad in law, the petitioners have placed reliance on the decision of the Supreme Court in V. Senthil Balaji vs. State & Ors.16 as well as on the decision of a Co- ordinate Bench of the Punjab & Haryana High Court in Dilbag Singh,17 where it has been held that compliance with section 19, including Section 19(2), is mandatory and brooks no exception. It has been argued that the law requires that the Magistrate before whom an arrestee is produced must satisfy himself as regards compliance with the safeguards mandated in section 15 16 17 cf. paras 47, 56-57, & 61-62 (2024) 3 SCC 51 cf. para 60 W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 19(2) of the PMLA, which postulates that immediately after arresting an accused, the concerned officer must forward a copy of the order alongwith the material in his possession to the adjudicating authority in a sealed envelope in the prescribed manner, which the adjudicating authority is required to retain for such period as may be prescribed. It is submitted that none of which was done in the present case. It is pointed-out that a perusal of remand order dated 18.06.2024 passed by the learned Vacation Judge, ASJ (FTSC)(POCSO), Dwarka Courts, New Delhi and arrest order dated 04.06.2024 recorded by the ED arresting the petitioner/Manideep Mago also carry no reference to compliance with the requirements of section 19(2) of the PMLA. It is further submitted that the requirement of complying with the provisions of section 19(2) of the PMLA has also been emphasized by the Supreme Court in its decisions in Ram Kishor Arora vs. Directorate of Enforcement18 and Vijay Madanlal Choudhary & Ors. vs. Union of India & Ors.19 It has been argued that the petitioners‟ arrest is vitiated since section 19(2) of the PMLA was not complied-with by the ED.

10.6. In support of their proposition that mere non-cooperation of a witness in response to summons issued under section 50 PMLA does not render a noticee liable for arrest under section 19, the 18 19 2023 SCC OnLine SC 1682 at para 21 2022 SCC OnLine SC 929 at para 322 W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 petitioners have drawn attention to the decision of Supreme Court in Vijay Madanlal Choudhary, 20 Pankaj Bansal vs. Union of India & Ors. 21 and Prem Prakash vs. Union of India.22 ENFORCEMENT DIRECTORATE’S SUBMISSIONS

11. On behalf of the respondents, the ED has defended the arrests made in the subject ECIR, and the Delhi Police have defended the arrests made in the subject FIR. It may be noted that there is little contestation, if any, insofar as the factual scenario is concerned; and the respondents are essentially contesting the legal propositions argued on behalf of the petitioners.

12. It is the ED‟s allegation that between 2016 and 2019, a sum of about Rs. 2,886 crores was deposited in various bank accounts belonging to the petitioners and/or their business entities. The ED has sought to clarify, that according to them, on point of fact, this money was part of the international hawala operations that the petitioners were conducting for Indian importers and others, to facilitate payments that were to be made to exporters in China, Hong Kong and other countries.

13. It is also the ED‟s case that a total of about Rs. 4,817 crores was remitted to foreign countries against bogus and fabricated invoices raised by foreign companies. The ED has set-out the names of several 20 21 22 cf. paras 431 & 449 (2024) 7 SCC 576 at paras 11 & 28 (2024) 9 SCC 787 at paras 22, 27, 28, 29, 30, 31, 32, 33 & 34 W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 companies and entities, which they claim, acted as escrow and sub- escrow service providers to foreign entities owned and controlled by the petitioners and their friends, the allegation being that foreign companies were fictitiously shown to have provided IT-related services (such as leasing and sale of software etc.) to fictitious clients based in India, through various entities owned and controlled by the petitioners; and payment towards fictitious sales and services were shown to have been made by the Indian clients in cash, to justify the collection of cash by the petitioners for onward international hawala transactions. The allegation is that crypto-payouts were also shown by fictitious Indian clients for receiving various services from foreign entities.

14. It is the ED‟s contention that the documents submitted by the petitioners to various banks for sending outward foreign remittances, were found to be based on bogus and fabricated invoices, raised upon fictitious clients in India, using fictitious names and e-mail IDs, etc. It is the ED‟s case that in the course of their investigation, they have recorded statements of several witnesses under section 50 PMLA, all of whom have said that they were directed by the petitioners to collect huge amounts of cash from various places and that invoices were drawn-up by them in India to justify the cash so collected, for onward international hawala transactions.

15. To answer the legal propositions canvassed on behalf of the petitioners, the ED has contended as follows : 15.1. Insofar as the petitioners‟ contention that any act or omission covered by FEMA cannot be the basis of registering a criminal W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 case, the ED contends that a bare perusal of the provisions of FEMA makes it clear that the said statute only penalises violations pertaining to foreign exchange transactions; and does not pertain to any criminal offences that may be committed in the process of making foreign exchange transactions, such as cheating, forgery, destruction of evidence etc.

15.2. It has been pointed-out that there is no provision in FEMA which ousts the application of other laws or the jurisdiction of other law enforcement agencies to initiate action for offences under those laws, if such offences are made-out in the process of making foreign exchange transactions. The ED has argued that if the petitioner‟s contention – viz. that after enactment of FEMA, any criminal offence committed in the course of making a foreign exchange stands nullified – is to be accepted, it would lead to „implied repeal‟ of the IPC; and grant of immunity from prosecution to a person for any offence under the IPC merely because the offence is committed while making a foreign exchange transaction.

15.3. It has also been argued that the petitioners have failed to show how the allegations made in the subject FIR, which constitute cognizable offences under the IPC, are covered within the ambit of FEMA, to say that neither forgery nor cheating can be prosecuted under FEMA.

15.4. It has been submitted that it is settled law, that the same set of acts may give a rise to an offence under different statutes, W.P.(CRL) 2241/2024 & W.P.(CRL) 2391/2024 Signature Not Verified Signed By:ANJALI KAUSHIK Signing Date:15.05.2025 14:54:29 which is the case here.23 It has been argued that it is also well- settled that „money laundering‟ is an independent offence, as has been held in several cases including Vijay Madanlal Choudhary. It has been further submitted that the petitioners‟ argument that since FEMA is a special statute, it would prevail over the IPC, also deserves to be rejected, since in a comparable situation a violation of the provisions of the IT Act, which is a special law, commonly leads to offences under the IPC e.g., cheating under section 420 of the IPC.24 It has also been argued, that in a case under section 105 of the Insurance Act, 1938, the Supreme Court has held that a prosecution under section 409 IPC can be initiated simultaneously based on the same set of facts.25

15.5. The ED has also argued, that assuming for sake of argument that the enquiry under FEMA is closed at some later stage, that would have no bearing on the criminal proceedings initiated against the petitioners in the subject FIR, since the proceedings under FEMA are of a civil nature, though arising from the same transaction. Parallel in this behalf is drawn from a well-settled principle that exoneration in a disciplinary enquiry, which is civil in nature, will not preclude or affect any criminal proceedings arising from the same set of allegations.26