The High Court · 2025

Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to Grant stay of all further proceedings in respect of ECIR No.EC|RlHYZOl36l2020, dt. 1511212020 pending disposal of the present Criminal Petition. - This Petitron coming on for hearing, upon perusing the Memorandum .df> Grounds of Criminirl Petition and upon hearing the arguments of Sri Shraddha Gupta, Advocate for the Petitioner and Sri Anil Prasad Tiwari, Standing Counsel for E nforcement Directorate on behalf of the Respondent state. The Court made the fc,ll,:wing: ORDER THE HONOURABLE SMT. JUSTICE JUWADI SRIDEVI CRIMINAL PETITION No.4671 OF 2024 ORDER: This Criminal Petition is filed by the petitioner seeking to quash the criminal proceedings against him in ECIR/HYZO|36|2020, dated 15J2.2020 by the Enforcement Directorate. The said investigation was initiated on the basis of the case filed by the Economic Offences Wing (for short 'EOW'), Bhopal, Madhya Pradesh, for the offences under Section 120-B read with 42O and 471 of the lndian Penal Code and Section 7 read with 13(2) of the Prevention of Corruption Act, 1988

02. Heard tVIs. Shraddha Gupta, learned counsel for petitioner and tvlr. Anil Prasad Tiwari, learned Standing Counsel for the respondent- Enforcement Directorate. Perused the record.

03. The main contention of the learned counsel for the petitioner is that the predicate offence which was investigated by the EOW, Bhopal was tried before the competent Court and acquitted by the said Court. Till date, no appeal was filed questioning the said acquittal. He further submits that in view of the Judgment of the Honourable Supreme court in Vijay Madanlal Choudhary vs. Union l of lndia and others', once the predicate offence resulted in acquittal, the prclceedings cannot go on, ur,1der the F,revention of Money Laundering Act, 2002. Further, this Court in CRL.P.No.634 of 2021, quashed ttre proceedings against Mantena Srinivas Ralu who was arrayed as en accused in predicate offence. ln the said order, it was found that the said Mantena Srinivas Raju has cc,nspired with Aditya Tripathi and M/s.Osmo l.T.Soluticlls Privarte Limited for tampering the E tenders and succeeded in tampering the tenders and getting orders. However, fact remains that the ar;cused were acquitted and tire entire process was cancelled and no crime proceeds were gonerated in favour of the venture company including Mantena Srinivas Raju. The Relevant para-34 of the CRL.P.No.634 of 2021, reads as follows "34. ln the present case, the offence for which the FIR was lssued was ended in acquittal oi the prime accused. The allegation against the present petitioner ts that the loint venture company has conspired with Adtya Tripittt and M/s.Osmo l.T.Soluticns Pnvate limited and ctigital ceftificate holders i.e., accused nos.1 to 3 for taropering the eienders and succeeded in tampeing tne elenders and gefting lhe contract:;. However, thet fact remains that accused Nos.7 fo 3 were acquitted and in fact, entire tender process was 1 2022 SCC Online SC 92! -) cancelled and no cime proceeds were generated in favour of the joint venture, including the petitioner herein. When crime proceeds were not generated or such crime proceeds did not come into possesslon of the petitioner, the authorities have no juisdiction to continue the proceedings under the PML Act. The authorities cannot justify the continuation of proceedings in spite of acquiftal of main accused on the ground that there were previous tampering of e-tenders based on the suspicion, which action amounts of abuse of process. "

04. Learned Counsel for the petitioner also relied on the orders of the Honourable Supreme Court in Parvathi Kollur v. State by Directorate of Enforcement in Criminal Appeal No.1254 of 2022 (arising out of SLP (Crl.) No.4258 of 2021) wherein it was held as follows: "Learned counsel for the appellants has contended that fhe issue as involved in this matter ls no more res integra, particularly for the view taken by a 3-Judge Bench of this Court in the case of Vijay Madanlal Choudhary & others v. Union of lndia and others, decided on 27.07.2022 where, the consequence of failure of prosecution for the scheduled offence has been clearly provided in the following terms: " 187 ... ...... ... .....(d) The offence under Sectlon 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity i \. '- -" 'l -II \ + relatlng to a scheduled offence. lt is conceming lhe lrrocess or activity connected with such propefty, which constitutes the offence of money-laundeing. The Authoritigs under the 2002 Act cannot prosecute any person ot1 notiotal basis or on the assumption that a sche,Tuled offence has been committed, unless ll ls r;o reglste red with the jurisdictional police and/c,r pending enquiry/trial including by way of ciminal complaint before the competent forum lf the person is finally discharged/acquitted of the :;cheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claim,ng such property being the propeiy linkect to stated scheduled offence through him." Learned ASG appearing for the respondent. in all fairness, d()es not dispute the above position of litw declared by tltis Court. The result c,f the dlscuss ion aforesaid is that the view as taken by the Tial Court in this matter had been a justified vietu of the matter and the High Court was not right in setting aside the discharged order despite tne fact that thet 266ussdl No.1 had already been acquitted in relation lo the scheduled offence and the present appellants vrcre not accused of any scheduled offence."

05. Learned ccunsel for the petitioner further submits that the bank locker of the per itroner's wife maintained at Kotak N/lahindra Bank, ., l 5 MP Nagar Branch, Bhopal was still not accessible to the petitioner's wife due to the direction given by the respondent authority to the Bank Managar. The predicate offence ended in acquittal of the petitioner. ln the said circumstances, the proceedings against the petitioner herein have to be quashed by following the decision of Honourable Supreme Court in Vijay Madanlal Choudhary's case (cited supra).

06. On the other hand, the learned Standing Counsel appearing on behalf of the Enforcement Directorate filed a counter, admitting that the petitioner was acquitted by the trial Court after a full-fledged trial It is further submitted that no appeal has been preferred till date However, a supplementary final report (closure) No.07 of 2023 has been filed before the learned trial Court, which is presently pending consideration for acceptance. lt is also submitted that an appeal has been filed against the order dated 08.09.2023 passed CRL.P.No.845 ot 2023, whereby the criminal proceedings against one M. Gopal Reddy were quashed. ln reply, learned counsel for the petitioner placed on record a copy of the dismissal order dated

13.05.2025 passed by the Hon'ble Supreme Couri in Petition(s) for Special Leave to Appeal (Crl.) No(s).2551 of 2024larising out of the impugned final judgment and order dated 08 09.2023 in Crl.P.No.B45 6 of 2021 passed by this Courtl, to which the learned Starrding Counsel fairly conceded

07. lt is borne out from the record that the petitioner was acquitted by the learned tr al Court after conclusion of trial. lt is als;o pertinent to note that any person found to be dealing with the pfoc,3eds of crime in any manner whatsoever falls within the ambit ol the offence punishable under Section 3 of the Prevention of l\4one,y-Laundering Act, 2002. The .ludgment of the Honourable Supreme Courl. in Vijay Madanlal Choudhary's case was followed subsequent y in the case of Parvathi Koilur v. Stafe by Directorate of E:.nforcement in Crl.Appeal No.1254 of 2022 arising out of SLP (C;rl.) 4258 oI 2021, dated 16.08.2022. The 3-Judge Bench of Honourable Supreme Court irr Vijay Madanlal Choudhary's case (cited supra) held as follows "467.Conclusion: (i) (ii) (iii) (tv) (v)(a) (b) (c) (d) The off.znce under Section 3 of the 2002 Act ,s dependent on illegal gain of propefty as a result <tf criminal activity relating to a scheduled offence. lt ts concerning lhe process or activity connected with such property, wnich constitutes the offence of money- laundering. -,'he Authorities under the 2002 Act cannc't prosecute a1y person on notional basls or on the 7 assumption that a scheduled offence has been committed, unless ll is so registered wth the jurisdictional police and/or pending enquiry/trial including by way of criminal compta'int before the the person is finally competent forum. lf discharged/acquitted of the scheduled offence or the criminal case agarnsf him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or any one claiming such propefty being the propefty linked to stated scheduled offence through him."

08. This Court, in CRL.P.No.634 of 2021 held that there were no proceeds of crime in the case. According to the learned counsel for the petitioner, the question of the petitioner being a beneficiary in any manner so as to attract Section 3 of the Prevention of Money- Laundering Ac|2002, does not arise. The Three-Judge Bench of the Hon'ble Supreme Court in Vijay Madanlal Choudhary's case (cited supra) has categorically held that where a person is finally discharged or acquitted of the scheduled offence, or where the criminal case itself is quashed by a Court of competent jurisdiction, there can be no offence of money laundering against such person or against anyone claiming that the property in question is linked to the alleged scheduled offence through him. I It

09. lt is pertint:rt to note that, even as per the count,lr filed by the respondent authorities, the criminal case was registere,d against the petitioner on the basis of suspicion in the alleged scanr, and it is not the case of the respondents that any proceeds of crime were derived or gained by the petitioner. Ultimately, the petitioner was acquitted of the predicate offence and no proceeds of crime were established. ln these circumstances, when there are admittedly no "proceeds of crime", this Court, following the law laid down by thr: Honourable Supreme Cou11 irr Vijay Madanlal Choudary's case (supra,) this Court deems it appropriate to quash the proceeding:; against the petitioner

10. Accordingl'1, the Criminal Petition is allowed, an<l the criminal proceedings agirinst the petitioner in ECIR/HYZO13612020 daled

15.12.2020 by the respondent i.e. Enforcement Directorate, are hereby quashecl. The petitioner shall be at libert'/ to file an appropriate application before the respondent-authorities seeking de- freezing of Bartk Locker No.83 standing in the rrame of the petitionei''s wife, rnaintained with Kotak Mahindra Bank, MP Nagar Branch, Bhopal (M.P.). Upon such application being filed, the respondent authorities shall dispose of the said aprplication, AS expeditiously as rossible, in accordance with law I 9 lVliscellaneous applications pending, if any, shall stand closed. SD/- K.BHAVANI SWAMY ASSISTANT REGISTRAR e //TRUE COPY' SECTION OFFICER To, I

1. The Directorate of Enforcement, Through Assistant Director - Hvderabad Zonal Office. 3rd Floor, Shakar Bhawan, Fateh Maidan Road, Hy'derabad, Telangana. \

2. One CC to Sri. Shraddha Gupta, Advocate [OPUC] 3. One CC to Sri. Anil Prasad Tiwari (SC for ED) Advocate [OpUC] 4. Two CD Copies. YJR /PSI- \g- HIGH COURT DATED:2210912025 ,rt I .rl ORDER CRLP.No.4671 ot 2424 /'o-"' //.\ /,'so 13- 2 ,o/. -;N i ir 4 0rr 2[fi :, !l

4.// 7 D _:l-,- CRIMINAL PEI'ITION IS ALLOWED. xr' a