M/S Humara India Credit Cooperative Society Ltd. Thru. its Dir. Dhananjay Subramanium and 3 v. The Directorate of Enforcement

Judgment

1. Heard Sri Vikram Chaudhary Senior Advocate, assisted by Sri Nadeem Murtaza, Sri Amrendra Nath Tripathi, Sri B.M. Tripathi, Sri Ram Sajan Yadav, Sri Sanjeev Kumar Mishra, Sri Parth Anand Advocates, the learned counsel for the petitioners and Sri S. V. Raju, the learned Additional Solicitor General of India assisted by Sri Zoheb Hossain, learned Special Counsel, Sri Rohit Tripathi, learned Retainer Counsel and Sri Ankit Khanna, the learned counsel for the opposite party no.1 - the Directorate of Enforcement.

2. The instant petition under Section 482 Cr.P.C/528 BNSS has been filed by four petitioners, namely, (i) M/s Humara India Credit Cooperative Society Limited, (ii) M/s Sahara Credit Cooperative Society Limited, (iii) M/s Stars Multipurpose Cooperative Society Limited, and (iv) M/s Saharayan Universal Multipurpose Society Limited jointly. The petitioner no.1 has its registered office at Kolkata and the local office at Sahara India Centre, 2 Kapoorthala Complex, Aliganj, Lucknow. The petitioners no.2, 3 and 4 have their registered office at Sahara India Bhawan, 1 Kapoorthala Complex, Aliganj, Lucknow. The petition seeks quashing of entire proceedings of search and seizure conducted by the Directorate of Enforcement at the petitioners’ offices at Lucknow and other locations during 03.07.2024 to 05.07.2024 in pursuance of an authorization order dated 02.07.2024 issued by the Deputy Director, Enforcement Directorate, Zonal Office, CGO Complex, Vidhan Nagar, Kolkata.

3. The Prayer No. B made by the petitioners is for quashing of ECIR No. KLZO-1/21/2023, dated 31.03.2023 and the subsequent proceedings of investigation undertaken by the respondents in pursuance thereof. However, during hearing held on 05.11.2024 by a coordinate Bench of this Court, Sri Kapil Sibbal, learned Senior Advocate appearing on behalf of the petitioners had stated that the petitioners have not assailed the Enforcement Case Information Report (hereinafter referred to as “the ECIR”) in question, but the subsequent proceedings of the investigation in pursuance thereof and he stated that only the first prayer is being pressed by the petitioners.

4. Briefly stated, facts of the case are that the Enforcement Directorate had registered the aforesaid ECIR dated 31.03.2023 against (a) M/s Humara India Credit Cooperative Society Limited, (b) Sri Rabinarayan Mishra, Branch Manager/Authorized Officer of Sahara India Limited, Bhubaneswar, Odisha, (c) Sri Ramakant Diwedy, Regional Manager, Bhubaneswar, Odisha, and (d) unknown others, stating that F.I.R. No. 142 was lodged on 03.07.2020 under Sections 294, 506, 406, 409, 417, 420, 120-B, 34 I.P.C. against the above mentioned suspects alleging that Humara India Credit Cooperative Society Limited is a subsidiary organization of Sahara Page no.2 of 29 India Limited. Its agents Rabinarayan Mishra and Ramakant Diwedy had persuaded the complainant to invest money with them with a promise of lucrative returns but no amount upon maturity of the investment was paid spite of several requests. The ECIR states that Sections 120-B and 420 I.P.C. mentioned in the above said F.I.R. are scheduled offences under the Prevention of Money Laundering Act, 2002 (hereinafter referred to as "the PMLA") and it appears that by committing the scheduled offences, the suspected persons have acquired the proceeds of crime.

5. After investigation conducted in furtherance of F.I.R. No.142/2020, a closure report was filed on 27.08.2020, which has been accepted by the jurisdictional Magistrate at Bhubaneswar on

14.09.2024. However, the Enforcement Directorate has taken into

consideration numerous other FIRs lodged in various districts/States on similar allegations. The Investigating Officer has found that about five hundred F.I.Rs/criminal cases were pending against SAHARA Group, out of which about three hundred F.I.Rs. involved some scheduled offence - largely under Section 420 I.P.C., and in some cases Sections 417 and 467 I.P.C. were also added. Thereafter, the Enforcement Directorate enlarged and extended the scope of investigation against various companies of SAHARA Group and issued summons for production of documents, records and books of accounts relating to the issue of OFCDs (Optionally Fully Convertible Debentures) by companies of the group.

6. On 02.07.2024 the Deputy Director, Enforcement Directorate, Kolkata Zonal Office issued eight different letters nos.71/24 to 78/24 of authorization for search, seizure and freezing under sub section (1) and sub section (1-A) and Section 17 of the Act and on 04.07.2024 another authorization letter no.79/24 was issued to conduct search and seizure of the premises specified in the schedule appended to the letters under Section 17(1) of PMLA and Rule 3 of PML Rules (Forms, search and seizure and the manner of forwarding the reasons Page no.3 of 29 and material to the adjudicating authority, impounding and custody of records and the period of retention) Rules, 2005. The letters directed the Authorized Officer to conduct search and seize or freeze any record of property which is considered relevant for the purposes of proceeding under the Act as per the procedure specified in Rule 4. The search and seizure conducted in furtherance of the aforesaid authorization letters has been challenged by way of this petition.

7. Sri. S. V. Raju, the learned Additional Solicitor General, has raised a preliminary objection regarding territorial jurisdiction stating that the ECIR, on the basis whereof the proceedings under PMLA were instituted and are continuing, was registered at Kolkata. The registered office of the petitioner no.1-Humara India is situated at Kolkata, the layering of proceeds of crime was done at Kolkata, the adjudicating authority is situated at Kolkata and search and seizures have been made from various locations all over India, including at Kolkata. Therefore, the courts at Kolkata will have territorial jurisdiction to examine the validity of the proceedings and the search and seizure and this court does not have any territorial jurisdiction.

8. Sri Raju has also submitted that the registered office of the petitioner is Kolkata, the board resolution for filing the instant petition has also been passed at Kolkata, which shows that the petitioner no.1 has its business at Kolkata. He has refuted the contention of the learned counsel for the petitioner that merely because some of the properties have been attached at Lucknow, the petition would lie in Lucknow.

9. Replying to the preliminary objection, Sri Vikram Chaudhary, the learned Senior Counsel for the petitioners has submitted that it is a case of pick and choose of forum by the Enforcement Directorate and it is the Enforcement Directorate itself, which is indulging in forum hunting by choosing Kolkata as the seat of commencement of their inquiry vide the impugned ECIR, although, the F.I.R. regarding the Page no.4 of 29 scheduled offences was registered at Bhubaneswar, Odisha. The ECIR itself mentions the place of occurrence as “Kharbel Nagar PBSR UPD” (Urban Police District Bhubaneswar Odisha).

10. The learned counsel for the petitioners has drawn attention of this Court to the organizational structure of ED, as per which the Director of Enforcement is the overall head of the organization. There are four Special Directors seated at Chandigarh, Mumbai, Chennai and Kolkata. Under the Special Director at Kolkata, there are Additional Directors/Joint Directors at Kolkata-I, Kolkata-II, Bhubaneswar, Guahati-I and Guahati-II respectively. The ECIR has been lodged by a Deputy Director, ED Kolkata Zonal Office-I and it has been forwarded to the Director, New Delhi, the Special Director at Kolkata and the State Joint Director at Kolkata.

11. The learned counsel for the petitioners has submitted that the jurisdictional officer at Bhubaneswar has not registered the ECIR in respect of the scheduled offences allegedly committed at Bhubaneswar and the ECIR has been lodged at Kolkata, which does not appeal even to ordinary prudence.

12. Shri Chaudhary has submitted that the ED is indulging in forum hunting. The ED had registered the first ECIR against the petitioners at Mumbai. The second ECIR has been registered at Kolkata alleging that one of the petitioner's societies has its offices at Kolkata.

13. The learned counsel for the petitioners has submitted that the place of registration of ECIR would not determine the jurisdiction of this Court as the ED has itself stated in the provisional attachment order that M/s Sahara India served as the operational backbone for all deposit taking entities in the Sahara Group. It was responsible for the collection of funds and facilitating re-investments other than ensuring proper repayment to the depositors. The registered offices of M/s Humara India Credit Cooperative Society Limited, M/s Sahara Partner Page no.5 of 29 India and M/s Sahara India Commercial Corporation Limited are situated at Lucknow.

14. In addition to the aforesaid facts, the learned counsel for the petitioners has submitted that all the books of accounts of the entire Sahara Group, including the petitioners’ societies, are maintained at Lucknow. The income tax assessment of all the petitioners takes place at Lucknow. The funds/deposits collected at any branch of the petitioners societies are transferred to Lucknow, from where the funds were deployed for various investment purposes and towards the expenditure incurred. The minutes of meetings of all Sahara Group Companies, including the petitioner’s societies, are maintained at Lucknow. The records of the entire Sahara Group, have been seized/collected by the Enforcement Directorate from Lucknow and the entire case of Enforcement Directorate is based on those records and most importantly the search and seizure has been conducted by the Enforcement Directorate at Lucknow office of the petitioners’ societies and various documents have been seized from Lucknow. An amount of Rs.2.98 Crores has also been seized from Lucknow.

15. The learned counsel for the petitioners has further submitted that none of the properties which have been provisionally attached are based in Kolkata to confer even an iota for the cause of action at Kolkata. The learned counsel for the petitioners has placed reliance on a judgment of the Hon’ble the Supreme Court in the case of Rana Ayyub Vs. Directorate of Enforcement: (2023) 4 SCC 357, K. A. Rauf Sherif Vs. Directorate of Enforcement: (2023) 6 SCC 92 nd Y. Abraham Ajith Vs. State: (2004) 8 SCC 100.

16. Sri. Chaudhary has submitted that in case of attachment, the jurisdiction of the High Court under PMLA is primarily connected with the place of residence or place of business etc. of the aggrieved person. Although, Section 42 PMLA applies at the stage of an appeal against the appellate tribunal’s order under PMLA, the essence and Page no.6 of 29 spirit of the same has been applied even in writ jurisdiction in several cases, including Aasma Mohammad Farooq Vs. Union of India and others: 2018 SCC OnLine Delhi 12800, which has been approved by the Hon’ble Supreme Court in Mohammad Farooq Vs. Union of India and others: SLP (Civil) No.32941 of 2018, decided on 14.12.2018.

17. Section 42 of PMLA provides as follows: - “42. Appeal to High Court.—Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law or fact arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. Explanation.—For the purposes of this section, “High Court” means— (i) the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain.”

18. The petitioners have approached this Court being aggrieved by the attachment of their properties, they have their offices at Lucknow and they carry on business for gain at Lucknow. Therefore, they can file an appeal under Section 42 PMLA at Lucknow. When an appeal would lie at Lucknow, applying the same principle, a petition under Section 482 Cr.P.C. can also be filed at Lucknow. Page no.7 of 29

19. In Y. Abraham Ajith Vs. State: (2004) 8 SCC 100, the Hon’ble Supreme Court has held that: - “12. The crucial question is whether any part of the cause of action arose within the jurisdiction of the court concerned. In terms of Section 177 of the Code, it is the place where the offence was committed. In essence it is the cause of action for initiation of the proceedings against the accused.

13. While in civil cases, normally the expression “cause of action” is used, in criminal cases as stated in Section 177 of the Code, reference is to the local jurisdiction where the offence is committed. These variations in etymological expression do not really make the position different. The expression “cause of action” is, therefore, not a stranger to criminal cases.

14. It is settled law that cause of action consists of a bundle of facts, which give cause to enforce the legal inquiry for redress in a court of law. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the allegedly affected party a right to claim relief against the opponent. It must include some act done by the latter since in the absence of such an act no cause of action would possibly accrue or would arise.

15. The expression “cause of action” has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider sense, it means the necessary conditions for the maintenance of the proceeding including not only the alleged infraction, but also the infraction coupled with the right itself. Compendiously, the expression means every fact, which it would be necessary for the complainant to prove, if traversed, in order to support his right or grievance to the judgment of the court. Every fact, which is necessary to be proved, as distinguished from every piece of evidence, which is necessary to prove such fact, comprises in “cause of action”.

16. The expression “cause of action” has sometimes been employed to convey the restricted idea of facts or circumstances which constitute either the infringement or the basis of a right and no more. In a wider and more comprehensive sense, it has been used to denote the whole bundle of material facts.

17. The expression “cause of action” is generally understood to mean a situation or state of facts that entitles a party to maintain Page no.8 of 29 an action in a court or a tribunal; a group of operative facts giving rise to one or more bases for sitting; a factual situation that entitles one person to obtain a remedy in court from another person. In Black's Law Dictionary a “cause of action” is stated to be the entire set of facts that gives rise to an enforceable claim; the phrase comprises every fact, which, if traversed, the plaintiff must prove in order to obtain judgment. In Words and Phrases (4th Edn.), the meaning attributed to the phrase “cause of action” in common legal parlance is existence of those facts, which give a party a right to judicial interference on his behalf.

18. In Halsbury's Laws of England (4th Edn.) it has been stated as follows: - “‘Cause of action’ has been defined as meaning simply a factual situation, the existence of which entitles one person to obtain from the court a remedy against another person. The phrase has been held from earliest time to include every fact which is material to be proved to entitle the plaintiff to succeed, and every fact which a defendant would have a right to traverse. ‘Cause of action’ has also been taken to mean that a particular act on the part of the defendant which gives the plaintiff his cause of complaint, or the subject-matter of grievance founding the action, not merely the technical cause of action.”

20. As searches and seizures have been conducted at the petitioners’ premises situated at Lucknow, a part of cause of action has accrued to them at Lucknow and for this reason also, they can file this petition at Lucknow.

21. In view of the foregoing discussion, I am unable to accept the preliminary objection raised by the ED that this Court lacks territorial jurisdiction to entertain the petition and I proceed to examine the merits of the matter.

22. Sri Vikram Chaudhary, the learned Senior Advocate appearing for the petitioner has submitted that after investigation conducted in furtherance of F.I.R. No.142/2020 - the scheduled offence which led to registration of the ECIR, a closure report was filed on 27.08.2020, which has been accepted by the jurisdictional Magistrate at Bhubaneswar on 14.09.2024. He has submitted that after acceptance Page no.9 of 29 of the closure report regarding the scheduled offence, no proceedings under PMLA can continue.

23. The second submission raised by the learned counsel for the petitioners is that non-payment of returns on investments would at the most make out an offence under Section 4 of the Banning of Unregulated Deposits Scheme Act, 2019 (hereinafter referred to as “BUDS Act”) which is punishable under Section 22 of the Act. Section 34 of BUDS Act provides that the provisions of this Act shall have effect notwithstanding anything contained in any other law for the time being in force, including any law made by any State or union territory. He has submitted that BUDS Act is a special Act and it bars the applicability of Indian Penal Code in so far as the offences under BUDS Act are concerned. He has submitted that as the allegations make out commission of offence under Section 4 of the BUDS Act, which is punishable under Section 22 of the Act, no prosecution would lie for the same offence under Section 420 I.P.C. The offence under BUDS Act is not a scheduled offence under PMLA and, therefore, the entire proceedings against the petitioners under the PMLA are unsustainable in law.

24. The third submission of the learned counsel for the petitioners is that the mere non-payment of returns on investments made in the petitioners societies would not make out commission of an offence punishable under Section 420 I.P.C. as the failure to pay the returns was neither fraudulent nor dishonest. The petitioner’s societies could not pay returns to their investors because of a restraint order passed by the Hon’ble Supreme Court. The reasons due to which the petitioners’ societies could not pay returns to their investors, were not within the control of the petitioners and it was due to force majeure.

25. Sri. Chaudhary has submitted that although, a closure report has been filed in F.I.R. No.142/20-the solitary offence mentioned in the ECIR, the Enforcement Directorate has taken into consideration Page no.10 of 29 numerous other FIRs lodged in various districts/States on similar allegations. The closure reports have been filed regarding FIR No.69/21 under Sections 406, 409, 420, 467, 468, 471, 120-B I.P.C., Police Station Malviya Nagar, Jaipur, Rajasthan and F.I.R. No.249/21, under Section 420, 406, 34 I.P.C., Police Station Kumbharpada, District Puri, Odisha against the petitioner no.1-society. An F.I.R. lodged complaining about failure of Sahara Society to pay the returns on maturity of the investments has been quashed by means of a judgment dated 11.04.2023, passed by the Punjab and Haryana High Court at Chandigarh in CWP-15165-2022 (O&M) and CWP-10709- 2022 (O&M) observing that a Writ Petition (Civil) No.191/22, titled Pinak Pani Mohanty Vs. Union of India and others was pending in the Hon’ble Supreme Court in which the following directions were issued on 29.03.2023: - “(i) Out of the total amount of Rs. 24,979.67 Crores lying in the “Sahara-SEBI Refund Account”, Rs. 5000 Crores be transferred to the Central Registrar of Cooperative Societies, who, in turn, shall disburse the same against the legitimate dues of the depositors of the Sahara Group of Cooperative Societies, which shall be paid to the genuine depositors in the most transparent manner and on proper identification and on submitting proof of their deposits and proof of their claims and to be deposited in their respective bank accounts directly. (ii) The disbursement shall be supervised and monitored by Justice R. Subhash Reddy, Former Judge of this Court with the able assistance of Shri Gaurav Agarwal, learned Advocate, who is appointed as Amicus Curiae to assist Justice R. Subhash Reddy as well as the Central Registrar of Cooperative Societies in disbursing the amount to the genuine depositors of the Sahara Group of Cooperative Societies. The manner and modalities for making the payment is to be worked out by the Central Registrar of Cooperative Societies in consultation with Justice R. Subhash Reddy, Former Judge of this Court and Shri Gaurav Agarwal, learned Advocate. xxxxxx (iv) We direct that the amount be paid to the respective genuine depositors of the Sahara Group of Cooperative Societies out of the aforesaid amount of Rs. 5,000 Crores at the earliest, but not Page no.11 of 29 later than nine months from today. The balance amount thereafter be again transferred to the “Sahara-SEBI Refund Account”.”

26. Thereafter, the Madhya Pradesh Government had issued an advisory on 05.07.2023 requiring the concerned Station House Officers to inform in writing to the investors-complainants about the mechanism set up by the Hon’ble Supreme Court. On 21.08.2024, the Bihar government had issued a similar advisory.

27. The learned Counsel for the petitioners has submitted that the petitioners continued to pay money to the investors as per the mechanism evolved by the Hon’ble Supreme Court and approximately Rs.10,02,00,00,000/- has been disbursed till 08.11.2024. On

08.11.2024 the Hon’ble Supreme Court passed an order providing that “further proceedings in the cases pending before various High Courts or District Consumer Disputes Redressal Commission, as per the details furnished in Annexure A2, appended with this application, shall remain stayed till further orders. However, the alleged investors, who have initiated these proceedings, shall be at liberty to raise their claim on the portal created by the Union of India”.

28. In the present petition an interim order was passed by a coordinate Bench of this Court on 28.02.2025 providing that if the petitioners participate in the investigation, no coercive steps shall be taken against them till the next date of listing and this order has been extended from time to time.

29. On 15.04.2025, a provisional attachment order was issued regarding various assets of the petitioners in Aamby Valley City worth Rs.31,44,49,943/-. On 23.04.2025 another provisional attachment order was issued attaching various properties in SAHARA City Homes worth Rs.15,38,92,84,027/-. A former employee and a real estate agent were arrested by the Enforcement Directorate during investigation on 11.07.2025. Page no.12 of 29

30. Sri S.V. Raju, the learned Senior Advocate representing the respondent-Directorate of Enforcement has raised a preliminary objection against submissions being advanced by the learned counsel for the petitioners no.1 in support of prayer no.1 and he has submitted that it is recorded in the order dated 05.11.2024 that the learned Senior Advocate representing the petitioners had given up the prayer challenging the validity of ECIR and he has objected to this fact not being pointed out by the learned counsel for the petitioners before starting submissions in support of the said prayer. Replying to this objection, the learned counsel for the petitioner has submitted that on

05.11.2024, Sri Kapil Sibal had merely stated that the petitioners have not assailed the ECIR in question but they have assailed the subsequent proceedings initiated by the respondents in pursuance thereof and rightly so, because in Vijay Madanlal Choudhury Vs. Union of India: (2023) 12 SCC 1, the Hon’ble Supreme Court has held that the ECIR is only an internal document and is not comparable to F.I.R. In Chetan Gupta Vs. Directorate of Enforcement: CRM- 39214/20, decided on 29.04.2024, the High Court of Punjab and Haryana has held as follows: - “24. A perusal of the judgments passed by a Division Bench of Madras High Court in N. Dhanraj Kochar, 2022 SCC Online Mad 8794; and by Orissa High Court in Jitendra Nath Patnaik v. Enforcement Directorate Bhubaneswar, CRLMC No.2891 of 2023; and by this Court in Pawan Insaa v. Directorate of Enforcement, 2024:PHHC:049512, clearly points out that in these cases quashing of ECIR was sought, whereas in the present case, the petitioner is not only seeking quashing of ECIR but also all consequent proceedings. There is no legal bar that restricts the powers of this Court under Section 482 CrPC by ignoring the prayers to quash ECIR but to consider the remaining prayers to quash the complaint as well as all subsequent proceedings.

34. The full form of ECIR is the “Enforcement Case Information Report,” and the full form of the FIR is the “First Information Report.” The difference between the two is that ECIR is a term given to itself by the Enforcement Directorate through some administrative order, whereas, to the contrary, FIR is a creation of a statute under Section 154 CrPC, 1973. Given this statutory Page no.13 of 29 origin, it is mandatory to register FIR when an offense discloses the commission of the cognizable offense. On the contrary, when the Enforcement Directorate starts an inquiry based on some predicate offense, they decide to assign an ECIR to an inquiry/investigation at some point in the given stage. For this reason, the courts have usually quashed the FIR, which would automatically cancel all subsequent proceedings. Since ECIR is not a condition precedent for starting an investigation or inquiry/ inquiry by the Enforcement Directorate and is only an internal record of the department, its quashing would serve no purpose whatsoever. However, it would not imply that if one of the prayers made by the accused also includes quashing of ECIR, then the Courts will not look at other prayers like quashing of complaint and quashing of further proceedings or any other proceedings pending before the Enforcement Directorate. If such a view is taken, then it would give untrammeled arbitrary powers to the Enforcement Directorate to continue and keep pending the inquiry/investigation against the accused under the pretext or disguise that even if an accused has been acquitted in the predicate offense, a decision is yet to be taken regarding the filing of a complaint against acquittal or such appeal is pending, or even when they do not find any evidence against the accused, at that stage, instead of absolving them, they continue to sit over the inquiry/investigation which would have unparalleled bearing on the accused mental health.”

31. The aforesaid order has not been challenged by the Enforcement Directorate and it has attained finality. Based on the aforesaid judgment, submission of the learned counsel for the petitioners is that the statement made by Sri Sibal, which is recorded in the order dated 05.11.2024, does not adversely affect the right of the petitioners to challenge the proceedings instituted on the basis of ECIR, including the investigation, the search and the seizure.

32. The learned counsel for the petitioner has submitted that the properties of Sahara group already stand attached by SEBI under an order passed by the Hon’ble Supreme Court. A property which is already under attachment of SEBI cannot be attached by ED.

33. On 28.02.2025, a coordinate Bench of this court had passed the following interim order: - Page no.14 of 29 “Heard Shri Amrendra Nath Tripathi and Shri Nadeem Murtaza, learned counsel for the applicants and Shri Shashi Prakash Singh, learned Senior Advocate and Additional Solicitor General of India assisted by Shri Rohit Tripathi, learned counsel for the Enforcement Directorate. In the present case, proceedings have been exchanged and this matter may be heard finally. However, learned Senior Advocate appearing on behalf of the E.D. has raised the objection regarding maintainability of this petition and that objection has been replied by petitioners/applicants. It has been informed by the learned counsel for the parties that the Enforcement Directorate is conducting the investigation in the present case and the present applicants/petitioners who are society are cooperating in the such investigation. learned counsel As per learned Additional Solicitor General of India, the investigation is still going on and it will take some more time. However, learned counsel for the applicants have submitted that such investigation pursuant to the ECIR in question is not permitted as the schedule/predicate offence of the ECIR has been finalised, but the present petitioners/applicants are cooperating in the investigation. Learned counsels have given undertaking that the present petitioners/applicants shall further cooperate in the investigation strictly in accordance with law, therefore, some sort of protection may be given to the petitioners/applicant. On that the learned Additional Solicitor General of India has stated that since the present applicants/petitioners are cooperating in the investigation, therefore, the competent authority of the E.D. has not initiated any step to take any coercive step against the applicants at this stage, however, as and when such requirement arises, the authorities may do so strictly in accordance with law. Having considered the submission of the learned counsel for the parties and also the undertaking of the present applicants/petitioners to cooperate in the investigation, I find it appropriate that the matter may be heard finally on the next date and on the next date, both the aspects, i.e., as to whether this petition is maintainable under Section 528 of BNSS and also as to whether pursuant to the ECIR in question, any complaint against the present applicants may be filed. Besides, after dealing the aforesaid aspects, the matter may be decided finally on merits also. List on 3rd April, 2025. This matter may be taken up after lunch. Page no.15 of 29 Till the next date of listing, if the present applicants/petitioners participate in the investigation proceedings and do not avoid the investigation proceedings, no coercive steps shall be taken against the petitioners/applicants. However, it is made clear that the interim protection may be extended on the next date after hearing learned counsel for the parties. If before the next date of listing, the present applicants/petitioners violates the aforesaid undertaking, any application may be filed by the E.D. and at the same time, it is also made clear applicants/petitioners to the effect that no coercive steps shall be taken against them would not be confused from the act or action of the E.D. to take appropriate steps strictly in accordance with law.” giving protection

34. Sri. Chaudhary has submitted that even though the aforementioned interim order was operative, the ED has arrested two persons in the month of July 2025, although their statements under section 50 PMLA had already been recorded.

35. Placing reliance on the judgement of the Hon'ble Supreme Court in the case of Vijay Madanlal Choudhary (supra), Shri Vikram Choudhary has submitted that the term “proceeds of crime” has to be construed strictly. There cannot be any assumption of proceeds of crime. Proceeds of crime has to be derived from commission of a scheduled offence. If the criminal proceedings regarding the scheduled offence have culminated into a closure report, commission of any scheduled offence is not established. In these circumstances, there can be no proceeds of crime generated by the commission of any scheduled offence and no proceedings under the PMLA can continue against the petitioner in such circumstance.

36. Section 2 (u) of the PMLA defined proceeds of crime as follows: - “(u) “proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held Page no.16 of 29 outside the country, then the property equivalent in value held within the country or abroad; Explanation.—For the removal of doubts, it is hereby clarified that “proceeds of crime” include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence.”

37. The learned counsel for the petitioners has placed reliance upon the following passage from the judgment in the case of Vijay Madanlal Choudhary: (2023) 12 SCC 1, wherein it was held that: - “105. The other relevant definition is “proceeds of crime” in Section 2(1)(u) of the 2002 Act. This definition is common to all actions under the Act, namely, attachment, adjudication and confiscation being civil in nature as well as prosecution or criminal action. The original provision prior to amendment vide the Finance Act, 2015 and Finance (No. 2) Act, 2019, took within its sweep any property [mentioned in Section 2(1)(v) PMLA] derived or obtained, directly or indirectly, by any person “as a result of” criminal activity “relating to” a scheduled offence [mentioned in Section 2(1)(y) read with Schedule to the Act] or the value of any such property. Vide the Finance Act, 2015, it further included such property (being proceeds of crime) which is taken or held outside the country, then the property equivalent in value held within the country and by further amendment vide Act 13 of 2018, it also added property which is abroad. By further amendment vide Finance (No. 2) Act, 2019, Explanation has been added which is obviously a clarificatory amendment. That is evident from the plain language of the inserted Explanation itself. The fact that it also includes any property which may, directly or indirectly, be derived as a result of any criminal activity relatable to scheduled offence does not transcend beyond the original provision. In that, the word “relating to” (associated with/has to do with) used in the main provision is a present participle of word “relate” and the word “relatable” is only an adjective. The thrust of the original provision itself is to indicate that any property is derived or obtained, directly or indirectly, as a result of criminal activity concerning the scheduled offence, the same be regarded as proceeds of crime. In other words, property in whatever form mentioned in Section 2(1)(v), is or can be linked to criminal activity relating to or relatable to scheduled offence, must be regarded as proceeds of crime for the purpose of the 2002 Act. It must follow that the Explanation inserted in 2019 is merely Page no.17 of 29 clarificatory and restatement of the position emerging from the principal provision [i.e. Section 2(1)(u)].”

106. The “proceeds of crime” being the core of the ingredients constituting the offence of money laundering, that expression needs to be construed strictly. In that, all properties recovered or attached by the investigating agency in connection with the criminal activity relating to a scheduled offence under the general law cannot be regarded as proceeds of crime. There may be cases where the property involved in the commission of scheduled offence attached by the investigating agency dealing with that offence, cannot be wholly or partly regarded as proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act — so long as the whole or some portion of the property has been derived or obtained by any person “as a result of” criminal activity relating to the stated scheduled offence. To be proceeds of crime, therefore, the property must be derived or obtained, directly or indirectly, “as a result of” criminal activity relating to a scheduled offence. To put it differently, the vehicle used in commission of scheduled offence may be attached as property in the case (crime) concerned, it may still not be proceeds of crime within the meaning of Section 2(1)(u) of the 2002 Act. Similarly, possession of unaccounted property acquired by legal means may be actionable for tax violation and yet, will not be regarded as proceeds of crime unless the tax legislation concerned prescribes such violation as an offence and such offence is included in the Schedule to the 2002 Act. For being regarded as proceeds of crime, the property associated with the scheduled offence must have been derived or obtained by a person “as a result of” criminal activity relating to the scheduled offence concerned. This distinction must be borne in mind while reckoning any property referred to in the scheduled offence as proceeds of crime for the purpose of the 2002 Act. Dealing with proceeds of crime by way of any process or activity constitutes offence of money laundering under Section 3 PMLA. * * *

109. Tersely put, it is only such property which is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence that can be regarded as proceeds of crime. The authorities under the 2002 Act cannot resort to action against any person for money laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the Page no.18 of 29 competent forum. For, the expression “derived or obtained” is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of the definition clause “proceeds of crime”, as it obtains as of now. (Emphasis added)

38. The learned counsel for the petitioner has drawn attention of this court to the averments made in the second supplementary affidavit to the effect that the Enforcement Directorate, Mumbai, has already registered ECIR No. MBZO/18/2014, dated 30.09.2014 against M/s Sahara India Real Estate Corporation Limited, M/s Sahara Housing Investment Corporation Limited, and their directors and others for investigation under the PMLA in the matter of OFCDs issued by the said two companies.

39. The learned counsel for the petitioners has submitted that although it has been held in Vijay Madanlal Choudhary (supra) that an ECIR is not an FIR, yet the principle applicable to FIR, that only the first information report of the commission of a cognizable offence can be registered, and investigation shall be instituted thereon, and no second report of the commission of an offence can be registered as a second FIR would also apply to registration of an ECIR, and no second ECIR can be registered on the same allegation. In this regard, he has placed reliance on the judgment of the Hon’ble Supreme Court in the case of T.T. Antony Vs. State of Kerala, 2001(6) SCC 181, paragraphs 18 and 21. Page no.19 of 29

40. He has submitted that there can be no second FIR and no fresh investigation and in support of this submission, he has relied on the judgments in the case of Amitbhai Shah, 2013(6) SCC 348, paragraphs 32, 58.3, and 58.5, Arnab Ranjan Goswami, 2020(14) SCC, page 1, paragraph 31, and Amish Devgan, 2021(1) SCC, page

41. The learned counsel for the petitioner has next submitted that the second ECIR registered by ED conceals the fact that an ECIR has already been registered against the petitioner. The second ECIR has been registered without seeking permission of the Hon’ble Supreme Court.

42. The Enforcement Directorate, Mumbai, has also filed IA Nos. 251-252 of 2016 dated 21.11.2016, in Contempt (Civil) Nos. 412 and 413 of 2012 and 260 of 2013 before the Hon’ble Supreme Court and had sought permission of the Hon’ble Supreme Court to attach the properties of the said companies. This IA was last listed on

03.09.2024 and 05.09.2024, but as no one was present on behalf of the Enforcement Directorate to press the application, the matter was adjourned. The learned counsel for the petitioner has submitted that the aforesaid facts indicate that the ED has virtually abandoned the aforesaid application. He has submitted that since the investigation on the same subject matter is already being made by the Zonal Office of ED at Mumbai, registration of a second ECIR at Kolkata, thereby extending and enlarging the scope of investigation is illegal.

43. It has been stated in the supplementary affidavit that the Central Government has already passed an order dated 31.10.2018 instituting an investigation by the Serious Fraud Investigation Office (hereinafter referred to as ‘the SFIO’) under Section 212(1) of the Companies Act, 2013, in respect of the entire affairs of three companies of the Sahara Group, namely M/s Sahara Housing Investment Corporation Limited, M/s Sahara Q Shop, Unique Products Range Limited, and M/s Sahara Page no.20 of 29 Q Gold Mart Limited (none of the petitioners is included in the aforesaid three companies).

44. Subsequently, the Central Government has passed an order dated 27.11.2020, extending the investigation against the entire affairs of six other companies of the Sahara Group namely M/s Sahara India Real Estate Corporation Limited, M/s Sahara India Financial Corporation Limited, M/s Sahara India Commercial Corporation Limited, M/s Sahara Prime City Limited, M/s Aamby Valley Limited, and M/s Aamby Valley City Developers Limited and the issue of OFCDs-debentures by these companies is being investigated by SFIO. The learned counsel for the petitioners has submitted that once such an investigation has been entrusted to SFIO under the Companies Act, investigation by any other agency becomes barred.

45. Section 212 (2) of the Companies Act, 2013, provides that “Where any case has been assigned by the Central Government to SFIO for investigation under the Companies Act, no other investigating agency of the Central Government or any State Government shall proceed with investigation in such case; and in case any such investigation has already been initiated, it shall not be proceeded further, and the concerned agency shall transfer the relevant documents and records in respect of such offenses under this Act to SFIO.”

46. It has been stated in the short counter affidavit dated

28.11.2024, filed by the ED that the petitioners have admitted in the petition that the funds collected by them were received at Lucknow where their office is situated despite the fact that the petitioners have their registered offices at Kolkata, Lucknow, Bhopal and Hyderabad. The investigation conducted under PMLA has revealed that all the companies and societies of Sahara Group cheated their depositors through M/s Sahara India and the agents employed by it. The scheduled offence was also committed from the same set of branches. Page no.21 of 29 The petitioners have admitted in the present petition itself that the funds collected by them were received at Lucknow which they have themselves claimed to be their Head office despite having their separate registered addresses at Kolkata, Lucknow, Bhopal and Hyderabad. The investigation conducted under PMLA revealed that the OFCDs/ Advance in the case of companies and the scheme of members and contribution in Cooperative societies was only a façade to receive deposits from gullible public since the subscribers of OFCDs were never in position to exercise the option of converting the debenture into share anyway in absence of access to the finances of the company and the members of the cooperative societies never attended any of the General Body meeting or participated in any of the decision making of the society.

47. It has also been stated in the counter affidavit that the ECIR in the present case has been registered at Kolkata Zonal Office, Kolkata, since the main accused M/s Humara India Credit Cooperative Society Limited was registered at Kolkata. After registration of the F.I.R. Kolkata office has carried out investigation in the matter and upon completion of investigation a prosecution complaint will be filed before the learned Special Court at Kolkata which has jurisdiction in the matter. Hence, the instant petition challenging the validity of the proceedings arising out of ECIR registered at Kolkata would not lie before this Court and would lie before the High Court at Kolkata.

48. Sri S. V. Raju, the learned Additional Solicitor General has submitted that the petitioners had challenged the provisional attachment order but during pendency of this petition, a final attachment order has been passed and, therefore, the prayer of the petitioner challenging validity of the search and seizure has become infructuous. He has submitted that the petitioners have got a statutory remedy of appeal under Section 26 of PMLA available against the final attachment order and thereafter a second appeal under Section 42 PMLA would lie before the High Court. Page no.22 of 29

49. Sri. Raju has further submitted that the investigation stands concluded and a prosecution complaint has already been filed at Kolkata on 06.09.2025.

50. Placing reliance on the judgment of the High Court of Delhi in the case of Mahendra K. Naren, 2004 SCC Online Delhi 1025, Sri Raju has submitted that the complainant has the discretion to choose the forum.

51. The petitioners have taken a ground that the search and seizure operations have been conducted at the premises of the petitioners, without complying with the mandatory provisions contained in the proviso appended to Rule 3(2) of the Prevention of Money Laundering (PML) Rules, 2005, (Forms search and seizure or freezing and the manner of forwarding the reasons and material to the adjudicating authority, impounding and custody of records and the period of retention) Rules 2005. Replying to this contention, Sri S.V. Raju has submitted that prior to amendment, Section 17(1) of PMLA had the following proviso appended to it: - “ Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 157 of the Code of Criminal Procedure, 1973 (2 of 1974) or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.”

52. The provisions contained in the aforesaid proviso were reproduced in Rule 3(2) of the aforesaid rules. Section 17 has been amended and the proviso has been deleted by an amendment made by Page no.23 of 29 Act No. 23 of 2019 with effect from 01.08.2019. When the proviso appended to the statute itself stands deleted, the mere fact that the legislature has omitted to delete the proviso from the Rules would not have any significance as the Rules are subservient to the Act, and when the Act has been amended to delete a particular provision, the non-deletion thereof from the Rules would not make the amendment made in the statute to be redundant.

53. Sri Raju has submitted that as many as 315 FIRs have been registered against the petitioners, and the ECIR is not based on a solitary FIR in which a closure report has been submitted. It has been stated in the counter affidavit that it was also revealed during investigation that when depositors of the cooperative society began requesting maturity payments following the due date and were denied these payments, they realized that they had been misled and cheated into depositing their funds with the society. Consequently, these depositors started filing complaints with various police stations. Several offences of cheating have been registered all over India against these cooperative societies as FIRs and in several of them even charge sheets have been filed by Police Authorities. Since these are scheduled offences, the proceeds of crime generated from the commission of scheduled offence and the offence of Money laundering are required to be investigated under PMLA, 2002. Pertinently, on perusal of 502 FIRs filed in various states across country, it was revealed that out of 502 cases, there are 315 FIRs which are registered for commission of Scheduled offence under PMLA, 2002. 276 of the FIRs/Charge-sheets have complained about cheating the depositor and non-repayment of their deposits even after the maturity dates or/and re-depositing of their maturity amount from one entity of Sahara Group to other scheme of the same entity or a different entity, without their consent. Approximately 25 complaints have been filed by representatives of depositors either by advocates or by court order in which FIR has been registered based upon complaint filed by multiple depositors. Page no.24 of 29

54. The complainant of many of these FIRs include agents of Sahara group itself who were lured by M/s Sahara India, wherein all deposit taking entities including the four cooperative societies, their key persons, branch managers of M/s Sahara India branches and Subrata Roy and his family members are named as suspects. Further, numerous allegations of cheating have been raised across India against these cooperative societies, with several resulting in FIRs wherein not only Section 420 of IPC has been invoked but several other provisions such as Sections 120-B, 327, 418, 467 and 471 have been invoked too which are schedule offences as per the schedule of the PMLA., Since, the offences as mentioned in the FIRs/Charge- sheets are scheduled offences, the proceeds of crime arising from these offences, along with the offences related to money laundering, must be investigated under the PMLA, 2002.

55. Shri Raju has submitted that multiple FIRs can form the basis of registration of a single ECIR. In support of this contention, he has placed reliance on the judgment of the Delhi High Court in the case of Rajinder Singh Chadha v. Union of India: (2023) 5 HCC (Del) 86 = 2023 SCC OnLine Del 7515.

56. Shri S.V. Raju has next submitted that merely because the offence under the IPC also makes out the commission of an offence under the BUDS Act, will not bar investigation and prosecution under the IPC. Section 35 of the BUDS Act specifically provides that the application of other laws is not barred. Moreover, he has further submitted that this contention can be raised by the petitioner while challenging the validity of the FIR and not the proceedings arising out of the registration of the ECIR.

57. Regarding the allegation of violation of the interim order restraining the taking of any coercive measures against the petitioners, Sri Raju has submitted that no property of any of the petitioners has been attached, and there is no violation of the interim order. Page no.25 of 29

58. Regarding the first submission of the learned Counsel for the petitioners that no proceedings can continue under the PMLA after filing of a closure report in FIR No. 142 of 2020, I am in agreement with the following view taken by the Delhi High Court in Rajinder Singh Chadha v. Union of India: (2023) 5 HCC (Del) 86 = 2023 SCC OnLine Del 7515: - “34. Insofar as the submission of learned Senior Counsel with respect to the issue of the “jurisdictional fact” is concerned, it is noted that during the pendency of the impugned ECIR, the registration of a third FIR with respect to “scheduled offences” gives jurisdiction to the department to investigate by taking the said third FIR on record. The authorities cited by learned Senior Counsel for the petitioner are distinguishable with respect to the facts of the present cases. For the sake of repetition, it is noted that after the third FIR was taken on record, the impugned ECIR cannot be stated to be without a predicate offence. The issue before the court, as explained hereinabove, is whether the investigation in the impugned ECIR can continue on the basis of registration of the third FIR. It is clarified that since this Court is of the opinion that the ECIR, as explained in Vijay Madanlal Choudhary case cannot be equated with an FIR and as per the stand of the department, the same is only for administrative purposes, there is no impediment in taking the third FIR on record which related to the same project forming the basis for registration of the first two FIRs, resulting in initiation of the impugned ECIR….” (Emphasis added)

59. The submission of the learned Counsel for the petitioner that since non-payment of returns to investors would be an offence under the BUDS Act, no offence would be made out under the Penal Code, apparently runs contrary to the statutory provision contained in Section 35 of the BUDS Act, which reads as follows: - “35. Application of other laws not barred. - The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.” Page no.26 of 29

60. As BUDS Act specifically states that the Act shall be in addition to, and not in derogation of, the provisions of any other law, it is obviously in addition to the provisions contained in the Penal Code. Therefore, merely because an act makes out commission of an offence under the BUDS Act, it cannot be said that although the act is punishable as an offence under IPC also, the offender cannot be prosecuted for commission of the offence punishable under IPC. Therefore, I find no force in the second submission of the learned Counsel for the petitioner.

61. The learned Counsel for the petitioners has submitted that mere non return of investments does not make out commission of an offence because money could not be refunded due to circumstances beyond the control of the petitioners. In this regard, the ED has stated in the counter affidavit that all the deposit taking entities of Sahara group used the same set of branches of M/s Sahara India, same set of agents and other infrastructure including the bank accounts. At the time of redeposit of funds, there was no bank account transfer and only books of different entities were adjusted. Thus, all the key decisions were taken by the Head office at Lucknow. The Chairman, Managing Director and Board Members were only for compliance purpose and none of the decisions was taken by them in the interest of the cooperative society or its members. The maturity amount of one scheme of Sahara Group was redeposited in the existing new scheme and for that no bank account transfer used to take place. The depositors were left with no option but to redeposit in its other existing scheme since the branch office of M/s Sahara India was not making repayment. The maturity amount paid during a year by M/s Sahara India on behalf of all entities is always less than the deposits received by it meaning thereby that the maturity amount was always paid from the new deposits received. The petitioners have claimed in the present petition that they could not make repayment because of an embargo order dated 21.11.2013 issued by Supreme Court, but even after that the petitioners have collected fresh deposits from public Page no.27 of 29 knowing that they are not in position to repay even their existing liabilities.

62. The aforesaid facts prima facie make out commission of offence of cheating by the petitioners so as to warrant their trial for the offence. Correctness of the allegations cannot be examined by this Court in exercise of its inherent powers and that will be done by the trial Court after the parties have been given opportunity to lead evidence in support of their respective case. Therefore, I am unable to accept this contention of the learned Counsel for the petitioner.

63. The learned Counsel for the petitioner has alleged violation of interim order dated 28.02.2025 providing that if the petitioners participate in the investigation, no coercive steps shall be taken against them. The learned Counsel for the respondent ED has refuted this allegation stating that no property of any of the petitioner has been attached after passing of the interim order dated 28.02.2025.

64. The petitioners have not instituted any contempt proceedings alleging violation of the order dated 28.02.2025 passed by this Court.

65. Firstly, the petitioners have failed to make out violation of the interim order dated 28.02.2025 and secondly, violation of an interim order would not make out a ground for quashing of the entire proceedings under PMLA against the petitioners.

66. The learned Counsel for the petitioners has also submitted that the Central Government has instituted an investigation by the Serious Fraud Investigation Office (‘SFIO’) under Section 212(1) of the Companies Act, 2013, in respect of the entire affairs of three companies of the Sahara Group, namely M/s Sahara Housing Investment Corporation Limited, M/s Sahara Q Shop, Unique Products Range Limited, and M/s Sahara Q Gold Mart Limited. Subsequently, the scope of investigation against them has been extended so as to include the entire affairs of six other companies of Page no.28 of 29 the Sahara Group namely M/s Sahara India Real Estate Corporation Limited, M/s Sahara India Financial Corporation Limited, M/s Sahara India Commercial Corporation Limited, M/s Sahara Prime City Limited, M/s Aamby Valley Limited, and M/s Aamby Valley City Developers Limited and the issue of OFCDs-debentures by these companies is being investigated by SFIO. The learned counsel for the petitioners has submitted that once such an investigation has been entrusted to SFIO under the Companies Act, investigation by any other agency becomes barred. This submission also cannot be accepted because even after extension of the scope of investigation by SFIO, it does not include investigation against any of the petitioners, namely, (i) M/s Humara India Credit Cooperative Society Limited, (ii) M/s Sahara Credit Cooperative Society Limited, (iii) M/s Stars Multipurpose Cooperative Society Limited, and (iv) M/s Saharayan Universal Multipurpose Society Limited. Therefore, there is no illegality in continuance of proceedings under PMLA against the petitioners.

67. In view of the foregoing discussion, I am of the considered view that there is no ground to interfere in the proceedings under the PMLA against the petitioners in exercise of the inherent powers of this Court under Section 482 Cr.P.C.

68. Although elaborate submissions have been made by the learned Counsel for the petitioners defending the allegations against the petitioners, I have not dealt with the same, leaving it open for the trial Court to do so during trial and it is clarified that any observation made in this order shall not affect the trial Court while examining the merits of the allegations.

69. In view of the foregoing discussion, the petition is dismissed. October 17, 2025 Ram. [Subhash Vidyarthi, J.] Page no.29 of 29