Delhi High Court: Quashed PMLA case against EMTA coal after CBI files closure report in 2015 fir; Coal block case

The Delhi High Court in the case Emta Coal Limited & Ors v. Deputy Director Directorate Of Enforcement observed and has quashed the ECIR and attachment orders passed by the Enforcement Directorate against EMTA Coal Limited and other individuals, wherein it is observed that if there is an acquittal for the discharge or a closure report has been filed in the predicate offence, thus, the ECIR would not stand and the same would be liable to be quashed. The bench headed by Justice Prathiba M Singh stated that this court is in view of the settled legal position in Vijay Madanlal Choudhary and the subsequent decisions and orders, thus, the impugned orders dated 14th February, 2022 and 20th June, 2022 as also the ECIRs which are quashed. The Supreme Court in 2014 had de-allocated and cancelled the various captive coal blocks which were allocated to West Bengal State Electricity Board and West Bengal Power Development Corporation Ltd. However, an FIR was registered by Central Bureau of Investigation (CBI) under sections 120B and 420 of the Indian Penal Code, 1860 and sections 13(2) and 13(1) (d) of the Prevention of Corruption Act, 1988 against EMTA its partners or directors and also the officials of the WBPDCL, WBSEB and other unknown persons in the year 2015. 

The ECIRs case was also registered by the ED on the basis of CBI FIR 

In the matter a closure report was filed by CBI in January 2021, In 2022, the closure report was accepted by the CBI and has stated that from the available record and it cannot be ascertained that there being any criminality in allocation of coal blocks and/ or their mining. Last year, the attachments orders passed by ED were stayed by the court in March and August 2022 after taking note of the submission that CBI has filed a closure report in the predicate offence. The counsel appearing for the petitioners submitted before the court that in view of the recent decisions of the Supreme Court and the high court, the provisional attachment orders in question would no longer survive as the petitioners have been discharged in the predicate offence. The court placed Reliance in the case Vijay Madanlal Choudhary v. Union of India & Ors and in the case Prakash Industries v. Directorate of Enforcement, wherein it is argued that once the scheduled offence itself has come to an end resulting in discharge or acquittal and no proceedings are pending against the petitioners, the order of attachment cannot be continued in view of the fact that section 3 of the PMLA contemplates that a predicate offence is a necessary precondition for any assets are to be considered as “proceeds of crime.” The bench by Justice Singh stated that the Supreme Court in the case Vijay Madanlal Choudhary has categorically held that for the existence of “proceeds of crime” under section 2(1)(u) of the PMLA, the existence of a criminal complaint is pending enquiry and/or trial would be necessary. Further, the court stated that the Supreme Court in the case Parvathi Kollur v. Enforcement Directorate observed and has reiterated that closure of the proceedings under the PMLA is the natural consequence of the acquittal/discharge in the predicate offence. Accordingly, it has been directed by the court that the the Trial Court, in the complaint case which was pending before it, has clearly come to a conclusion that the closure report deserves to be accepted and no criminality is ascertainable as the documents in respect thereof were not being available. Therefore, the court quashed the attachment orders and also the ECIRs. The counsels appearing for the petitioner, Senior Advocate Siddharth Aggarwal and Advocates Krishna Datta Multani, Parangat Pandey, Arshiya Ghosh, Shaunak Dutta, Abhimanyu Bhandari, Kartika Sharma and Vanshita Gupta. 

The counsels 

Anupam S Sharma, Special Counsel ED along with Advocates Harpreet Kalsi, Prakarsh Airan, Abhishek Batra and Ripudaman Sharma represented the respondents.

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