# Mohan Lal Rathi v. U.O.I. & Anr

- **Citation:** (2023) 9 ILRA 944
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-09-19
- **Case number:** Application U/S 482 No. 1663 of 2023
- **Bench:** Subhash Vidyarthi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/mohan-lal-rathi-v-u-o-i-anr-50810
- **Pages:** 15

## Headnote

Prevention of Money Laundering Act, 2002
- Sections 3, 4 & 50 - Code of Criminal
Procedure, 1973 - Sections 306, 308 &
482 - Constitution of India, 1950 - Article
226 - Effect of Pardon in Scheduled
Offence on PMLA Proceedings - Applicant, a
Chartered Accountant and approver in a CBI
case for disproportionate assets under Sections
109, 120-B IPC, and Section 13(2) read with
13(1)(e) of the Prevention of Corruption Act,
1988, sought to quash PMLA proceedings,
cognizance order dated 08.08.2019, and nonbailable warrant dated 04.02.2023, arguing that
pardon in the scheduled offence absolved him
from
PMLA
liability.
The
Enforcement
Directorate contended that PMLA offences are
stand-alone, and pardon under Section 306
Cr.P.C. does not extend to PMLA unless
specifically granted. Relying on Vijay Madanlal
Chaudhary, the court held that pardon does not
equate to discharge, acquittal, or quashing of
the scheduled offence, as it is granted to an
accomplice involved in the offence, not an
innocent
person.
PMLA
proceedings
can
continue unless the accused seeks pardon for
PMLA
offences
with
full
disclosure.
The
applicant's role in layering illicit funds justified
the trial. No illegality found in the cognizance
order or proceedings. Application dismissed.
(Paras 24-25, 48-56)

Application dismissed.

List of Cases cited:

## Text

_Characters 0–39,857 of 48,756. This is a partial read: ask again with offset=39857 for what follows._

944 INDIAN LAW REPORTS ALLAHABAD SERIES
department
of
Railways,
seeking
information with respect to posting of the
applicant at Charbagh Railway Station and
further the response received thereof, are
unlawful as there is no such procedure
prescribed in Cr.P.C. or any other law for
the time being inforce, which could
empower the trial court to exchange any
internal correspondence to any of the
agency or institution for reaching upon any
conclusion and therefore, so far as the
present matter is concerned, the trial court
has wrongly proceeded, while referring the
matter, vide it's letter to the department of
Railways
thereby
seeking
certain
informations. Further such information
could not have been treated as an evidence,
at any stage of the trial.

25. This Court is also of considered
opinion that the provisions of criminal law
are stringent and that affects and curtails
the right to life and personal liberty of a
person and therefore, no order can be
passed on the basis of hypothesis unless
there is prima facie satisfaction of being
much stronger evidence. In the present
matter it has categorically been recorded in
the impugned order that 'if the applicant
shall
be
brought
before
the
prosecutrix/victim, she would identify the
accused who were involved in the offence.'
This clearly indicates that there is no
probability that the present applicant was
involved in committing offence.

26. It is trite law that nature of
satisfaction which is required for invoking
the power under section 319 of Cr.P.C. is
analogous to the degree of satisfaction as is
required for 'framing of charges' and
therefore, there requires much stronger
evidence than mere probability of the
complicity, but so far as the present case is
concerned, the trial court has failed to
follow the above-said test.

27. Further, there is un-rebutted
contention of counsel for the applicant that
the applicant is 57 years of age and he is
suffering with Carcinoma of advanced
stage. Though, the same do not have any
legal consequence, but it prima facie
corroborates the arguments.

28. This Court is also not unmindful
to the judgment of Apex Court rendered in
Hardeep Singh Versus State of Punjab and
Others and Labhuji Amratji Thakor and
others Versus State of Gujarat and another
(Supra), which also supports the version of
the applicant.

29. Consequently, the impugned order
dated 11.12.2008 is hereby set aside and the
criminal proceedings of Sessions Trial No.
Case No. 119 of 2008 ( State Versus Smt.
Asha Alias Sanjana and others) arising out
of Case Crime No. 271 of 2007 under
section 376, 120 B IPC, Police Station
Naka,
District
Lucknow,
are
hereby
quashed.

30. The application is allowed
accordingly.
---------
(2023) 9 ILRA 944
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 19.09.2023

BEFORE

THE HON'BLE SUBHASH VIDYARTHI, J.

Application U/S 482 No. 1663 of 2023

Mohan Lal Rathi ...Applicant
Versus
U.O.I. & Anr. ...Opposite Parties
9 All. Mohan Lal Rathi Vs. U.O.I. & Anr.
945
Counsel for the Applicant:
Sunil Kumar Singh

Counsel for the Opposite Parties:
Kuldeep Srivastava, Anurag Kumar Singh

Prevention of Money Laundering Act, 2002
- Sections 3, 4 & 50 - Code of Criminal
Procedure, 1973 - Sections 306, 308 &
482 - Constitution of India, 1950 - Article
226 - Effect of Pardon in Scheduled
Offence on PMLA Proceedings - Applicant, a
Chartered Accountant and approver in a CBI
case for disproportionate assets under Sections
109, 120-B IPC, and Section 13(2) read with
13(1)(e) of the Prevention of Corruption Act,
1988, sought to quash PMLA proceedings,
cognizance order dated 08.08.2019, and nonbailable warrant dated 04.02.2023, arguing that
pardon in the scheduled offence absolved him
from
PMLA
liability.
The
Enforcement
Directorate contended that PMLA offences are
stand-alone, and pardon under Section 306
Cr.P.C. does not extend to PMLA unless
specifically granted. Relying on Vijay Madanlal
Chaudhary, the court held that pardon does not
equate to discharge, acquittal, or quashing of
the scheduled offence, as it is granted to an
accomplice involved in the offence, not an
innocent
person.
PMLA
proceedings
can
continue unless the accused seeks pardon for
PMLA
offences
with
full
disclosure.
The
applicant's role in layering illicit funds justified
the trial. No illegality found in the cognizance
order or proceedings. Application dismissed.
(Paras 24-25, 48-56)

Application dismissed.

List of Cases cited:

1. Vijay Madanlal Chaudhary Vs U.O.I., 2022
SCC OnLine SC 929

2. J. Sekar Vs Directorate of Enforcement,
(2022) 7 SCC 370

3. Parvathi Kollur Vs Directorate of Enforcement,
2022 SCC OnLine SC 1975

4. Adjudicating Authority Vs Shri Ajay Kumar
Gupta & ors., Criminal Appeal No. 1269 of 2017
5.
Directorate
of
Enforcement
Vs
M/s
Obulapuram Mining Company Pvt. Ltd, Criminal
Appeal No. 1269 of 2017

6. EMTA Coal Ltd. Vs The Deputy Director,
Directorate of Enforcement, W.P. (C) No.
3821/2022

7. Harish Fabiani & ors. Vs Enforcement
Directorate & ors., W.P. (Crl.) 408 of 2022

8.
Prakash
Industries
Ltd.
Vs
U.O.I.,
2023/DHC/000481

9.
Naresh Goyal Vs The Directorate of
Enforcement, 2023 ALLMR (Cri.) 1840

10. Debendra Kumar Panda Vs U.O.I., 2023
(243) AIC 451

11. Mainak Mehta Vs CBI, Criminal Writ Petition
No. 2444 of 2022

12. St. (Delhi Administration) Vs Jagjit Singh,
AIR 1989 SC 598

13. Jasbir Singh Vs Vipin Kumar Jaggi & ors.,
(2001) 8 SCC 289

14. A. Devendran Vs St. of T.N., (1997) 11 SCC
720

15. Chandmal Vs St. of M.P. & anr., 2023 SCC
OnLine SC 127

16. Sanjay Kumar Agarwal Vs Directorate of
Enforcement, 2022 SCC OnLine Jhar 1248

17. Pepsi Foods Ltd. & ors. Vs Special Judicial
Magistrate & ors., (1998) 5 SCC 749

18.
Bhaskar
Industries
Ltd.
Vs
M/s
Bhiwani Denim & Apparels Ltd., (2001) 7
SCC 401

19. St. of Haryana Vs Bhajan Lal & ors., 1992
Supp (1) SCC 335

20. Dipesh Chandak Vs U.O.I., (2004) 8 SCC
511

21. A.J. Peiris Vs St. of Madras, AIR 1954 SC
616
946 INDIAN LAW REPORTS ALLAHABAD SERIES
22. St. of Maharashtra Vs Abu Salem Abdul
Kayyum Ansari, (2010) 10 SCC 179

23. Yakub Abdul Razak Memon Vs St. of Mah.,
(2013) 13 SCC 1

24. CBI Vs Ashok Kumar Aggarwal, (2013) 15
SCC 222

25. Radheshyam Kejriwal Vs St. of W.B., (2011)
3 SCC 581

26. Bawa Faqir Singh Vs Emperor, AIR 1938 PC
266

27. Kenchava Kom Vs Girimallappa Channappa,
AIR 1924 PC 209

28. Vellikannu Vs R. Singaperuma, (2005) 6 SCC
222

29.
P.
Chidambaram
Vs
Directorate
of
Enforcement, (2020) 13 SCC 791

(Delivered by Hon'ble Subhash Vidyarthi, J.)

1. Heard Sri Dhruv Gupta, the learned
counsel for the applicant, Sri Kuldeep
Srivastava, the learned counsel for the
Enforcement
Directorate
and
Sri
Dharmendra Pratap Singh, holding brief of
Sri Anurag Kumar Singh, the learned
counsel for the respondent-C.B.I..

2. By means of this application filed
under Section 482 Cr.P.C., the applicant has
sought to assail the validity of the
cognizance/
summoning
order
dated
08.08.2019 passed in Complaint Case
No.121/2019
titled
"Directorate
of
Enforcement Vs. Yadav Singh & Others" in
the Court of Session Judge / Special Judge
PMLA, Lucknow, summoning the applicant
for trial of offences under Sections 3/4 of
Prevention of Money Laundering Act,
2002, and all proceedings of the aforesaid
complaint case, including the order dated
04.02.2023,
whereby
a
non-bailable
warrant has been issued against the
applicant.

3. In furtherance of the order dated
16.07.2015, passed by a Division Bench of
this Court in Writ Petition No. 12396
(M/B) of 2014, the C.B.I. had registered an
FIR
bearing
RC
No.
DST/2015/A/0003/CBI/ STF/DLI against
five persons - (1) Yadav Singh, the then
Chief Engineer Noida, (2) Smt. Kusumlata,
wife of Yadav Singh, (3) Ms. Garima
Bhushan, daughter of Yadav Singh, (4)
Sunny Yadav, son of Yadav Singh and (5)
Rajinder Manocha, as associate of Yadav
Singh, for commission of offences under
Section 109 read with 120- B IPC, read
with Section 13(2), read with Section
13(1)(e) of Prevention of Corruption Act,
1988 on 30.07.2015.

4. The C.B.I., after investigation,
submitted a charge-sheet dated 26.09.2017
against 11 persons, including the applicant.
It is stated in the charge-sheet that Yadav
Singh
was
found
in
possession
of
disproportionate
assets
worth
₹
231,541,514 - 512.66% to his known
sources of income, either in his own name
or in the name of his family members. The
applicant was the Chartered Accountant of
Yadav Singh.

5. The family members of Yadav
Singh
had
incorporated
numerous
companies and firms and most of the
business transactions found in those entities
were fake and were used to convert the illgotten money of Yadav Singh into white
money with the help of a battery of
Chartered Accountants. The Chartered
Accountants helped in layering the illgotten money by putting the same in
various other companies and by making
accommodation entries in accounts.
9 All. Mohan Lal Rathi Vs. U.O.I. & Anr.
947

6. On an application filed by the
applicant, the Special Judge, Prevention of
Corruption Act, C.B.I., Ghaziabad has
passed an order in Special Case No.
08/2017 whereby the applicant has been
made an approver and he has been granted
pardon in the aforesaid case arising out of
RC No. DST/2015/A/0003/CBI/STF/DLI
regarding offences under Sections 109 read
with 120- B IPC, read with Section 13(2),
read with Section 13(1)(e) of Prevention of
Corruption Act, 1988.

7. The order dated 25.06.2017
granting pardon to the applicant was
challenged by the co-accused Yadav Singh
by filing an Application under Section 482
No. 31498 of 2018, which was dismissed
by a Division Bench of this Court by means
of an order dated 11.09.2018. S.L.P. (Crl.)
No. 9692 of 2018 filed by Yadav Singh
against the aforesaid order was dismissed
by the Hon'ble Supreme Court by means of
an order dated 07.12.2018.

8. The recording of examination-inchief of the applicant in C.B.I. case
commenced
on
18.09.2018
and
it
concluded on 30.10.2018 and thereafter his
cross-examination was started. However,
his
cross-examination
could
not
be
completed because proceedings of the
C.B.I. trial have been stayed by means of
an order dated 07.12.2018, passed by the
Hon'ble Supreme Court in Writ Petition
(Criminal) No. 322 of 2018, filed by Smt.
Kusumlata and another.

9. The Enforcement Directorate
registered ECIR/05/PMLA/LKZO/2015 on
23.10.2015 and it filed a complaint against
Yadav Singh, his wife Kusumlata and M/s
PGP charitable trust on 23.12.2017.

10. On 28.12.2018 the E.D. filed a
supplementary
complaint
against
five
persons, including the applicant. It is stated
in the complaint that the applicant was the
Chartered Accountant of Yadav Singh and
he had arranged various persons, through
whom the illegal money was routed to the
companies owned by Yadav Singh and
Kusumlata, by making accommodation
entries in the form of business income,
referral commission and unsecured loans,
which
was
subsequently
used
for
construction and purchase of properties.

11. On 29.04.2019, the E.D. issued
summon under Sub-sections (2) and (3) of
Section 50 of Prevention of Money
Laundering Act to the applicant, directing
him to appear on 13.05.2019 and another
summon
was
issued
on
27.05.2019
directing him to appear on 11.06.2019.
Thereafter a non-bailable warrant was
issued against the applicant.

12. On 04.02.2023, the applicant filed
an application for recall of the non-bailable
warrant, without appearing before the trial
Court and the application was rejected on
the same date.

13. The applicant has sought quashing
of the proceedings under the Prevention of
Money Laundering Act on the ground that
he has been made an approver and has been
granted pardon in the scheduled offence.
Now, he is no more an accused in the
scheduled offence. The proceedings under
the Prevention of Money Laundering Act
cannot continue only against a person who
is an accused in a scheduled offence and
having
been
granted pardon
in
the
scheduled offence, he cannot be tried for
the offence under PMLA also.
948 INDIAN LAW REPORTS ALLAHABAD SERIES

14. The affidavit filed in support of
the application contains references to the
judgments in the cases of Vijay Madanlal
Chaudhary versus Union of India, 2022
SCC OnLine SC 929, J. Sekar versus
Directorate of Enforcement, (2022) 2 SCC
370, Parvathi Kollur versus Directorate of
Enforcement, Criminal Appeal No. 1254
of
2022
decided
on
16.08.2022,
Adjudicating Authority versus Shri Ajay
Kumar Gupta and others, Criminal
Appeal No. 1269 of 2017 decided on
02.12.2022, judgment of the Delhi High
Court in the case of Prakash Industries
Ltd. versus Union of India, Writ Petition
(C) No. 13361 of 2018, decided on
24.01.2023, Jasbir Singh versus Vipin
Kumar Jaggi and others, (2001) 8 SCC
289, A. Devendran versus State of Tamil
Nadu, AIR 1988 SC 2821, Pepsi Foods
Ltd. and others versus Special Judicial
Magistrate and others, AIR 1998 SC 128,
Chandmal @ Chandanmal versus The
State of Madhya Pradesh and another,
Criminal Appeal No. 359 of 2023 decided
on 07.02.2023, Bhaskar Industries Ltd.
Versus M/s Bhiwani Denim & Apparels
Ltd. Ltd. (2001) 7 SCC 401, Satender
Kumar Antil versus CBI, 2022 SCC
OnLine 825 and State of Haryana versus
Bhajan Lal and others, 1992 Supp. (1)
SCC 335.

15. The E.D. has filed a counter
affidavit stating that the offence under
PMLA is a stand-alone offence and the
applicant has not been granted pardon in
respect of the aforesaid offence. The
counter affidavit refers to the judgments in
the cases of Vijay Madanlal Chaudhary
versus Union of India, 2022 SCC OnLine
SC 929, Shyam Sunder Singhvi versus
Union of India ̧ Criminal Writ Petition
No. 273 of 2019 decided by Rajasthan
High Court on an undisclosed date, Neeraj
Upadhyay versus Union of India, W.P. No.
5916 of 2019 decided by this Court on an
undisclosed date, VGN Developers versus
Deputy Director, Crl.O.P. No. 9796 of
2019 by an undisclosed Court on an
undisclosed date, Union of India versus
Sushil Kumar Katiyar, by an undisclosed
Court on an undisclosed date, in all of
which it has been held that the offence
under PMLA is a stand-alone offence.

16. In reply to the reference to
Satender kumar Antil (Supra) made in the
affidavit filed in support of the application,
it has been stated in the counter affidavit
that a bail application has to be considered
on case-to-case basis and in this regard, the
counter
affidavit
also
refers
to
P.
Chidambaram
versus
Directorate
of
Enforcement, (2020) 13 SCC 791.

17. The counter affidavit refers to the
judgments in the cases of State of Bihar
versus K. J. D. Singh and R, P. Kapoor
versus State of Punjab, regarding the scope
of power under Section 482 Cr.P.C., but
neither their citations have been mentioned
nor has any other particulars of the
judgments been disclosed and copies to
these judgments have also not supplied to
the Court. This casual manner of giving
references
of
precedents
cannot
be
appreciated by the Court.

18. Chapter IV of the Allahabad High
Court Rules, 1952 deals with "Affidavits
and Oath Commissioners" and Rule 8 of
Chapter IV provides that "The affidavit
shall contain no statement which is in the
nature of an expression of opinion or
argument." The affidavit and the counter
affidavit filed in the present case are full of
arguments and case laws in support of the
arguments, which certainly is in violation
of Rule 8 aforesaid.
9 All. Mohan Lal Rathi Vs. U.O.I. & Anr.
949

19. Further, Rule 12 of Chapter IV of
the Allahabad High Court Rules provides
that "Except on interlocutory applications,
an affidavit shall be confined to such fact
as the
 deponent is able of his own knowledge to
prove."

20. Application under Section 482
Cr.P.C. is certainly not an interlocutory
application and the affidavit and the
counter affidavit filed in the present case
should have been confined to facts within
the personal knowledge of the deponents of
the respective affidavits.

21. Although the above referred Rules
are being followed generally, in some cases
a new emerging practice has been observed
where Advocates refer to numerous caselaws in the affidavits and counter affidavits,
although the same is prohibited in the High
Court Rules. The case-laws should not be
incorporated in the affidavits, but those
should be placed by the learned Counsel
while
advancing
submissions,
with
reference to the specific passage containing
the ratio decidendi of the judgment. The
practice of mentioning case-laws in the
affidavits filed before the Courts, and that
too in a casual manner without even
mentioning the citation or other complete
particulars such as the name of the Court,
case number and date of decision, and the
relevant paragraph containing the ratio
decidenei of the judgment results in
wastage of the Court's time. Such a
practice is deprecated and it should stop.

22. The learned counsel for the
applicant
has
submitted
that
the
consequence of granting pardon to the
applicant is that he stands discharged in the
scheduled offence and, therefore, he cannot
be tried for the offence under the PMLA.

23.

Per
contra,
Sri
Kuldeep
Srivastava, learned counsel for the E.D. has
submitted that since the applicant has not
been discharged by the learned trial court,
rather he has become an approver and he
has been granted pardon on this ground,
which is subject to certain conditions
mentioned in Section 306 Cr.P.C., the grant
of pardon in the scheduled offence will not
have any effect on the proceedings under
PMLA.

24. In Vijay Madanlal Chaudhary
versus Union of India, 2022 SCC OnLine
SC 929, the Hon'ble Supreme Court held
that: -

"253.... 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.
* * *

269. From the bare language of
Section 3 of the 2002 Act, it is amply clear
that the offence of money-laundering is an
independent offence regarding the process
or activity connected with the proceeds of
crime which had been derived or obtained
as a result of criminal activity relating to
or in relation to a scheduled offence...."
(Emphasis supplied)

25. In the Conclusions recorded in
Vijay Madanlal Chaudhary (Supra), the
Hon'ble Supreme Court reiterated that: -

"467. In light of the above
analysis, we now proceed to summarise our
950 INDIAN LAW REPORTS ALLAHABAD SERIES
conclusion on seminal points in issue in the
following terms:-
* * *

(v)...

(d) The offence under Section 3 of
the 2002 Act is dependent on illegal gain of
property as a result of criminal activity
relating to a scheduled offence. It is
concerning
the
process
or
activity
connected with such property, which
constitutes
the
offence
of
moneylaundering. The Authorities under the 2002
Act cannot prosecute any person on
notional basis or on the assumption that a
scheduled offence has been committed,
unless it is so registered with the
jurisdictional
police
and/or
pending
enquiry/trial including by way of criminal
complaint before the competent forum. If
the person is finally discharged/acquitted
of the scheduled 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 claiming such property being
the property linked to stated scheduled
offence through him."
(Emphasis supplied)

26. After closure of submissions, the
learned Counsel for the applicant has
submitted a compilation of photocopies of
15 judgments, and he has submitted copies
to
two
judgments
with
his
written
submissions and I proceed to deal with
those
judgments
in
the
following
paragraphs: -

27. In Dipesh Chandak v. Union of
India, (2004) 8 SCC 511, the appellant was
an accused in a number of cases pertaining
to the Fodder Scam in the Animal
Husbandry Department of Bihar but the
trial judge had passed an order dated
28.08.1998 granting him pardon, on the
condition that he makes a full and complete
disclosure. On the basis of the statement
made by the accused, the Income Tax
Department issued a show-cause notice to
him as to why prosecution should not be
initiated against him, under Sections 277
and 278 of the Income Tax Act, for having
filed false returns of income tax. The
appellant stated that he has been granted a
pardon under Section 306 of the Cr.P.C.
and thus the show-cause notice was not
maintainable.
The
Commissioner
of
Income Tax rejected the contention and
opined that the pardon was restricted only
to offences under IPC only. Accordingly,
Complaint Case was registered under
Sections 277 and 278 of the Income Tax
Act and the Court of Economic Offences,
Patna,
took
cognizance
and
issued
summons. The appellant filed a petition
under Section 482 Cr.P.C. for quashing this
complaint. The High Court dismissed the
petition, inter alia, on the ground that the
terms of the pardon had not been fulfilled
till then and till full evidence was given by
the appellant and the trial of all cases stood
concluded, he continued to be an accused
and, therefore, cannot claim immunity from
prosecution. The Hon'ble Supreme Court
held that: -

"13. In our view, the High Court
was not correct in concluding that until
evidence has been given by the appellant
the pardon could not operate. However, the
fact remains that under Section 306 CrPC
the pardon is granted in respect of the
offence for which he had been charged as
an accused. Of course, a pardon need not
be only in respect of an offence under the
Penal Code, 1860. A person may be
charged, in respect of the same transaction
or act, under the Penal Code, 1860 and
under some other Act e.g. the Prevention of
Corruption Act. The pardon would operate
9 All. Mohan Lal Rathi Vs. U.O.I. & Anr.
951
in respect of all offences pertaining to that
transaction. However, the pardon does not
operate in respect of a transaction or act
entirely unconnected with the offence in
respect of which pardon has been granted.
In this case, the pardon has been granted
for the offence of misappropriation of
funds. This offence has nothing to do with
filing of false returns by the appellant. The
prosecution under Sections 277 and 278 is
in respect of filing false return and making
of false declaration. The pardon which has
been granted would not cover those
offences."
(Emphasis supplied)

The Hon'ble Supreme Court did
not interfere in the order of the High Court.

28. In A.J. Peiris v. State of Madras,
AIR 1954 SC 616, it was held that the
moment the pardon is tendered to the
accused, he must be presumed to have been
discharged, whereupon he ceases to be an
accused and becomes a witness.

29. In Prakash Industries Ltd. versus
Union of India, 2023/DHC/000481 = 298
(2023) DLT 444, the questions involved
were stated in the first paragraph of the
judgment thus: -

"1. These two writ petitions raise
an important question relating to the powers
of the Enforcement Directorate 1 to
provisionally attach properties under Section
5 of the Prevention of Money Laundering Act,
2002 2 even though no proceedings relating
to the predicate offense may have been
initiated by the competent agency functioning
under an independent statute and in terms of
which the scheduled offense stands created.
The ancillary and yet equally fundamental
issue which the Court is called upon to
answer is whether the ED could be
recognised to have the jurisdiction to enforce
the measures contemplated in Section 5 of the
Act solely upon it being of the opinion that
the material gathered in the course of an
investigation or enquiry evidences the
commission of a predicate offense. The
questions posited would also raise the
ancillary issue of the powers that the ED
could be recognised to derive from the Act
while investigating an offense of money
laundering."

30. It is not the fact in the present case
that the proceedings under PMLA have been
initiated against the applicant without any
proceedings for a scheduled offence having
been
initiated
against
him.
Therefore,
Prakash Industries Ltd. (Supra) is of no
avail to the applicant.

31. In J. Sekar v. Enforcement
Directorate, (2022) 7 SCC 370, the Income
Tax
Department
had
seized
currency
amounting to Rs 106,98,89,800 and 128.495
kg of gold. CBI registered an FIR for
offences under Section 120-B read with
Sections 409, 420 IPC and Section 13(2),
read with Sections 13(1)(c) and 13(1)(d) of
the Prevention of Corruption Act, 1988. The
E.D. registered an ECIR. The CBI had
registered 3 cases in respect of the scheduled
offences on the same set of facts, but after
investigation, the CBI submitted a closure
report in the main case and the said report
was accepted by the trial Court. The other
two F.I.Rs. were quashed by the High Court.
The Income Tax Department had also closed
the investigation initiated on the basis of the
search. In the aforesaid background, the
Hon'ble Supreme Court concluded that when
the CBI had filed a closure report, the
appellant could not be prosecuted under
PMLA.

32. In para 20 of the judgment in J.
Sekar (Supra), the Hon'ble Supreme Court
952 INDIAN LAW REPORTS ALLAHABAD SERIES
relied upon the earlier judgment of
Radheshyam Kejriwal v. State of W.B.,
(2011) 3 SCC 581, in which it was held
that: -

"(v) Adjudication proceedings by
the
Enforcement
Directorate
is
not
prosecution by a competent court of law to
attract the provisions of Article 20(2) of the
Constitution or Section 300 of the Criminal
Procedure Code;

(vi)
The
finding
in
the
adjudication proceedings in favour of the
person facing trial for identical violation
will depend upon the nature of finding. If
the
exoneration
in
adjudication
proceedings is on technical ground and
not on merit, prosecution may continue;
and

(vii) In case of exoneration,
however, on merits where the allegation is
found to be not sustainable at all and the
person held innocent, criminal prosecution
on the same set of facts and circumstances
cannot be allowed to continue, the
underlying principle being the higher
standard of proof in criminal cases.'
* * *

39. In our opinion, therefore, the
yardstick would be to judge as to whether
the
allegation
in
the
adjudication
proceedings as well as the proceeding for
prosecution is identical and the exoneration
of the person concerned in the adjudication
proceedings is on merits. In case it is found
on merit that there is no contravention of
the provisions of the Act in the adjudication
proceedings, the trial of the person
concerned shall be an abuse of the process
of the court.'
(Emphasis supplied)

33. In Parvathi Kollur versus
Directorate of Enforcement, 2022 SCC
OnLine SC 1975, the appellant had been
acquitted in trial of the scheduled offence.
The Hon'ble Supreme Court held that that
having been acquitted for the scheduled
offence, the appellant no more remained an
accused in any scheduled offence.

34. In Adjudicating Authority versus
Shri Ajay Kumar Gupta and others,
Criminal Appeal No. 1269 of 2017 decided
on 02.12.2022, Directorate of Enforcement
versus M/s Obulapuram Mining Company
Pvt. Ltd, Criminal Appeal No. 1269 of 2017
decided on 02.12.2022, EMTA Coal Ltd.
versus The Deputy Director, Directorate of
Enforcement, W.P. (C) No. 3821/2022
decided on 10.01.2023, Harish Fabiani and
others versus Enforcement Direcotorate
and others, W.P. (Crl.) 408 of 2022 and
other
connected
matters
decided
on
26.09.2022,
Prakash
Industries
Ltd.
versus Union of India, 2023/DHC/000481
= 298 (2023) DLT 444, Naresh Goyal
versus The Directorate of Enforcement
2023 ALLMR (Cri.) 1840 and Debendra
Kumar Panda versus Union of India, 2023
(243) AIC 451, the accused persons had
been acquitted of the scheduled offence and,
therefore, they were discharged of the
charge of offence under PMLA.

35. The order dated 25.07.2022
passed by the Delhi High Court in Mainak
Mehta versus CBI, Criminal Writ Petition
No. 2444 of 2022, is merely an interim
order and nothing has been decided by
means of the aforesaid interim order and,
therefore, there is absolutely no relevance
of the aforesaid interim order for deciding
the present case.

36. State (Delhi Administration)
versus Jagjit Singh AIR 1989 SC 598 and
Jasbir Singh versus Vipin Kumar Jaggi
and others (2011) 8 SCC 279 do not deal
with the point in issue.
9 All. Mohan Lal Rathi Vs. U.O.I. & Anr.
953

37. In A. Devendran v. State of T.N.,
(1997) 11 SCC 720, the questions under
consideration
were
(1)
whether
the
approver's evidence can at all be relied
upon to bring home the charge against the
accused
persons?,
(2)
whether
nonexamination of the approver as a witness
after grant of pardon and thereby noncompliance of sub-section 4(a) of Section
306 vitiates the entire proceeding and (3)
whether the prosecution case can be held to
be
proved
beyond
reasonable
doubt
excluding the evidence of the approver
from consideration. There was no point in
issue in A. Devendran (Supra) as would be
relevant for decision of the present case.

38. In Chandmal Versus State of
Madhya Pradesh and Another, 2023 SCC
OnLine SC 127, the issue before the
Hon'ble Supreme Court was "whether on
the charge sheet having been filed and
during that period the appellants having
cooperated but not having appeared before
the Court personally but through a counsel,
the action of the trial Court to issue nonbailable warrants is something which can
be sustained." There was no issue
regarding the effect of grant of pardon in
the scheduled offence, consequent to the
accused
having
turned
an
approver.
Therefore, the aforesaid case is of no
relevance for decision of the present case.

39. In Sanjay Kumar Agarwal Versus
Directorate of Enforcement, 2022 SCC
OnLine Jhar 1248, the High Court of
Jharkhand at Ranchi was dealing with a
petition filed for quashing of an order passed
by the trial Court rejecting an application
under Section 205 Cr.P.C. for dispensing with
the personal appearance of the petitioner, and
the issue regarding the effect of grant of
pardon in the scheduled offence was not
involved there. Therefore, the aforesaid case
also is of no relevance for decision of the
present case.

40. In Pepsi Foods Ltd. and others
versus Special Judicial Magistrate and
others, (1998) 5 SCC 749, the Hon'ble
Supreme Court held that "Summoning of an
accused in a criminal case is a serious
matter. Criminal law cannot be set into
motion as a matter of course. It is not that the
complainant has to bring only two witnesses
to support his allegations in the complaint to
have the criminal law set into motion. The
order of the Magistrate summoning the
accused must reflect that he has applied his
mind to the facts of the case and the law
applicable thereto."

41. Bhaskar Industries Ltd. Versus M/s
Bhiwani Denim & Apparels Ltd. Ltd.,
(2001) 7 SCC 401, was a case arising out of a
complaint
under
Section
138
of
the
Negotiable Instruments Act and the question
considered by the Hon'ble Supreme Court
was whether personal appearance of an
accused person can be exempted by the
Magistrate.

42. As noted above, several of the
judgments referred in the affidavit filed in
support of the application or supplied as a
part of the compilation, are absolutely
irrelevant and by supplying those judgments,
the learned Counsel for the applicant has
wasted the precious time of the Court.

43. In State of Haryana versus
Bhajan Lal and others, 1992 Supp. (1)
SCC 335 the Hon'ble Supreme Court has
explained the scope of interference under
Section 482 Cr.P.C. and there is no dispute
regarding this point in the present case.

44. In the numerous cases relied upon
by the learned Counsel for the applicant,
954 INDIAN LAW REPORTS ALLAHABAD SERIES
including Vijay Madanlal Chaudhary
(supra) on the issue of effect of acquittal in
scheduled offence, it has been held that 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 moneylaundering against such a person or person
claiming through him in relation to the
property linked to the stated scheduled
offence. The applicant in the present case
has not been finally absolved by a Court of
competent jurisdiction owing to an order of
discharge, acquittal or because of quashing
of the scheduled offence against him.

45. In Vijay Madanlal Chaudhary
(Supra), the Hon'ble Supreme Court did not
deal with the question of effect of grant of
pardon under Section 306 Cr.P.C. in respect
of
the
scheduled
offence
upon
the
proceedings under PMLA. It is a well
established principle of the law of precedents
that a decision is an authority for which it
decides and not what can logically be
deduced therefrom. It is also well settled that
a little difference in facts or additional facts
may make a lot of difference in the
precedential value of a decision.

46. In light of the aforesaid principle,
this Court has to consider whether grant of
pardon under Section 306 Cr.P.C. would
also fall within the purview of 'finally
absolved
by
a
Court
of
competent
jurisdiction owing to an order of discharge,
acquittal or because of quashing of the
scheduled offence against him'.

47. Sections 306 Cr.P.C., which deals
with the issue of grant of pardon, provides
as follows: -

306.
Tender
of
pardon
to
accomplice.-(1) With a view to obtaining
the evidence of any person supposed to
have been directly or indirectly concerned
in or privy to an offence to which this
section
applies,
the
Chief
Judicial
Magistrate or a Metropolitan Magistrate at
any stage of the investigation or inquiry
into, or the trial of, the offence, and the
Magistrate of the first class inquiring into
or trying the offence, at any stage of the
inquiry or trial, may tender a pardon to
such person on condition of his making a
full and true disclosure of the whole of the
circumstances
within
his
knowledge
relative to the offence and to every other
person concerned, whether as principal or
abettor, in the commission thereof.
* * *

(4) Every person accepting a
tender of pardon made under sub-section
(1)-

a. shall be examined as a witness
in the Court of the Magistrate taking
cognizance of the offence and in the
subsequent trial, if any;

(b) shall, unless he is already on
bail, be detained in custody until the
termination of the trial.
(Emphasis supplied)

48. An order for discharge of the
accused
is
passed
or
the
criminal
proceedings against him are quashed when
on the face of the allegations, no triable
offence is made out against the accused
person and an order of acquittal is passed
when the accused could not be proved
guilty even after facing the trial. On the
other hand, pardon is granted to a person
who is 'supposed to have been directly or
indirectly concerned in or privy to an
offence'. Pardon is granted only to persons
who were involved in commission of the
offence and not to a person against whom
9 All. Mohan Lal Rathi Vs. U.O.I. & Anr.
955
no case is made out or no case could be
established. Therefore, a person who is
granted pardon under Section 306 Cr.P.C.
in a scheduled offence, would not be a
person who has been 'finally absolved by a
Court of competent jurisdiction owing to an
order of discharge, acquittal or because of
quashing of the scheduled offence against
him'
mentioned
in
Vijay
Madanlal
Chaudhary (Supra), against whom no
proceedings under PMLA can continue.

49. In State of Maharashtra v. Abu
Salem Abdul Kayyum Ansari, (2010) 10
SCC 179, the Hon'ble Supreme Court held
that: -

"15. The salutary principle of
tendering a pardon to an accomplice is to
unravel the truth in a grave offence so
that guilt of the other accused persons
concerned in commission of crime could
be brought home. It has been repeatedly
said by this Court that the object of
Section 306 is to allow pardon in cases
where heinous offence is alleged to have
been committed by several persons so that
with the aid of the evidence of the person
granted pardon, the offence may be
brought home to the rest. Section 306
CrPC
empowers
the
Chief
Judicial
Magistrate or a Metropolitan Magistrate to
tender a pardon to a person supposed to
have been directly or indirectly concerned
in or privy to an offence to which the
section applies, at any stage of the
investigation or inquiry or trial of the
offence on condition of his making a full
and true disclosure of the whole of the
circumstances
within
his
knowledge
relative to the offence.
* * *

17. An accomplice who has been
granted pardon under Section 306 or 307
CrPC gets protection from prosecution.
When he is called as a witness for the
prosecution, he must comply with the
condition of making a full and true
disclosure
of
the
whole
of
the
circumstances
within
his
knowledge
concerning the offence and to every other
person concerned, whether as principal or
abettor, in the commission thereof and if
he suppresses anything material and
essential within his knowledge concerning
the commission of crime or fails or refuses
to comply with the condition on which the
tender
was
made
and
the
Public
Prosecutor gives his certificate under
Section 308 CrPC to that effect, the
protection given to him is lifted."
(Emphasis supplied)

50. In Yakub Abdul Razak Memon v.
State of Maharashtra, (2013) 13 SCC 1,
the Hon'ble Supreme Court highlighted the
legislative intent behind enactment of
Section 306 Cr.P.C. as follows: -

"312. The object of Section 306 is
to tender pardon in cases where a grave
offence is alleged to have been committed
by several persons so that the offence could
be brought home with the aid of evidence of
the person pardoned. The legislative intent
of this provision is, therefore, to secure the
evidence of an accomplice in relation to
the whole of circumstances, within his
knowledge, related to the offence and
every other person concerned."
(Emphasis supplied)

51. The legislative intent behind
laying down the policy of granting pardon
to an approver was explained by the
Hon'ble Supreme Court in CBI v. Ashok
Kumar Aggarwal, (2013) 15 SCC 222,
which was an appeal preferred against an
order passed by the High Court of Delhi, by
which it had set aside the order of the
956 INDIAN LAW REPORTS ALLAHABAD SERIES
Special
Judge
granting
pardon
to
Respondent 2 under Section 306 of Cr.P.C.
and making him an approver in the case
wherein Respondent 1 was also an accused.
The Hon'ble Supreme Court refused to
interfere in the order by stating that: -

"33. In view of the above and
considering the judgment of the Privy
Council in Bawa Faqir Singh AIR 1938 PC
266, we are of the view that the grant of
pardon by a court under Section 306 CrPC
on being asked by the accused and duly
supported by the State is a judicial act and
while
performing
the
said
act,
the
Magistrate is bound to consider the
consequences of grant of pardon taking
into consideration the policy of the State
and
to
certain
extent
compare
the
culpability of the person seeking pardon
qua the other co-accused.

34. For illustration, we take a
case where a person hires a professional
criminal to kill his entire family i.e. father
and brothers and succeeds in the said
mission.