Quashing FIR on technical grounds cannot be basis to quash ECIR: Madras HC

CHENNAI: The Madras High Court held that the enforcement case information register (ECIR) in the PMLA case need not be quashed merely because the predicate case’s FIR had been quashed under technical grounds.

The quashing of the FIR in the predicate offences merely on technical grounds and not on substantive grounds should not warrant an automatic quashing of ECIR, wrote a division bench of Justice SM Subramaniam and Justice V Sivagnanam while dismissing the petition of Vijayaraj Surana seeking to quash the ECIR registered by the Directorate of Enforcement (ED).

Referring to the landmark judgment of the Supreme Court in Vijay Madanlal v Union of India case, the bench wrote, “We feel that all cases where FIR is quashed shall not automatically become a ground for quashing an ECIR. Instead, a case-to-case analysis is a prerequisite for deciding on the sustenance of an ECIR.”

The bench also wrote that since the petitioner failed to prove his case, the trial proceedings against him should continue on facts and decide the issues based on the documents and evidence.

The factual matrix of the case is that the petitioner transferred the loans obtained to the tune of Rs 1,301.76 crore and Rs 1,495.76 crore from IDBI Bank and Rs 1,188.56 crore from State Bank of India (SBI) to fictitious accounts.

The CBI registered a case against the petitioner as he routed the loan borrowed to his various companies and facilitated misappropriation, manipulation of books of accounts through fictitious accounts and conversion of property.

Based on this predicate case, in September 2020, the ED booked the petitioner under PMLA.

However, the petitioner contended that since the High Court of Karnataka quashed the predicate offences, the ED’s ECIR also should be quashed.

The Additional Solicitor General (ASG) ARL Sundaresan, on behalf of ED, relied upon Vijay Madanlal’s case and contended that the process under PMLA was construed as standalone process, once the scheduled offence is traced out and ECIR is filed, investigation commences and a complaint has been filed under Section 44 and 45 of PMLA, then seeking quash of ECIR would be premature.