Case Law Details
R. Madhavan Pillai Vs Rajendran Unnithan. S & Ors. Etc. (Supreme Court of India)
Supreme Court of India has overturned a portion of a High Court judgment that directed the Enforcement Directorate (ED) to register an Enforcement Case Information Report (ECIR). The case, R. Madhavan Pillai Vs. Rajendran Unnithan. S & Ors. Etc., involved writ appeals where the High Court had ordered the ED to initiate an ECIR based on its assessment that a predicate offense under the Prevention of Money-laundering Act, 2002 (PMLA) had occurred. The High Court’s directive stemmed from concerns about the lack of criminal cases against all individuals involved in alleged financial irregularities within a cooperative society, beyond just the secretary. The High Court sought explanations from the Home Secretary and Additional Chief Secretary of Cooperative Societies regarding the absence of FIRs against other implicated parties, emphasizing that both criminal and civil proceedings can run concurrently.
The Supreme Court, however, found the High Court’s order to be overly drastic. It determined that the High Court lacked sufficient grounds to compel the ED to register an ECIR solely based on a prima facie conclusion of a predicate offense. Consequently, the Supreme Court quashed the portion of the High Court’s judgment that mandated the registration of an ECIR. The ECIR that had been registered based on the High Court’s order was also set aside. The Supreme Court clarified that the decision to initiate proceedings under the PMLA rests with the Enforcement Directorate. The apex court explicitly stated that it would leave it to the ED to independently assess and determine whether to initiate such proceedings. This decision underscores the principle that judicial directives to investigative agencies must be based on substantial legal grounds, and that the agencies retain their discretionary powers in initiating investigations. The appeals were allowed on these terms.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. As per the office report, all the respondents have been served. The second to fourth respondents are represented by a learned counsel.
2. Leave granted.
3. The explanation of the appellant in the affidavit filed pursuant to the order dated 27th January, 2025 is hereby accepted.
4. While dealing with the writ appeals, by the impugned judgment, the Division Bench of the High Court directed the Enforcement Director to register an Enforcement Case Information Report (for short, “the ECIR”). Paragraphs 6 and 7 of the impugned judgment read thus:
“6. On perusal of the order passed as extracted above, it is evident that the FIR has been only registered firstly against only the Secretary. It is wholly intriguing as to how and in what manner the other surcharge persons has been let off with no criminal case. We would like to have the information from tho Home Secretary and Additional Chief Secretary, Co- operative Societies by way of an affidavit, explaining the circumstances and the reasons of not registering the FIR against the other persons, as it is settled law that both criminal and civil proceedings for recovery can go side by side which will also state the stage of investigation or submissions of final report in the aforementioned FIRs.
7. Prima facie, it is a case of breach of trust and cheating which which is a predicate offence as per the provisions of Section 3 of the Prevention of Money Laundering Act, 2002. Since we had issued a notice to Mr.Jayasankar, Standing Counsel for the Enforcement Directorate, we thus direct the Enforcement Director to register an ECIR as provided under the Act against all the persons involved, for misappropriation, breach of trust, cheating as Well as offences under the PC Act forthwith.”
5. According to us, the High Court had no reason to pass a drastic order of directing the Enforcement Directorate to register an ECIR only because the High Court prima facie came to a conclusion that a predicate offence exists. Therefore, we set aside that part of the impugned judgment by which a direction is issued to the Enforcement Directorate to register an ECIR. Therefore, the ECIR registered on the basis of the impugned judgment is hereby quashed and set aside. We leave it to the Enforcement Directorate to take a call on the question of initiating proceedings under the Prevention of Money-laundering Act, 2002.
6. The Appeals are allowed on the above terms.
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