Himachal Pradesh High Court
Gian Chand vs . State Of Himachal Pradesh on 23 January, 2025
Gian Chand Vs. State of Himachal Pradesh
& Ors.
Cr. WP No.2 of 2025
23.01.2025 Present: Mr. Vikram Chaudhari, Sr. Advocate, through
Video Conference, Mr. Tara Singh Chauhan, Sr.
Advocate with Mr. Surya Chauhan, Ms. Diya
Bhagwan and Ms. Mannat Kaur, Advocates, for
the petitioner.
Mr. Diwakar Dev Sharma & Mr. Harinder Rawat,
Addl. Advocates General with Mr. Manish
Thakur and Ms. Niyati Mohan, Deputy
Advocates General, for respondents No.1 and
2/State.
Mr. Suryaprakash V. Raju, Addl. Solicitor
General of India with Mr. Zohe B. Hussain, Mr.
Hitarth Raja and Mr. Suradhish Vats,
Advocates, through Video Conferencing, Mr.
Balram Sharma, Deputy Solicitor General of
India with Mr. Rajeev Sharma, Advocate, for
respondent No.3/Union of India.
Status reports dated 20.01.2025 and
22.01.2025 filed by the respondent/State. The same are
placed on record. Copy whereof have been supplied to the
learned counsel for the petitioner.
List on 25.02.2025.
Cr. MP No.62 of 2025
Heard counsel for the petitioner. Perused the
pleadings.
At the very outset learned Senior Counsel for
the petitioner submits that he would not be pressing relief
‘C’ as is claimed in the petition.
In the case at hand in a nutshell as per the
Enforcement Directorate on account of illegal sand/mineral
mining operations conducted by the present applicant in
several parts of District Hamirpur and Kangra including the
Riverbed of Beas criminal activity relating to scheduled
offences under the Prevention of Money Laundering Act
(hereinafter for the purpose of brevity referred to as PML
Act) has been committed by the applicant. As a
consequence of which, it is alleged that proceeds of crime
have been generated. From the same, it is contended on
behalf of the Enforcement Directorate, the applicant has
purchased a stone crusher in Uttarakhand.
Learned counsel appearing on behalf of the
applicant submits that since part of the cause of action has
arisen within the jurisdiction of this Court, therefore, the
present petition is maintainable. In this context, attention
of this Court is invited to Article 226(2) which reads as
follows:
“226. Power of High Courts to issue certain
writs:
(2)The power conferred by clause (1) to issue
directions, orders or writs to any Government,
authority or person may also be exercised by any
High Court exercising jurisdiction in relation to the
territories within which the cause of action, wholly
or in part, arises for the exercise of such power,
notwithstanding that the scat of such Government
or authority or the residence of such person is not
within those territories.”
In order to buttress the aforesaid submission,
reliance has been placed upon 2000 (7) SCC 640 titled
Navinchandra N. Majithia vs State of Maharashtra &
Others and 2014 (9) SCC 129 titled Dashrath Rupsingh
Rathod vs State of Maharashtra & Another.
Per contra, learned Addl. Solicitor General of
India appearing on behalf of the Enforcement Directorate
has placed reliance on 2019 (5) SCC 266 titled Serious
Fraud Investigation Office Vs. Rahul Modi and
Another. In the judgment cited on behalf of the
Enforcement Directorate, the accused had been produced
before the Judicial Magistrate, Gurugram. The said Judicial
Magistrate had remanded the accused to custody and had
further directed that the accused be produced before the
Special Court, Gurugram. The arrest in the case at hand
was made at Delhi. The accused was kept in custody in
Delhi. Based on the aforesaid, it was contended that the
High Court at Delhi would be competent to entertain and
consider the writ petition preferred. In the same, following
reliefs were prayed for:
“8. On 17.12.2018 Writ Petition (Criminal)
Nos.3842 & 3843 of 2018 were filed under Articles
226 & 227 of the Constitution of India read with
Section 482 of Cr.P.C. by Rahul Modi and Mukesh
Modi respectively in the High Court of Delhi. It was
submitted that with the expiry of period within
which the investigation had to be completed in
terms of order dated 20.06.2018, all further
proceedings including the arrest of the respondents
were illegal and without any authority of law. The
Writ Petitions therefore prayed for declaration that
the investigation carried out after 19.09.2018 was
illegal and without jurisdiction and also prayed for
Writ of Habeas Corpus directing release from illegal
arrest made on 10.12.2018. The prayers in both the
petitions were almost identical and were as under:
A. “Issue a writ of mandamus or any other
appropriate writ/direction/order in the nature
of a writ declaring that the power of
Respondents No.2 to 4 to carry out
investigation under Section 2012(2)
Companies Act, 2013 after the expiry of the
time period is illegal and unconstitutional.
B. Issue a writ of mandamus or any other
appropriate writ/direction/order in the nature
of a writ declaring that the investigation
carried out after 19.09.2018 in File
No.SFIO/INV/AOI/2018-19-AGC & L/842-
966 vide order No.07/115/2018-CL-II dated
20.06.2018 as illegal and without
jurisdiction.
C. Issue a writ/direction/order declaring the
arrest of the Petition dated 10.12.2018 at
New Delhi in the office of Respondent No.2
by Respondent No.3, and proceeding
emanating therefrom being without
jurisdiction and illegal and the Petitioner
Rahul Modi be released forthwith.
D. Issue a writ of Habeas Corpus directing
immediate release of the Petitioner herein
Sh. Rahul Modi from the illegal arrest dated
10.12.2018 at New Delhi and consequent
illegal custody from Respondent No.2 to 4
at;”
In the aforesaid backdrop, the Apex Court after
relying on the judgment cited by the applicant noted herein
before was of the considered view that the High Court at
Delhi should not have entertained the challenge. Relevantextract of the judgment is being reproduced herein below:
“26. It is true that the decision in Dashrath
Rupsingh Rathod was in the context of a criminal
complaint under Section 138 of the Negotiable
Instruments Act and not while dealing with an issue
of maintainability of a writ petition under Article 226
of the Constitution. It cannot, therefore, be said
that in the present case, the High Court completely
lacked jurisdiction to entertain the petition.
However, since the challenge was with respect to
the detention pursuant to valid remand orders
passed by the Judicial Magistrate and the Special
Court, Gurugram, in our considered view, the High
Court should not have entertained the challenge. If
the act of directing remand is fundamentally a
judicial function, correctness or validity of such
orders could, if at all, be tested in properly
instituted proceedings before the appellate or
revisional forum. In the circumstances, even if the
arrests were effected within the jurisdiction of the
High Court, since the accused were produced before
a competent court in pursuance of Sections 435,
436 of the 2013 Act, the High Court ought not to
have entertained the writ petition. However, since
the High Court considered the matter from the
standpoint whether the initial order of arrest itself
was valid or not and then found that such illegality
could not be sanctified by subsequent order of
remand, we may deal with that question now.”
Learned counsel for the applicant submits that
in the case at hand, from a perusal of relief clause, it is
evident that not only has the arrest been challenged, but
even the remand orders have been challenged. Besides
the aforesaid, it is submitted by the learned counsel that in
view of the law laid down in Criminal Appeal No.2493 of
2024, titled Arvind Kejriwal Vs. Directorate of Enforcement,
decided on 12.07.2024, the remand orders in the case at
hand cannot validate an illegal arrest. In the aforesaid
facts and attending circumstances all that is being
examined at this stage is a plea for grant of bail in terms
of Section 45 of PML Act with respect to the issue of arrest
in the case at hand.
For raising a presumption under Section 24 of
the PML Act, the foundational facts as per the law laid down
in Arvind Kejriwal‘s case (supra) which must exist are as
follows:
“criminal activity relating to the scheduled offence
has been committed; property in question has been
derived or obtained directly or indirectly by any
person as a result of that criminal activity; and the
person concerned is directly or indirectly involved
in any process or activity connected with the said
property being proceeds of crime, have to be
established. It is only on establishing the three facts
that the offence of money laundering is
committed.”
From the perusal of the grounds of arrest and
the reasons to believe appended along with petition as
Annexure P-34 and P-35 respectively, it is evident that the
Enforcement Directorate had received formal complaints
and intelligence inputs indicating illegal sand/mineral
mining being done by the applicant in the case at hand.
Based on the aforesaid, discreet inquiries were got
conducted, details whereof are contained in the
panchnama report dated 17.06.2024.
By virtue of an amendment made in the year
2019, proviso in Sub-Section1 of Section 17 of the 2002
Act which required 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 1973
Code or a complaint has been filed before a Magistrate in
regard of such offence stands omitted. In this respect, it
would be appropriate to refer to the judgment reported as
2022 SCC Online SC 929, titled Vijay Madanlal
Choudhary & Ors. vs. Union of India & Ors.
“311. ……However, for strengthening the
mechanism, including regarding prevention of
money-laundering, the Parliament in its wisdom
deemed it appropriate to drop the proviso in sub-
section (1) of Section 17 of the 2002 Act, thereby
dispensing with the condition 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 1973 Code or
a complaint has been filed before a Magistrate in
regard to such offence. As it is indisputable that
the 2002 Act is a special Act and is a self-
contained Code regarding the subject of searches
and seizures in connection with the offence of
money-laundering under the 2002 Act, coupled
with the fact that the purpose and object of the
2002 Act is prevention of money-laundering; and
the offence of money-laundering being an
independent offence concerning the process and
activity connected with the proceeds of crime, the
deletion of the first proviso has reasonable nexus
with the objects sought to be achieved by the
2002 Act for strengthening the mechanism of
prevention of money-laundering and to secure the
proceeds of crime for being dealt with
appropriately under the 2002 Act.”
The aforesaid discreet inquiries got conducted
in the case at hand revealed that the applicant is engaged
in illegal sand/mineral mining at various place in Kangra
and Hamirpur District including the Beas riverbed. Since
the aforesaid acts entailed scheduled offences namely
Sections 120-B, 411 and 420 of IPC and Section 15 of the
Environment Protection Act, 1986. ECIR
No.ECIR/HQ/01/2014 was recorded on 02.07.2024 qua
offences of money laundering.
During the course of investigation under the
PMLA, search proceedings were conducted on 4/5.07.2024,
whereupon it transpired that the applicant had purchased
a stone crusher in Saharanpur, Uttar Pradesh for a
consideration of Rs.4.70 crores in the year 2023-24. Out of
Rs.4.70 crores, Rs.1.6 crores were paid in cash generated
from the sale of illegal mined minerals in the State of H.P.
On the basis of seizures made at the residential
house of one Sanjay Sharma, documents/papers/ledgers
relating to sale of illegally mined minerals at the stone
crushers owned by the applicant in the State of H.P. were
seized. The aforesaid papers/documents/ledgers did not
match with the data available in Tally with respect to the
stone crushers owned by the applicant. In the Tally, names
of persons were also found to whom illegally mined
minerals excavated at the stone crushers in the State of
H.P. had been sold. Statements of concerned individuals
were also recorded. Besides the aforesaid, relevant
material in the shape of challans issued to the applicant by
the mining department were also collected.
On 07.11.2024, a FIR bearing No.360 was got
registered by the Mining Inspector, Mining Department,
District Magistrate Office Saharanpur, Uttar Pradesh under
Sections 379, 413, 415, 417, 418, 424, 471 and 120B of
the IPC, Section 3(2) of the Prevention of Damage to Public
Property Act, 1984 and Sections 4 and 21 of the Mines and
Minerals (Regulation and Development) Act, 1957. As a
consequence of the aforesaid, in the ECIR bearing
No.ECIR/HQ/1/2014 by way of an addendum scheduled
offences under Sections 413, 417, 418, 422, 471 and 120B
of IPC were added and the FIR bearing No.360 was merged
in the aforesaid ECIR. In the aforesaid background, the
applicant was arrested under Section 19 of the Act on
18.11.2024 at 8:21 PM. At the time of arrest, both the
grounds of arrest and reasons to believe had been supplied
to the applicant. The reasons to believe at page 427 of the
paper book contained reasons with respect to custodial
interrogation of the applicant.
On account of criminal activity relating to
scheduled offences, proceeds of crimes were generated
which were used to purchase a stone crusher in
Saharanpur, Uttar Pradesh. Prosecution of a person for
offences of money laundering under the Act gets triggered
if there exists proceeds of crime within the meaning of
Section 2(i)(u) of the Act. Prior registration of a FIR with
respect to a scheduled offence is not a sine qua non for
action under the PMLA. In this regard, reference can be
made to Vijay Madanlal Choudhary Vs. Union of India.
Relevant extract is reproduced herein below:
“Be it noted that the authority of the Authorised
Officer under the 2002 Act to prosecute any person
for offence of money-laundering gets triggered only
if there exists proceeds of crime within the meaning
of Section 2(1)(u) of the 2002 Act and further it is
involved in any process or activity. Not even in a
case of existence of undisclosed income and
irrespective of its volume, the definition of
“proceeds of crime” under Section 2(1)(u) will get
attracted, unless the property has been derived or
obtained as a result of criminal activity relating to a
scheduled offence. It is possible that in a given case
after the discovery of huge volume of undisclosed
property, the authorised officer may be advised to
send information to the jurisdictional police (under
Section 66(2) of the 2002 Act) for registration of a
scheduled offence contemporaneously, including
for further investigation in a pending case, if any.
On receipt of such information, the jurisdictional
police would be obliged to register the case by way
of FIR if it is a cognizable offence or as a non-
cognizable offence (NC case), as the case may be.
If the offence so reported is a scheduled offence,
only in that eventuality, the property recovered by
the authorised officer would partake the colour of
proceeds of crime under Section 2(1)(u) of the
2000 Act, enabling him to take further action under
the Act in that regard.”
In view of the aforesaid, the argument raised
on behalf of the applicant that relevant material has been
ignored i.e. out of six FIRs mentioned in the grounds of
arrest, four stand cancelled, the 5th does not pertain to the
applicant and the 6th FIR does not deal with any scheduled
offence, prima facie is of no consequence at this stage. The
aforesaid FIRs were only indicative of the fact that there is
rampant illegal mining in the area in question. Besides the
aforesaid, quashing of the order of stoppage of one of the
stone crushers of the National Green Tribunal (NGT) by the
Hon’ble High Court is also of no avail to the applicant at
this stage.
At this juncture, the Court cannot go into the
correctness of the opinion formed or sufficiency of material
on which it is based. The correctness of facts cannot also
be enquired into at this stage except where the facts found
existing are not supported by any evidence or the finding
is so perverse that no reasonable man would say that the
facts and circumstances exists. Facts in the case at hand
are duly supported by material on record.
A bare reading of Section 19 reflects the pre-
conditions and requirements which must be satisfied prior
to the arrest of a person. The conditions are as follows:
(i) The officer must have material in his possession.
(ii) On the basis of such material, the authorized officer
should form and record in writing, “reasons to
believe” that the person to be arrested is guilty of
offence punishable under the PML Act.
(iii) The person arrested, as soon as may be, must be
informed of the grounds of arrest.
The facts, in the case at hand, made out from
the grounds of arrest and reasons to believe prima facie
reflect that the officer, in the case at hand, had material in
his possession, on the basis of which in writing reasons to
believe were recorded, that the applicant, who is to be
arrested is guilty of the offence under the Act. As is the
requirement of law, grounds of arrest and reasons to
believe were supplied to the applicant upon his arrest. The
conclusion drawn prima facie appears to logically flow from
the facts. Prima facie neither there exists any error of nor
there appears to be any improper exercise of power.
In view of the aforesaid, I am of the considered
view that no case for grant of bail has been made out in
terms of Section 45 of the PML Act, as there exist
reasonable grounds for believing that the applicant is guilty
of such offence. Moreover, taking into account the
antecedent of the applicant, his propensities, the way and
manner in which the applicant is alleged to have committed
the offence, in my considered view, the applicant is likely
to commit similar offences, if enlarged on bail in the future.
Necessity of arrest, in the case at hand, has been made out
in the reasons to believe (Page 427 of the paper book). No
case is made out for grant of bail at this stage.
(Bipin C. Negi)
Vacation Judge
23rd January, 2025
(Gaurav Rawat)
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