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Judgment
Hon'Ble Subhash Vidyarthi, J.
Heard Sri. Shivam and Sri Romil Seth, learned counsel for the petitioner and Sri Kuldeep Srivastava assisted by Sri Lakshya Tiwari, learned counsel for the respondent- Directorate of Enforcement.
The learned counsel for the petitioner has filed a rejoinder affidavit, today, in Court, and the same is taken on record.
By means of the instant petition filed under Section 528 of Bhartiya Nagrik Suraksha Sanhita (BNSS), the petitioner has prayed to quash the proceedings of Case No. 908 of 2026 titled Directorate of Enforcement versus M/s Vinayak Nirman Private Limited and Others, pending in the Court of the learned Special Judge, Anti-Corruption CBI, Court No. 3 (Special Court for cases under PMLA), Lucknow, which has been registered in pursuance of a cognizance order dated 17.06.2026 passed by the learned Special Judge, Anti-Corruption CBI, Court No. 3, Lucknow in Criminal Misc. Case No. 225 of 2026 (Directorate of Enforcement v. M/s Vinayak Nirman Private Limited and Others), arising out of ECIR/ALSZO/02/2024 dated 10.04.2024.
The dispute relating to the aforesaid case has originated on the basis of an FIR No. 475 of 2023, under Sections 420, 467, 468, 471 of IPC, lodged by a Deputy Director of Income Tax in Police Station Cantonment, District Varuna (Commissionerate Varanasi) against unnamed employees of M/s Vinayak Nirman Private Limited, Varanasi, stating that M/s Vinayak Nirman Private Limited, Varanasi had submitted a completion certificate dated 06.02.2012, purportedly issued by a Joint Director of Varanasi Development Authority but this certificate was not available in the records of Varanasi Development Authority. The company is said to have claimed certain benefits on the basis of the aforesaid completion certificate, which were available only to those builders who could complete their project within five years of its commencement. The completion certificate was issued on 06.02.2012 whereas the petitioner became a Director of the company on 30.09.2019. On the basis of the aforesaid allegations against the employees of the company M/s Vinayak Nirman, the Directorate of Enforcement registered ECIR No. ALSZO/02/2024 on 10.04.2024, against the company M/s Vinayak Nirman only. However, on 30.06.2026, ED filed a complaint against M/s Vinayak Nirman Private Limited and its Directors, Sri Sarvesh Kumar Agarwal, Smt. Abha Ganesh Kumar Gupta (the petitioner) and Sri Vinod Kumar Singhal.
The learned counsel for the petitioner has submitted that the alleged proceeds of crime are said to have been generated through an offence regarding which FIR No. 475 of 2023 has been lodged in Police Station Cantonment, District Varuna (Commissionerate Varanasi) on 18.10.2023. After investigation, the investigating officer has submitted closure reports in connection with the aforesaid FIR on 27.06.2025 and on 29.06.2025. He has submitted that as the commission of the alleged offence, through which the proceeds of crime are said to have been generated, has not been established during investigation, there is no occasion of the offence of money laundering having been committed by the petitioner.
In reply to the aforesaid submission, Sri Kuldeep Srivastava, learned counsel for respondent ED, has submitted that the closure report has not yet been accepted by the trial court. Till the acceptance of the closure report by the trial Court, the proceedings under the Prevention of Money Laundering Act, 2002 cannot be closed.
In Vijay Madanlal Choudhary v. Union of India: (2023) 12 SCC 1, the Hon'ble Supreme Court held that: -
"382.8.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 money laundering. 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."
In Ms. C. Uma Reddy & Others vs. Directorate of Enforcement, Writ Petition No. 19337/2022 decided on 14.12.2022, the Karnataka High Court had to deal with the question whether the proceedings under PMLA should be permitted to be continued when the proceedings relating to the scheduled offence had been stayed by an interim order. The High Court referred to the aforesaid ratio laid down in Vijay Madanlal Choudhary (supra) and held that: -
"Therefore, if the allegations in the predicate offences are considered to be the flesh, the offences under the PMLA is the blood, they are impregnable. Therefore, if the predicate offences are not permitted to move forward, the impugned proceedings cannot. It would have been altogether different circumstance, if the petitioners were all acquitted of the offences under the IPC or any other predicate offence to which the offence under the PMLA is linked. The situation in the case at hand is not with regard to acquittal, but the stay of the proceedings. Therefore, they are eclipsed and not extinguished. The Apex Court does not deal with a circumstance as to what should happen in a case, where it is eclipsed. The Apex Court only dealt with a situation where there is extinguishment of predicate offences. Therefore, it is necessary to consider taking cue from the findings of the Apex Court as to whether attachment order should be permitted to be confirmed or otherwise.
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17.The effect of an order of stay means that the operation of the impugned order is stayed or stands stalled as if the impugned order does not exist. Therefore, to bring the parties to the proceedings from taking further action in relation to the subject matter pending the final adjudication, stay order is granted in the interest of both parties. During the currency of stay order, if any proceedings are permitted to go on and in the meanwhile, if any damage has been caused to the reputation or the goodwill of the parties, the same cannot be compensated. Whereas if the Department waits for the final outcome of the proceedings, no prejudice would be caused to them."
The aforesaid judgment has been followed by the Karnataka High Court in Pavitra Ramanujam v. Directorate of Enforcement, Writ Petition No. 14309 of 2026, decided on 07.07.2026.
I find myself in complete agreement with the aforesaid view expressed by the Karnataka High Court. Since the closure report is pending consideration of the trial court and there is a possibility of the outcome going either way, it appears to be just and proper to let the Enforcement Directorate wait for the outcome of the closure report before the trial court. In case the closure report is accepted by the trial court, there would remain no scheduled offence against the petitioner or any other accused person and, therefore, a trial for the offence of money laundering would not continue against them. However, in case the trial court rejects the closure report, then ED would be justified in proceeding to prosecute the accused persons for the offence of money laundering.
In case, ED proceeds with the prosecution during pendency of consideration of the closure report by the trial court and the closure report is ultimately accepted, the efforts and energy of officials of ED put in prosecution of the petitioner will go in vain and the petitioner accused also would be put to unwarranted hardship. This will not serve the interests of justice.
Therefore, this petition is disposed of by providing that the respondent ED shall not proceed with Complaint Case No. 908 of 2026, titled Directorate of Enforcement vs. M/s Vinayak Nirman Private Limited and Others till a decision is taken by the trial court regarding the closure report submitted in furtherance of FIR No. 475 of 2023, under Sections 420, 467, 468, 471, Police Station Cantt, District Varuna (Commissionerate Varanasi)
In case the closure report is accepted by the trial court, the scheduled offence would vanish and the proceedings under the PMLA would stand closed. In case the closure report is rejected, the ED will be at liberty to proceed with the prosecution.
The Chief Judicial Magistrate, Varanasi is directed to take a reasoned decision on the closure report filed in furtherance of FIR No. 475 of 2023 expeditiously in accordance with law.
The petitioner is directed to produce a copy of this order in the court of Chief Judicial Magistrate, Varanasi for its compliance.