Quashing Of Subsequent FIR Doesn’t Extinguish Existence Of PMLA Offence When Earlier FIR Subsists: Madhya Pradesh High Court

The High Court was considering the writ petitions questioning the legality, validity and propriety of a case and all consequential proceedings initiated by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002 (PMLA).

The Single Bench of Justice B. P. Sharma held, “This Court is also of the considered view that the ECIR is not an FIR in the strict sense and is merely an internal document of the Enforcement Directorate for initiating investigation. The validity of the ECIR cannot be tested on the same parameters as an FIR. The Enforcement Directorate is entitled to act on the basis of material available to it, including information derived from multiple sources.”

“In view of the foregoing analysis, this Court holds that the quashing of FIR No.27/2024 does not extinguish the existence of the scheduled offence and that FIR No.0492/2023 registered at Police Station Habibganj continues to provide a valid source and jurisdictional foundation for the proceedings under the PMLA. The investigation initiated by the Enforcement Directorate is, therefore, legal and valid”, the order read.

Senior Advocate Anil Khare represented the Petitioner, while Advocate Vikram Singh represented the Respondent.

Factual Background

Allegations of serious economic offences were made against the petitioner–company and its functionaries, involving the manufacture and export of adulterated milk products using forged laboratory reports. Initially, an FIR numbered 0492/2023 was registered under Sections 420, 406 and 120-B IPC, and subsequently, another FIR numbered 27/2024 came to be registered by the Economic Offences Wing, Bhopal, under Sections 420, 467,468, 471 and 120-B of IPC, containing allegations of fabrication of laboratory reports and export of substandard products. Based on the said material and other information, the Directorate of Enforcement registered a case and initiated proceedings under the PMLA against the petitioners and their company.

The subsequent FIR (FIR No.27/2024) was quashed by the Court in a Writ Petition. The petitioners approached the High Court with the contention that the very substratum of the proceedings under the PMLA stood extinguished in view of the quashing of the second FIR registered by the Economic Offences Wing, and thus the continuation of the investigation was without jurisdiction.

Reasoning

On a perusal of the facts of the case, the Bench noted that the Court in the second FIR had categorically observed that the allegations contained therein were not distinct or independent, but were in continuation of the same set of facts and transactions forming the subject matter of the earlier FIR. The High Court had further observed that the preparation of forged laboratory reports and the acts alleged in the second FIR were part of the same transaction and could be investigated within the framework of the earlier FIR.

“The relevant findings recorded by this Court clearly indicate that the quashing of the second FIR was not on the ground that no offence was made out, but on the ground that registration of a second FIR on the same set of facts was impermissible in law”, it added.

The Bench refused to accept the contention of the petitioners that the quashing of subsequent FIR would result in the obliteration of the scheduled offence. “The legal effect of the order dated 13.02.2025 passed in W.P. No.22979/2024 is not to extinguish the allegations, but to consolidate them within FIR No.0492/2023. Therefore, the earlier FIR continues to subsist and remains a valid source of investigation. The allegations of preparation of forged laboratory reports, manufacture and export of adulterated products, and generation of unlawful gains continue to be under investigation in the earlier FIR”, it held.

Thus, dismissing the petition, the Bench ordered, “The Enforcement Directorate shall be at liberty to proceed further in accordance with law.”

Cause Title: M/S Jayshri Gaytri Food Products Pvt Ltd. v. Directorate of Enforcement (Neutral Citation: 2026:MPHC-JBP:23463)

Appearance

Petitioner: Senior Advocate Anil Khare, Advocates Priyankush Jain, Shantanoo Saxena, Ashwin Rastogi

Respondent: Advocate Vikram Singh

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