Can High Court quash ECIR registered by ED? Kerala High Court answers

The Kerala High Court recently held that High Courts are empowered under Section 482 of the Code of Criminal Procedure (CrPC) to quash Enforcement Case Information Reports (ECIRs) registered by the Enforcement Directorate (ED) [South Indian Bank v. Director of Enforcement & Ors.].Justice Bechu Kurian Thomas observed that Section 482 of CrPC grants High Courts a wide ambit of powers to pass orders to prevent misuse of court processes."A reading of section 482 CrPC itself is sufficient to comprehend the profound extent and scope of the power vested upon this Court.... Even an administrative order can be quashed in exercise of the power under section 482 CrPC, if it is required to give effect to an order issued under the CrPC or if it is necessary to secure the ends of justice," the Court said.When a predicate offence ceases to exist, the ED is supposed to close its ECIR on its own volition. When it refuses to do so, the High Court can step in to quash the ECIR even though it is an internal and administrative document of the ED, the Court said. "It is essential that the ECIR be closed by the ED on its own volition soon after the predicate offence is quashed or the accused is acquitted or discharged. When the ED refuses to close the ECIR, an aggrieved person is certainly entitled to knock at the doors of this Court either under Article 226 of the Constitution of India or under section 482 CrPC,", the Court stated in its order. .The order was passed on a petition moved by South Indian Bank.The petitioner-bank had filed a complaint against Atlas Jewellery alleging offences including Section (cheating and dishonestly inducing delivery of property) and Section 471 (using as genuine a forged document) of the Indian Penal Code (IPC), which are also scheduled offences under the Prevention of Money Laundering Act, 2002 (PMLA).While the Crime Branch was investigating the matter, the Enforcement Directorate (ED) registered an ECIR. However, the Crime Branch later filed a final report classifying the issue as a civil matter, which the Chief Judicial Magistrate accepted.Despite this, the ED did not release the properties of Atlas Jewellery attached under the PMLA.Since these properties were the subject matter of mortgage with South Indian Bank, they approached the High Court to quash the ED proceedings under Section 482 CrPC..The bank's primary argument was that the ECIR should be quashed since the crime had been declared as a civil matter. However, the ED opposed the plea contending that an ECIR cannot be challenged under Section 482 CrPC..However, the Court disagreed with the ED, citing the Supreme Court’s ruling in RP Kapur v. State of Punjab, which outlined four scenarios where courts had inherent power to quash proceedings: When there is a legal bar to the initiation or continuation of the case;When the allegations, even if true, do not constitute an offence;When there is no evidence adduced or when evidence is insufficient to support the charge.The Court observed that the Judicial Magistrate's acceptance of the Crime Branch's final report was an order under the CrPC. The Court, therefore, held that to fulfill the order, the Court can use its inherent powers to quash proceedings, including ECIRs which are administrative documents."The final report in the predicate offence did not reveal the commission of any criminal offence. The order of the learned Chief Judicial Magistrate, Thrissur accepting the final report as RC.No. 73/2023 on 05.01.2024 is an order issued under the Cr.P.C. To give full effect to such an order, this Court can exercise its inherent powers to quash a proceeding, including an administrative document like the ECIR, when it continues to exist, without legal authority," the Court explained. .The Court, therefore, allowed South Indian Bank's petition and quashed all proceedings initiated against Atlas Jewellery pursuant to the ECIR registered by the ED..The Petitioners were represented by Senior Advocate Joseph Kodianthara and advocate G Chitra.Central Government Counsel Jayanshankar V Nair appeared for the Enforcement Directorate..The nature of ECIR has been a subject matter of debate for quite some time now.In a recent judgement, the Punjab and Haryana High Court had said that since ECIR was only an internal document of the ED, the High Court lacks the power to quash it.However, another Bench of the same High Court questioned the ED's stand that the ECIR is only an internal document and cannot be equated with First Information Report (FIR) and cannot be quashed by the High Court like an FIR. .[Read Kerala High Court Order]