Acquittal in Predicate Offence Does Not Automatically Quash ECIR When Seized Assets Exceed Scope of Trial Court Inquiry: Jharkhand HC
Jharkhand High Court refuses to quash ED's ECIR against a man acquitted of coal theft charges, holding that Rs 85 lakh cash and 134 property deeds seized during searches fell entirely outside the trial court's inquiry, and that the ECIR itself is an internal administrative record, not a quashable statutory document.
The High Court of Jharkhand at Ranchi has dismissed a writ petition seeking to quash Enforcement Case Information Report No. ECIR/RNZO/08/2023 registered by the Directorate of Enforcement against Amar Mandal, a Dumka resident who had been acquitted of the underlying coal-smuggling charges by a first-instance court in February 2026. Justice Sujit Narayan Prasad, sitting singly, held that the acquittal did not constitute “final absolution” as understood in the Supreme Court's decision in Vijay Madanlal Choudhary v. Union of India, that an ECIR is an internal administrative record that cannot be quashed under Article 226 of the Constitution of India, and that questions about Rs 85 lakh in cash and 134 property deeds recovered from the petitioner's home are fact-intensive matters exclusively within the Adjudicating Authority's domain. The interim stay of the ECIR proceedings, granted on 13 May 2026, was vacated.
The Coal-Smuggling FIR and the ED's Parallel Inquiry
On 20 January 2019, the Jharkhand Police intercepted a truck carrying coal without valid transport documents at Poraiyahat, District Godda. The driver, Kartik Bhandari, allegedly named Amar Mandal and three others as the persons behind illegal coal trading from West Bengal for sale across Bihar, Jharkhand and neighbouring states. Poraiyahat P.S. Case No. 07 of 2019 was registered for offences under Sections 414 and 120B of the Indian Penal Code, 1860, read with Sections 4 and 21 of the Mines and Minerals (Development and Regulation) Act, 1957.
After investigation, Jharkhand Police filed Charge-sheet No. 137/2022 dated 12 July 2022 against Mandal and others, alleging illegal coal trading and transportation without authorisation causing revenue loss to the government exchequer. Sections 414 and 120B of the IPC are listed as scheduled offences under Part A of the Schedule to the Prevention of Money Laundering Act, 2002. The Directorate of Enforcement registered ECIR No. ECIR/RNZO/08/2023 on 13 February 2023 and initiated proceedings under the PMLA against the persons named, including Mandal.
On 21 November 2025, ED officials searched Mandal's residence at Village Sejakora, P.S. Jama, District Dumka, and seized Rs 85,00,000 in cash, 134 original property deeds, and loose sheets. The ED filed Original Application No. 381 of 2025 before the Adjudicating Authority under Section 17(4) of the PMLA seeking retention of the seized assets. The Adjudicating Authority issued a show cause notice under Section 8(1) of the Act; Mandal filed a detailed reply on 6 February 2026 contending that the cash belonged to the legitimate operations of his firm M/s Rudra Minerals and his personal savings, and that the documents bore no nexus with proceeds of crime.
The Acquittal and What the Trial Court Did Not Examine
While the PMLA proceedings were underway, Mandal contested the criminal trial arising from the predicate FIR. On 10 February 2026, Shri Amit Bansal, Judicial Magistrate First Class, Godda, acquitted Mandal in G.R. Case No. 1125, holding that the prosecution had failed to establish the offences beyond reasonable doubt and that the essential ingredients had not been proved.
Mandal filed an affidavit dated 19 February 2026 before the Adjudicating Authority placing the acquittal on record. He also submitted a representation to the ED with a copy of the acquittal order. When no response came from the ED, he filed W.P. (Cr.) No. 231 of 2026 before the High Court seeking to quash the ECIR and a declaration that no further investigation under Section 2(na) of the PMLA could continue against him.
The court's analysis turned in significant part on what the Magistrate's court had and had not examined. Justice Prasad noted that the trial at Godda was strictly confined to the interception of a single coal-laden truck on 20 January 2019 and the limited police evidence about that incident. The Magistrate had no occasion to examine, much less adjudicate upon, the recovery of Rs 85 lakh in cash, 134 original property deeds, or what the ED described as Rs 8.94 crores in cash deposits across bank accounts of Mandal's proprietary concerns — M/s Maa Laxmi Coal Traders and M/s Rudra Minerals.
The Legal Contest: Final Absolution Versus First-Instance Acquittal
Mr Ajit Kumar, Senior Advocate for the petitioner, relied primarily on paragraph 109 of the Supreme Court's judgment in Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929, which holds that if the person named in a criminal activity relating to a scheduled offence is “finally absolved” by a court of competent jurisdiction — through discharge, acquittal, or quashing — there can be no action for money laundering against that person in relation to property linked to the scheduled offence. He also placed reliance on Pavana Dibbur v. Directorate of Enforcement, (2023) 15 SCC 91, and Yash Tuteja v. Directorate of Enforcement, 2024 SCC Online SC 1586, to the effect that money-laundering proceedings cannot survive in the absence of a subsisting scheduled offence.
Mr Amit Kumar Das, Senior Advocate for the ED, raised maintainability at the outset. He argued that the PMLA is a self-contained code providing adjudication by the Adjudicating Authority under Section 8, a statutory appeal to the Appellate Tribunal under Section 26, and a further appeal to the High Court under Section 42. Invoking Article 226 to interdict the machinery at inception was, he submitted, impermissible. He also argued that the acquittal order of 10 February 2026 passed by a first-instance Magistrate does not constitute “final absolution” because it remains subject to challenge before the appellate forum under the Bharatiya Nagarik Suraksha Sanhita, 2023.
The ED further contended that the acquittal related only to a single truck interception and did not touch the massive cash deposits or the 134 property deeds — material that the Magistrate never examined. Relying on paragraph 370 of Vijay Madanlal Choudhary, the ED also argued that an ECIR is an internal, non-statutory document of the department that cannot be equated with an FIR and is therefore not amenable to quashing.
How the Court Reasoned
Justice Prasad framed five interconnected issues and answered them together. The analytical core of the judgment rests on three distinct but related grounds.
The ECIR is not quashable. Citing paragraphs 366 to 372 of Vijay Madanlal Choudhary, the court held that an ECIR is strictly an internal administrative document created by the ED for departmental reference before initiating penal action. It is not a statutory document; there is no provision in the PMLA requiring the authority under Section 48 to record an ECIR. The absence of an ECIR does not prevent the ED from commencing inquiry or initiating civil attachment action. Since the ECIR does not, by itself, entail penal consequences or affect fundamental rights in a manner warranting intervention at the threshold of a complex financial probe, it cannot be the subject matter of a quashing petition under Article 226 of the Constitution of India.
The acquittal is not yet "final absolution". The court accepted the legal proposition in paragraph 109 of Vijay Madanlal Choudhary but held it was not triggered on the facts. Final absolution, the court said, crystallises upon exhaustion of all available appellate remedies or expiry of the limitation period for appeal without any challenge. The order of the Judicial Magistrate First Class, Godda, dated 10 February 2026, remains amenable to challenge before the appellate forum under the Bharatiya Nagarik Suraksha Sanhita, 2023 and is therefore not a final acquittal for this purpose. Further, even setting aside finality, the Magistrate's court never examined the Rs 85 lakh cash recovery, the 134 property deeds, or the alleged Rs 8.94 crore in bank deposits — which is the independent evidential foundation for the ED's proceedings. Mandal could not, the court held, use “a localized, non-final acquittal as a blanket shield” to demand release of assets subject to independent statutory adjudication.
The PMLA's alternative statutory remedy must be exhausted. The court held that Mandal had already submitted to the jurisdiction of the Adjudicating Authority by filing a detailed reply to the show cause notice on 6 February 2026. Having done so, simultaneously pursuing a writ petition seeking to quash the very proceedings before that authority amounted to parallel litigation across two forums at the same time, which is impermissible. The determination of whether the Rs 85 lakh was working capital of a partnership firm or represented integrated illicit wealth, and whether 134 property deeds constitute a methodology of integration, involves rigorous sifting of financial ledgers, bank statements, and documents — exclusively within the Adjudicating Authority's specialised domain. The writ court could not convert its extraordinary jurisdiction into a parallel fact-finding exercise or deliver a preemptive verdict on disputed financial facts.
Section 66(2) and the Bridge to Other Agencies
The court also dealt with the ED's supplementary counter affidavit dated 4 August 2026, which disclosed that the Directorate had, under Section 66(2) of the PMLA, formally shared evidence of unexplained assets and potential tax evasion with relevant statutory authorities, including the Income Tax Department and State Police.
Justice Prasad examined Section 66(2) at length and held that it operates in a distinct sphere from Chapter II of the PMLA, which deals with penal consequences flowing from a scheduled offence. Section 66(2) empowers the Director, where he forms an opinion based on material in possession that any other law is being contravened, to share information with the concerned agency for necessary action. This power is independent of whether a predicate offence has been registered or whether an accused has been acquitted of one. The court drew upon paragraph 151 of Vijay Madanlal Choudhary, where the Supreme Court observed that after discovery of undisclosed property, the authorised officer may send information to jurisdictional police under Section 66(2) for registration of a scheduled offence. Citing Anil Tuteja v. Union of India, 2025 SCC OnLine SC 2110, the court noted that Section 66(2) casts a mandatory duty on the ED to share collected materials with other concerned agencies.
The court applied the doctrine of harmonious construction to hold that Chapters II and X of the PMLA do not overlap; they operate in their respective spheres on different facts. Here, the predicate offence related only to the interception of one truck, while the ED's search unearthed Rs 85 lakh in cash and 134 property deeds entirely distinct from what the State prosecution ever examined. The ED's invocation of Section 66(2) was therefore not a misuse of power.
Order
Justice Sujit Narayan Prasad dismissed W.P. (Cr.) No. 231 of 2026 as devoid of merit. The interim order dated 13 May 2026, which had stayed further proceedings in connection with ECIR/RNZO/08/2023 during the pendency of the writ petition, was vacated. The petitioner was left at liberty to pursue his remedies before the Adjudicating Authority and other concerned authorities, placing his entire case on record — including the factum of his acquittal in the predicate offence. The Adjudicating Authority was directed to take an appropriate decision in accordance with law. All pending interlocutory applications were disposed of.