Delhi HC stays proceedings in ED probe against Hero MotoCorp’s Pawan Munjal

“Accordingly, there shall be a stay of proceedings under the ECIR,” the court said, listing the matter on March 21, 2024.

The HC clarified that the stay of ED proceedings under its Enforcement Case Information Report (ECIR) was in relation to Munjal only “considering the peculiar facts and circumstances of the case” and the fact that there was a stay order in the DRI probe.

The HC noted that the predicate offences in the ED’s ECIR are emanating from a March 2022 order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) wherein the petitioner had already been exonerated on the same set of facts.

The ED has initiated an investigation on the basis of a prosecution complaint filed by the DRI under Section 135 (evasion of duty or prohibitions) of the Customs Act against Munjal and others, accusing them of taking foreign exchange/currency out of India illegally, The Indian Express had reported.

The agency has alleged that Munjal used foreign currency issued in the name of other persons for his personal expenditure abroad to override RBI rules. On November 10, the ED had said it attached three immovable properties — land worth around Rs 24.95 crore in Delhi — of Munjal under provisions of the Prevention of Money Laundering Act (PMLA), The Indian Express had reported.

Appearing for Munjal, senior advocate Mukul Rohatgi argued that the ED’s cause of action is a complaint by DRI, proceedings under which had been stayed by the HC.

“Their cause of action is the complaint, the complaint deserves to be quashed because show cause notice resulted in exoneration,” Rohatgi argued. The show cause notice of 2019 issued by customs authorities proposing to impose a penalty on Munjal under Section 114 (i) Customs Act was a subject of proceedings before the CESTAT, wherein ultimately Munjal was exonerated in March 2022.

Rohatgi said although the present plea sought quashing of the ED’s ECIR, however, in the interim, the proceedings under ECIR and summons issued to Munjal be stayed.

Appearing for the ED, advocate Zoheb Hossain opposed the grant of stay. He questioned the maintainability of the present petition as “premature, primarily because only summons have been issued qua the presence of the petitioner”.

Hossain argued that an offence under PMLA is an independent offence. He referred to the SC’s 2022 judgment in Vijay Madanlal Chaudhary v UOI and said, “The SC said only if the scheduled offence is completely evaporated by way of an acquittal, discharge or quashing, then only PMLA offence won’t survive. Short of this, there is no bar on ED proceedings.”