Delhi High Court Holds ECIR Ends With Predicate Offence Closure, Quashes ED Case Against Prasad Family

The Delhi High Court on 19 August quashed proceedings initiated by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA) against members of the family of late Aristo Group founder Dr. Mahendra Prasad and others, after finding that the predicate offence forming the basis of the Enforcement Case Information Report (ECIR) had been closed.

Justice Anish Dayal also set aside the ED's August 2025 addendum adding an earlier FIR to the existing ECIR. He observed:

“The ED cannot, therefore, be permitted to take the position that it may turn the clock backwards and selectively draw upon an earlier predicate offence in order to sustain an existing ECIR after the original predicate offence has ceased to subsist.”

The case arose from a dispute concerning the affairs and estate of late Dr. Mahendra Prasad, founder of the Aristo Group of Companies. The petitioners included members of his family and personnel associated with the Group.

In September 2019, the Crime Branch registered an FIR alleging wrongful confinement of late Satula Devi, removal of certain jewellery and offences under the Passports Act 1967. A chargesheet was subsequently filed, but charges had not been framed. The ED did not rely on this FIR as the scheduled offence when it later registered the ECIR.

In February 2021, the Economic Offences Wing (EOW) registered another FIR alleging, among other things, forgery of Satula Devi's signatures in connection with share transfers and bank transactions. The ED subsequently registered an ECIR exclusively on the basis of this FIR, which constituted the scheduled offence for the PMLA investigation.

The EOW later filed a Cancellation Report, finding that no offence was made out after relying on a Forensic Science Laboratory report which found the disputed signatures to be genuine. The Magistrate Court accepted the Cancellation Report and closed the investigation.

In August 2025, however, the ED issued an addendum incorporating the 2019 FIR as an additional scheduled offence. It subsequently conducted searches at the premises of certain petitioners and issued summons to them under the PMLA.

The petitioners approached the High Court seeking quashing of the ECIR and the consequential PMLA proceedings. They argued that the ED could not club the 2019 FIR with the existing ECIR through an addendum, as the FIR arose from a different cause of action and involved separate alleged proceeds of crime. They also contended that the FIR was already within the ED's knowledge and could not subsequently be added merely to continue the PMLA investigation.

The ED, on the other hand, argued that the two FIRs were interconnected and should be read together as part of the same sequence of events.

On maintainability, the Court observed that the challenge concerned the jurisdictional basis for continuing the ECIR after closure of the second FIR. It held that such a challenge could be examined in writ jurisdiction and that the petitioners were not required to pursue the alternative statutory remedy before the Adjudicating Authority.

The Bench then examined the closure of the second FIR, noting that it was the sole scheduled offence on the basis of which the ECIR had originally been registered. It held that once the Cancellation Report was accepted by the Magistrate, the predicate offence forming the foundation of the ECIR ceased to subsist. It held:

“To permit the investigation to nevertheless continue would open a Pandora's box whereby persons who stand discharged or acquitted, or in whose favour the predicate proceedings have been quashed or otherwise brought to an end, may continue indefinitely to be subjected to summons under Section 50 of the PMLA as also search and seizure proceedings.”

Therefore, the Court held that the ED could not continue PMLA proceedings on the strength of an ECIR whose foundational scheduled offence had been closed.

The Bench then examined the ED's addendum adding the 2019 FIR to the existing ECIR. It rejected the attempt to use the addendum to sustain the ECIR after the original predicate offence had ceased to exist. It held:

“If such a course were to be accepted without limitation, it would confer an untrammelled licence upon the ED to continually rope in prior FIRs, even where the connection is tenuous or founded upon a slender factual thread, merely to keep an ECIR alive.”

It added that if the ED considered the 2019 FIR to independently disclose a scheduled offence giving rise to proceeds of crime, it could have initiated proceedings on that basis at the appropriate stage.

Accordingly, the High Court allowed the petitions and quashed the ECIR and the consequential proceedings emanating from it, including the proceedings based on the addendum.

For Petitioners: Senior Advocates N. Hariharan, Siddharth Agarwal, Dayan Krishnan, Advocates B. Shravanth Shanker, Prerna Robin, I.V. Nikhil, Shiv Nath, D. Abhinav Rao, B and Yeshwanth Raj

For Respondents: Senior Advocates Anurag Jain, Vikas Singh, Mahesh Jethmalani, Advocates Sagar Singh, Vaishali Gujjar, Varun Singh, Deepeika Kalia, Alankriti Dwivedi, Somesa Gupta, Sudeep Chandra, Khushi, Kshitij Mudgal, Ansh Mittal, Ravi Sharma, Anjani Kumar Rai, Sarthak Chhilwar, Satish Kumar Shukla and Praphull Kumar