M/S JAYSHRI GAYTRI FOOD PRODUCTS PVT LTD. V. DIRECTORATE OF ENFORCEMENT 2026:MPHC-JBP:23463:

DATE: 18.03.2026

COURT: High Court of Madhya Pradesh

BENCH: Justice B. P. Sharma

FACTS:

The petitioners approached the High Court under Article 226 challenging the legality of proceedings initiated by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 (PMLA), including ECIR No. ECIR/BHZO/13/2024. Their primary contention was that the very foundation of the PMLA proceedings had ceased to exist following the quashing of FIR No.27/2024 registered by the Economic Offences Wing, Bhopal. According to the petitioners, since the ECIR was based on this FIR, its quashing rendered all consequential proceedings without jurisdiction and an abuse of process.

The case records revealed that allegations of serious economic offences had been made against the petitioner-company, including the manufacture and export of adulterated milk products using forged laboratory reports. Initially, FIR No.0492/2023 was registered at Police Station Habibganj under various IPC provisions, followed by FIR No.27/2024 by the Economic Offences Wing covering similar allegations. Although FIR No.27/2024 was later quashed by the High Court, the Enforcement Directorate had already initiated PMLA proceedings based on the material available from these allegations.

ISSUES:

The principal issue before the Court was whether the quashing of FIR No.27/2024 extinguished the very basis of the PMLA proceedings, thereby rendering the ECIR and subsequent investigation invalid, or whether the earlier FIR No.0492/2023 continued to provide a valid foundation for the Enforcement Directorate to proceed under the PMLA.

JUDGEMENT WITH REASONING:

The High Court dismissed the writ petitions, holding that the quashing of FIR No.27/2024 did not invalidate the PMLA proceedings. It ruled that FIR No.0492/2023 continued to subsist and provided a valid jurisdictional basis for the Enforcement Directorate to proceed. Consequently, the investigation under the PMLA was held to be lawful, and the petitions were found to be devoid of merit.

The Court closely examined the earlier order by which FIR No.27/2024 had been quashed and clarified that the quashing was not on merits but on the ground that multiple FIRs cannot be registered for the same set of facts. It noted that the allegations in the second FIR were not independent but formed part of the same transaction already covered under FIR No.0492/2023. Therefore, the effect of the quashing order was merely to consolidate the allegations within the earlier FIR rather than to extinguish them. As a result, the underlying criminal activity and allegations of fraud, forgery, and generation of unlawful gains continued to subsist within the framework of the first FIR.

The Court further emphasized that for invoking the provisions of the PMLA, the essential requirement is the existence of a scheduled offence and proceeds of crime arising therefrom. In the present case, the offences alleged under the IPC clearly fell within the schedule to the PMLA, and the material on record indicated continued investigation into such offences under FIR No.0492/2023. The Court also clarified that an ECIR is not equivalent to an FIR but is an internal document for initiating investigation, and its validity cannot be challenged on the same grounds. It rejected the petitioners’ reliance on precedents, distinguishing them on facts, and held that since the predicate offence continued to exist, the PMLA proceedings were neither without jurisdiction nor an abuse of process.

ANALYSIS:

This judgment reinforces the principle that proceedings under the Prevention of Money Laundering Act, 2002 are not mechanically extinguished by the quashing of one predicate FIR, particularly where the underlying criminal activity continues to subsist through another valid proceeding. The Court adopts a substance-over-form approach by focusing on the continuity of the alleged offence rather than the technical fate of a particular FIR. By holding that the second FIR was merely a duplication of the first and that its quashing resulted only in consolidation rather than elimination of allegations, the decision prevents accused persons from exploiting procedural technicalities to evade investigation. This interpretation strengthens the enforcement framework by ensuring that the existence of a “scheduled offence” is assessed in a holistic manner, rather than being narrowly tied to a single procedural document.

At a broader level, the ruling clarifies the independent and somewhat autonomous nature of enforcement proceedings under the PMLA. The Court’s observation that an ECIR is not equivalent to an FIR underscores the distinct procedural architecture of money laundering investigations, granting the Enforcement Directorate wider latitude in acting upon available material. This has significant implications, as it limits the scope of judicial interference at the threshold stage and affirms that the validity of PMLA proceedings depends on the continued existence of underlying criminality, not the survival of a specific FIR. However, the judgment also raises concerns regarding potential overreach, as it allows enforcement agencies to proceed despite the quashing of a formally recorded offence, thereby placing greater responsibility on courts to ensure that such powers are exercised with due regard to fairness and safeguards against arbitrary investigation.