Dismissed¶48

Vineeta Loomba v. Directorate of Enforcement, Govt. of India

Gauhati HC12 Mar 2025Crl. Pet./26/2024

Case brief

AI extract

What is this about?

HPZ Token cryptocurrency fraud; PMLA Sections 3, 4 and 70 (offences by companies); liability of a Non-Executive Independent Director; quashing of ECIR and cognizance under Section 482 CrPC; post-complaint summons and further investigation (Section 44(2) PMLA; Sections 200-204 and 203 CrPC); Razorpay merchant IDs / CreditGo / Superior Finlease Ltd.; Bhajan Lal guidelines and Neeharika Infrastructure principles referred; Yash Tuteja and Ravindranatha Bajpe distinguished; Gauhati High Court Kohima Bench; petition dismissed and interim order vacated.

What did the court decide?

The Court declined to interfere with the ongoing PMLA investigation at this stage, considering that a prima facie case had been found against the accused for involvement in the alleged offence and that the case was still under investigation. ¶47

Vineeta Loomba Vs Directorate of Enforcement, Govt. of India — Money Laundering | Gauhati HC (2025)

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2025:GAU-NL:98

GAHC020008092024

THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) KOHIMA BENCH

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Case No. : I.A.(Crl.)/31/2024

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DIRECTORTATE OF ENFORCEMENT REPRESENTED BY ITS ASSISTANT DIRECTOR DIMAPUR SUBZONAL OFFICE AT GUWAHATI ZONAL OFFICE 6TH FLOOR, MAINAAK TOWER, CHRISTIAN BASTI G.D. ROAD, GUWAHATI781005

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VERSUS

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MS. VINEETA LOOMBA W/O SH. DEEPAK LOOMBA R/O A-238 FIRST FLOOR VIKASPURI WEST DELHI-110018

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Advocate for the Petitioner : Y.P. GUPTA,

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Advocate for the Respondent : ,

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Linked Case : Crl. Pet./26/2024

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VINEETA LOOMBA W/O SH. DEEPAK LOOMBA R/O FIRST FLOOR VIKASPURI WEST DELHI-110018

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VERSUS

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DIRECTORATE OF ENFORCEMENT GOVT. OF INDIA REPRESENTED BY ITS ASSISTANT DIRECTOR DIMAPUR SUB-ZONAL OFFICE AT GUWAHATI ZONAL OFFICE 6TH FLOOR MAINAAK TOWER CHRISTIAN BASTI G.D. ROAD GUWAHATI-781005

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-----------Advocate for : A. ZHO Advocate for : CGSC appearing for DIRECTORATE OF ENFORCEMENT GOVT. OF INDIA

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BEFORE

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HON'BLE MR. JUSTICE BUDI HABUNG

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Date of hearing Date of Judgment

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: 27.01.2025. : 13.03.2025.

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:: Judgment and Order :: [CAV]

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Heard Mr. Kartik Yadav, learned counsel assisted by Ms. C. Losu, learned counsel for the petitioner. I have also heard Mr. Y. P. Gupta, learned Special PP for the Enforcement Directorate.

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2. This is a criminal petition filed under Section 482 of the Code of Criminal Procedure, 1972 with the following prayers:

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(i) To set aside and quash the summoning/cognizance order dated 22.03.2024, passed by the Special Judge for cases under the Prevention of Money Laundering Act (PMLA), 2022 at Dimapur, Nagaland qua the present petitioner in Prosecution Complaint bearing

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PMLA-SC No. 01 of 2024 titled as “Directorate of Enforcement Government of India V. Bhupesh Arora & Ors.”

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(ii) To quash the ECIR No. ECIR/GWZO-II/09/2022 dated 12.04.2022, registered by Enforcement Directorate, Guwahati, Zone GWZO-II, Sub Zone KHSZO, qua the present petitioner and all the consequential proceeding emanating thereto.

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3. The brief fact of the case is that based on the complaint against the M/S “HPZ Token” and others disclosing that thousands of people were duped by this entity on the pretext of receipt of investment for Bitcoin mining, the Cyber Crime Police Station, Nagaland, registered FIR No. 03/2021 dated 08.10.2021 under Section 420/120B of IPC read with 66(D) of Information Technology Act.

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4. The allegation in the FIR is that HPZ Token was an app based token which promised users of large gains against investment by investing in mining machines for Bitcoin and other crypto currencies. The investigation conducted by the police has ascertained that the fraudsters have committed crime using the VPA (Virtual Payment Address) and all the payments were made through the HW App which was downloaded from the HPZ website.

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5. The offence under section 420/120B of IPC, being the schedule offences under paragraph 1 of part A of Prevention of

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Money Laundering Act (PMLA), 2022, therefore, the matter was examined by the Directorate of Enforcement, and since prima facie a money laundering case was made out (Section 3 of Prevention of Money Laundering Act,2002) punishable under Section 4 of the said Act, the Enforcement Directorate, Guwahati had registered an Enforcement Case Information Report (ECIR) bearing No. GWZO-II/09/2022, dated 12.04.2022, and investigation was initiated under Prevention of Money Laundering Act (PMLA), 2002.

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6. The respondent filed the Prosecution Complaint against 299 accused persons before the Special Judge for Cases under the Prevention of Money Laundering Act (PMLA), 2002 at Dimapur, Nagaland in Prosecution Complaint bearing PMLA-SC No. 01 of 2024, titled as "Directorate of Enforcement Government of India v. Bhupesh Arora & Ors " whereby the Petitioner was included as the accused. The charge sheet was filed after investigation on 04.03.2024 before the Special Court of Prevention of Money Laundering Act (PMLA), 2002 at Dimapur, Nagaland.

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7 . The allegation against the petitioner, Vineeta Loomba, is reproduced herein below:

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“He is one of the directors of M/s Superior Finlease Limited and was in charge for the conduct and day to day affairs of the company at the relevant period of violation as per the provisions of Section 70 of the PMLA.

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As revealed during investigation, accused person is also the beneficiary of the proceeds of crime. Accused person has not only received the proceeds of crime and also came in possession of such "proceeds of crime". In the instant case, accused persons have

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knowingly acquired, possessed, transferred, layered and used the said proceeds of crime obtained or derived by commission of scheduled offences in such a manner as if it was untainted money and therefore, guilty of offence of money-laundering as per the provisions of Section 3 read with Section 70 of PMLA and therefore liable to be punished under Section 4 of PMLA.”

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8. On perusal of the complaint under Section 44 and 45 of the Prevention of Money Laundering Act (PMLA), 2022 along with the report and investigation in the form of chargesheet for offences punishable under Prevention of Money Laundering Act (PMLA), 2022 against the accused Bhupesh Arora and 298 Others, the Principal District and Sessions Judge, Dimapur, Nagaland having found prima facie case, took cognizance of the case on 23.02.2024, for offences of money laundering and a case was taken into file and registered the same as Money Laundering Case No. 01/2024. On the same day, the Court issued summon to all 329 accused and ordered for supply of copies to all the accused persons.

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9. It is this chargesheet and the cognizance taken by the Court, the accused is aggrieved and filed this petition on the following grounds:

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(i) That the petitioner was wrongly roped in the instant ECIR alleging that the petitioner was in charge for the conduct and day to day affairs of the company namely M/s Superior Finlease Ltd. whereas the petitioner was placed as an Independent Director in the said company.

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(ii) That the respondent has placed false allegation against the petitioner and no specific role has been designated against the petitioner except for bald statement that the petitioner is also a beneficiary of the proceeds of the crime and the accused person has not only received the proceeds of the crime and also came in possession of such “proceeds of crime”.

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(iii) That the learned Special Judge has summoned the present petitioner merely on the basis of complaint filed by the respondent of levelling general and bald allegations of having possession of the proceeds of crime.

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(iv) That the petitioner was never called up by the respondent during the course of investigation to present her side to the case or to give any sort of explanation.

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(v) That pursuant to the Resolution dated 12.02.2021 passed at the meeting of Board of Directors of M/s Superior Finlease Limited, the proposal to appoint the petitioner namely Vineeta Loomba (DIN:02458243) as an Additional Director in the category of Non-Executive Independent Director of the Company was forwarded to the Bombay Stock Exchange (BSE)Limited vide letter dated 12.02.2021 to regularize her as a Director for the term of 5 years subject to the approval of shareholders in the next Annual General Meeting of

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the Company. But, the petitioner had forwarded a resignation letter dated 05.04.2024 from the post of the Independent Director from the Company i.e. M/S Superior Finlease Limited.

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(vi) The MCA record dated 16.05.2024 of cessation having Receipt and Form No.DIR-12 in respect of the Directorship of the petitioner as Independent Director from the Company namely, M/s Superior Finlease Limited with effect from 05.04.2024.

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(vii) The Company namely M/s Superior Finlease Limited had issued the duration of the directorship of the petitioner as on 16.05.2024 in the said Company duly verified by the Company Secretary whereby the date of Appointment was stated to be 12.02.2021 and date of resignation was stated to be 05.04.2023.

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(viii) That the petitioner was appointed as Non-executive Independent Director in the said company who was neither in charge for the conduct and day to day affairs of the company at the relevant period nor at any point of time.

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(ix) The role of independent director is like a neutral observer on a Company’s board of directors. They are not involved in the day to day operation of part of the company’s top management. Instead, they bring an outsider’s perspective to decision-making. As per

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Section 2(47) of the Companies Act, 2013, independent directors are non-executive directors who contribute to improving corporate governance. They are individuals not directly or indirectly associated with the company’s day to day operations.

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(x) That the petitioner shall be condemned to face a vey lengthy trial unnecessarily despite not having even an iota of a role in the alleged crimes whatsoever.

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(xi) That as per prosecution filed by the respondents, the scam had started in June 2021 and by August 2022, the fraudster had stopped the payments and the website was not accessible. However, the petitioner had resigned from the said company as independentdirector before receiving the summons issued by the learned Special Court, Dimapur.

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10. The learned counsel for the petitioner submits that except for the bald averments and surmises, no evidence has been placed on record to establish any presumption against the petitioner as mandated by the provisions of PMLA, 2002. He further submitted that summoning post cognizance PMLA refers to a legal situation under the Prevention of Money Laundering Act (PMLA), where a Special Court issues a summons to an accused person after it has already taken cognizance of a complaint against them, meaning the court has decided there is enough evidence to proceed with the case.

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11. Furthermore, once a complaint is filed before the Special Court, the provisions of Sections 200 to 204 of the Cr. P.C. will apply to the complaint. It is also submitted that there is no provision in the PMLA which overrides the provisions of Sections 200 to Sections 204 of Cr. P.C. Hence, the Special Court will have to apply its mind to the question-whether a prima facie case of a commission of an offence under Section 3 of the PMLA is made out in a complaint under Section 44(1)(b) of the PMLA. If the Special Court is of the view that no prima facie case of an offence under Section 3 of the PMLA is made out, it must exercise the power under Section 203 of the Cr. P.C. to dismiss the complaint.

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12. However, in the present case, the Ld. Trial Court did not take any opportunity to satisfy itself about the prima-facie case or to assess any evidence against the petitioner having specific allegation and has proceeded to pass the said cognizance only on the instance of the respondent without expressing her opinion in a mechanical and robotic manner, hence the Cognizance Order dated 22.03.2024 is liable to be quashed/set aside.

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13. In support of his submission, the learned counsel for the petitioner cited the judgment of the Hon’ble Supreme Court in the case of Yash Tuteja V. Union of India reported in 2024 INSC 301 , the relevant paragraph is reproduced herein below:

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“ 6. The only mode by which the cognizance of the offence under Section 3, punishable under Section 4 PMLA, can be taken by the Special Court is upon a complaint filed by the Authority authorised on this behalf. Section 46 PMLA provides that the provisions of CrPC

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(including the provisions as to bails or bonds) shall apply to proceedings before a Special Court and for the purposes of CrPC provisions, the Special Court shall be deemed to be a Court of Sessions. However, sub-section (1) of Section 46 starts with the words "save as otherwise provided in this Act". Considering the provisions of Section 46(1) PMLA, save as otherwise provided in PMLA, the provisions of the Code of Criminal Procedure, 1973 (for short "CrPC") shall apply to the proceedings before a Special Court. Therefore, once a complaint is filed before the Special Court, the provisions of Sections 200 to 204 CrPC will apply to the complaint. There is no provision in PMLA which overrides the provisions of Sections 200 to Sections 204 CrPC. Hence, the Special Court will have to apply its mind to the question of whether a prima facie case of a commission of an offence under Section 3 PMLA is made out in a complaint under Section 44(1)(b) PMLA. If the Special Court is of the view that no prima facie case of an offence under Section 3 PMLA is made out, it must exercise the power under Section 203 CrPC to dismiss the complaint. If a prima facie case is made out, the Special Court can take recourse to Section 204 CrPC.”

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14. In the case of Ravindranatha Bajpe Vs. Mangalore Special Economic Zone Ltd. reported in (2022) 15 SCC 430 , whereby while referring to several other judgments has held that it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the stature specifically provides so.

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15. The learned counsel for the petitioner further submitted that the petitioner has wrongfully, illegally and unlawfully been implicated as accused person under Section 70 of the PMLA, 2022, under the presumption by overlooking the basic ingredients of the said provision. He further submits that for a person to be charged with the said provision, the person needs to be in charge of and was responsible to the company or the conduct of the business of the company as well as the company

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at the time the contravention was committed. However, the petitioner was implicated by the respondent without even knowing the fact that the petitioner was appointed/placed as Non Executive Independent Director in the said company who was neither in charge for the conduct and day to day affairs of the company at the relevant period of the scam nor at any point of time.

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16. The learned counsel for the petitioner further submits that the summon dated 16.07.2024, were duly replied by the petitioner explaining her status in the said company on 18.07.2024, and how she cannot be associated with the alleged offence and the same is not objected to by the respondent thereby giving an impression that the same has been accepted in its entirety and totality.

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17. The learned counsel for the petitioner further submitted that the Hon’ble Supreme Court observed the limitations on ordering further investigations under Section 173(8) of the CrPC. It ruled that requests for further investigation must be based on new evidence or materials that could significantly impact the case, rather than mere speculation. Moreover, the Hon’ble Supreme Court further observed that further investigation cannot be permitted as a fishing and roving enquiry when police have already filed a charge sheet.

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18. The learned counsel for the petitioner further submitted that even otherwise, the allegations against the company,

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wherein the petitioner was previously placed as Non-Executive Independent Director, cannot stand on their own legs since the Merchant ID as mentioned by the respondent was not in control and in command of the said company as well which is evident from the email sent by the Razorpay.

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19. On the other hand, the respondent in their affidavit-inopposition contended that the petition is not maintainable since the case is still at the trial stage before the Special Judge in Dimapur, Nagaland. The learned Special PP, NIA argued that the ECIR dated 12.04.2022, recorded by the Directorate of Enforcement cannot be quashed at the petitioner's request, as the economic offense stems from a pre-planned conspiracy involving multiple entities that duped thousands under the guise of bitcoin mining investments.

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20. The learned Special PP for NIA further argued that the petition is not maintainable since it does not meet any conditions outlined in the Supreme Court's judgment in Bhajan Lal Vs. State of Haryana (1992 Suppl. 1 SCC 335) , wherein the Hon’ble Supreme Court has laid down broad guidelines for exercising powers under Section 482 Cr.PC. The relevant paragraph is reproduced below:

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“In the exercise of the extra-ordinary power under Article 226 or the inherent powers under Section 482 of the Code of Criminal Procedure, the following categories of cases are given by way of illustration wherein such power could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any

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precise, clearly defined and sufficiently channelised and inflexible guide- myriad kinds of cases wherein such power should be exercised:

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(a) where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the ac- cused;

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(b) where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R.do not disclose a cognizable offence, justifying an investi- gation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code;

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(c) where the uncontroverted allegations made in the FIR or 'complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused;

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(d) where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code;

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(e) where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused;

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(f) where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institu- tion and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party;

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(g) where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.”

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21. He further submitted that the present petition is premature and misconceived, with grounds that do not align with

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established legal principles and constitute an abuse of the legal process. Additionally, the petition shows gross disregard for the Supreme Court's judgment in Neeharika Infrastructure Vs. State of Maharashtra (2021 SCC Online 315), where the Hon’ble Apex Court, after analyzing judicial precedents, established the following principles regarding the quashing of criminal proceedings. The relevant paragraph is reproduced below:

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“…57. From the aforesaid decisions of this Court, right from the decision of the Privy Council in the case of Khawaja Nazir Ahmad (supra), the following principles of law emerge:

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(i) Police has the statutory right and duty under the relevant provisions of the Code of Criminal Procedure contained in Chapter XIV of the Code to investigate into cognizable offences;

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ii) Courts would not thwart any investigation into the cognizable offences;

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(iii) However, in cases where no cognizable offence or offence of any kind is disclosed in the first information report the Court will not permit an investigation to go on;

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(iv) The power of quashing should be exercised sparingly with circumspection, in the ‘rarest of rare cases’. (The rarest of rare cases standard in its application for quashing under Section 482 Cr.P.C. is not to be confused with the norm which has been formulated in the context of the death penalty, as explained previously by this Court);

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(v) While examining an FIR/complaint, quashing of which is sought, the court cannot embark upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR/complaint;

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(vi) Criminal proceedings ought not to be scuttled at the initial stage;

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(vii) Quashing of a complaint/FIR should be an exception and a

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rarity than an ordinary rule;

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(viii) Ordinarily, the courts are barred from usurping the jurisdiction of the police, since the two organs of the State operate in two specific spheres of activities. The inherent power of the court is, however, recognised to secure the ends of justice or prevent the above of the process by Section 482 Cr.P.C.

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(ix) The functions of the judiciary and the police are complementary, not overlapping;

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(x) Save in exceptional cases where non-interference would result in miscarriage of justice, the Court and the judicial process should not interfere at the stage of investigation of offences;

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(xi) Extraordinary and inherent powers of the Court do not confer an arbitrary jurisdiction on the Court to act according to its whims or caprice;

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(xii) The first information report is not an encyclopaedia which must disclose all facts and details relating to the offence reported. Therefore, when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law. During or after investigation, if the investigating officer finds that there is no substance in the application made by the complainant, the investigating officer may file an appropriate report/summary before the learned Magistrate which may be considered by the learned Magistrate in accordance with the known procedure;

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(xiii)The power under Section 482 Cr.P.C. is very wide, but conferment of wide power requires the court to be cautious. It casts an onerous and more diligent duty on the court;

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(xiv) However, at the same time, the court, if it thinks fit, regard being had to the parameters of quashing and the self-restraint imposed by law, more particularly the parameters laid down by this Court in the cases of R.P. Kapur (supra) and Bhajan Lal (supra), has the jurisdiction to quash the FIR/complaint; and xv) When a prayer for quashing the FIR is made by the alleged accused, the court when it

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exercises the power under Section 482 Cr.P.C., only has to consider whether or not the allegations in the FIR disclose the commission of a cognizable offence and is not required to consider on merits whether the allegations make out a cognizable offence or not and the court has to permit the investigating agency/police to investigate the allegations in the FIR.”

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22. The learned Special PP for the NIA stated that the FIR revealed that the "HPZ Token" app promised users substantial returns on investments in Bitcoin and other cryptocurrencies through mining machines. Investors were assured that their money would be used to buy mining machines, generating cryptocurrency gains. However, the app suddenly stopped functioning, preventing investors from withdrawing their funds. He further stated that the investigation uncovered a larger conspiracy to defraud unsuspecting investors, with various related entities operating similar fraudulent apps and websites under the guise of unregistered gaming, betting, and loan services during the PMLA investigation.

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23. The PMLA investigation established that Lillian Technocab Pvt. Ltd and Shigoo Technology Private Limited (STPL) were primarily involved in operating and collecting money from investors under the "HPZ Token" scheme. Multiple UPIs were used to receive funds from these gullible investors. Analysis of the UPIs mentioned in the FIR revealed bank accounts linked to them, showing total credits and debits of approximately Rs. 115 crores. Funds were subsequently transferred to various entities and individuals. A portion of the proceeds was returned to

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investors, while the remainder was diverted through various bank accounts and payment aggregator accounts, layering the proceeds of crime in a complex manner.

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24. The learned Special PP further stated that the PMLA investigation revealed a larger conspiracy involving a complex web of companies. Inquiries from Google LLC, USA, regarding the registered email ID of M/s Shigoo Technology Pvt. Ltd (STPL) —[email protected]—indicated that it was controlled by M/s Jilian Consultants India Pvt. Ltd., a Chinese-controlled entity, and was linked to various other Chinese companies.

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25. Additionally, the investigation uncovered that the registered email ID of M/s Shigoo Technology Pvt. Ltd. was associated with M/s Jilian Consultants India Pvt. Ltd. The analysis of the domains/websites of Lillian Technocab Pvt. Ltd. and Shigoo Technology Pvt. Ltd. also revealed the creation of 99 other domains/websites by the masterminds, all connected to companies involved in a similar criminal conspiracy to deceive unsuspecting users under the guise of gaming, loans, and other services.

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26. It is submitted that [email protected] is the registered email ID of M/s Shigoo Technology Private Limited. Enquiries from Google LLC, USA, revealed that M/s Shigoo Technology was linked to various Chinese-controlled companies, with M/s Jilian Consultants India Pvt Ltd in Gurugram suspected to be behind several fraudulent entities. One such entity, linked

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to [email protected], is Creditgo Technology Private Limited, a Chinese fintech/service provider. Investigations from various API/payment service providers indicated that Creditgo was involved in operating loan apps/websites to collect funds fraudulently. Loans were disbursed and repayments were made through accounts maintained with Razorpay. Further investigation revealed that another company, M/s Superior Finlease Limited, operated under the merchant’s name "Superior Finlease" (MID: FgpIgIsN8WF3e6) was also engaged in similar fraudulent activities under the DBA name "CreditGo."

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27. The service agreement authorized signatory for Superior Finlease Limited and Creditgo Technology Private Limited is Mr. Wang Jian Chun, a Chinese national. This network of Chinese nationals has created a web of companies to defraud the public. The petitioner knowingly assisted Superior Finlease Limited in generating proceeds of crime through money laundering.

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28. The learned Special PP for the NIA submitted that on 11.10.2022, Original Application (OA) No. 744/2022 was filed under section 17(4) of PMLA before the Ld. Adjudicating Authority, seeking retention of properties and records frozen during searches on 14.09.2022. Proceeds of crime amounting to Rs. 1,91,80,695.74 in the account of M/s Superior Finlease Ltd. were frozen, and OA 744/2022 was subsequently filed. The Ld. Adjudicating Authority, New Delhi, confirmed OA 744/2022 via Order dated 06.03.2023, allowing the application.

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29. Additionally, on 04.03.2024, a Prosecution Complaint was filed before the Ld. Special Judge (PMLA), Dimapur, Nagaland, against the petitioner and 298 others. The Ld. Special Judge took cognizance on 22.03.2024 in Prosecution Complaint ML No. 01 of 2024, issuing a notice on 24.05.2024, to the petitioner and others. However, instead of participating in the legal proceedings, the petitioner has filed the current frivolous petition.

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30. The learned Special PP for the NIA further submitted that the complaint filed under Section 44 and 45 of the Prevention of Money Laundering Act, (PMLA) 2002, read with section 70 of the PMLA, 2002, establishes the commission of money laundering offences under Section 3, which are punishable under Section 4 of the Prevention of Money Laundering Act, (PMLA) 2002.

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31. The learned Special PP for the NIA also submitted that, even afterthe filing of the charge sheet, the investigation may continue under section 44(2) of the Prevention of Money Laundering Act, (PMLA), 2002.

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32. The investigation conducted by the Enforcement Directorate found that the petitioner is guilty of the offence of money Laundering. The petitioner was summoned on 16.07.2024 for her appearance on 19.07.2024 but failed to appear on that date.

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33. In support of his submission, the learned Special PP for the NIA relied upon the decision of the Hon’ble Supreme Court in the

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case of The Assistant Director Directorate of Enforcement Vs. Gautam Kundu and Anr, Spl(Crl)/271/2024 . The relevant paragraphs are reproduced below:

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“ 2. The short issue that arises for consideration is as to whether after the filing of the complaint, the accused can be called for interrogation or not for the purpose of recording their 50 of the Prevention of Money statement under Section Laundering Act, 2002 (for short, the PMLA).

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3. The High Court, in the impugned judgment, did not take into consideration the explanation (ii) to Section 44 (1) of the PMLA, wherein it is specifically provided that such a course is well open to the investigating agency.

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4. In such view of the clear provision contained in Section 44, as afore-stated, we are inclined to set aside the impugned judgment.

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5. The impugned order stands set aside.

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6. Liberty is given to the appellant to call the respondents for further examination in which case, they shall cooperate with the further interrogation.”

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34. The learned Special PP for the NIA submitted that the investigation revealed M/s Superior Finlease Ltd. was linked to two merchant IDs with Razorpay Private Limited: MID: FgpIgIsN8WF3e6 (operating under the name "Superior Finlease" and DBA "CreditGo") and MID: FBb1KCobT169ot (associated with Creditgo Technology Private Ltd.). Both merchant IDs operated the website http://www.Creditgo365.com, indicating a connection between M/s Superior Finlease Ltd. and the HPZ Token scam. For MID: FgpIgIsN8WF3e6, total payins were Rs. 31,762,377.75 and payouts Rs. 29,785,137.09. For MID: FBb1KCobT169ot, total payins were Rs. 34,850,563.55 and

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payouts Rs. 19,252,269.34. The account details for Superior Finlease Ltd. (A/c 343905500162, IFSC ICIC0003439) were also reported for both MIDs.

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35. This evidence indicates that Superior Finlease Ltd. was directly involved in operating http://www.creditgo365.com. The funds received and available balances in these merchant IDs are proceeds of crime, as the company, being an NBFC, permitted the operation of loan apps/websites and engaged in fraudulent fundraising activities, thus participating in a criminal conspiracy to generate, park, and route ill-gotten money.

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36. The learned Special PP for the NIA further submitted that the petitioner is guilty of the offence of money laundering, as emerged during the investigation conducted under the PMLA. This is in accordance with Section 70 read with section 3 of the PMLA 2002, which is reproduced below:

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“ 70 . Offences by companies.-(1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was In charge of, and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:.

¶138

In terms of Section 3 of the PMLA:

¶139

3. Offence of money laundering: Whoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the [proceeds of crime including its concealment, possession,

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accusation or use and projecting or claiming] it as untainted property shall be guilty of offence of money laundering.

¶142

37. The learned Special PP for the NIA submitted that the petitioner was appointed as an Additional Director (NonExecutive Independent Director) of the Company on 12th February 2021. Therefore, the petitioner is guilty of money laundering as revealed during the investigation by the Directorate, in accordance with Sections 3 and 70 of the PMLA, 2002.

¶143

38 . Furthermore, the learned Special PP for the NIA emphasized that the objective of the PMLA is to prevent money laundering and to provide for the confiscation of property derived from or involved in money laundering, along with related matters. He referenced Sections 22, 23, and 24 of the Prevention of Money Laundering Act (PMLA), 2002, as follows:

¶144

“ 22. Presumption as to records or property in certain cases .—(1) Where any records or property are or is found in the possession or control of any person in the course of a survey or a search4 [or where any record or property is produced by any person or has been resumed or seized from the custody or control of any person or has been frozen under this Act or under any other law for the time being in force,] it shall be presumed that—

¶145

(i) such records or property belong or belongs to such person;

¶146

(ii) the contents of such records are true; and

¶147

(iii) the signature and every other part of such records which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a record, stamped, executed or attested, that it was

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executed or attested by the person by whom it purports to have been so stamped, executed or attested.

¶150

(2) Where any records have been received from any place outside India, duly authenticated by such authority or person and in such manner as may be prescribed, in the course of proceedings under this Act, the Special Court, the Appellate Tribunal or the Adjudicating Authority, as the case may be, shall—

¶151

(a) presume, that the signature and every other part of such record which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person’s handwriting; and in the case of a record executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;

¶152

(b) admit the document in evidence, notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence.

¶153

23. Presumption in inter-connected transactions .—Where money-laundering involves two or more inter-connected transactions and one or more such transactions is or are proved to be involved in money-laundering, then for the purposes of adjudication or confiscation 1 [under section 8 or for the trial of the money-laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court], be presumed that the remaining transactions from part of such interconnected transactions.

¶154

24. Burden of proof .—In any proceeding relating to proceeds of crime under this Act,—

¶155

(a) in the case of a person charged with the offence of moneylaundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and

¶156

(b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in moneylaundering.”

¶157

39. That it is further submitted that due to clerical typing error,

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the petitioner’s gender has been typed wrongly, however, the petitioner has gone out of context to counter that the general allegation have been levelled without giving due consideration to the role of each accused so arraigned in the prosecution content which is completely baseless. It is further submitted that the role of the petitioner surfaced after detailed investigation conducted by the Directorate and it was found that the petitioner is guilty for the offence of money laundering.

¶160

40 . In view of the facts and circumstances stated above, the learned Special PP for the NIA submitted that the present case does not warrant the exercise of extraordinary powers under this Court’s jurisdiction. The petition is not maintainable based on the circumstances of the case and, therefore, is devoid of merit and liable to be dismissed with costs.

¶161

41. I have heard the submissions from both parties' counsel, and I have also considered the documents on record and the citations presented by both sides.

¶162

42. The challenge in this petition is against the chargesheet submitted against the petitioner for offences under the Prevention of Money Laundering Act (PMLA), 2002, along with all consequential proceedings. The petitioner contends that there is no prima facie case against her, and she received summon only after she left the company. Additionally, the petitioner asserts that after the filing of the chargesheet, the Investigating Officer has no right to issue a summon against the accused without

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seeking permission from the Trial Court.

¶165

43. On the other hand, the learned Special PP for the NIA contended that the complaint was filed under Section 44 and 45 of the Prevention of Money Laundering Act, (PMLA), 2002, read with Section 70 of the PMLA, 2002, for the commission of offences under Section 3, punishable under Section 4 of the Prevention of Money Laundering Act, (PMLA), 2002. The Investigating Officer can file a subsequent complaint regarding further investigation and may also present any additional evidence. The section 44(ii) is reproduced herein below:

¶166

“44(ii) the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence, for which complaint has already been filed, whether named in the original complaint or not.”

¶167

44. The learned Special PP for NIA further submitted that the matter is still under active investigation, however, the accused despite of issuance of notice is not cooperating and appearing before the IO to give her statement. He further submitted, that in case the investigation does not reveal any offence against the petitioner, the Enforcement Agency, at the time of filing Supplementary Charge sheet would automatically prays for her discharge, in which case, alternatively, the petitioner would also have liberty to make appropriate application for her discharge.

¶168

45. The case has been chargedsheeted against 298 accused persons, including the present petitioner. Many individuals and

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companies are involved in the case. A perusal of the FIR revealed that “HPZ Token,” an app-based token, promised users substantial gains or returns in exchange for investments in mining machines for Bitcoin and other cryptocurrencies. Investors were assured that their invested money was being used to purchase various mining machines for cryptocurrency mining, and they would receive profits from the sale of such cryptocurrencies. Suddenly, the application stopped functioning, and investors were unable to withdraw their funds. The investigation under the PMLA uncovered a larger conspiracy and involvement of a complex web of companies aimed at defrauding unsuspecting investors, as well as various related entities. Similar Apps and websites were also found to be fraudulently acquiring funds from the public under the pretext of unregistered gaming, betting, loan services, etc., during the PMLA investigation. The petitioner was alleged to have been appointed as an Additional Director (Non-Executive Independent Director) of the Company on 12th February 2021, and therefore, she is guilty of money laundering as revealed during the investigation by the Directorate, in accordance with Sections 3 and 70 of the PMLA, 2002. The investigation of the case is still ongoing. The investigation conducted by the Enforcement Directorate found that the petitioner was appointed as an Additional Director (NonExecutive Independent Director) of Company on 12^th February, 2021, and therefore, she is guilty of the offence of money Laundering. The petitioner was summoned on 16.07.2024 for his

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appearance on 19.07.2024 but failed to appear till date.

¶173

46. In view of the above, the fact of the present case is different from Yash Tuteja V. Union of India (Supra) and Ravindranatha Bajpe Vs. Mangalore Special Economic Zone Ltd. (Supra) .Therefore, the same are not applicable in the present case.

¶174

47. In light of these facts and considering that a prima facie case has been found against the accused for involvement in the alleged offence, and given that the case is still under investigation, I am not inclined to interfere with the investigation at this stage.

¶175

48 . Accordingly, this petition is dismissed. The interim order passed earlier stands vacated.

¶176

JUDGE

¶177

Comparing Assistant

Procedural history

How this case reached the court

AI extract

Order under challenge
Summoning/cognizance order dated 22.03.2024 passed by the Special Judge (PMLA), Dimapur, taking cognizance qua the petitioner in Prosecution Complaint PMLA-SC No. 01 of 2024 ('Directorate of Enforcement Government of India v. Bhupesh Arora & Ors.'); sought to be quashed along with ECIR No. ECIR/GWZO-II/09/2022 dated 12.04.2022 and consequential proceedings.¶24
Special Judge for cases under the Prevention of Money Laundering Act (PMLA), Dimapur, Nagaland · 22.03.2024
Prior proceeding
Cyber Crime Police Station, Nagaland registered FIR No. 03/2021 dated 08.10.2021 under Section 420/120B IPC read with Section 66(D) of the Information Technology Act following complaints that thousands were duped by 'HPZ Token' on the pretext of Bitcoin-mining investments.¶28
Prior proceeding
Enforcement Directorate, Guwahati (Zone GWZO-II, Sub-Zone KHSZO) registered ECIR bearing No. GWZO-II/09/2022 dated 12.04.2022 and initiated investigation under the PMLA.¶32
Prior proceeding
On 11.10.2022 Original Application (OA) No. 744/2022 was filed under Section 17(4) PMLA before the Adjudicating Authority seeking retention of properties and records frozen during searches on 14.09.2022; proceeds of crime of Rs. 1,91,80,695.74 in the account of M/s Superior Finlease Ltd. were frozen.¶118
Prior proceeding
The Adjudicating Authority, New Delhi confirmed OA 744/2022 via Order dated 06.03.2023, allowing the application.¶118
Prior proceeding
Respondent (ED) filed Prosecution Complaint PMLA-SC No. 01 of 2024, titled 'Directorate of Enforcement Government of India v. Bhupesh Arora & Ors.', before the Special Judge (PMLA), Dimapur, Nagaland against 299 accused persons, including the petitioner.¶33
Prior proceeding
Charge sheet filed after investigation on 04.03.2024 before the Special Court (PMLA), Dimapur, Nagaland.¶33
Prior proceeding
Principal District and Sessions Judge, Dimapur, Nagaland, having found a prima facie case, took cognizance on 23.02.2024 for offences of money laundering and registered the case as Money Laundering Case No. 01/2024; summons were issued to all 329 accused and copies ordered to be supplied.¶39
Prior proceeding
As per the respondent's account, the Ld. Special Judge took cognizance on 22.03.2024 in Prosecution Complaint ML No. 01 of 2024 and issued a notice on 24.05.2024 to the petitioner and others.¶120
Prior proceeding
Petitioner was summoned on 16.07.2024 for appearance on 19.07.2024 but failed to appear (subsequently recorded as failure to appear till date).¶123

Vineeta Loomba v. Directorate of Enforcement, Govt. of India

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Vineeta Loomba v. Directorate of Enforcement, Govt. of India

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