The recent recovery of cash to the tune of Rs 190 crore in Uttar Pradesh was referred to by the Supreme Court which on Thursday asked whether the Enforcement Directorate (ED) will have no jurisdiction to probe the unaccounted money under PMLA in the absence of a predicate offence. Under the Prevention of Money Laundering Act (PMLA), ED registers an ECIR (enforcement case information report) to probe laundering of proceeds of a crime, committed prior, for which an FIR is already there.
A bench comprising justices A M Khanwilkar, Dinesh Maheshwari and C T Ravikumar, which is dealing with a batch of petitions concerning interpretation of certain provisions of the PMLA, referred to the raids leading to huge recovery of cash and posed a query if ED has no jurisdiction to probe it. "We are talking about a very recent episode. The Enforcement Directorate organised some searches and traced almost like Rs 190 crore cash and now no predicate offence is registered (under the PMLA) against that person.
"How do you deal with that kind of money? Local police did not do their job and the Income Tax Authorities did not do their job. It is ED which intervened and … can you say that ED has no jurisdiction," the bench said in its query to senior advocate Amit Desai who was arguing on behalf of one of the petitioners. The bench asked in this scenario which authorities will be responsible and which one will have the jurisdiction.
"The fact that a particular appropriate authority does not do its job which it is supposed to do is no reason for conferring jurisdiction to an authority which has no jurisdiction," Desai responded. The senior lawyer also referred to the existence of a coordination committee, which is often used for sharing actionable inputs among agencies like the Income Tax Department, SFIO and ED etc.
"As a matter of law, the jurisdiction cannot be conferred which does not exist," the lawyer said, adding that conferring the jurisdiction was "outside the scope of PMLA". This may have some "very serious connotations" in criminal law, he said, adding, "To say that ED can suo motu start the inquiry would be contrary to the scheme of the powers under PMLA and then there is no end." The bench then asked whether information received by an ED officer that some unaccounted cash was lying at someone's house then "should that officer rush to a police station to consider…" The senior lawyer said that no jurisdiction can be conferred just because the other appropriate agency does not do its work.
He also raised the issue of retrospective application of PMLA saying that "left, right and centre" attachment of properties are being done for main predicate offences committed way back in 1990s. "The underlying principle of PMLA was to deal with proceeds of the crime generated through organised crime syndicate. Organised crimes are it in prostitution, narcotics generated proceeds of crime and those through various processes integrated into the legitimate economy of nation," he said.
The money laundering law was intended to cut the financing of a particular activity or business since that was the only way to tackle the same. Now the list of scheduled offences has increased leading to a situation where the main intention of the legislation has been lost, he said.
There was a time when the TADA was being misused, but later the court intervened, he said, adding now the action such as attachment of properties happen very fast under the PMLA at the initial stage before a predicate offence reaches a significant level of investigation. The hearing in the case would resume on Tuesday through virtual mode.
Earlier, the court was told that there cannot be "mechanical lodging" of an ECIR as the PMLA requires that there must be some indication of the act of money laundering and projecting the proceeds of crime as untainted. Solicitor General Tushar Mehta had earlier told the bench that there are over 200 petitions in the matter and interim stays have been granted in several serious cases due to which investigation has been affected.
Some of these petitions have challenged the validity of certain provisions of the PMLA.
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