ED Is Not Superior To CBI; Must Accept Its Investigation In Non-PMLA Cases: J&K&L High Court

This decision is connected to alleged misappropriation of funds from the Jammu & Kashmir Cricket Association.

A Bench of Justice Sanjeev Kumar said, "The Enforcement Directorate is not an authority or investigating agency in any manner superior to CBI, nor is it vested with or conferred the power and jurisdiction to sit in appeal against the investigation made and the conclusion drawn by the later. The Enforcement Director being a parallel investigating agency in respect of crimes under PMLA must accept the investigation carried by another investigating agency and the conclusion drawn by the said agency in respect of commission of the offences other than the offences under PMLA”

The Court annulled the complaint and the charges framed by a Srinagar Court in 2020, ruling that the ED lacked jurisdiction under the Prevention of Money Laundering Act (PMLA) due to a technical oversight. The Court said, “In the absence of there being any case registered for commission of scheduled offence or any case pending enquiry or trial in respect of scheduled offence, authorities under PMLA have no jurisdiction to register ECIR and launch prosecution for offence of money laundering under Sections 3/4 of PMLA. When there is no scheduled offence having been registered or pending enquiry or trial, there are no proceeds of crime and, thus, there is no offence of money laundering under Section 3 of the Act.”

Advocate Shariq J Reyaz appeared for the Petitioner and Additional Solicitor General SV Raju appeared for the respondent.

The Court emphasized that without a registered case for a scheduled offence or a pending enquiry or trial concerning such an offence, the ED had no authority to register an Enforcement Case Information Report (ECIR) or pursue a money laundering prosecution. The Court said, “In the instant case, indisputably, the jurisdictional police, the CBI has not registered any case for commission of any scheduled offence. Enquiry by way of complaint before the CJM, Srinagar is also not in respect of any scheduled offence. In the absence of there being any case registered for commission of scheduled offence or any case pending enquiry or trial in respect of scheduled offence, authorities under PMLA have no jurisdiction to register ECIR and launch prosecution for offence of money laundering under Sections 3/4 of PMLA.”

The Court rejected the ED’s argument that it could independently assess whether the petitioner had committed a scheduled offence, noting that the ED could not override the conclusions of the CBI. 

The petitioners contended that the basis for the PMLA prosecution was flawed because Section 120-B of the Ranbir Penal Code (RPC) was no longer a scheduled offence following the Supreme Court's decision in Pavana Dibbur v. Directorate of Enforcement. The Supreme Court had clarified that a conspiracy under Section 120-B RPC or IPC could not be deemed a scheduled offence unless it was related to a specific offence listed in the PMLA schedule.

The High Court concurred with this view and said, “The Enforcement Directorate, if so permitted, may approach the Chief Judicial Magistrate and canvass before it that apart from the offences of Section 120-B, 406 and 409 RPC, scheduled offences like Section 411 and 424 RPC are also made out. If the Court of Chief Judicial Magistrate frames charges against the petitioner for any of the scheduled offences, it shall be open for the Enforcement Directorate to register fresh ECIR and launch prosecution against the petitioner, if he is found to have been involved in the commission of offence of money laundering under Section 3 PMLA”

The Court's ordered, “The complaint, the charge-sheet and the charges framed by the designated Special Court (Principal Sessions Court, Srinagar) vide order dated 18.03.2020 are quashed. It is, however, made clear that notwithstanding quashing of the charges, it shall remain open to the Enforcement Director to register ECIR afresh and launch prosecution against the petitioner under Section 3 of the PMLA if ultimately the Court of Chief Judicial Magistrate, Srinagar frames charges for offence/offences, which are specifically mentioned in the schedule of PMLA.”

Cause Title: Ahsan Ahmad Mirza v. Directorate of Enforcement

Appearance:

Petitioner: Advocates Shariq J Reyaz and M Syed Bhat

Respondent: Additional Solicitor General SV Raju, Special Counsel Zoheb Hossein, Manin Jain, Deputy Solicitor General TM Shamsi, and advocates Faizan, Rehana Qayoom, and Monika Kohli.