PMLA– Courts Not Expected To Stall Investigations Falling Within Exclusive Domain Of Executive Unless There's Misuse Of Power: Madras HC

The Madras High Court while dealing with a writ petition filed for the issue of a writ mandamus against the Assistant Director of the ED (Enforcement Directorate) held that the Courts are not expected to stall investigations that fall within the exclusive domain of the executive unless there is a misuse of a power of investigation.

The Division Bench comprising Justice P.N. Prakash and Justice N. Anand Venkatesh stated –

"We do not want to deal with any issue touching upon the merits of the case by taking the role of the investigation agency. We have to satisfy ourselves as to whether the respondent is acting within the four corners of PML Act and not misusing the powers of investigation. If we are convinced that the investigation taken up by the respondent is within their powers and there is no misuse of powers, we cannot act as a stumbling block in the further progress of the investigation conducted by the respondent. It is left open to the petitioner Company to submit their explanation to the respondent along with all supporting documents and we expect the respondent to proceed further with the investigation within the scope of PML Act. The Apex Court time and again has frowned upon interference into investigations conducted by the Investigation Agency since Courts are not expected to stall investigations, which falls within the exclusive domain of the executive, unless such an investigation is found to be without jurisdiction or there is misuse of power of investigation or such an investigation is an abuse of process of law."

Senior Advocate B. Kumar appeared for the petitioner while Special Public Prosecutor N. Ramesh represented the respondent.

In the present case, the petition was filed for the issue of a Writ of Mandamus forbearing the respondent from proceeding further on the ground that the respondent is acting beyond the jurisdiction conferred by the provisions of the Prevention of Money Laundering Act, 2002 (PMLA). A case under the Foreign Exchange Management Act (FEMA) was registered against the petitioner on the allegation that they had sent foreign exchange abroad in violation of FEMA Rules and an investigation was taken up by the ED. The ED passed provisional orders of seizure of certain movable and immovable properties of the petitioner, which were not confirmed by the Competent Authority acting under Section 37-A of FEMA. Challenging the orders of the Competent Authority, the ED filed two writ petitions before the High Court and the Court granted an interim stay of the orders passed by the Competent Authority.

The petitioner was having an account with Axis Bank and overseas remittances were made through Axis Bank, which is an authorised dealer under the FEMA. On a complaint given by Axis Bank, the Central Crime Branch registered a case against the petitioner company for the offences under Sections 417 and 420 of the IPC. Since the FIR disclosed the commission of an offence, the ED registered a case and issued a summons to the petitioner under Section 50 of the PMLA. The petitioner being aggrieved by this filed the present writ petition.

The High Court after hearing the contentions of both parties observed, "In view of the foregoing discussion, we do not find any ground to interfere with the investigation conducted by the respondent and in the result, this Writ Petition stands dismissed. No costs. Consequently, connected miscellaneous petition is closed."

Accordingly, the Court dismissed the petition.

Cause Title - Southern Agrifurane Industries Private Ltd. v. The Assistant Director, Directorate of Enforcement

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