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The Delhi High Court has quashed provisional attachment orders (PAO) issued four years ago against two firms and stated that the Enforcement Directorate (ED) can only probe offences defined under the Prevention of Money Laundering Act (PMLA) and not assume predicate offences noticed during the course of the case.
Justice Yashwant Varma was of the view that law designates authorities to investigate listed predicate offences and the ED should share information with concerned agencies for appropriate action rather than arrogate power to probe those offences.
The high court’s verdict came while allowing two separate petitions filed by Prakash Industries Limited and Prakash Thermal Power Limited challenging the Provisional Attachment Orders (PAO) issued by the ED on November 29, 2018 to seize their assets worth ₹117 crore. The ED began the probe after taking up a CBI case against the Prakash Industries accused of false declaration with Bombay Stock Exchange way back in 2008 to boost value of their shares. The entities were allocated Fatehpur coal block in Chhattisgarh.
“What needs to be emphasised is that the PMLA empowers the ED to investigate Section 3 offences only. Its power to investigate and enquire stands is confined to the offence of money laundering as defined in that section. However, the same cannot be read as enabling it to assume from the material, that it may gather in the course of that investigation, when a predicate offence stands committed,” read the Delhi High Court judgement passed on January 24.
Justive Varma wrote in the 111-page order that “The predicate offence has to be necessarily investigated and tried by the authorities empowered by law in that regard...In any case, it (ED) cannot and on its own motion proceed on the surmise that a particular set of facts evidence the commission of a scheduled offence and based on that opinion initiate action under the PMLA”.
The Judge did not accept the ED counsel’s plea that due to Supreme Court directions on PMLA, the Delhi High Court did not have powers to entertain the petition. Similarly, Varma also turned down the agency’s argument that Apex Court’s July 25, 2014 verdict on coal scam forbid Delhi High Court but for the special designated court from hearing related case.
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