'ED Not a Super Cop or a Loitering Munition to Attack at Will On Any Criminal Activity': Madras HC
The Madras high court. Photo: roadconnoisseur/Flickr CC BY-SA 2.0
New Delhi: The Madras high court has said that the Enforcement Directorate (ED) can take action only upon the existence of a predicate offence and the agency cannot conduct investigations on its own.
A bench of Justices MS Ramesh and V Lakshminarayanan reiterated the fact that ED is not a super cop for investigating anything and everything that came to its notice.
'The ED is not a super cop to investigate anything and everything which comes to its notice. There should be a 'criminal activity' which attracts the schedule to PMLA, and on account of such criminal activity, there should have been 'proceeds of crime'. It is only then the jurisdiction of ED commences,' said the court, reported LiveLaw.
The court added that there must be criminal activity coming within the schedule of the Act along with the presence of proceeds of crime based on which the ED will have jurisdiction to start a probe.
'The terminus a quo for the ED to commence its duties and exercise its powers is the existence of a predicate offence. Once there exists a predicate offence, and the ED starts investigation under the PMLA, and file a complaint, then it becomes a stand alone offence,' said the court.
The court said that if the agency was allowed to conduct an investigation merely on coming to know about any activity, the ED would be conducting roving enquiry.
'The essential ingredient for the ED to seize jurisdiction is the presence of a predicate offence. It is like a limpet mine attached to a ship. If there is no ship, the limpet cannot work. The ship is the predicate offence and 'proceeds of crime'. The ED is not a loitering munition or drone to attack at will on any criminal activity,' said the court.
The observations were made by the court while hearing a plea filed by RKM Powergen Private Limited, which has challenged the ED's action of freezing its fixed deposits.
The court added that as per Section 66(2) of the PMLA, if the ED comes across a violation of law during the course of the investigation, it cannot assume the role of an investigating agency and investigate those offences also.
In June this year, Justice Ramesh had remarked that while courts often term the Prevention of Money Laundering Act (PMLA) of 2002 as an 'evolving legislation' which throws up new legal questions, but it is actually the 'officials of the Enforcement Directorate (ED) who are evolving day by day by expanding their powers.'
Justice Ramesh's remarks came as he wondered which provision of the PMLA empowers the ED officials to seal a residential/business premises if it was found to be locked when the officials go over there for a search and seizure operation.
Following the remarks, the ED had told the high court that it did not have the power to seal premises if the same was locked at the time of making a search as per Section 17 of the Prevention of Money Laundering Act.
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