Published on: 29 September 2023 at 15:10 IST
Kerala HC held that if the Enforcement Case Information Report (ECIR) has been quashed and no subsequent FIR has been registered against the accused, then an order under Section 17(1-A) of the Prevention of Money Laundering Act, 2002 (PMLA) cannot be enforced.
This ruling came as the Court considered that such an order would prejudice the individual against whom it is issued.
Section 17(1-A) of the PMLA serves as an alternative to Section 17(1) and allows authorized officers to issue freezing orders when a search and seizure operation is not feasible.
Justice Devan Ramachandran, who presided over the bench, emphasized, “…when there is no FIR registered, hypostasized on which an ‘ECIR’ is also not available, any further investigation against the petitioner under the ‘PMLA’ will have to cease…I am certain, without any doubt, that in view of quashing of the ‘ECIR’ and in the absence of any further FIR being registered against the petitioner, Ext.P12 cannot be allowed to hold the field, particularly when it causes sure prejudice to the person against which it is issued.”
Senior Advocate Mahesh Jethmalani, instructed by D. Kishore and representing the petitioner, argued that the case registered by the Enforcement Directorate under the PMLA had been quashed by the Court. Consequently, Ext.P12, the order in question, had no legal basis and should be set aside.
In this case, the Standing Counsel, Jaishankar V. Nair, representing the Enforcement Directorate, contended that the order (Ext.P12) was issued when the petitioner faced criminal charges under Section 420 of the Indian Penal Code (IPC) initiated by the jurisdictional Police Authorities.
Since Section 420 IPC is one of the scheduled offenses under Section 2(1)(y) of the PMLA, and the ECIR had been registered on September 6, 2022, it was necessary to protect the properties covered by Ext.P12 from depletion or destruction.
Referring to the Vijay Madanlal Choudhary case, it was further argued that additional information against the petitioner had come to light during the investigation, and this information was being examined by the police.
The bench, however, pointed out that no new FIR had been registered in connection with this information.
The bench concluded that without an FIR and ECIR, further PMLA investigation against the petitioner would have to cease.
It also highlighted that the Court had made it clear that if the predicate offense were to be revived, the Enforcement Directorate would be free to restart proceedings under the PMLA. Therefore, the bench allowed the writ petition and set aside Ext.P12.
Case Title: V.P. Nandakumar V. The Assistant Director Directorate Of Enforcement