CHENNAI: In a significant ruling, the Madras High Court has held that mere registration of an FIR on a predicate offence does not mandate the Enforcement Directorate to register a case on money laundering.
However, it pointed out that the subjective satisfaction of the authorised officer of the agency is essential for initiating proceedings on tainted money.
It also highlighted that it is up to the Central Agency to decide on initiating money laundering proceedings under the Prevention of Money Laundering Act (PMLA) against seven ex-ministers belonging to the AIADMK.
The ruling was given by the first Bench of Chief Justice Sushrut Arvind Dharmadhikari and Justice G Arul Murugan while dismissing the petitions filed by DMK MP R Girirajan seeking directions to the Enforcement Directorate to register an Enforcement Case Information Report (ECIR) based on the FIRs registered by the Directorate of Vigilance and Anti-Corruption (DVAC) against seven former ministers of AIADMK over the corruption and misappropriation of public funds.
“The registration of FIR in a predicate offence does not ipso facto mandate the ED to register an ECIR, but it is only based on the satisfaction of the authorised officer from the predicate case and the materials available. This Court cannot substitute the satisfaction of ED, which is to be arrived at from the materials available, in accordance with the PML Act,” the Bench said in a recent order.
Despite refusing to grant the relief sought in the writ petitions and dismissing them, the Bench said, “However, we make it clear that it is for the ED to decide in respect of initiating any proceedings under the PMLA based on the materials available and we express no opinion.”
Girirajan had filed the petitions seeking ED to register money laundering cases based on the FIRs registered against the former ministers Velumani, Thangamani, C Vijaya Baskar, MR Vijayabaskar, R Kamaraj, KC Veeramani, KP Anbalagan, former MLA B Sathyanarayanan/ T Nagar Sathya, and former president of Central Cooperative Bank in Salem R Elangovan by the DVAC for ‘large scale corruption’ and ‘misappropriation of public funds’.
Pointing out that the cases were registered for offences under Section 13(2) r/w 13(1)(e) and Section 13(2) r/w 13(1)(b), he noted that the offences committed by them constitute ‘scheduled offences’ under the PMLA, but ED has not yet registered money laundering cases against them.
The Bench, citing the Supreme Court’s judgment in the R. Madhavan Pillai case, said, “This court (HC) cannot direct the ED to register the ECIR merely on the finding that there exists a predicate offence.”
Further, it noted that the PMLA does not contemplate that wherever the case is registered, invoking scheduled offences, the ED is mandated to register an ECIR under the Act.
It is only based on the satisfaction of the authorised officer that there are proceeds of crime that the authority would proceed further under the Act.