ED's Role In Money Laundering Cases: Challenging Discharge Orders

Additional Solicitor General S V Raju advises the Enforcement Directorate (ED) to actively pursue money laundering cases by challenging discharge orders and sharing new evidence with predicate agencies.

Key Points

Additional Solicitor General S V Raju advises the ED to share fresh evidence and challenge rulings in predicate offences to strengthen money laundering cases.
Raju highlights that the ED can share information with primary agencies under Section 66 of the PMLA for further investigation or registering fresh cases.
The ASG suggests the ED should file a revision petition as an 'aggrieved party' when a court refuses to acknowledge a chargesheet filed by a predicate agency.
Raju addresses challenges in cases involving compounding, settlement, or compromise, urging the ED to find solutions to these hurdles.

Additional Solicitor General S V Raju on Friday said the discharge of an accused or a closure report filed in a predicate offence should not end the ED's investigation as he asked the agency to share fresh evidence and challenge the ruling as an "aggrieved" party.

Raju was speaking on the topic, 'Whether money laundering was an independent/standalone offence' at the 70th 'Enforcement Directorate (ED) Day' event held here.

The criminal provisions of the Prevention of Money Laundering Act (PMLA) stipulate that the federal agency can file a case only after taking cognisance of a predicate or scheduled offence registered by the police, Central Bureau of Investigation (CBI) or any other primary investigating agency.

The prevalent law also states that if the primary case fails in court, the money laundering case automatically vanishes.

Understanding the Link Between PMLA and Predicate Offences

Raju underlined this position saying the current understanding of the law is that the predicate offence is like an "umbilical cord" to the money laundering crime.

"The PMLA offence has to be linked with the predicate (scheduled) offence. So, scheduled offence is the heart of the proceeds of crime. And proceeds of crime is the heart of the offence of money laundering.

"So, if there are no proceeds of crime, there can't be an offence of money laundering," he said.

Speaking about discharge, where the court releases the accused before trial due to a lack of evidence from the prosecuting agency, Raju said the ED can opt to share fresh inputs with the predicate agency so that its money laundering case does not fail.

ED's Role After Accused Discharge

"Discharge, according to me, will not prevent further investigation...look at the discharge papers, have a look at the discharge order, find out why the order has been passed and then go to the predicate agency, give information, ask the predicate agency to further investigate and see that these crooks do not go scot-free," he told ED officers.

Recently, a Delhi court discharged former Delhi Chief Minister Arvind Kejriwal and 22 others in the CBI-probed excise policy case, citing a lack of evidence. The CBI appealed the order before the Delhi High Court, which is scheduled to hear the matter on May 4.

Discharge is unlike acquittal (where the accused receives a clean chit after a trial in court), he said.

"If discharge is not acquittal, the provisions of the law that a person convicted once cannot be tried again will not apply...so, this is one thing that the ED must try," the ASG said.

Utilising PMLA Powers for Effective Investigation

Raju also asked the ED to use its powers under the PMLA (Section 66), which allows it to share information or evidence gathered by it with a primary agency like the police or CBI for a "second look" at the case, continuation of investigation or even for registering a fresh case against the accused.

This, he said, can be used where the ED finds that the predicate agency was "lax" in investigating the case or the investigating officer did not do their job properly.

The ASG said that in cases where a predicate agency files a closure report, it does not mean no offence was committed.

"ED should make an endeavour for impleadment in such matters and also give information to the predicate agency (under Section 66 of PMLA), even if necessary, change the investigating agency which is found to be colluding with the accused," the top government law officer said.

Challenging Court Decisions and Addressing Hurdles

In an instance where a court refuses to take cognisance of a chargesheet filed by a predicate agency, Raju suggested the ED can file a revision petition as it is an "aggrieved party" in such a case.

The consequence (of court not taking cognisance) affects the ED because this will lead to the money laundering offence being "whitewashed". So, you are an "aggrieved" in that sense, he asserted.

"If you are an aggrieved person, you have a right to file a revision...may be a writ petition, therefore, ED must take up these matters and file such proceedings and say, yes we are not there in the predicate offence but look at the consequence, the consequence affects me and I have a right to say," he said.

Talking about those scheduled offences punishable with imprisonment for one or two years, Raju suggested that the agency could apply for "condonation" of delay before the court and also file a revision petition.

He also spoke about criminal cases involving a "compounding or settlement or compromise", such as one between a builder and homebuyers who were not given their promised abode.

Raju said such cases are "hurdles" that the ED has to deal with.

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