Jammu and Kashmir High Court quashes money laundering case against Farooq Abdullah

The Jammu & Kashmir and Ladakh High Court today quashed a money laundering complaint filed by Enforcement Directorate (ED) against former Jammu & Kashmir (J&K) Chief Minister Farooq Abdullah and others in connection with the alleged misappropriation of funds of the J&K Cricket Association [Ahsan Ahmad Mirza vs Directorate of Enforcement]..Justice Sanjeev Kumar also set aside the charges framed by a Srinagar Court in the case in 2020. However, the Court made it clear that notwithstanding quashing of the charges, it shall remain open to the ED to register the case afresh and launch prosecution against the accused in accordance with law.The Court granted the relief to the accused on a technical ground - that the predicate offence registered by the Central Bureau of Investigation (CBI) did not involve any scheduled offence under the Prevention of Money Laundering Act (PMLA)“In the absence of there being any case registered for commission of scheduled offence or any case pending enquiry or trial in respect of scheduled offence, authorities under PMLA have no jurisdiction to register ECIR and launch prosecution for offence of money laundering under Sections 3/4 of PMLA. When there is no scheduled offence having been registered or pending enquiry or trial, there are no proceeds of crime and, thus, there is no offence of money laundering under Section 3 of the Act,” the Court ruled..The Court rejected the ED’s argument that it was not bound by the conclusions drawn by the CBI and it can independently look into the material contained in the charge-sheet to come to a conclusion that the petitioner has committed a scheduled offence to justify registration of case under PMLA.“The Enforcement Directorate is not an authority or investigating agency in any manner superior to CBI, nor is it vested with or conferred the power and jurisdiction to sit in appeal against the investigation made and the conclusion drawn by the later. The Enforcement Directorate being a parallel investigating agency in respect of crimes under PMLA must accept the investigation carried by another investigating agency and the conclusion drawn by the said agency in respect of commission of the offences other than the offences under PMLA,” said the Court..Abdullah was not a petitioner before the High Court in the present matter. The judgment was passed in the case of co-accused Ahsan Ahmad Mirza and Manzoor Gazanfar who were represented by Advocate Shariq J Reyaz.The petitioner’s main submission before the Court was that the very basis of launching the prosecution under PMLA was that Section 120-B of the Ranbir Penal Code (as was applicable to the J&K then) was a scheduled offence. .However, it was argued that Section 120B in isolation was no longer a scheduled offence in view of Supreme Court’s judgement in Pavana Dibbur v. Directorate of Enforcement.The top court in Pavana Dibbur’s case had ruled that offence punishable under Section 120B RPC or IPC shall not be a scheduled offence unless conspiracy alleged is of committing an offence specifically included in the schedule.The Court accepted the argument and said,“From a perusal of the complaint filed by the respondent before the Designated Special Court it clearly transpires that the ECIR was registered and prosecution was launched by the respondents only on the assumption that Section 120-B RPC in respect of which there was a case registered by the CBI against the petitioner was a scheduled offence.”Advocate Reyaz, who represented the petitioners, confirmed to the Bar & Bench that the entire prosecution in the PMLA case had been set aside..The Court also observed that authorities under PMLA cannot resort to action against any person for money laundering only on the assumption that the property recovered by them must be proceeds of crime. It added that registration of a scheduled offence by the jurisdictional police is a must.“In the instant case, indisputably, the jurisdictional police, the CBI has not registered any case for commission of any scheduled offence. Enquiry by way of complaint before the CJM, Srinagar is also not in respect of any scheduled offence. In the absence of there being any case registered for commission of scheduled offence or any case pending enquiry or trial in respect of scheduled offence, authorities under PMLA have no jurisdiction to register ECIR and launch prosecution for offence of money laundering under Sections 3/4 of PMLA,” the Court further said..With regard to the CBI case, the Court said it was now for the Court of Chief Judicial Magistrate (CJM) to consider the entire material collected during investigation and determine as to what offences are made out against the accused.“The Enforcement Directorate, if so permitted, may approach the Chief Judicial Magistrate and canvass before it that apart from the offences of Section 120-B, 406 and 409 RPC, scheduled offences like Section 411 and 424 RPC are also made out. If the Court of Chief Judicial Magistrate frames charges against the petitioner for any of the scheduled offences, it shall be open for the Enforcement Directorate to register fresh ECIR and launch prosecution against the petitioner, if he is found to have been involved in the commission of offence of money laundering under Section 3 PMLA,” it added..However, the Court clarified that ED cannot be permitted to preempt the outcome of an exercise, which is yet to be undertaken by a competent court of law at the stage of charge/ discharge.The ED cannot be allowed to assume jurisdiction of the competent Court of criminal jurisdiction and arrive at conclusions different from those arrived at by CBI which has investigated the matter and presented the charge sheet before the CJM in Srinagar, the judge said. “As on date, the charge-sheet presented by the CBI is only respect of Section 120-B, 406 and 409 RPC, which are admittedly not the scheduled offences,” the Court stated. .The Court also said that it was necessary for the ED to respect the decisions of the CBI to maintain harmony and to avoid contradictory stand by the two investigating agencies operating in their independent fields.“The complaint, the charge-sheet and the charges framed by the designated Special Court (Principal Sessions Court, Srinagar) vide order dated 18.03.2020 are quashed It is, however, made clear that notwithstanding quashing of the charges, it shall remain open to the Enforcement Director to register ECIR afresh and launch prosecution against the petitioner under Section 3 of the PMLA if ultimately the Court of Chief Judicial Magistrate, Srinagar frames charges for offence/offences, which are specifically mentioned in the schedule of PMLA,” the Court ordered..Advocates Shariq J Reyaz and M Syed Bhat represented the petitioners.Additional Solicitor General SV Raju, Special Counsel Zoheb Hossein and Manin Jain with Deputy Solicitor General of India TM Shamsi and advocates Faizan, Rehana Qayoom and Monika Kohli represented the ED..[Read Judgment]