ED is not a 'super cop' or 'loitering munition' to investigate everything: Madras HC

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Coming down heavily on the Directorate of Enforcement (or ED), the Madras High Court has said that the national anti-money laundering agency cannot conduct investigations on its own. A division bench said the agency can initiate action only upon the existence of a predicate offence.
The bench of Justice MS Ramesh and Justice V Lakshminarayanan stated that the ED was not a super cop to investigate 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 the Prevention of Money Laundering Act, and on account of such criminal activity, there should have been “proceeds of crime”.
“It is only then that the jurisdiction of ED commences. 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 files a complaint, then it becomes a stand-alone offence,” the court said.
The court made the observations in response to a plea filed by RKM Powergen Pvt Ltd, which challenged the ED's action of freezing its fixed deposits and preventing the ED from proceeding with the investigation.
The court also observed that the ED was like a limpet mine attached to a ship, with the ship serving as the predicate offence and the proceeds of crime. The court added that without the ship, the limpet mine could not work. It stressed that the ED was not a loitering munition or drone to attack at will on any criminal activity.
If during the investigation, the ED comes across a violation of law, it cannot assume the role of an investigating agency and probe those offences also, the bench said. The court stated that, as per the PML Act, the ED was required to inform the relevant agency, which would then commence an investigation. If, after investigation, the agency did not find any case with respect to the aspects pointed out by the ED, the ED could not suo motu proceed with the investigation and assume power.
(with LiveLaw inputs)