The Jammu & Kashmir and Ladakh High Court has dismissed a money laundering complaint filed by the Enforcement Directorate (ED) against former Jammu & Kashmir (J&K) Chief Minister Farooq Abdullah and others. This complaint was linked to the alleged misappropriation of funds from the J&K Cricket Association. The ruling came in the case of Ahsan Ahmad Mirza vs Directorate of Enforcement.
Court’s Decision
Justice Sanjeev Kumar also nullified the charges framed by a Srinagar Court in 2020. Despite this ruling, the Court indicated that the ED may file a fresh case and pursue prosecution according to the law.
Technical Grounds for Relief
The relief was granted on the technical ground that the predicate offence, as registered by the Central Bureau of Investigation (CBI), did not involve a scheduled offence under the Prevention of Money Laundering Act (PMLA). The Court clarified that without a registered or pending enquiry for a scheduled offence, authorities under PMLA lack the jurisdiction to file an Enforcement Case Information Report (ECIR) or prosecute for money laundering.
Rejection of ED’s Argument
The Court rejected the ED’s argument that it could independently assess whether the petitioner had committed a scheduled offence, regardless of the CBI’s conclusions. It emphasized that the ED does not have superior authority over the CBI and must accept the CBI’s findings regarding non-PMLA offences.
Petitioners’ Main Argument
The petitioners argued that the prosecution under PMLA was based on the incorrect assumption that Section 120-B of the Ranbir Penal Code (RPC) was a scheduled offence. They cited the Supreme Court’s judgment in Pavana Dibbur v. Directorate of Enforcement, which ruled that Section 120-B RPC is not a scheduled offence unless it involves a conspiracy to commit an offence specifically included in the PMLA schedule.
Court’s Observations
The Court agreed with the petitioners, noting that the ED’s action was based on the mistaken belief that Section 120-B RPC was a scheduled offence. It observed that authorities under PMLA must have a scheduled offence registered by the jurisdictional police to proceed with money laundering charges.
Next Steps
The Court has left it to the Chief Judicial Magistrate (CJM) to review the material collected by the CBI and determine the appropriate charges. Should the CJM frame charges for scheduled offences, the ED may file a new ECIR and pursue prosecution for money laundering if applicable.
Conclusion
The Court has quashed the complaint and charges filed by the ED but has left the door open for potential future actions if scheduled offences are established. It stressed the importance of respecting the CBI’s conclusions and maintaining consistency between investigating agencies.
Advocates Shariq J Reyaz and M Syed Bhat represented the petitioners, while Additional Solicitor General SV Raju and other counsel represented the ED.
