High Court declines to address Bhupesh Baghel's opposition to Section 44 of the PMLA Act
The Supreme Court of India has provided clarity on the conditions under which the Enforcement Directorate (ED) can conduct further investigations in money laundering cases. In a landmark ruling, the court held that for the ED to proceed with such investigations under the Prevention of Money Laundering Act (PMLA), there must be the existence of a predicate offence and the presence of proceeds of crime linked to that offence.
In the case of Bhupesh Kumar Baghel v. Union of India and Ors, the court quashed an initial money laundering case as no predicate offence was found. The High Court had earlier emphasised that the ED's jurisdiction under PMLA depends on the existence of a predicate offence; in its absence, any freezing of assets or investigation is a "non-starter".
The ED can only proceed if there are proceeds of crime connected to a predicate offence. Mere suspicion or absence of such an offence does not grant jurisdiction. The Supreme Court also acknowledged that while the ED has "enabling powers" under Section 44 of the PMLA, these are not limitless and must be exercised respecting procedural protections and safeguards laid down by recent penal law amendments and case-by-case judicial remedies.
Justice Kant, one of the judges presiding over the case, said, "There is nothing wrong in the provision. If it is being abused, then go to the High Court." The petition in question challenged the ED's ability to carry out further investigation in money laundering cases based on subsequent complaints filed after the original complaint.
The case in question pertains to the Chhattisgarh Liquor Scam during Bhupesh Baghel's chief ministership. The Enforcement Directorate is probing this case, which involves money laundering allegations in connection with an alleged ₹2,000 crore liquor syndicate racket in Chhattisgarh.
During the hearing of Baghel's plea, Senior Advocate Kapil Sibal submitted that the ED files supplementary complaints in PMLA cases every few months, leading to delays in trial. The Supreme Court refused to entertain Baghel's petition challenging the ED's powers under Section 44 of the Prevention of Money Laundering Act.
Justice Bagchi remarked, "The devil is not in the law but in the abuse." The court added that if the ED has acted contrary to the prescribed procedures, the accused person can always approach the High Court. The Enforcement Directorate has claimed that this syndicate collected illegal commissions and sold unaccounted liquor through government liquor shops.
In conclusion, the specific circumstance allowing the ED to conduct further investigation is the existence of a legally recognised predicate offence that establishes a link between the crime and allegedly laundered proceeds. Without this, further ED action would lack a legal foundation according to this ruling.
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