The Punjab and Haryana High Court has held that Enforcement Directorate ( ED ) can launch prosecution by filing a complaint for violation of Section 3 and Section 4 of Prevention of Money Laundering Act, 2002 ( PMLA ) based on the predicate offence.
The Enforcement Directorate officials, including one Assistant Director, searched the business and residential premises of Pirtpal Singh, the petitioner and petitioner’s company, namely M/s Seabird International Pvt. Ltd. under Section 37 of the Foreign exchange Management Act. It would be appropriate to refer to provisions of Sections 36 and 37 of Foreign Exchange Management Act, 1999, [FEMA].
The Central Government shall establish a Directorate of Enforcement with a Director and such other officers or class of officers as it thinks fit, who shall be called officers of Enforcement, for this Act.
The searches were conducted based on reliable secret information received for a grave violation of the provisions of FEMA. As mentioned in para 3.2 of the above-captioned complaint, the Enforcement Directorate had received information that the petitioner and one Manoj Kumar were obtaining education visas for students, falsely claiming they had two colleges in Australia, namely Australian Adelaide International College and Durban International College.
The petitioner and associates incorporated the company M/s Seabird International Pvt. Ltd. on 01.05.2015, and the other Directors were Gurinder Singh and Jagmohan Singh. The information revealed a serious violation of forex through RTGS payments. Acting swiftly, the officials, including respondent No.2, who was Assistant Director, searched the premises of the petitioner’s company and recovered the documents, as mentioned in para no.3.2 of the complaint,
After that, the Enforcement Directorate officials recorded statement of petitioner under Section 37 of FEMA. The Joint Director of Enforcement Directorate sent a written communication to the Senior Superintendent of Police, SAS Nagar Punjab, stating that there is a violation of the IPC and Arms Act. Subsequently, their counterparts of Punjab Police about such violations, based on such information,
After the registration of the above captioned FIR, the Enforcement Directorate registered the above captioned ECIR on 30.11.2017. A reference to ECIR mentions that it is based on two FIRs, i.e., FIR No.118 and 158.
The petitioner has been mentioned as suspect No. 1. Subsequently, the Enforcement Directorate filed a complaint before the Special Judge, Mohali, under Sections 44 and 45 of the PMLA Act for the commission of offense punishable under section 3 read with Ss. 70 and 4 of the PMLA. Apprehending arrest, the petitioner filed anticipatory bail before the Special Judge, and the same was dismissed.
It was viewed that the Enforcement Directorate is created under Section 36 of the FEMA, 1999, and they have powers to conduct searches under Section 37 of FEMA. However, the officers, while conducting searches under Section 37 of FEMA, can exercise the powers like those conferred on Income tax authorities under Income Tax Act, 1961, and Section 37(3) FEMA makes it mandatory that the officer shall exercise such powers subject to such limitations laid down under Income Tax Act, 1961. The petitioner’s primary grounds for quashing ECIR and the complaint are that all this was done under the provisions of PMLA without any predicate offence.
The Court viewed that the police report points out that the FIR, challan has been filed under Sections 472 and 473 of IPC, 1860. Part A, paragraph 1 of the Schedule annexed to PMLA under Section 2(y) of PMLA mentions 472 and 473 of IPC as scheduled offences.
The Court comprising Justice Anoop Chitkara the held that Enforcement Directorate was well within the scope of PMLA, 2002 to launch prosecution by filing a complaint for violation of Sections 3 and 4 of PMLA based on the predicate offense under Section 472 and 473 IPC.
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