PMLA is A Parasitic Offence, Doesn’t Have Its Own Legs To Stand: Supreme Court

A Supreme Court bench said that the ED 'must thoroughly establish the underlying predicate offences before pursuing money laundering charges in a case even though one or more accused may not be named in the predicate offence,' as per a report.

The Wire Staff

pmla is a parasitic offence doesn’t have its own legs to stand supreme court

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New Delhi: The Supreme Court on Friday, May 17 said that the offences under the Prevention of Money Laundering Act (PMLA) are "parasitic" and such cases cannot stand on their own without a predicate offence.

Hindustan Times reported that a bench comprising of justices Surya Kant and K.V. Viswanathan underlined the "absence of a predicate and scheduled offence" and granted bail to a Chattisgarh businessman who was arrested in connection with a money laundering case involving the illegal levy on coal transportation.

Notably, the apex court bench suggested that the Enforcement Directorate (ED) "must thoroughly establish the underlying predicate offences before pursuing money laundering charges in a case even though one or more accused may not be named in the predicate offence," as per the report.

“But there must be a predicate offence registered in the case. Otherwise, how can the agency proceed on its own? PMLA is a parasitic offence. It must have a predicate offence to survive. It doesn’t have its own legs to stand,” the bench was quoted as saying by HT.

Solicitor General S.V. Raju gave examples of previous Supreme Court judgments to highlight that an individual who is accused by the ED may not be accused of a scheduled offence as the investigations into offence of money laundering were "independent of the probe conducted by any other law enforcement agency in a predicate offence".

However, the bench said: “You (ED) will be left clutching at straws if there is no predicate offence. There has to be a predicate offence somewhere and against someone for you to proceed under PMLA,” as per the HT report.

The case in question pertained to the arrest of Sunil Kumar Agarwal in October 2022. The ED had initiated the probe against the businessman based on a report from the Income Tax department. He was arrested after the law enforcement agency registered an ECIR (equivalent to an FIR in ordinary criminal case) in Chhattisgarh capital Raipur and a connected criminal case against a co-accused in Bengaluru.

As per the report, while the FIR in Bengaluru initially mentioned Section 384 (extortion, which is a scheduled offence under PMLA), the charge sheet was later filed under non-scheduled offences of destroying records and assaulting public servants.

The bench noted that a “strong prima facie” case is made out for releasing Agarwal on bail as there was no predicate offence. Moreover, the Supreme Court gave the ASG "six weeks to come back with a statement whether the Chhattisgarh police have independently investigated the allegations of an alleged scam of illegal levy on coal transportation," HT reported.

This article went live on May twentieth, two thousand twenty four, at forty-one minutes past one in the afternoon.

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