Madras HC refuses to quash ED case against parties under CBI probe, says cases involve two different offences
PMLA does not state that the predicate offence has to be proved for the prosecution under the money laundering proceedings, wrote the bench.
Madras High Court
CHENNAI: The Madras High Court refused to quash an Enforcement Case Information Report (ECIR) registered against the proprietors of private companies for an alleged tainted money transaction, saying that predicate offence and money laundering case cannot be considered the same in the case filed by Directorate of Enforcement.
Relying upon several judgments of the Supreme Court including the landmark Vijay Madanlal Choudhary vs Union of India case, a division bench of Justice SM Subramaniam and Justice M Jothiraman held that the money laundering offence is a stand-alone offence, it is wrong to state that only when predicate or schedule offence is proved can the prosecution under the prevention of money laundering act (PMLA) proceedings be taken up.
PMLA does not state that the predicate offence has to be proved for the prosecution under the money laundering proceedings, wrote the bench. The petitioners C Manoharan, M Thenmozhi and C Lakshmi moved the court seeking to quash the PMLA proceedings of ED.
In 2014 CBI booked cases against the petitioners on the alleged offence of importing carbide inserts by evading customs duty between 2009-2011 and caused Rs 4.35 crore loss to the exchequer. While the trial was pending, ED filed ECIR against the petitioners and brought in money laundering charges.
The ED issued a show cause notice to the petitioners demanding a differential duty of Rs 13.79 crore from Nithish Tools Private Limited and Rs 3 crore from Shree Sai Enterprises.
Aggrieved by the money laundering proceedings initiated by ED, the petitioners moved the court to quash the case pending against them before the principal sessions court, Chennai.
The petitioners contended that the allegations both under the predicate offence and the money laundering offence are one and the same. So, they sought to quash the ED proceedings as the CBI had already initiated proceedings for the predicate offence.
The bench refused to accept the contention and wrote that the offence under the Customs Act is totally different and distinct, the petitioners are attempting to paint two distinct offences as if it is the very same transaction.
The bench dismissed the petition and directed the trial court to continue with proceedings against the petitioners.