Delhi court discharges journalist Rajeev Sharma, 2 others in money laundering case

Sharma was first booked in an FIR in 2020, registered under the Official Secrets Act at the special cell of the Delhi Police, for allegedly maintaining links with Chinese intelligence officers and transmitting sensitive information relating to national security and foreign affairs through electronic means. It was also alleged that he received funds via hawala channels and Western Union. He was arrested in this case in September 2020.

According to the police, subsequent probe had revealed that some payments were routed through shell companies which were operated by Chinese nationals, namely Cheng Zhang and Qing Shi. These companies were then allegedly used to deliver hawala funds to Sharma through Raj Bohara alias Sher Singh.

The accused, while seeking their discharge from the ED case, had argued that no offence of money laundering is present in the predicate offence and since the Official Secrets Act offences are not scheduled under the PMLA and the only Indian Penal Code (IPC) charge in the predicate FIR is Section 120B (criminal conspiracy), there is no ground to proceed with the prosecution complaint filed under the PMLA.

The special PMLA court also recorded that the “existence of a Scheduled Offence must be real and demonstrable on the basis of the prosecution’s case” and it “cannot be the product of speculative or inferential reasoning”.

Relying on the judicial precedent set by the Supreme Court, Additional Sessions Judge Aparna Swami of Patiala House Court reasoned that it is “abundantly clear that a prosecution under PMLA is not maintainable where the alleged predicate offence is not one of the offences enumerated in the schedule to the PMLA”.

“The commission of a scheduled offence is the very foundation on which a money laundering charge rests. If the foundation fails, the superstructure (herein PMLA case) must collapse. In practical terms, this means that if the only invoked offences in the predicate FIR/ chargesheet are outside the Schedule, the Enforcement Directorate has no jurisdiction to proceed under the PMLA.”

The ED had argued that, although the police in the predicate offence did not explicitly charge the accused persons with IPC Section 411 (dishonestly obtaining or retaining stolen property), which is also a scheduled offence to prosecute under PMLA, the factual allegation implicitly makes out such an offence.

The argument, however, did not cut teeth with the court, as it observed, “…the arguments of the ED essentially ask the court to look beyond the formal chargesheet and infer that a property offence (theft/ receiving of stolen property) was inherently involved in the accused’s act of espionage…This court..finds the submissions to be misconceived in law and unsupported by facts on record.”

“The suggestion of a Section 411 IPC offence arises solely from the ED’s own conjecture during arguments; however, the same was not part of the case originally made by the investigating authorities…An offence under the Official Secrets Act does not inherently involve theft of information,” the court added.

“The Enforcement Directorate’s attempt to retroactively read a section 411 IPC offence into the facts of the present case is not legally tenable…It is beyond the mandate of a PMLA court to enlarge the scope of predicate case by adding new offences on a factual hypothesis.”

Discharging the three, the court held that their “PMLA prosecution is devoid of legal foundation” as the predicate offences under Sections 3, 4 and 5 of the Official Secrets Act and Section 120B of the IPC are not Scheduled Offences under the PMLA, adding that “no amount of inventive argument can make good this fundamental deficiency”.