4 min readNew DelhiAug 21, 2023 05:28 PM IST
First published on: Aug 21, 2023 at 05:27 PM IST
The Delhi High Court Monday sought the Centre’s stand in a plea against a notification where chartered accountants, company secretaries and cost accountants have been included among “reporting entities” under the Prevention of Money Laundering Act (PMLA)
A division bench of Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula granted time to Additional Solicitor General Chetan Sharma, who appeared for the Centre, to “seek instructions” and listed the matter on October 4.
The bench also noted the petitioner’s submission that he was confining himself to “prayer a” of the petition where a direction for quashing the May 3 gazette notification by the Union Ministry of Finance has been sought.
As per the plea, the notification has “read into” the provisions of the PMLA and “expanded the definition” of the word “person” used in Section 2(1)(sa)(vi) and the definition of the word “activity”.
“Specifically, a class of professionals i.e., Chartered Accountants/Company Secretaries/Cost Accountants have been included within the definition of ‘Reporting Entities’ and onerous obligations under the PMLA have been put on them,” the plea said.
The plea stated that the notification lays down that if the relevant persons conduct the activities i.e., transactions specified in the notification on behalf of their clients, “then they would have to perform the function of a Reporting Entity and report such transactions under PMLA to the Director (ED) as and when information is sought”.
Appearing for the petitioner Rajat Mohan, who is a practising chartered accountant, senior advocate Trideep Pais said the inclusion of these professionals was on a “vague and subjective” basis, which is also in violation of the fiduciary relationship that they share with their clients.
ASG Sharma said the National Financial Fraud Reporting Authority is an authority created by law to look into “financial fraud”.
“Any interference will upset the harmonious arc” for reporting such transactions, the ASG said. He further said there will be a full mechanism put in place and each and every case will be looked at on its own terms.
The plea stated that the provisions of the PMLA make it mandatory for all chartered accountants/company secretaries/cost accountants to “practically maintain a vigil in the nature of policing on the records and transactions of all the parties approaching them”.
“This is the function of the state as per law and not of ordinary citizens who are merely professionals in a particular field and not qualified prosecutors,” the plea added.
The petition said the notification violates Articles 14 (equality before law), 19(1)(g)(right to practice profession, or carry out occupation), 20 (3) (no person accused of any offence shall be compelled to be a witness against himself), 21 (protection of life and personal liberty) and 300A (right to property) of the Constitution as well as other civil and statutory rights, including the “right of privacy” as well as the protection accorded to “professional, privileged, and confidential communications”.
It also contended that the notification gives “unbridled and unlimited, arbitrary, and whimsical power” to the authority under the PMLA and creates the framework for a fishing and roving enquiry into every financial transaction of each individual/citizen of the country.
“The scope and application of PMLA is extremely rigorous and strict and even a bonafide oversight shall put the life, liberty careers of the reporting entities under threat. A sword of Damocles would always remain hanging on the head of the petitioner,” the plea submitted.
The plea stated that the provisions of the PMLA make it mandatory for all chartered accountants/company secretaries/cost accountants to "practically maintain a vigil in the nature of policing on the records and transactions of all the parties approaching them". (File) 
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