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‘Draconian’: Karnataka HC halts ED probe against man years after death of his grandmother, sole accused in predicate offence
The Karnataka High Court pointed out the six-year delay in the ED's action and the dangers of designating properties as "proceeds of crime" long after a case is closed.
In its interim order, the Karnataka HC stayed the ED's proceedings against the grandson of the accused of a 2017 cheating case (Image generated using AI).
In a significant ruling on the limits of the Prevention of Money Laundering Act (PMLA), the Karnataka High Court Thursday stayed proceedings against a man whose deceased grandmother was the sole accused in a 2017 cheating case. On the Enforcement Directorate’s (ED) decision to initiate action six years after the primary case abated, the court orally said, “If this is allowed, it would be draconian.”
The case centres on whether the ED can legally pursue “proceeds of crime” when the underlying “predicate offence” has been closed due to the death of the only person charged.
Justice M Nagaprasanna, in the interim order, said, “The matter would require consideration on the score because the sole accused (grandmother) in the predicate offence dies and the proceedings are closed having been abated. Whether the offence would still lie as there was no other accused in the crime except the one that died for the ED to spring into action, six years after the closure of the proceedings and begin to treat the properties of the petitioners as being one of proceeds of crime.”
The order added, “Therefore, there shall be an interim order of stay, owing to the peculiar circumstances of the case till the next date of hearing.”
The petitioner, Anirudh Gupta, sought to quash the proceedings and the summons issued against him by the agency last month in connection with money-laundering charges.
The ED initiated criminal proceedings based on a case registered at Ulsoor Gate police station (UGPS) in 2017 against his grandmother Sarwan Kumari for offences such as providing false information to a public servant and misappropriation of property under the Indian Penal Code (IPC).
During the hearing, the bench observed ‘delay’ in initiating proceedings by the ED, which is a factor to be considered by the court. The court orally said, “If this is permitted, then it can also happen that ten years later, ED may say this house is out of the proceeds of crime, so register an ECIR (Enforcement Case Information Report).”
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‘Death of an accused does not extinguish crime’
In the previous hearing, Additional Solicitor General Aravind Kamath argued that proceeds of crime would have to be investigated even if the sole accused had expired. He said, “The money laundering is all about proceeds of crime, and it is money generated out of a criminal activity; there is no denial of criminal activity having been committed. The passing away of an accused would not extinguish the crime or the proceeds of crime.”
Senior advocate Sandesh J Chouta, appearing for the petitioner, then argued, “In 2017, when the death of the grandmother took place, the predicate offence goes. How can they (ED) have PMLA in 2023? They cannot say that after seven years we have come to know that there are some proceeds of crime, that is not how PMLA works, it works on the basis of scheduled offences.”
The court has now posted the matter for further hearing on March 26.
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