PMLA : Parallel investigation by different agencies is permissible : Prevention of Money Laundering Act operates independently

Delhi High Court Upholds Provisional Attachment Orders in Money Laundering Case Court dismisses petitions challenging enforcement actions under PMLA, affirming independence of parallel investigations.

In a significant ruling, the Delhi High Court has dismissed petitions filed by Sanjay Aggarwal and others challenging the Directorate of Enforcement's (ED) actions under the Prevention of Money Laundering Act (PMLA), 2002. The petitions contested the validity of a Provisional Attachment Order (PAO) issued under Section 5(1) of the PMLA and subsequent proceedings, including an Original Complaint and a Show Cause Notice. The High Court, comprising Justices Anil Kshetarpal and Harish Vaidyanathan, concluded that the PAO was validly issued based on objective evidence and the statutory framework of PMLA operates independently of the Companies Act, 2013.

The case stemmed from a complaint by Bank of Baroda's Deputy General Manager, highlighting serious irregularities in foreign exchange transactions involving shell companies, amounting to approximately Rs. 6000 Crores. The Central Bureau of Investigation (CBI) and the Directorate of Enforcement registered cases leading to the PAO and related actions.

Petitioners argued that the investigation should be solely under the Serious Fraud Investigation Office (SFIO) as per Section 212(2) of the Companies Act, 2013. However, the Court clarified that SFIO's jurisdiction is limited to offences under the Companies Act and does not preclude simultaneous investigations under other laws like PMLA. The judgment emphasized that PMLA is a standalone statute with its own investigative regime, and parallel investigations by different agencies are permissible.

The Court also addressed the petitioners' contention that the PAO required a prior charge sheet under Section 173 of CrPC, affirming that the issuance of a PAO does not mandatorily require such a charge sheet if sufficient 'reason to believe' is established based on tangible evidence.

The bench further noted that the PAO had been confirmed by the Adjudicating Authority and the petitioners had already filed an appeal under Section 26 of the PMLA, rendering the writ petitions infructuous. The Court emphasized that constitutional courts should ordinarily refrain from interfering when a statutory remedy is available unless exceptional circumstances warrant such intervention.

This judgment reinforces the autonomy of investigative processes under PMLA, ensuring that money laundering offences are addressed without being hindered by proceedings under corporate governance laws.

Bottom Line:

Parallel investigation by different agencies under distinct statutory regimes is permissible when offences relate to their respective domains, and the Prevention of Money Laundering Act (PMLA) operates independently of the Companies Act, 2013. Provisional Attachment Order (PAO) under Section 5(1) of the PMLA does not require the prior filing of a charge sheet under Section 173 of the CrPC.

Statutory provision(s): Prevention of Money Laundering Act, 2002; Companies Act, 2013; Indian Penal Code, 1860; Prevention of Corruption Act, 1988; Code of Criminal Procedure, 1973.

Sanjay Aggarwal v. Union of India, (Delhi)(DB) : Law Finder Doc Id # 2813581