In HC relief for Farooq Abdullah, rap to ED. ‘Conspiracy alone is not a scheduled offence, cannot invoke PMLA’

New Delhi: Farooq Abdullah, leader of the National Conference and former chief minister of Jammu and Kashmir, said he was “grateful to the Supreme Court for bringing out the truth” and proving that the allegations against him were “fabricated, false and only meant to tarnish his image”. He spoke to ThePrint soon after the Jammu and Kashmir High Court quashed chargesheets filed by the Enforcement Directorate (ED) implicating him and others in the alleged Jammu and Kashmir Cricket Association (JKCA) scam.

There was neither a “planned” crime, nor could the ED “assume” an infringement, the court said on Wednesday.

Scheduled offences under the Prevention of Money Laundering Act (PMLA) are those listed in the Schedule to the Act and relate to any kind of property or assets derived from proceeds of crime or used in the commission of offences relating to those offences. Scheduled offences are a prerequisite for a money laundering investigation.

The court added that during its investigation, the Central Investigation Bureau (CBI) filed an FIR under Section 406 (criminal breach of trust) and 409 (criminal breach of trust in relation to property) of the Ranbir Penal Code, both of which are non-scheduled offences.

The judge said that Section 120B (criminal conspiracy) cited by the CBI becomes a scheduled offence only if the alleged conspiracy was to commit an offence which is also a scheduled offence. This was not the case in this case, the court added.

“It is therefore argued that commission of scheduled offence is an indispensable prerequisite for commission of money laundering offence and, therefore, without commission of scheduled offence, there can be no proceeds of crime and no offence under PMLA,” the court said.

The court, however, said that the ED can initiate fresh proceedings if the Chief Judicial Magistrate ultimately frames charges in the CBI case that are specifically listed in the Schedule to the PMLA.

But at the moment, it is said, the CBI chargesheet makes it clear that the offence of money laundering under Section 3 of the PMLA has not been met.

“The complaint, charge sheet and charges framed by the Special Court (Principal Sessions Court, Srinagar) are quashed,” the court ruled.

The “fraud”

The alleged fraud involves the embezzlement of Rs 113 crore transferred by the Board of Control for Cricket in India (BCCI) to the Jammu and Kashmir Cricket Association (JKCA).

Abdullah was president of the JKCA when the alleged embezzlement took place in 2012. In September 2015, the Jammu and Kashmir High Court officially handed over the case to the CBI.

The ED case is based on an FIR filed by the CBI, which arrested former JKCA office-bearers, including Mohammed Saleem Khan and Ahsan Ahmad Mirza. In 2018, the CBI filed a chargesheet naming Abdullah and three others for allegedly embezzling over Rs 43 crore from BCCI grants.

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Abdullah, then General Secretary of JKCA Saleem Khan, former Treasurer Ahsan Ahmad Mirza and Managing Director of J&K Bank Bashir Ahmad Misgar were charged under the provisions of the Ranbir Penal Code (RPC) relating to criminal conspiracy and criminal breach of trust. The RPC was applicable in the erstwhile state under Article 370.

“ED cannot anticipate the outcome of an exercise”

Deputy Attorney General of India SV Raju argued that while the CBI has framed charges of criminal breach of trust and conspiracy, the agency will further disclose offences under Section 411 (dishonestly receiving stolen property) and 424 (dishonestly or fraudulently removing or concealing property), both of which are among the listed offences.

The court, however, reminded Raju of the legal position in the matter and said that the offence under Section 120-B RPC or IPC cannot be considered as a separate offence unless the alleged conspiracy was aimed at committing an offence.

“The ED cannot be permitted to prejudge the outcome of an examination which is yet to be conducted by a competent court at the time of charge/discharge,” the court said.

The court reiterated that the chargesheet filed by the CBI did not relate to any offence on the basis of which an investigation into money laundering could be initiated.

“In the instant case, it is undeniable that no case has been registered by the CBI for commission of any of the listed offences. Since no case has been registered for commission of any of the listed offences or any case for any of the listed offences is pending, the authorities are not empowered under PMLA to register ECIR and initiate criminal proceedings for money laundering under Sections 3/4 of PMLA,” the court said.

“If no planned offence is registered or there is no investigation or trial pending, there are no proceeds of crime and hence no offence of money laundering under Section 3 of the Act has been committed,” it added.

“ED is not superior to CBI”

Raju also argued that the ED was not bound by the CBI's conclusions and could independently examine the materials contained in the chargesheet to “come to the conclusion that the complainant has committed a scheduled offence to warrant registration of the case under PMLA”.

The court rejected this argument and observed that the ED is neither an agency or investigative authority superior to the CBI in any way nor does it have any power or jurisdiction to appeal against the investigations conducted by the latter and the conclusions reached by it.

The ED, a parallel investigating agency for offences under PMLA, “must accept the investigation conducted by any other investigating agency and the conclusions reached by it with regard to the commission of offences other than the offences under PMLA,” the court said.

The judge further stated that the CBI had investigated the case and submitted a charge sheet to the Chief Judicial Magistrate in Srinagar for offences not specifically mentioned in the list. It was now time to The court should examine all the material collected during the investigation and determine which crimes the accused is accused of.

The ED, the court said, can approach the Justice of the Peace and “find before him that in addition to the offences under Sections 120 (B), 406 and 409 RPC, offences under Sections 411 and 424 RPC also exist”.

It was said that the emergency department could open a new case if the magistrate brought charges for any of the planned crimes.

(Edited by Tikli Basu)

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