The Patna High Court has temporarily halted an Enforcement Directorate probe into a Bihar liquor ban violation case, questioning the jurisdiction under the Prevention of Money Laundering Act.
The Patna High Court intervened in a contentious money laundering investigation, issuing a stay on proceedings against an individual accused by the Enforcement Directorate (ED) of violating the Bihar Excise Prohibition Act of 2016 through illicit liquor supply. This case has sparked a legal debate on the jurisdiction and scope of the Prevention of Money Laundering Act (PMLA), 2002, in relation to state-specific prohibition laws, offering a complex interplay between federal enforcement mechanisms and state legislation.
ALSO READ: Patna High Court Rejects Lawyer’s Plea, Prompting Dramatic Suicide Attempt; Legal Strain Exposed
The court’s directive to the ED to halt further proceedings in the case (ECIR No. PTZO/37/2022 dated 13.12.2022) until a detailed response to the plea for the dismissal of the Enforcement Case Information Report (ECIR) is submitted underscores the legal intricacies involved.
The bench explicitly stated –
“In the meantime, further proceedings in ECIR No. PTZO/37/2022 dated 13.12.2022 shall remain stayed. It is made clear that stay has been granted only with respect to the petitioner herein,”
Highlighting the provisional nature of this relief and its specific applicability to the petitioner.
The petitioner is arguing about what qualifies as a scheduled offense under the Prevention of Money Laundering Act (PMLA), specifically in relation to the Bihar Excise Prohibition Act, 2016. They are challenging the Enforcement Directorate’s (ED) reasoning for starting a case, questioning the legitimacy of categorizing an offense as scheduled based only on its connection to Section 120B of the Indian Penal Code (IPC) related to criminal conspiracy.
Section 120B of the Indian Penal Code (IPC) –
- If someone is part of a conspiracy to commit a serious offense (punishable with death, life imprisonment, or rigorous imprisonment of two years or more), and there is no specific punishment mentioned in the code for such a conspiracy, that person will be punished as if they abetted (aided or encouraged) the actual offense.
- If someone is part of a criminal conspiracy for an offense that is not as serious (not punishable with death, life imprisonment, or rigorous imprisonment of two years or more), they can be punished with imprisonment for up to six months, a fine, or both.
ALSO READ: SC tells Patna HC to deal with delay in uploading orders
The argument is based on a Supreme Court precedent (Pavanadibbur Vs. The Directorate of Enforcement 2023 INSC 1029), which states that an offense can only be considered a scheduled offense under the PMLA if it directly relates to an offense listed in the Act’s schedule. The petitioner insists on a clear and direct connection between the alleged offense and the offenses explicitly mentioned in the PMLA schedule.
The petitioner’s is saying that the Bihar Excise Prohibition Act, 2016, isn’t on the list of offenses that the Prevention of Money Laundering Act (PMLA) covers. Therefore, they argue that the Enforcement Directorate (ED) doesn’t have the authority to investigate money laundering in this case. The contention is that the allegations in the FIR don’t match up with what the PMLA considers an offense, raising doubts about the justification for initiating the Enforcement Case Information Report (ECIR) against the petitioner.
ALSO READ: Supreme Court Collegium Nominates Eminent Officers for Patna High Court Judgeship
In response to these arguments, the counsel representing the Union of India and the ED requested six weeks to file a counter affidavit, indicating the government’s intention to thoroughly address the legal questions raised. Justice Satyavrat Verma’s directive for a detailed counter affidavit underscores the court’s commitment to a comprehensive examination of the issues at hand, stating,
“The counter affidavit shall given parawise reply of the pleadings made in the quashing application and shall also reply the submission made by the learned counsel for the petitioner based on the judgment of the Hon’ble Supreme Court.”
This case, now scheduled for a hearing on 29th April,2024.
