Karnataka High Court to Decide on 'Dangerous' Money Laundering Precedent Involving Deceased Accused's Relatives
The Karnataka High Court has taken up a pivotal case that could set a significant legal precedent regarding the Enforcement Directorate's authority to pursue money laundering proceedings against relatives of an accused individual who has passed away. This case centers on whether such actions can continue when the sole accused in the underlying predicate offence is deceased.
Case Background and Legal Arguments
Justice M Nagaprasanna has directed the Enforcement Directorate to file objections in response to a petition filed by Anirudh Gupta. Gupta seeks to quash proceedings and summons issued against him by the ED last month, linked to an eight-year-old case involving his grandmother, Sarwan Kumari, who died in 2017. The predicate offence, registered at Ulsoor Gate Police Station in 2017, accused Kumari of providing false information to a public servant and misappropriating property under various sections of the Indian Penal Code, including cheating and criminal breach of trust.
Senior Advocate Sandesh J Chouta, representing Gupta, argued that the predicate offence abated in 2018 following Kumari's death. He emphasized that the Prevention of Money Laundering Act operates based on schedule offences, and with the primary accused deceased, the foundation for ED's investigation collapses. Chouta warned that allowing the ED to initiate proceedings years later sets a dangerous precedent, undermining the legal framework of schedule offences.
Enforcement Directorate's Stance
Advocate Madhukar Deshpande, appearing for the ED, opposed the petition, asserting that the proceeds of crime are held by the children of the deceased, necessitating investigation. He referenced Section 8(7) of the PMLA, arguing that the Act not only punishes individuals involved in crimes but also facilitates the confiscation of properties. Deshpande contended that the crime does not vanish with the accused's death, especially when property confiscation is involved, and the ED must investigate all parties connected to the proceeds.
Judicial Scrutiny and Key Questions
During the hearing, Justice Nagaprasanna raised critical questions, noting that an offence is tied to a specific individual. He queried, "Offence cannot hang in thin air; it is qua someone, if that someone goes, would that offence not die with that someone?" This highlights the court's focus on whether legal proceedings can persist without a living accused in the predicate offence.
The court also pointed out that in predicate offences, guilt must be established before property can be confiscated as proceeds of crime. This underscores the procedural challenges in cases where the primary accused is no longer available for adjudication.
Petitioner's Claims and Further Developments
Gupta's petition contends that all monies received from his grandmother, amounting to Rs 50,00,058, have already been recovered and transferred to the recovery officer's account. Thus, he asserts no involvement in holding any funds related to the compensation received by Kumari from the Karnataka Industrial Areas Development Board. The plea argues that the ED's actions constitute a gross abuse of process and infringe upon fundamental rights.
The case has been posted for further hearing on February 21, with the outcome potentially influencing future ED investigations involving deceased accused individuals and their relatives.
