Existence of a predicate offence for initiation of proceedings under the PML Act is not a condition precedent to initiate proceedings: Madras High Court

Existence of a predicate offence for initiation of proceedings under the PML Act is not a condition precedent to initiate proceedings: Madras High Court

predicate offence - initiation of proceedings - PML Act - initiate proceedings - Madras High Court - Taxscan

The Madras High Court held that the existence of a predicate offense for initiation of proceedings under the Prevention of Money Laundering Act, 2002is not a condition precedent to initiate proceedings.

The batch of writ petitions have been filed questioning the provisional order of attachment, summons issued, order passed by the adjudicating authority, proceedings initiated, complaint filed before the adjudicating authority, consequential possession notice issued under the Prevention of Money Laundering Act, 2002.

The counsel for the petitioners, P N. Manmohan contends that offence has occurred in India and money is transferred from Dubai and there is no compliance with Section 2(1)(ra) of the PML Act.

It was further contended that Section 55 of PML Act deals with the definition of ‘Contracting State’ and section 56 refers to an agreement between foreign countries and section 57 deals with letter of request to contracting state in certain cases and reading of these provisions together does not indicate that any offense has been committed by the petitioners at Dubai, which is a condition precedent for invoking proceedings under PML Act as indicated in Section 2(1)(ra) of PML Act. Therefore, the initiation of proceedings is bad in law.

The court was of the considered view that the constitution of a bench hearing the original complaint or its adjudication thereof consisting of one member cannot be found fault with. It can be further noticed that under sub-section (13) of Section 6, if the vacancy arises in the office of the Chairperson by reason of death, resignation or otherwise, the senior-most member would act as the Chairperson, and such Chairperson would exercise the power as provided under Section 6 of the PML Act.

The court held that the order of confirmation was an order without jurisdiction. Hence, the same is liable to be set aside, and accordingly, the order of confirmation passed by the third respondent is quashed. However, it requires to be clarified that quashing of confirmation order does not prevent the respondent authorities from proceeding in accordance with law, if they so desire and all contentions of both.

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