In a severe legal setback for the Enforcement Directorate, a court in the capital, Delhi has rejected the agency’s complaint of money laundering filed in the National Herald case thus giving procedural relief to Congress Party leaders Sonia Gandhi and Rahul Gandhi.
Special Judge Vishal Gogne at Rouse Avenue Courts rejected ED’s cognisance of the prosecution complaint, saying that it is not a legally maintainable one, mainly on account of the certain flaws in the manner of investigation. These are points of law and do not pertain to an examination of merits of accusations leveled.
Why the court rejected the ED case
The judgment of the court is based on the focal requirement of the PMLA regarding money laundering investigation to be predicated on a registered FIR with a scheduled or predicate offence.
No FIR, no jurisdiction
The case brought before the ED originated from a private complaint case filed by BJP party member Subramanian Swamy under Section 200 of CrPC. However, it came to notice that no FIR yet filed by CBI or any other law enforcement agency in respect to the alleged punishable offense.
As observed by the court itself, “The complaint under investigation and prosecution pertaining to the offence of money laundering is not maintainable in absence of an FIR qua the scheduled offence.” In other words, under Indian law, a complaint and an FIR are no different than “chalk and cheese.”
There are no private complaints that can invoke the provision for the Judge Gogne held that when a complaint is made by a public personality, though the complaint reveals an offence scheduled, it does not give powers to the ED to start money laundering investigation. When a complaint is made under section 200 CrPC, it cannot investigate like statutory authority, held by the court.
The ED thus did not have any jurisdiction to record an Enforcement Case Information Report and file a complaint of prosecution based on a complaint.
The Cognizance refused to rise to the occasion and said it was a case of law, not merits.
It follows that the Court had refused to take cognizance for lack of sufficient legal grounds. Since the prosecution case unfounded, there was no need to examine the factual allegations made out at that stage.
Other arguments “may live to fight another day,” the order states, leaving the merits open, should the case be brought forward through the proper legal channels.
Court questions ED’s timing
The judge has also drawn attention to the issues related to the registration of an ECIR by the ED in June 2021, in the absence of an FIR for the scheduled offence since 2014. Notably, he has said that even the CBI did not register an FIR.
Considering the chronology of events that followed, including the filing of an FIR by EOW thereafter, the court ruled that it is premature to form a prima facie view on the charges.
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What is the National Herald case?
This case pertains to the matter at Associated Journals Limited, AJL, which owns National Herald Newspaper. During 2010, the ownership of the AJL debt by the Congress Party for the amount of ₹50 lakh enabled the acquisition of the AJL assets worth over ₹2,000 crore by the company called Young Indian Pvt Ltd, YIL.
Accusations have been made that Sonia Gandhi and Rahul Gandhi held a majority stake in YIL and that, therefore, party funds were used to gain control of AJL’s properties. Properties of AJL to the extent of ₹661 crore were sought to be taken possession of by the ED based on the accusation of money laundering.
What the ruling means
The discharge is an interim relief for the Gandhis, as it secures them that the ED cannot proceed with their complaint. However, at the same time, it has also made a hint at charging them if done properly in the law with a valid FIR about the predicate offense. The order puts more emphasis on judicial review as regards the application of money laundering laws and that procedural compliance is imperative, even in high-profile cases and those considered politically sensitive.
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