Recently, the Supreme Court set aside a High Court directive compelling the Enforcement Directorate (ED) to register an Enforcement Case Information Report (ECIR). The Court held that such an order, based solely on a prima facie finding of a predicate offence, was unjustified. It emphasized that the ED must retain discretion in initiating proceedings under the Prevention of Money Laundering Act, 2002 (PMLA).
The case arose from writ appeals wherein the Division Bench of the High Court directed the Enforcement Directorate to register an ECIR against all individuals allegedly involved in financial irregularities. The High Court noted that while an FIR had been registered against the Secretary, no criminal proceedings were initiated against other individuals implicated in the matter. It sought an explanation from the Home Secretary and Additional Chief Secretary, Cooperative Societies, regarding the omission of these individuals from criminal prosecution. Additionally, the High Court concluded that the allegations amounted to a predicate offence under Section 3 of PMLA and directed the Enforcement Directorate to register an ECIR.
The petitioner contended that the High Court exceeded its jurisdiction by mandating the registration of an ECIR, which is an internal document of the Enforcement Directorate. It was argued that the High Court’s direction impinged upon the investigative discretion of the agency and preempted the statutory process under PMLA. The petitioner also submitted that the mere existence of an FIR does not automatically warrant an ECIR, as the Enforcement Directorate is empowered to assess whether a case falls within the purview of PMLA before initiating proceedings.
The Supreme Court, after considering the contentions, held that the High Court had overstepped its jurisdiction by directing the Enforcement Directorate to register an ECIR. The Court emphasized that the registration of an ECIR is a matter of administrative discretion and must be determined by the Enforcement Directorate based on its independent assessment. The Court noted “According to us, the High Court had no reason to pass a drastic order of directing the Enforcement Directorate to register an ECIR only because the High Court prima facie came to a conclusion that a predicate offence exists.
Therefore, we set aside that part of the impugned judgment by which a direction is issued to the Enforcement Directorate to register an ECIR. Therefore, the ECIR registered on the basis of the impugned judgment is hereby quashed and set aside. We leave it to the Enforcement Directorate to take a call on the question of initiating proceedings under the Prevention of Money Laundering Act, 2002.”
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