New Delhi, Mar 17 (PTI) The Supreme Court on Monday said money laundering by those in power eroded public confidence in governance and led to systemic vulnerabilities in financial institutions as it dismissed the plea of former Gujarat IAS officer Pradeep Sharma in cases probed by the Enforcement Directorate.
A bench of Justices Vikram Nath and P B Varale also dismissed a plea in which Sharma sought a preliminary inquiry into the multiple corruption cases filed against him by Gujarat Police.
The bench in the Prevention of Money Laundering Act (PMLA) case said money laundering had far-reaching consequences, not only in terms of individual acts of corruption but also in causing significant loss to the public exchequer.
"The alleged offences in the present case have a direct bearing on the economy, as illicit financial transactions deprive the state of legitimate revenue, distort market integrity, and contribute to economic instability. Such acts, when committed by persons in positions of power, erode public confidence in governance and lead to systemic vulnerabilities within financial institutions," it said.
The top court said the anti-money laundering law was enacted with the primary objective to prevent money laundering and confiscating the proceeds of crime while ensuring the illicit funds did not undermine the financial system.
"The PMLA was enacted to combat the menace of money laundering and to curb the use of proceeds of crime in the formal economy. Given the evolving complexity of financial crimes, courts must adopt a strict approach in matters concerning economic offences to ensure that perpetrators do not exploit procedural loopholes to evade justice," the order said.
Justice Vikram Nath, who authored the verdict on behalf of the bench, said the present case involved grave allegations of financial misconduct, misuse of position, and involvement in transactions constituting money laundering.
"The appellant seeks an end to the proceedings at a preliminary stage, effectively preventing the full adjudication of facts and evidence before the competent forum. However, as established in multiple judicial pronouncements, cases involving economic offences necessitate a thorough trial to unearth the complete chain of events, financial transactions, and culpability of the accused," it added.
From the material placed by the federal probe agency, coupled with the broad legislative framework of the PMLA, the court found the necessity to allow the trial to proceed and not discharge the appellant at the nascent stage of framing of charges.
"The argument that the proceedings are unwarranted is devoid of substance in light of the statutory objectives, the continuing nature of the offence, and the significant financial implications arising from the alleged acts. Discharging the appellant at this stage would be premature and contrary to the principles governing the prosecution in money laundering cases," the verdict said.
Given the severe and grave nature of the allegations against the appellant, the court said, it was imperative that he must undergo thorough judicial scrutiny during trial.
"A proper trial is necessary to unearth the full extent of the offence, to evaluate the evidence produced by the appellant, to analyse the complete chain of final transactions, and find out the veracity of the severe allegations and the amount of proceeds of crime. The legal framework under the PMLA serves as a crucial mechanism to ensure that individuals involved in laundering proceeds of crime are brought to justice and that economic offences do not go unpunished," the bench said.
From the materials on record it was evident that Sharma failed to establish any legally sustainable ground warranting interference at a pre-trial stage, it said.
"The offence alleged against the appellant is clearly a continuing offence under the PMLA, and the quantum of proceeds of crime involved far exceeds the statutory threshold and requires proper investigation and judicial scrutiny. The findings of the courts below are well reasoned and do not call for interference," it held.
On Sharma's plea of a preliminary inquiry, the bench said the allegations against him related to the abuse of official position and corrupt practices while holding public office.
"Such allegations fall squarely within the category of cognisable offences, and there exists no legal requirement for a preliminary inquiry before the registration of an FIR in such cases. The appellant's contention that successive FIRs have been registered against him with an ulterior motive is a matter that can be examined during the course of investigation and trial," it said.
The top court said Sharma had adequate remedies under the law, including the right to seek quashing of frivolous FIRs under Section 482 CrPC, the right to apply for bail, and the right to challenge any illegal actions of the investigating authorities before the appropriate forum.
"This court cannot issue a blanket direction restraining the registration of FIRs against the appellant or mandating a preliminary inquiry in all future cases involving him. Such a direction would not only be contrary to the statutory framework of the CrPC but would also amount to judicial overreach," the order said.
