The Madras High Court has advised the Enforcement Directorate (ED) to prioritise cases involving public money, corruption and scams of national consequence, instead of invoking the Prevention of Money Laundering Act (PMLA) to probe private disputes [Ala Alagappan v The Additional Director, Directorate of Enforcement]

Justice N Ramesh made the observation while granting bail to accused Ala Alagappan in a money laundering case arising out of transactions between a woman and Alagappan’s father, who was her power-of-attorney holder.

“The stringent provisions of the Act are not meant to be invoked where the dispute is, in its essence, between private individuals over private property, for which the ordinary criminal and civil law already provides," the Court said.

The Court noted that the PMLA was enacted against the backdrop of international efforts to combat laundering of proceeds from serious crimes affecting the financial system and national interests.

It acknowledged that cheating and criminal breach of trust are scheduled offences and that the PMLA, as presently framed, can apply to proceeds arising from every scheduled offence.

However, the Court opined that the mere breadth of statutory power does not mean it should be exercised in every case falling within its reach.

“But the reach of a power is not the measure of the occasions for its use,” the Court said.

The Court noted that ED's own record revealed the dispute in the present case arose out of dealings between one individual and the family of her power-of-attorney holder. No public money, public body or public servant was involved, it found.

The Court also found that the complainant had already lodged seven FIRs in the matter and that the principal criminal case has culminated in a final report. The same is now pending trial. She had also obtained a civil decree concerning one of the transactions.

The Court, while commenting on the consequences of such investigations by a central agency, said:

“Each hour its officers spend tracing a flat bought by a father in his son's name in 2016 is an hour not spent on the laundering of public money, the proceeds of corruption, scams that defraud the public at large, and crime that touches the security and economic interest of the nation.”

The Court clarified that it was for the ED to decide where its investigations should be directed, and that its observations were not a direction to close or abandon the present probe.

Nevertheless, it said the agency should give primacy to serious cases.

On the merits of the bail plea, the Court found that the ED had not produced sufficient material to show that the properties attributed to accused Ala Alagappan were derived from the scheduled offence or that he knowingly participated in laundering .

In particular, regarding a T Nagar flat, the Court found that the ED's claim of money trail rested more on assertion than material placed before the Court.

It consequently held that there were reasonable grounds to believe that Alagappan was not guilty of money laundering and was unlikely to commit an offence while on bail.

"Accordingly, this Criminal Original Petition is allowed, and the petitioner is ordered to be released on bail on his executing a bond for a sum of Rs.25,000/- (Rupees Twenty Five Thousand only) with two sureties, for a like sum to the satisfaction of the learned Special Court, PMLA, Chennai," the Court ordered.

Senior Advocate T Mohan, instructed by G Uma Maheswari, appeared for Alagappan.

Special Public Prosecutor P Sidharthan represented the ED.

[Read Order]