The Enforcement Case Information Report (ECIR) is a formal entry of the complaint lodged by the Enforcement Directorate (ED). Though there is no mention about the ECIR in Prevention of Money Laundering Act, 2002 (PMLA Act) or Rules. However, as per the practice of ED, the ECIR is lodged before taking any action under the PMLA Act.
The ECIR under the PMLA Act is similar to the First Information Report lodged by the Police for the cognizable offences under the Code of Criminal Procedure, 1973 (Cr.P.C.). However, the Hon'ble Supreme Court in the landmark case of Vijay Madanlal Choudhary and Ors. Vs. Union of India (UOI) and Ors., Special Leave Petition (Criminal) No. 4634 OF 2014, held that ECIR cannot be equated with an FIR under the Cr.P.C.
That on the perusal of the provisions of the PMLA Act, it can be seen that the certain provisions of the PMLA Act does not mention any requirement of pendency of any FIR or complaint in the Court before initiation of PMLA case. Few provisions under the PMLA Act only state about the material in the possession of the ED on the basis of which the ED has reason to believe that an offence of money laundering has been committed.
Further, by virtue of the Finance Act, 2019, which received the assent of President of India and became an Act, certain amendments have been made in the provisions of the PMLA Act. Through the said amendment, the following provision has been deleted from Sections 17(1) And 18(1) of the PMLA Act, namely:--
"Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973(2 of 1974), or a complaint has been filed by a person, authorized to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorized to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorized by the Central Government, by notification, for this purpose."
The impact of deleting the proviso from Sections 17(1) And 18(1) of the PMLA, is that the authorized officer under the PMLA can enter any property for purpose of conducting search and seizure, and the search of any person, even in absence of any reporting of the scheduled offence to a Magistrate or court for taking cognizance of the scheduled offence or to the Additional Secretary to the Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be.
The Hon'ble Delhi High Court in the case of Vir Bhadra Singh v. Enforcement Directorate and Ors., 2017 (3) RCR(Criminal) 576, observed that registration of an FIR is not necessary for exercising the powers given to the empowered officers under PMLA.
In the case of Criminal Appeal No. 1340 of 2019 (Arising out of SLP (Crl.) No. 7523 of 2019) titled P. Chidambaram Vs. Directorate of Enforcement, (2019) 9 SCC 24, the Supreme Court has held that a "scheduled offence" is a sine qua non for the offence of money laundering which would generate the money that is being laundered. However, this judgment, nowhere states that the registration of FIR is a sine qua non.
In the case of Vijay Madanlal Choudhary and Ors. Vs. Union of India (UOI) and Ors., the Hon'ble Supreme Court has clarified the position and held that to initiate "prosecution" for offence under Section 3 of the PMLA Act registration of scheduled offence is a prerequisite, but for initiating action of "provisional attachment" under Section 5 there need not be a pre-registered criminal case in connection with scheduled offence. Further, the Hon'ble Court also held that ECIR is not a statutory document, nor there is any provision in PMLA Act requiring Authority referred to in Section 48 of the PMLA Act to record ECIR or to furnish copy to the accused and the fact that such ECIR has not been recorded, does not come in the way of the authorities referred to in Section 48 of the PMLA Act to commence inquiry/investigation for initiating civil action of attachment of property being proceeds of crime.
In view of the above, it is apparent that there is no requirement of an FIR or a pendency of complaint in any Court before starting investigation under the PMLA Act or lodging of ECIR.
By
Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court
Email id: vpdalmia@vaishlaw.com
Mobile No.: +91 9810081079
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AND
Rajat Jain, Advocate
Email id: rajatjain@vaishlaw.com
Mobile No. 9953887311
LinkedIn: https://www.linkedin.com/in/rajat-jain-75772398/
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