Offence U/S 5(1)(d) J&K Prevention Of Corruptions Act Remains A Scheduled Offence Under PMLA: J&KL High Court
The High Court of Jammu & Kashmir and Ladakh has held that an offence under Section 5(1)(d) of the J&K Prevention of Corruption Act continues to qualify as a “scheduled offence” under the Prevention of Money Laundering Act, 2002 (PMLA), even after the omission of Section 13(1)(d) of the Central Prevention of Corruption Act in 2018.
Justice Sanjay Dhar held that the amended Section 7 of the Central PC Act corresponds to Section 5(1)(d) of the J&K PC Act. Since amended Section 7 is included in the PMLA Schedule, the corresponding J&K provision would also be treated as a scheduled offence under Section 2(2) of the PMLA.
The Court observed,
“After coming into effect of amendment Act of 2018, amended Section 7 of the Central PC Act is the provision corresponding to Section 5(1)(d) of the J&K PC Act.”
The Court further held,
“Since amended Section 7 of the Central PC Act is a Scheduled offence, therefore, offence under Section 5(1)(d) of the J&K PC Act would also fall within the definition of a scheduled offence in the light of the provisions contained in Section 2(2) of the PMLA.”
The Court was dealing with a petition filed by one M/s Reach Dredging Limited, challenging summons issued by the Directorate of Enforcement under Section 50 of the PMLA and the ECIR registered against the company. The proceedings arose from an FIR registered by the Anti-Corruption Bureau, Srinagar, under Section 5(1)(d) of the J&K PC Act and Section 120-B RPC in connection with a government contract relating to construction and dredging work at Hokersar Wetland.
The petitioner had contended that the ED could proceed under the PMLA only if the underlying offence was a scheduled offence. According to the petitioner, Section 13(1)(d) of the Central PC Act, which earlier corresponded to Section 5(1)(d) of the J&K law, had been omitted in 2018. Therefore, there was no corresponding provision in the Central Act after the amendment and the J&K offence could not be treated as a scheduled offence, it was submitted.
Scheduled Offence Necessary For PMLA Proceedings
The Court noted that “proceeds of crime” under the PMLA means property derived or obtained from criminal activity relating to a scheduled offence. Thus, the Court held that commission of a scheduled offence is a sine qua non for the existence of proceeds of crime and the offence of money laundering under Section 3 of the PMLA.
The Court also noted that although the J&K PC Act is not itself included in the PMLA Schedule, Section 2(2) of the PMLA requires a reference to a corresponding law where the Central enactment is not in force in the concerned area.
However, the Court rejected the petitioner's argument that deletion of Section 13(1)(d) had left Section 5(1)(d) of the J&K PC Act without a corresponding Central provision. Comparing the provisions, the Court found Section 5(1)(d) of the J&K PC Act to be in pari materia with the pre-amendment Section 13(1)(d) of the Central PC Act.
The Court then examined the Statement of Objects and Reasons of the 2018 Amendment Act and held that Parliament had not intended to eliminate the conduct earlier covered by Section 13(1)(d). Instead, it had made Section 7 more comprehensive. Justice Dhar observed,
“The Legislature, on the one hand, intended to expand the scope of Section 7 of the Central PC Act so as to include even the offences which are covered under Section 13(1)(d) of the said Act.”
The amended Section 7 covers, among other things, a public servant obtaining an undue advantage by abusing his position or through corrupt or illegal means, the court said and held that this covered the conduct previously dealt with under Section 13(1)(d).
Section 7 Corresponds To Section 5(1)(d), Not Section 4-A
The Court also rejected the petitioner's argument that amended Section 7 of the Central PC Act corresponds to Section 4-A of the J&K PC Act. It held that Section 4-A is not comprehensive enough to cover the conduct falling within amended Section 7. Accordingly, the court observed,
“Amended Section 7 of the Central Act is not in pari materia with Section 4-A of the J&K PC Act, but it does correspond with Section 5(1)(d) of the J&K PC Act.”
The Court emphasised that since the amended Section 7 of the Central PC Act is specifically included in Paragraph 8 of the PMLA Schedule, Section 5(1)(d) of the J&K PC Act also falls within the scheduled-offence framework through Section 2(2) of the PMLA.
The Court consequently rejected the challenge to the ED's jurisdiction, holding that there was no basis to contend that no scheduled offence existed so as to prevent the ED from investigating the alleged money laundering. The petition was accordingly dismissed.
Case Title: M/s Reach Dredging Limited v. Directorate of Enforcement
Citation: 2026 LiveLaw (JKL) 326
Appearances:
Petitioner: Mr. Shariq J. Reyaz, Advocate, with Mr. Prabahar Mishra and Ms. Humaira, Advocates
Respondent: Ms. Masooda Jan, Senior Advocate, with Ms. Nazima and Mr. Anup Pandey, Advocates