High Court Can't Direct ED To Register ECIR Merely On Prima Facie Finding That Predicate Offence Existed : Supreme Court

The Supreme Court recently set aside a direction passed by the Kerala High Court to the Enforcement Directorate to register a case under the Prevention of Money Laundering Act in an alleged Co-operative bank fraud case.

The High Court could not have passed a "drastic order" to register an Enforcement Case Information Report (ECIR) merely on the basis of a prima facie conclusion that a predicate offence has been committed.

"High Court had no reason to pass a drastic order of directing the ED to register an ECIR only because the High Court prima facie came to a conclusion that a predicate offence exists," observed a bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan. The bench also set aside the ECIR which was registered on the basis of the High Court's direction.

The bench left it to the ED to take a call on the question of initiating proceedings under the PMLA.

The High Court bench of Justice Amit Rawal and Justice K. V. Jayakumar passed the impugned order while deciding an appeal filed by a depositor of the bank. As per allegations, , an amount of Rs. 24 Crore has been siphoned off from the Bank. The Court noted that FIR has been registered only against the former Secretary of the Bank. The surcharge proceedings initiated by the Kerala Co-operative Societies Act has fixed a liability of Rs 24,22,95,724 on 14 members of the former governing body of the Bank. The court wondered how other persons were let out without any criminal case.

The Court observed that since breach of trust and cheating is a predicate offence as per the provisions of the Prevention of Money Laundering Act, a direction to register ECIR was warranted.

Case : P Madhavan Pillai vs Rajendran Unnithan and others

Citation : 2025 LiveLaw (SC) 295

Click here to read the order