PMLA investigation and Look Out Circular sustained where predicate offences, SEBI findings, and ongoing inquiry justified continued restraint.

Madras HC held that the Enforcement Directorate could continue investigation where the predicate FIRs and SEBI findings disclosed a prima facie scheduled offence under PMLA, including allegations of share-price manipulation, fund diversion and related-party transactions; the objection based on absence of punishment under the cited SEBI provision failed, and the investigation was maintainable. It also upheld the travel restriction and Look Out Circular, noting the petitioner's incomplete cooperation, pending analysis of electronic and financial material, and the need for his presence in India to preserve evidence and complete the inquiry. The writ petition was rejected, with directions to complete the investigation and file the complaint within the time fixed.

---

---

Issues: (i) whether the Enforcement Directorate had jurisdiction to continue investigation on the basis of the predicate FIRs and the SEBI findings, including the alleged contravention of securities law provisions; (ii) whether the petitioner was entitled to removal of his name from the travel-restriction database and revocation of the Look Out Circular pending completion of investigation.

Issue (i): whether the Enforcement Directorate had jurisdiction to continue investigation on the basis of the predicate FIRs and the SEBI findings, including the alleged contravention of securities law provisions.

Analysis: The predicate FIRs disclosed offences that formed scheduled offences under the Prevention of Money Laundering Act, 2002. The materials placed before the Court, including the SEBI order and the allegations relating to manipulation of share price, diversion of funds, and related-party transactions, showed a prima facie basis to proceed under the money-laundering framework. The objection that the Enforcement Directorate lacked jurisdiction because the petitioner was not punished under the particular SEBI provision was rejected, since the record disclosed a prima facie violation of Section 12A(c) of the Securities and Exchange Board of India Act, 1992, and the allied findings were sufficient to sustain investigation at that stage.

Conclusion: The challenge to the Enforcement Directorate's jurisdiction failed, and the investigation was held to be maintainable.

Issue (ii): whether the petitioner was entitled to removal of his name from the travel-restriction database and revocation of the Look Out Circular pending completion of investigation.

Analysis: The Court found that the petitioner had not fully cooperated with the investigation, that significant electronic and financial material was still under analysis, and that his presence in India was necessary for the completion of the investigation. On the facts, the apprehension that permitting travel could affect the investigation and the preservation of evidence was accepted. In those circumstances, the request to lift the travel restraint was declined until the investigation was completed.

Conclusion: The petitioner was not entitled to removal from the database or revocation of the Look Out Circular at that stage.

Final Conclusion: The writ petition was rejected, while the investigating agency was directed to complete the investigation and file the complaint within the time fixed by the Court.

Ratio Decidendi: A Look Out Circular may be sustained where ongoing investigation and available material show the necessity of the subject's presence in India, and investigation under the money-laundering law can proceed when the predicate offences and allied material disclose a prima facie scheduled offence and possible proceeds of crime.

---