Money laundering investigation actions upheld as valid with proper authorization hierarchy under Section 17(1) PML Act

The Calcutta HC dismissed a writ petition challenging money laundering investigation actions. The court held it had territorial jurisdiction under Article 226(2) to hear the petition since part of the cause of action arose within its jurisdiction, despite the original case being from another state. The investigation revealed illegal proceeds from online gaming operations were laundered through associates. The court found the search, seizure, and freezing orders valid, noting proper authorization hierarchy under Section 17(1) of PML Act where Director authorized Deputy Director who then authorized Assistant Director. The statutory provisions prevailed over any apparent rule inconsistencies, and show cause notices were properly issued.

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Issues Involved:
1. Territorial Jurisdiction
2. Validity of Search, Seizure, and Freezing Orders
3. Authorization and Delegation under PMLA, 2002
4. Procedural Compliance and Provision of Reasons to Believe

Summary:

1. Territorial Jurisdiction:
The primary issue raised was whether the Calcutta High Court had the territorial jurisdiction to entertain the writ petition. The Enforcement Directorate (ED) argued that since the FIRs and ECIRs were lodged in Chhattisgarh, only the Chhattisgarh High Court should have jurisdiction. However, the court held that u/s Article 226(2) of the Constitution of India, it had the power to entertain the writ petition as the search, seizure, and freezing actions took place within its jurisdiction, causing legal and financial injury to the petitioners in Kolkata. Reliance was placed on precedents like Aasma Mohammed Farooq and Nawal Kishore Sharma.

2. Validity of Search, Seizure, and Freezing Orders:
The petitioners challenged the search, seizure, and freezing orders issued by the ED, arguing that they were not named in the FIRs related to the predicate offense and that the actions were conducted without proper authorization. The court found that the ED had conducted searches across multiple states, including West Bengal, as part of a broader investigation into money laundering involving the Mahadev Book App. The court noted that the search and seizure actions were part of an ongoing investigation by the ED's Raipur office.

3. Authorization and Delegation under PMLA, 2002:
The petitioners contended that the Assistant Director who issued the freezing order lacked proper authorization. The court examined the procedural compliance under Sections 17 and 20 of PMLA, 2002. It was found that the Deputy Director of ED, Raipur, had duly recorded his "Reason to Believe" and authorized the Assistant Director to conduct the search and seizure. The court held that the delegation of authority was consistent with the statutory provisions, and the Assistant Director's actions were valid.

4. Procedural Compliance and Provision of Reasons to Believe:
The petitioners argued that the freezing orders and the continuation orders were issued without proper "Reason to Believe" and that the Adjudicating Authority did not provide the necessary documents. The court found that the ED had followed the required procedures, including recording the "Reason to Believe" and communicating the continuation of the freezing orders. The court also noted that the petitioners had been provided with copies of the recorded reasons and relevant documents.

Conclusion:
The Calcutta High Court dismissed the writ petition, finding no merit in the petitioners' arguments. The court held that the ED had acted within its statutory powers and followed the proper procedures under PMLA, 2002. The court also confirmed its territorial jurisdiction to hear the case. There was no order as to costs.

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