PMLA information-sharing and prima facie UAPA material can justify registration and continuation of investigation.
Section 66(2) of the PMLA permits the Director or authorised authority to share information with the concerned agency where material suggests contraventions of other laws, so communication originating in PMLA proceedings can lawfully support registration of a crime under FEMA or other penal statutes when the disclosure is detailed and relevant. The document also notes that, for UAPA-related allegations, prima facie material of foreign funding, fund withdrawal through ATMs, concealment of identity, card circulation, and alleged channelisation of funds into extremist areas is sufficient to justify continued investigation at the threshold, without a final finding on guilt. The Karnataka HC declined to halt the investigation.
Issues: (i) Whether information shared by the Enforcement Directorate under Section 66(2) of the Prevention of Money-Laundering Act, 2002 could lawfully be acted upon for registration of crime under other laws; (ii) Whether the invocation of offences under the Unlawful Activities (Prevention) Act, 1967 disclosed sufficient prima facie material to prevent interdiction of investigation at the threshold.
Issue (i): Whether information shared by the Enforcement Directorate under Section 66(2) of the Prevention of Money-Laundering Act, 2002 could lawfully be acted upon for registration of crime under other laws.
Analysis: Section 66(2) expressly permits the Director or authorised authority, on forming an opinion that provisions of any other law have been contravened, to share the information with the concerned agency for necessary action. The provision is intended to ensure that material uncovered during investigation under one enactment is not confined to that statute when it discloses violations under other laws. The communication in question was detailed and disclosed alleged contraventions under FEMA and other penal statutes, so it could not be treated as lacking authority merely because the information originated from proceedings under PMLA.
Conclusion: The sharing of information and the consequential registration of crime were held to be legally sustainable.
Issue (ii): Whether the invocation of offences under the Unlawful Activities (Prevention) Act, 1967 disclosed sufficient prima facie material to prevent interdiction of investigation at the threshold.
Analysis: The allegations disclosed a network of foreign funding, withdrawal of funds through ATMs using debit cards, concealment of identity through false naming, circulation of cards, and alleged channelisation of funds into regions affected by left wing extremism. The Court held that at the stage of investigation it was not required to return findings of guilt, and that the material on record was not so barren as to justify judicial interference. The alleged conduct was considered sufficient to permit investigation into unlawful activity, raising of funds for a terrorist act, and conspiracy or preparation related thereto.
Conclusion: The invocation of UAPA and continuation of investigation were held to be justified at the prima facie stage.
Final Conclusion: The petitions were rejected, the criminal investigation was allowed to continue, and the Court declined to exercise inherent jurisdiction to halt the proceedings at the threshold.
Ratio Decidendi: Where statutory information-sharing power expressly authorises communication of contraventions of other laws, and the record discloses prima facie material suggesting serious offences touching national security, investigation should not be interdicted at its inception.